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1. INDUSTRY PROFILE
2. COMPANY PROFILE
3. INTRODUCTION TO TOPIC
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1. INDUSTRY PROFILE
Fig no. 1.1: Textile Industry
1.1 Evolution :
Indian Textile industry is one of the leading textiles industries in the world. Though was
predominantly unorganized industry even a few years back, but the scenario started changing
after the economic liberalization of Indian economy in 1991. The opening up of economy gave
the much-needed thrust to the Indian textile industry, which has now successfully become one of
the largest in the world. Indian textile industry largely depends upon the textile manufacturing
and exports. It also plays a major role in the economy of the country. India earns about 27% of
its total foreign exchange through textile exports.
Further, the textile industry of India also contributes nearly 14% of the industrial production of
the country. It also contributes around 3% to the GDP of the country. India textile industry is
also the largest in the country in terms of employment generation. It not only generates job in its
own industry, but also opens up the scopes for the ancillary sectors. India textile industry
currently generates employment to more than 35 million people.
Indian textile industry can be divided into various segments, some of which can be listed as
below:
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Cotton Textiles
Silk Textiles
Woolen Textiles
Readymade Garments
Hand-crafted Textiles
Jute and coir
1.2 CURRENT SCENERIO:
The Indian textile industry contributes about 14% to the industrial production, 4% to the
country’s gross domestic product (GDP) and 17% to the country’s export earnings. The industry
provides direct employment to over 35 million people and is the second largest provider of
employment after agriculture. Fabric production rose to 60,996 million sq meters in FY 2011
from 52,665 million square meters in FY 2007.
Production of raw cotton grew to 32.5 million bales in FY 2011 from 28 million bales in FY
2007 while Production of man-made fiber rose to 1,281 million kgs in FY 2011 from 1,139
million kgs in FY 2007. Production of yarn grew to 6,233 million kgs in FY 2011from 5,183
million kgs in FY 2007.
India has the potential to increase its textile and apparel share in the world trade from the current
level of 4.5 per cent to 8 per cent and reach US $ 80billion by 2020.Exports of textile grew to
USD 26.8 billion in FY 2010 from USD 17.6 billion in FY 2006. India’s textile trade is
dominated by exports with a CAGR of 6.3 per cent during the same period1.
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1.3 MAJOR PLAYERS IN THE TEXTILE INDUSTRY:
TABLE: 1.1
MAJOR PLAYERS IN THE TEXTILE INDUSTRY
COMPANY BUSINESS AREAS
Welspun India Ltd Home Textiles, bathrobes, terry towels
Vardhman groups Yarn, fabric, sewing threads, acrylic fibre
Alok Industries Ltd Home textiles, Woven and Knitted apparel
fabric, garments and polyester yarn
Raymond Ltd Worsted suiting, tailored clothing, denim,
shirting, woolen outwear
Arvind Mills Ltd Spinning, weaving, processing and garment
production (denims, shirting, khakis, knitwear)
Bombay Dyeing and Manufacturing Company
Ltd
Bed Linen, towels, furnishings, fabric for suits,
shirts, dresses and saris in cotton and polyester
blends
Garden Silk Mills Ltd Dyes and printed Fabric
Mafatlal Industries LTD Shirting, poplins, bottom wear fabric, voiles
Aditya Birla Nuvo, a diversified conglomerate
of the Aditya Birla Group, comprising three
divisions—Madura Garments, Jayashree
Textiles, and Indian Rayon
Madura Garments — Lifestyle market (Louis
Philippe, Van Heusen, Allen Solly, The
Collective)
Jayashree Textiles – domestic linen and
worsted yarn
Indian Rayon – viscose filament yarn
ITC Lifestyle Lifestyle market
Reliance Industries Ltd Fabric, Formal Menswear
Source: www.cci.in/survey reports/textile industry
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1.4 OPPORTUNITIES OF TEXTILE INDUSTRY
India’s strong performance and growth in the textiles sector is aided by several key advantages
that the country enjoys, in terms of easy availability of labor and material, buoyant and large
market demand, presence of supporting industries and supporting policy initiatives from the
government.
1. Abundant Availability Of Raw Materials
a. Cotton
b. Jute
c. Silk
d. Wool
e. Handloom
2. Low raw material costs, wastage costs and labor costs
3. Enhanced Flexibility In Production
4. Lower Lead Times
5. Favorable demand conditions – large, growing domestic market
6. Strong Presence of related and supporting industries in terms of design, engineering and
machinery
7. Industry competition – promotes innovation
1.5 CHALLENGES OF TEXTILE INDUSTRY:
The Indian textile industry faces the following constraints:
Fragmented structure with the dominance of the small scale sector
High power costs
Rising interest rates and transaction costs
Unfriendly labor laws
Foreign investments are not coming in as the overall factors influencing the industry are not
investment friendly.
Logistical disadvantages in terms of shipping costs and time pose serious threats to its growth
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2. COMPANY PROFILE
INTRODUCTION TO SARWATI OVERSEAS LIMITED:
Sarwati Overseas Ltd. services the worldwide market and owns and operates its manufacturing
facilities in India. The design studio is in New York and warehouses in Toronto, Canada and
Greenville, South Carolina. The company is completely EDI compatible. Our combination of
modern technology and traditional skills create a unique vertical manufacturing facility, with a
ISO-9002 systems certification, capable of producing a wide range of home furnishings for any
North American company.
Company’s business partners
Sonoma Group, Marmaxx, Cracker Barrel, Welcome Home, Saks Inc, HBC Companies, Sears,
Canadian Tire, LNT & JC Penney and many more. We also work closely with Private Brand
Departments and OEM Program.
Company design and manufacture two seasonal lines introduced at the March and October New
York markets. Company also has holiday textiles which are graphic groups and can be tailored to
the needs of any retailer.
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INRODUCTION TO THE COMPANY
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INRODUCTION TO COMPANY
2.1 INTRODUCTION TO SARWATI OVERSEAS (P) LTD, PANIPAT
Fig no. 2.1: Plant of Sarwati Overseas (P) ltd, Panipat
2.1.1 FOUNDER
Shri ASHOK JAIN had founded the Sarwati Overseas Ltd in the year 1993. Later on company is
converted into private limited in the year 1997.
2.1.2 PRESIDENT
Shri RAKESH JAIN & ASHOK JAIN had an experience of manufacturing textile products like
cushions, table cloth for more than 20 years.
