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Chapter 2

MGTA02H3 Chapter Notes - Chapter 2: Total Quality Management, Business Process Reengineering

Management (MGT)
Course Code
H Laurence

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MGTA04 Chapter 2: Increasing Productivity and Quality
The Productivity Quality Connection
Productivity is a measure of economic performance a measure of efficiency that compares
how much is produced with the resources used to produce it
Quality: a products fitness for use in terms of offering the features that consumers want
Quality is defined in terms of value to the customer companies must design their marketing
efforts to cultivate a more customer oriented focus
Improvement in quality= increase in payoffs for firms
Four factors are involved in this process: customers, quality, productivity, and profits
Measuring Productivity: countries use labor productivity to measure a countries productivity
o Labor productivity: partial productivity ratio calculated by dividing GDP by total number
of workers
o =GDP/# Workers
o Focuses more on labor rather than on other resources (accurate record on employment
and hours worked kept)
Productivity Among Global competitors
o Technology, human skills, economic policies, natural policies, and even tradition
influence productivity in many countries
Domestic Productivity
o Nations must be concerned about domestic productivity regardless of their global
standing. A country that improves productivity can increase its wealth and
GDP…decrease in productivity means a decrease in nations total wealth
Manufacturing Vs. Service Productivity
o Manufacturing productivity is higher than service productivity
o Harder to increase service productivity
o Services can become more productive by becoming more like factories and they use
modern information technology to eliminate inefficiencies i.e. automatic check in kiosks
at airports
Industry Productivity
o Industries within sectors also differ vastly in terms of productivity
o Improvement via a new technology=casting
Company Productivity
o High productivity gives a company a competitive advantage because its costs are lower
and therefore offer products at lower prices also involves increased wages
o Productivity if individual companies is also important to investors, workers, and
managers i.e. shares, profit sharing, etc
Total Quality Management
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