Quality Management and Strategic Success

Quality management and strategic success – by John Currie

Quality management and strategic success By John Currie – Examiner in Professional 1 Strategic Management Accounting

Quality management: Theory and practice It seems to be part of the “conventional wisdom” of management accounting that the implementation of total quality management (TQM) is essential for business success. For example, calculation-type questions on examination papers often involve calculating the opportunity cost of using scarce production capacity to repair defective output, and the discussion parts of the same questions often require candidates to elaborate on the highly negative consequences for a company’s image and goodwill if its customers experience external failure in its products or services. However, this conventional wisdom appears to conflict with an important observed commercial phenomenon, namely, the success of the budget brand. Examples of commercially successful budget brands include low-cost airlines like Ryanair, budget hotel chains like Travelodge, and discount supermarkets like Aldi. Surely if the golden rule is that attention to quality management is essential for commercial success, then it is the most upmarket operators (rather than these budget brands) which ought to be the most commercially successful? Or does the success of budget brands somehow indicate that quality is not as important as we tend to think? In fact, if the success of budget brands is properly understood, then it serves to confirm (rather than refute) the idea that quality management is of central importance in achieving commercial success. It is important, however, that the approach to quality management should reflect the strategy of the business. There are two aspects to this, which will be explained next.

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Quality management and strategic success – by John Currie

Maintaining quality while minimising non-value-adding costs The successful management of a budget brand...