2.1.3 DIRECTOR
1. Shri Ashok Jain had joined the company in the year 2003 as Assistant Manager (Executive
Customer Service) and being promoted as Director (Works and Administration) in the year
2007. He mainly deals in exports of home furnishing.
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2. Shri Anand Jain, Director of Sarwati polymers —Deals in Retail outlets. Sarwati polymers
were established in the year 2002 to showcase the best in home fashion. Sarwati polymers
has exclusive 9 independent retail outlets in Delhi, Noida, Gurgaon, Ludhiana, Mumbai,
Pune etc
2.1.4 COMMITMENTS OF ORGANISATION
Competitive market price.
Quality products.
On time deliveries.
They use safe, eco friendly dyes for healthy environment.
No Child Labor!
Clean and healthy working environment!
Progressive company policy for workers!
2.1.5 PRODUCT RANGE OF ORGANISATION
Fig no. 2.2: Products of Sarwati Overseas
1. Cushions and Throw Pillows
2. Kitchen Linens
3. Tabletop Linens
4. Fashion Bedding
5. Windows Fashion
6. Floor coverings
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2.1.6 PEOPLE
Fig no. 2.3: Employees working at Sarwati Overseas
Employing over a thousand people, investing in infrastructure, managing people, production and
quality, meeting the pressures of on-time deliveries-the whole exercise only goes forward year
after year when the return is the satisfaction of a job done well.
Total no of employees: 300—400
2.1.7 ENVIRONMENT
Today, more and more people are looking beyond the boundaries of their own lives and
considering the quality of life they create for the future. Company believes every little bit counts.
All effluent by-products of manufacturing and dyeing go through a treatment plant to neutralize
them before discharge or recycling.
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2.1.8 INFRASTRUCTURE
Fig no. 2.4: Infrastructure of Sarwati Overseas
Sarwati Overseas have an extremely efficient production infrastructure equipped with all the
facilities under one roof which is capable of performing in the most competitive environments
Company manufacturing unit works with the latest technology developments for color, dyeing,
and processing. Various processes of printing, weaving, quilting, cording, embroidery etc. are
brought under one roof to ensure quality and time efficiencies.
Yarn is tested for strength and dyed according to computerised calibration. Company weaving
facilities are set up to weave both dobbies and jacquards in fabric and rugs. Company is able to
weave standard and wide widths, on traditional handlooms as well as modern shuttle-less looms.
Company manufacture and weave cotton chenille yarn. The process unit is able to dye, screen
print, and give finishes to both cotton and synthetic yarn.
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2.1.9 QUALITY AT ORGANISATION
Fig no. 2.5: Quality Standards
Quality and value are the fundamental concerns at Sarwati, which Company is able to control
by completely owning the manufacturing facilities. Company is able to offer product at
manufacturers’ costs allowing larger margins for retailers. Ensuring that this product meets
exacting quality standards has earned us an ISO 9002 systems certification.
At Sarwati overseas, Quality is corporate mantra at every level of production and administration
that ensures maximum customer satisfaction. The in-house quality checks done under
professional personnel make sure that the home furnishing meets all international standards.
They have a team of highly talented designers who are continuously coming out with exquisite
designs, magnificent cuts and fabulous colors to appeal the clients all over the globe. They are
engrossed in bringing forth a collection of products which is a fusion of modernity and tradition.
The company understands each yarn needs specific attention and it is because of this emphasis
on quality that they have successfully achieved customer appreciation resulting in long term
relations. Sarwati believes that if something is worth doing, it is worth doing well. Company
inculcates a work habit that is called PRIDE: Personal Responsibility in Delivering Excellence.
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INRODUCTION TO THE TOPIC
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3. INTRODUCTION TO THE TOPIC
3.1 PRICING
Setting the right price is an important part of effective marketing. It is the only part of the
marketing mix that generates revenue (product, promotion and place are all about marketing
costs).Price is also the marketing variable that can be changed most quickly, perhaps in response
to a competitor price change.
Put simply, price is the amount of money or goods for which a thing is bought or sold.
The price of a product may be seen as a financial expression of the value of that product. For a
consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a
product, as compared with other available items.
The concept of value can therefore be expressed as:
(Perceived) VALUE = (perceived) BENEFITS – (perceived) COSTS
A customer’s motivation to purchase a product comes firstly from a need and a want.e.g.
• Need: "I need to eat
• Want: I would like to go out for a meal tonight")
The second motivation comes from a perception of the value of a product in satisfying that
need/want (e.g. "I really fancy a McDonalds").
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The perception of the value of a product varies from customer to customer, because perceptions
of benefits and costs vary. Perceived benefits are often largely dependent on personal taste (e.g.
spicy versus sweet, or green versus blue). In order to obtain the maximum possible value from
the available market, businesses try to ‘segment’ the market – that is to divide up the market into
groups of consumers whose preferences are broadly similar – and to adapt their products to
attract these customers.
In general, a products perceived value may be increased in one of two ways – either by:
(1) Increasing the benefits that the product will deliver, or,
(2) Reducing the cost.
For consumers, the PRICE of a product is the most obvious indicator of cost - hence the need to
get product pricing right.
3.2 FACTORS AFFECTING DEMAND:
Consider the factors affecting the demand for a product that are
(1) Within the control of a business and
(2) Outside the control of a business:
3.2.1 Factors within a businesses’ control include:
• Price (assuming an imperfect market – i.e. not perfect competition)
• Product research and development
• Advertising & sales promotion
• Pricing and organization of the sales force
• Effectiveness of distribution (e.g. access to retail outlets; trained distributor agents)
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• Quality of after-sales service (e.g. which affects demand from repeat-business)
3.2.2 Factors outside the control of business include:
• The price of substitute goods and services
• The price of complementary goods and services
• Consumers’ disposable income
• Consumer tastes and fashions
Price is, therefore, a critically important element of the choices available to businesses in trying
to attract demand for their products.
3.3 DEFINITION
Method adopted by a firm to set its selling price. It usually depends on the firm's average costs,
and on the customer's perceived value of the product in comparison to his or her perceived value
of the competing products. Different pricing methods place varying degree of emphasis on
selection, estimation, and evaluation of costs, comparative analysis, and market situation.
3.4 PRICING A PRODUCT
Definition: To establish a selling price for a product
No matter what type of product the company sells, the price charged to the customers or clients
will have a direct effect on the success of your business. Though pricing strategies can be
complex, the basic rules of pricing are straightforward:
All prices must cover costs and profits.
The most effective way to lower prices is to lower costs.
Review prices frequently to assure that they reflect the dynamics of cost, market demand,
response to the competition, and profit objectives.
Prices must be established to assure sales.
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Before setting a price for the product, company must know the costs of running its business. If
the price for the product or service doesn't cover costs, the cash flow will be cumulatively
negative, it will exhaust the company financial resources, and the business will ultimately fail.To
determine how much it costs to run the business including property and/or equipment leases,
loan repayments, inventory, utilities, financing costs, and salaries/wages/commissions, also add
the costs of markdowns, shortages, damaged merchandise, employee discounts, cost of goods
sold, and desired profits to your list of operating expenses. Most important is to add profit in the
calculation of costs. Treat profit as a fixed cost, like a loan payment or payroll, since none of us
is in business to break even. Because pricing decisions require time and market research, the
strategy of many business owners is to set prices once. However, such a policy risks profits that
are elusive or not as high as they could be.
3.5 SITUATIONS TO REVIEW THE PRICE OF THE PRODUCT:
Introducing a new product or product line
Cost of products changes
Entering into a new market
Competitors change their prices;
The economy experiences either inflation or recession;
Sales strategy changes
Customers are making more money because of the product or service.
3.6 BASICS OF PRICING:
To price products, company need to get familiar with pricing structures, especially the difference
between margin and markup. As mentioned, every product must be priced to cover its production
or wholesale cost, freight charges, a proportionate share of overhead (fixed and variable
operating expenses), and a reasonable profit. Factors such as high overhead (particularly when
renting in prime mall or shopping center locations), unpredictable insurance rates, shrinkage
(shoplifting, employee or other theft, shippers' mistakes), seasonality, shifts in wholesale or raw
material, increases in product costs and freight expenses, and sales or discounts will all affect the
final pricing.
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3.6.1 OVERHEAD EXPENSES:
Overhead refers to all non labor expenses required to operate your business. These expenses are
either FIXED OR VARIABLE.
FIXED EXPENSES :
Fixed expenses are those expenses which remain fixed throughout the month or year
irrespective of change in production. In other words, fixed expenses are those expenses
which do not change with the change in production. Fixed expenses include rent or mortgage
payments, depreciation on fixed assets (such as cars and office equipment), salaries and
associated payroll costs, liability and other insurance, utilities, membership dues and
subscriptions (which can sometimes be affected by sales volume), and legal and accounting
costs. These expenses do not change, regardless of whether a company's revenue goes up or
down.
VARIABLE EXPENSES:
Variable expenses are those expenses which change with the change in production. Variable
expenses are really semi variable expenses that fluctuate from month to month in relation to
sales and other factors, such as promotional efforts, change of season, and variations in the
prices of supplies and services. Fitting into this category are expenses for telephone, office
supplies (the more business, the greater the use of these items), printing, packaging, mailing,
advertising, and promotion. When estimating variable expenses, use an average figure based
on an estimate of the yearly total.
3.6.2 COST OF GOODS SOLD:
Cost of goods sold, also known as cost of sales, refers to the cost to purchase products for resale
or cost to manufacture products. Freight and delivery charges are customarily included in this
figure. Accountants segregate cost of goods on an operating statement because it provides a
measure of gross-profit margin when compared with sales, an important yardstick for measuring
the business' profitability. Expressed as a percentage of total sales, cost of goods varies from one
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type of business to another. Normally, the cost of goods sold bears a close relationship to sales. It
will fluctuate, however, if increases in the prices paid for merchandise cannot be offset by
increases in sales prices, or if special bargain purchases increase profit margins. These situations
seldom make a large percentage change in the relationship between cost of goods sold and sales,
making cost of goods sold a semi variable expense.
3.6.3 DETERMINING MARGIN:
Margin, or gross margin, is the difference between total sales and the cost of those sales. For
example: If total sales = Rs 1,000 and cost of sales = Rs 300, then the margin = Rs700.
Gross-profit margin can be expressed in rupees or as a percentage. As a percentage, the gross-
profit margin is always stated as a percentage of net sales. When all operating expenses (rent,
salaries, utilities, insurance, advertising, and so on) and other expenses are deducted from the
gross-profit margin, the remainder is net profit before taxes. If the gross-profit margin is not
sufficiently large, there will be little or no net profit from sales. Some businesses require a higher
gross-profit margin than others to be profitable because the costs of operating different kinds of
businesses vary greatly. If operating expenses for one type of business are comparatively low,
then a lower gross-profit margin can still yield the owners an acceptable profit.The following
comparison illustrates this point. Keep in mind that operating expenses and net profit are shown
as the two components of gross-profit margin, that is, their combined percentages (of net sales)
equal the gross-profit margin:
Business A Business B
Net sales 100% 100%
Cost of sales 40 65
Gross-profit margin 60 35
Operating expenses 43 19
Net profit 17 16
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Markup and (gross-profit) margin on a single product, or group of products, are often confused.
The reason for this is that when expressed as a percentage, margin is always figured as a
percentage of the selling price, while markup is traditionally figured as a percentage of the
seller's cost.
3.7 TYPES OF PRICING
3.7.1 COST PLUS PRICING:
Many manufacturers use cost-plus pricing. The key to being successful with this method is
making sure that the "plus" figure not only covers all overhead but generates the percentage of
profit required as well. FOR EXAMPLE:
Cost of materials Rs 50.00
+ Cost of labor Rs 30.00
+ Overhead Rs 40.00
= Total cost Rs 120.00
+ Desired profit (20% on
sales)
Rs 30.00
= Required sale price Rs 150.00
3.7.2 DEMAND PRICING:
Demand pricing is determined by the optimum combination of volume and profit. Products
usually sold through different sources at different prices--retailers, discount chains, wholesalers,
or direct mail marketers--are examples of goods whose price is determined by demand. A
wholesaler might buy greater quantities than a retailer, which results in purchasing at a lower
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unit price. The wholesaler profits from a greater volume of sales of a product priced lower than
that of the retailer. The retailer typically pays more per unit because he or she are unable to
purchase, stock, and sell as great a quantity of product as a wholesaler does. This is why retailers
charge higher prices to customers. Demand pricing is difficult to master because you must
correctly calculate beforehand what price will generate the optimum relation of profit to volume.
3.7.3 COMPETITIVE PRICING:
Competitive pricing is generally used when there's an established market price for a particular
product or service. If all competitors are charging rs 100 for a replacement windshield, for
example, that's what company should charge. Competitive pricing is used most often within
markets with commodity products, those that are difficult to differentiate from another. If there's
a major market player, commonly referred to as the market leader that company will often set the
price that other, smaller companies within that same market will be compelled to follow. To use
competitive pricing effectively, know the prices each competitor has established. Then figure out
the optimum price and decide, based on direct comparison, whether company prices defend the
competitors prices. Should the company wish to charge more than competitors, be able to make a
case for a higher price, such as providing a superior customer service or warranty policy. Before
making a final commitment to the prices, make sure company know the level of price awareness
within the market.
If company uses competitive pricing to set the fees for a service business, be aware that unlike a
situation in which several companies are selling essentially the same products, services vary
widely from one firm to another. As a result, company can charge a higher fee for a superior
service and still be considered competitive within your market.
3.7.4 MARK UP PRICING:
Used by manufacturers, wholesalers, and retailers, a markup is calculated by adding a set amount
to the cost of a product, which results in the price charged to the customer. For example, if the
cost of the product is rs 100 and your selling price is rs 140, the markup would be rs 40. To find
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the percentage of markup on cost, divide the rupees amount of markup by the rupees amount of
product cost.
Rs 40 / Rs 100 = 40%
This pricing method often generates confusion--not to mention lost profits--among many first-
time small-business owners because markup (expressed as a percentage of cost) is often
confused with gross margin (expressed as a percentage of selling price). The next section
discusses the difference in markup and margin in greater depth.
3.8 TOTAL QUALITY MANAGEMENT
Fig no 3.1: Total Quality management
TQM is a set of management practices throughout the organization, geared to ensure the
organization consistently meets or exceeds customer requirements. TQM places strong focus on
process measurement and controls as means of continuous improvement. Total Quality
Management is an approach to the art of management that originated in Japanese industry in the
1950′s and has become steadily more popular in the West since the early 1980′s. Total Quality is
a description of the culture, attitude and organization of a company that aims to provide, and
continue to provide, its customers with products and services that satisfy their needs. The culture
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requires quality in all aspects of the company’s operations, with things being done right first
time, and defects and waste eradicated from operations. Many companies have difficulties in
implementing TQM. Surveys by consulting firms have found that only 20%-36% of companies
that have undertaken TQM have achieved either significant or even tangible improvements in
quality, productivity, competitiveness or financial return. As a result many people are skeptical
about TQM. However, when you look at successful companies you find a much higher
percentage of successful TQM implementation.
3.9 BENEFITS OF TQM IMPLEMENTATION:
The most effective way to spend TQM introduction funds is by training top management, people
involved in new product development, and people involved with customers it’s much easier to
introduce EDM/PDM in a company with a TQM culture than in one without TQM. People in
companies that have implemented TQM are more likely to have the basic understanding
necessary for implementing EDM/PDM. For example, they are more likely to view EDM/PDM
as an information and workflow management system supporting the entire product life cycle then
as a departmental solution for the management of CAD data.
3.10 IMPORTANT ASPECTS OF TQM IMPLEMENTATION:
A. Customer-driven quality
B. Top management leadership and commitment
C. Continuous improvement
D. Fast response
E. Actions based on facts
F. Employee participation
G. TQM culture.
A. CUSTOMER DRIVEN QUALITY
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TQM has a customer-first orientation. The customer, not internal activities and constraints,
comes first. Customer satisfaction is seen as the company’s highest priority. The company
believes it will only be successful if customers are satisfied. The TQM Company is sensitive to
customer requirements and responds rapidly to them. In the TQM context, `being sensitive to
customer requirements’ goes beyond defect and error reduction, and merely meeting
specifications or reducing customer complaints. The concept of requirements is expanded to take
in not only product and service attributes that meet basic requirements, but also those that
enhance and differentiate them for competitive advantage. Each part of the company is involved
in Total Quality, operating as a customer to some functions and as a supplier to others. The
Engineering Department is a supplier to downstream functions such as Manufacturing and Field
Service, and has to treat these internal customers with the same sensitivity and responsiveness as
it would external customers.
B. TOP MANAGEMENT LEADERSHIP AND COMMITMENT:
TQM is a way of life for a company. It has to be introduced and led by top management. This is
a key point. Attempts to implement TQM often fail because top management doesn’t lead and
get committed – instead it delegates and pays lip service. Commitment and personal involvement
is required from top management in creating and deploying clear quality values and goals
consistent with the objectives of the company, and in creating and deploying well defined
systems, methods and performance measures for achieving those goals. These systems and
methods guide all quality activities and encourage participation by all employees. The
development and use of performance indicators is linked, directly or indirectly, to customer
requirements and satisfaction, and to management and employee remuneration.
C. CONTINOUS IMPROVEMENT:
Continuous improvement of all operations and activities is at the heart of TQM. Once it is
recognized that customer satisfaction can only be obtained by providing a high-quality product,
continuous improvement of the quality of the product is seen as the only way to maintain a high
level of customer satisfaction. As well as recognizing the link between product quality and
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customer satisfaction, TQM also recognizes that product quality is the result of process quality.
As a result, there is a focus on continuous improvement of the company’s processes. This will
lead to an improvement in process quality. In turn this will lead to an improvement in product
quality, and to an increase in customer satisfaction. Improvement cycles are encouraged for all
the company’s activities such as product development, use of EDM/PDM, and the way customer
relationships are managed. This implies that all activities include measurement and monitoring
of cycle time and responsiveness as a basis for seeking opportunities for improvement.
Elimination of waste is a major component of the continuous improvement approach. There is
also a strong emphasis on prevention rather than detection, and an emphasis on quality at the
design stage. The customer-driven approach helps to prevent errors and achieve defect-free
production. When problems do occur within the product development process, they are generally
discovered and resolved before they can get to the next internal customer.
D. FAST RESPONSE:
To achieve customer satisfaction, the company has to respond rapidly to customer needs. This
implies short product and service introduction cycles. These can be achieved with customer-
driven and process-oriented product development because the resulting simplicity and efficiency
greatly reduce the time involved. Simplicity is gained through concurrent product and process
development. Efficiencies are realized from the elimination of non-value-adding effort such as
re-design. The result is a dramatic improvement in the elapsed time from product concept to first
shipment.
E. ACTION BASED ON FACTS:
The statistical analysis of engineering and manufacturing facts is an important part of TQM.
Facts and analysis provide the basis for planning, review and performance tracking,
improvement of operations, and comparison of performance with competitors. The TQM
approach is based on the use of objective data, and provides a rational rather than an emotional
basis for decision making. The statistical approach to process management in both engineering
and manufacturing recognizes that most problems are system-related, and are not caused by
particular employees. In practice, data is collected and put in the hands of the people who are in
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the best position to analyze it and then take the appropriate action to reduce costs and prevent
non-conformance. Usually these people are not managers but workers in the process. If the right
information is not available, then the analysis, whether it be of shop floor data, or engineering
test results, can’t take place, errors can’t be identified, and so errors can’t be corrected.
F. EMPLOYEE PARTICIPATION:
A successful TQM environment requires a committed and well-trained work force that
participates fully in quality improvement activities. Such participation is reinforced by reward
and recognition systems which emphasize the achievement of quality objectives. On-going
education and training of all employees supports the drive for quality. Employees are encouraged
to take more responsibility, communicate more effectively, act creatively, and innovate. As
people behave the way they are measured and remunerated, TQM links remuneration to
customer satisfaction metrics.
G. TQM CULTURE:
It’s not easy to introduce TQM. An open, cooperative culture has to be created by management.
Employees have to be made to feel that they are responsible for customer satisfaction. They are
not going to feel this if they are excluded from the development of visions, strategies, and plans.
It’s important they participate in these activities. They are unlikely to behave in a responsible
way if they see management behaving irresponsibly – saying one thing and doing the opposite.
3.11 PRODUCT DEVELOPMENT IN A TQM ENVIRONMENT:
Product development in a TQM environment is very different to product development in a non-
TQM environment. Without a TQM approach, product development is usually carried on in a
conflictual atmosphere where each department acts independently. Short-term results drive
behavior so scrap, changes, work-around, waste, and rework are normal practice. Management
focuses on supervising individuals, and fire-fighting is necessary and rewarded. Product
development in a TQM environment is customer-driven and focused on quality. Teams are
process-oriented, and interact with their internal customers to deliver the required results.
Management’s focus is on controlling the overall process, and rewarding teamwork.
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3.12 TQM AS A FOUNDATION:
TQM is the foundation for activities which include;
1. Meeting Customer Requirements
2. Reducing Development Cycle Times
3. Just In Time/Demand Flow Manufacturing
4. Improvement Teams
5. Reducing Product and Service Costs
6. Improving Administrative Systems Training
3.13 STEPS OF TQM:
1. Pursue New Strategic Thinking
2. Know the Customers
3. Set True Customer Requirements
4. Concentrate on Prevention, Not Correction
5. Reduce Chronic Waste
6. Pursue a Continuous Improvement Strategy
7. Use Structured Methodology for Process Improvement
8. Reduce Variation
9. Use a Balanced Approach
10. Apply to All Functions
3.14 PRINCIPLES OF TQM:
1. Quality can and must be managed.
2. Everyone has a customer and is a supplier.
3. Processes, not people are the problem.
4. Every employee is responsible for quality.
5. Problems must be prevented, not just fixed.
6. Quality must be measured.
7. Quality improvements must be continuous.
8. The quality standard is defect free.
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9. Goals are based on requirements, not negotiated.
10. Life cycle costs, not front end costs.
11. Management must be involved and lead.
12. Plan and organize for quality improvement.
3.15 MANAGING AND IMPROVING THE PROCESSES:
1. Defining the process
2. Measuring process performance (metrics)
3. Reviewing process performance
4. Identifying process shortcomings
5. Analyzing process problems
6. Making a process change
7. Measuring the effects of the process change
8. Communicating both ways between supervisor and user
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REVIEW OF LITERATURE
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LITERATURE REVIEW
In order to comprehensively answer the research questions, literature is reviewed on pricing and
total quality management. To appreciate the specific nature of pricing and total quality
management, it was essential to first explore general pricing and total quality management
literature.
TQM gurus have mentioned little about organization structure. Many companies superimpose
their TQM committees on their existing structures, overlooking the fact the success of any
organization rests heavily on the compatibility between its strategy and its structure.
Restructuring is absolutely necessary for a successful TQM implementation Naceur Jabnoun,
(2000). It includes senior management commitment, development needs of senior directors,
company-wide employee involvement, reward recognition, orientation towards strategic
management and core competencies and organizational capability Hides, et al., (2000). The
reliability and validity of the instrument were tested and validated. Various methods were
employed for this test and validation. The instrument presented was reliable and valid. Industrial
practitioners will be able to use this instrument to evaluate their TQM implementation so as to
target improvement areas Zhang, et al., (2000).
There is a need for a formal empirical study to resolve the existing debate about the standards’
long-term contribution and true value to ISO 9000-certified companies. For the purposes of this
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study, a TQM measurement instrument was developed and tested for its reliability and validity to
measure TQM performance improvement in certified companies. This performance improvement
was then used to test the basic research hypothesis: “Can ISO 9000 standards provide a good first
step towards TQM?” Presentation was done in eight basic TQM categories, showing the certified
companies’ performance improvement in the basic elements of each category, and revealing their
strengths and weaknesses on their way to TQM Gotzamani, (2001). TQM is a proven systematic
approach to the improvements of the organization’s overall business process, including quality of
products and services. Organizational lack of information and data on the critical success factors
are an obstacle in implementing TQM effectively and successfully. It has developed a TQM soft
model which is fit for application. There is a relationship between the soft elements of critical
success factors on TQM tangible effects, influences by soft elements activities such as culture,
trust, teamwork, employment continuity, education and training, top management leadership for
quality and continuous improvement, employee involvement and customer satisfaction/
involvement. Three main research methods were adopted in developing the TQM soft model: a
postal questionnaire survey, a structured interview and the practical implementation of the model
at a manufacturing company. Multiple regression analysis and binomial testing are used to
analyze the data Lau & Idris, (2001). There are many success and failure stories of the firms
adopting total quality management (TQM). There was a broad review of the current status of
TQM and ISO 9000. It considers the extent to which ISO 9000 and TQM are being successfully
implemented. It also presents the reasons for obtaining an ISO 9000 certificate, difficulties faced
during the registration process, improvements achieved and disappointments experienced after
being certified Beskese & Cebeci, (2001).
Quality has been widely accepted as essential in today’s global competition, limited work has
been conducted on the management processes that lead to it. The control processes in quality
assurance and total quality management was discussed. The generic management control process
is first presented and its deficiencies are highlighted. It proposes control processes for quality
assurance and total quality management Jabnoun, (2002).
In the manufacturing industry, product quality has become a key factor in determining a firm’s
success or failure in the global marketplace. Advanced, highly reliable manufacturing methods
have made it possible to achieve very high standards of product quality. As a result, more and
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more firms are making product quality a keystone of their competitive strategy. The
improvement of production quality is a long-term commitment to continuous improvement in
every aspect of the production process. Today’s competitive market, in almost every category of
products and services, is characterized by accelerating changes, innovation, and massive amounts
of new information. Changing customer needs fuels much of the rapid evolution in markets.
Most organizations that have been successful with their quality improvement effort have adopted
an integrated approach commonly referred to as total quality management (TQM) Mohammad
Talha, (2004). Organizations need to keep vigilant in observing the changes occurring in the
business environment and adjust their strategy in accordance with these changes. Quality
management system needs to be implemented and aligned with the company's business strategy.
TQM principles that were developed in the manufacturing area can be adapted in the design and
development area and provide a greater leverage for the business in the future. Finally, it is
highly important for organizations to redefine and broaden the application of the principles of
total quality management and to understand the need to tailor these principles Prajogo & Sohal,
(2004). In keeping with the socio-economic and cultural transformation that has placed newer
demands on the educational system, in terms of greater responsibility and accountability and
increased expectations by stakeholders, the system has been pressurized to shift its focus from
one in quantitative expansion to one with emphasis on quality. Such shifts and changes are being
witnessed not only in the developed countries, but also in the developing countries of the world.
The education system, and more so the higher education system in particular, in an attempt to
react to the demands and ever increasing pressures from its stakeholders, finds itself in a market-
oriented environment, with internal and external customers; wherein, “delighting the customer”,
is the rule for survival in the long run. “Delighting the customer”, is the core message of total
quality management (TQM) and, hence, there is a need to identify and apply the relevant
concepts of TQM to each and every aspect of academic life; that is, to the teaching, learning and
administrative activities Sahney, et al (2004).
While the concepts of performance evaluation and total quality management (TQM) have been
explored in the management literature of the last decades, there has been relatively little work on
the particular characteristics that an organization with a TQM approach to human resource (HR)
performance evaluation should adopt. It gives an overview of the implications of a quality
orientation for the evaluation of employee performance. It reveals the main difficulties with the
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concept of performance evaluation from a quality perspective; and it also examines particular
characteristics of performance evaluation that could maximize the effectiveness of HR
performance evaluation in organizational environments with a quality orientation. Both the
assumptions of TQM and the requirements for HR evaluation are used as a foundation from
which to examine the ways in which HR performance evaluation might have changed to
integrate TQM requirements. The main criteria of a TQM-based HR performance evaluation
system are refined and enhanced, thus moving towards a situation in which TQM can drive HR
performance evaluation in practice. It also serves as a guide for the evaluation of the
effectiveness of such a system Soltani, et al., (2004). The rapid rate of change in global and
niche markets has increased pressure on organizations to become more competitive. TQM is not
immune from such changes. Rather, TQM theory and practice must continually adapt to be in the
vanguard of such change and potential future changes. It determine the influencing/driving
factors for the future of TQM involved a panoptic literature review and an inductive grounded
theory approach using multiple case studies. It indicates that both the mechanistic and organism
aspects of TQM will continue into the future, along with the continual representative
development of initiatives to meet current and future organizational change McAdam &
Henderson, (2004).
TQM practices are determined by different types of cultures. Interestingly, hierarchical culture
was found to have a significant relationship with certain practices of TQM. Additionally, the
cultural factors underpinning different elements of TQM are dissimilar, even antagonistic;
organizations can implement them in harmony Prajogo & McDermott, (2005). The objectives,
which are pursued, are fundamentally qualitative rather than quantitative in their nature with a
particular emphasis given on the companies’ customers. However, the pricing methods, which
are adopted by the majority of the companies, refer to the traditional cost-plus method and the
pricing according to the market's average prices Avlonitis & Indounas, (2005).
An examination of TQM empirical studies resulted in compilation of critical success factors.
Implementation difficulties exist to operationalize such a large number of critical success factors
in organizations. It analyzed and sorted the critical success factors in descending order according
to the frequency of occurrences using Pareto analysis Karuppusami & Gandhinathan, (2006).
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The model based on TQM with respect to role stressors provides a basis for assessing the level of
role conflict and role ambiguity under which the use of different aspects of TQM should be
retained or revised. It suggests that TQM is not a panacea that can be unthinkingly applied, but
must be practiced with a clear sense of the impact on role stressors Lee Teh, et al., (2008).
Customer value-based pricing is increasingly recognized by academics and practitioners as the
most effective approach to pricing for companies wishing to achieve increased profitability and
sustained success. However, despite this apparent support for the implementation of value-based
pricing, the practical reality is that many companies continue to price their products and services
primarily on the basis of costs and/or competitive price levels. Five main obstacles to the
implementation of value-based pricing strategies have been identified: deficits in value
assessment; deficits in value communication; lack of effective market segmentation; deficits in
sales force management; and lack of support from senior management Andreas Hinterhuber,
(2008).
The most important TQM barriers in Indian industry are: “no benchmarking of other company's
practices” and “employees are resistant to change”. Factor analysis of the potential barriers to
TQM implementation revealed the following five underlying constructs: lack of customer
orientation, lack of planning for quality, lack of total involvement, lack of management
commitment, and lack of resources Bhat & Rajashekhar, (2009). Customer focus must be the
prime objective for various industries to achieve total quality management. All the factors must
be used systematically to achieve total quality management (TQM) and it can be done efficiently
by using a model having four phases to implement TQM Kumar, et al (2009).
Three levels of TQM application starting with quality control, then a broader application of
management involvement with quality assurance process and finally a system-wide application
of TQM that involves a high degree of strategic integration of TQM principles. The integration
between functional areas in the factory, formalization of activities and clear strategy were present
at the TQM businesses and resulted in effective and efficient systems of customer service,
operational excellence and human resource integration Azizan Abdullah, (2010). Three main
stages (commodity, control, and value) corresponding to different levels of maturity of the
pricing function. Many managers feel they lack opportunities to “push the price button”; there
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was a progressive and systematic deployment of tools and capabilities allows companies to gain
more pricing power Carricano, et al., (2010).
Total quality management (TQM) has begun to influence national business systems and is
widely seen as a “revolution” in management. TQM initiatives continuously search the needs of
the customers and incorporate them in the organization on an ongoing basis. There was a
significance and usage of TQM in Indian service industries. The Indian service industries are
well aware of the TQM program, though more efforts need to be focused on implementing it
properly, use of TQM models and frameworks, and continuously improving the ongoing TQM
practices Talib, et al., (2011). Total quality management (TQM) is a modern management
philosophy and a journey, not a destination. TQM is a systematic management approach to meet
the competitive and technological challenges which has been accepted by both service and
manufacturing organizations globally. It defines the quality with emphasis on top management
commitment and customer satisfaction. It focuses on attaining and maintaining impeccable
quality in manufacturing as well as services, by improving the performance of products,
processes and services to satisfy customers' expectations. Manufacturing and service industries
recognize TQM differently Kumar, et al., (2011). TQM barriers are identified. There are two
groups of barriers, one having high driving power and low dependency requiring maximum
attention and of strategic importance (such as lack of top-management commitment, lack of
coordination between departments) and the other having high dependence and low driving power
and are resultant effects (such as high turnover at management level, lack of continuous
improvement culture, employees' resistance to change) Talib, et al., (2011).
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RESEARCH METHODOLOGY
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3. RESEARCH METHODOLOGY
Every project work is based on certain methodology, which is a way to systematically solve the
problem or attain its objectives. It is very important guideline and lead to completion of any
project work through observation, data collection and data analysis.
RESEARCH
It tends to describe the steps taken by the researcher in studying the research problem along with
the logic behind them. . The methodology combines economy with efficiency.
The procedure adopted for conducting the research requires a lot of concentration as it has direct
bearing on accuracy, reliability and adequacy of results obtained. Research in common language
refers to a search for knowledge. Research can also be defined as a scientific and systematic
search for pertinent information on a specific topic. Research is an art of specific
investigation. Research is an academic and as such the term should be used in a technical
sense. It is a voyage of discovery. Research methodology is a way to systematically study and
solve the research problems
Types of Research
Basic research: the basic premise is the need to KNOW and the concern is primarily
academic in nature.
Applied research: Solution or action oriented research, that is contextual and practical in
approach.
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Exploratory research is loosely structured and the basic premise is to provide direction to
subsequent, more structured method of enquiry.
Conclusive research is structured and definite in orientation. These studies are usually
conducted to validate formulated hypotheses and specified relationships.
3.1. JUSTIFICATION OF THE STUDY
The study is significant as it helps to know the pricing and quality management techniques of a
manufacturing concern. Marketing management plays a vital role in today’s business firms. It is
a very challenging part of Business Management. Proper pricing and quality management
programs are very compulsory for every organization in today’s Competitive Business
Environment. In modern era, it is very necessary to have multi skilled employees so that
productivity can be increased. The study explains the pricing and quality management techniques
used by the organization and also helps to know its sources. The study helps to know how the
company is using pricing and quality management methods as a tool to get the competitive
advantage in the industry and to enhance the efficiency of their organization. So the study
becomes relevant to understand the process of pricing and developing potential employees in the
manufacturing concern.
3.2 SCOPE
This study provides a value insight on the pricing and quality management process being
followed by SARWATI OVERSEAS PVT LTD. This study helps to get the practical knowledge
in pricing strategy followed by the organization. The study helps me for my future in
MARKETING. This study gives some suggestions for making the present pricing and quality
management system more effective.
The study was conducted during the six weeks pricing in the MARKETING Department on the
“STUDY OF PRICING AND QUALITY MANAGEMENT PROCESS”.
3.3 OBJECTIVE OF THE STUDY
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Main objective: - The basic objective of the project is to study the pricing and quality
management process being followed by SARWATI OVERSEAS PVT. LTD.
Sub objectives :
1. To know about the various guidelines involved in deciding the product pricing.
2. To study how the actual process of Marketing carried out in the organization.
3. To know the pricing strategies used by Sarwati Overseas.
4. To know about the implementation of total quality management.
5. To know about the quality management operation.
6. To know how the distribution method affects the sales percentage.
7. To know about the company’s policies to compete with the competitors pricing policies.
8. To know about the benefits and consequences of implementing TQM.
9. To know about the actual performance of the employees.
3.4. RESEARCH DESIGN
The research design used in this project is Descriptive in nature. Descriptive research includes
surveys and fact-finding enquiries of different kinds. The main purpose of this descriptive
research is description of the state of affairs as it exists at present. As the study was conducted on
the pricing and quality management process, so the practices followed by Sarwati OVERSEAS
PVT LTD have been studied and its main procedures for T&D are viewed. As the main
characteristic of descriptive research is that it has no control over the variables; it can only report
what has happened or what is happening so here descriptive research has been used.
3.5. SAMPLE DESIGN
The sample design used in this study is RANDOM SAMPLING.
3.5.1. UNIVERSE
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In statistics, universe or population means an aggregate of items about which we obtain
information. A universe or population means the entire field under investigation about which
knowledge is sought. A population can be of two kinds (i) Finite and (ii) Infinite. In a finite
population, number of items is definite such as, numbers of students or teacher in a college. On
the other hand, an infinite population has infinite number of items e.g. no. of stars in a sky, no. of
water drops in an ocean, no. of leaves in a tree or no. of hairs on the head.
But in this research project, only finite population is used as “ALL THE EMPLOYEES OF
SARWATI OVERSEAS PVT LTD PANIPAT”.
3.5.2 SAMPLE UNIT
All Employee of SARWATI OVERSEAS PVT LTD
3.5.3 SAMPLE SIZE
A part of population is called sample. In other words, selected or sorted units from the population
are known as sample. In fact, a sample is that part of the population which we select for the
purpose of investigation.
In this research project, the sample size of this study is 100 employees.
3.6. METHODS OF DATA COLLECTION
To determine the appropriate data for research mainly two kinds of data was collected
1) Primary Data
2) Secondary Data
Primary data: - Primary data had been collected from the employees of the company directly.
Secondary data: - Secondary data are the data collected for some purpose other than the
research situation; such data are available from the sources such as books, company reports,
journals, rating organization, census department etc . Sources of secondary data are
Internet.
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Book and Journals.
Company manual.
Research work of others.
DATA USED FOR THE STUDY
For the study conducted both kind of data have been used, primary as well as secondary.
PRIMARY DATA- With the help of questionnaire and researcher’s own observation
SECONDARY DATA- With the help of internet and company manuals.
3.7 RESEARCH INSTRUMENT
QUESTIONNAIRE
Questionnaire refers to a device for securing answer to a formally arranged list of Questions by using a term, which the respondents fill in by themselves.
Questionnaire design
Open Ended Questions
Close Ended Questions
Dichotomous Questions
Multiple Questions
A. Open Ended Questions
In this question, the respondents answer in his own words. This type of questions is rarely
used because it is difficult to weight the result.
B. Close Ended Questions
In this question respondent is given a limited number of alternatives from which he selects
the one that most closes matches his opinion or attitude.
C. Dichotomous Questions
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A Dichotomous question refers to one which offers the respondent a choice between only
two alternatives and reduces the issues to its simplest form.
D. Multiple Questions
A Multiple – choice Question refers to one which provides several set of alternatives for its
answers. These types of questions are asked on demographic section.
3.8. TOOLS USED FOR ANALYSIS
Graphical and Tabular analysis
The tools used for the analysis are as follows:-
Tables: Tables are used to represent the response of the respondents in a precise term so that it
become easy to evaluate the data collected.
Pie-charts: Pies charts have been used to express that how much percentage of the respondents
have a particular response towards a particular option.
Graphs:-Graphs are nothing more than a graphical representation of the data collected.
Chi-square test: - Chi-square test is used when the set of observed frequencies obtained after
experimentation have to be supported by hypothesis or theory. The test is known as X 2- test of
goodness of fit and is used to test if the deviation between observation (experiment) and theory
may be attributed to chance (fluctuations of sampling). Ho= There is no significant difference
between level of employees and satisfaction of training programmes. H1= There is significant
difference between level of employees and satisfaction of training programmes.
Here we have the assumption of H0.
If,
Calculated value < Tabulated value
Then, hypothesis is accepted else it’s rejected.
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(O-E) 2
Ψ²= ——— where,
E
O = Observed frequency
E = Expected frequency
PERCENTAGE METHOD
Percentage refers to a special kind of ratio. Percentages are used in making comparison between
two (or) more series of data. Percentages are used to describe the relationship. Percentage can
also be used to compare the relative terms, the distribution of two or more series of data. Since
the percentage reduce everything to a common base and thereby allow meaning comparisons to
be made.
The data collected through questionnaire response was analyzed in the following manner:
Raw data was coded and tabulated
The tabulated data was converted into percentage, to show the percentage of opinion
among respondents.
Percentage analysis thus involves the simple interpretation/ analysis of the various items
to be taken up in the questionnaire on a percentage basis from the data collected.
Interpretation of the gaps also includes mean scores obtained by the organization on
every aspect/ item as calculated.
3.9. LIMITATIONS OF THE STUDY
Limitation is regarding the sample selection.
Limited time for conducting the study.
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Lack of interest of respondents.
Findings are based on the views expressed by the respondents of different occupation,
age and sex so it may suffer from biased prejudices.
The study has not been intended on a very large scale, have the possibility of errors,
which can’t be ruled out.
The misunderstanding of the terms used in questionnaire by the respondents.
Consciously avoiding a particular response due to the extreme factors.
Lack of awareness and knowledge among the selected sample unit.
Some of the workers did not respond properly as they thought HR Department was
carrying on some performance assessment on the basis of their responses.
Time limitation was another constraint. Workers were not able to entertain properly due
to their busy schedules.
It was found that some workers were not really satisfied with their present job in the
organization. They were little confused.
DATA ANALYSIS
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INTERPRETATION
ANALYSIS
4.1 What is the price range of your product?
TABLE NO 4.1
PRICE RANGE OF THE PRODUCT
PRICE RANGE PERCENTAGE0-200 50%
200-400 30%
400-600 15%
600-800 5%
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50%
30%
15% 5%
PRICE RANGE
0-200200-400400-600600-800
Fig no 4.1: Price range of the product
INTERPRETATION:
From the above table it can be inferred that, 50% of the product lies between the ranges of Rs 0
to Rs 200 whereas 30% of the product lies in the range of Rs 200 to Rs 400 and 15% of the
product lies between the ranges of Rs 400-Rs 600.
4.2 What is the Pricing policy of the company to sell products as compared to the competitor’s
prices?
TABLE NO 4.2: PRICE LEVEL
PRICE RANGE Percentage
Higher prices 20%
Lower prices 25%
Same prices 55%
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20%
25%
55%
PRICE LEVEL
Higher pricesLower priceSame price
Fig no 4.2: Price Level
INTERPRETATION: From the above table it can be inferred that, 55% of the products remains
with the same price level as competitors whereas 25% of the product remains with lower price
and 20% of the products remain with higher prices.
4.3 What is the pricing strategy followed by the organization?
TABLE NO 4.3PRICING STRATEGY
PRICING STRATEGIES PERCENTAGE
Skimming 4%
Penetration 14%
Go-pricing 60%
Marginal pricing 10%
Cost plus 12%
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4%14%
60%
10%12%
PRICING STRATEGY
SkimmingPenetrationGo-pricingMarginal pricingCost plus
Fig no 4.3 pricing strategy
INTERPRETATION:
From the above table it can be inferred that, 60% of the respondent is in opinion that company
follows go-pricing strategy whereas 14% of the respondent is in the opinion that company
follows penetration pricing policy.
4.4 How does the method of distribution affect the price?
TABLE NO 4.4DISTRIBUTION METHODS
DISTRIBUTION METHODS PERCENTAGE
Direct sales 15%
Brokers/agency 75%
Online selling 10%
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15%
75%
10%
DISTRIBUTION METHODS
Direct SalesBrokers/agencyOnline Selling
Fig no 4.4 distribution methods
INTERPRETATION:
From the above table it can be inferred that, 75% of the price of the product is affected by the
Distribution method of Broker/agency whereas 10% of the price of the product is affected by the
distribution method of online selling.
4.5 How does the promotional policy affect the price of the product?
TABLE NO 4.5 PROMOTIONAL POLICY
PROMOTION
POLICY
PERCENTAGE
Free sampling 60%
Advertisement 25%
Introductory price 15%
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60%
25%
15%
PROMOTIONAL POLICY
Free samplingAdvertisementIntroductory price
Fig no 4.5 promotional policy
1INTERPRETATION: From the above table it can be inferred that, 60% of the prices of
products are affected by the free sampling whereas 25% of the prices of the product are affected
by the advertisement and 15% of the prices of the products are affected by the introductory
prices.
4.6 What are the quality practices organization are applying for?
TABLE NO 4.6QUALITY PRACTISES
QUALITY PRACTICES PERCENTAGE
Customer satisfaction survey 5%
Quality function deployment 0%
Benchmarking 15%
Data warehouse 15%
Balanced scoreboard 0%
Flexible manufacturing 65%
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5% 15%
15%
65%
QUALITY PRACTICES
Customer satisfaction surveyQuality function deploymentBenchmarkingData warehouseBalanced scoreboardFlexible manufacturing
Fig no 4.6 quality practices
INTERPRETATION:
From the above table it can be inferred that, 65% of the employees are in the opinion that
flexible manufacturing quality practices is applied in the organization whereas 15% of the
employees are in the opinion that benchmarking and data warehouse is applied in the
organization.
4.7 Is there any difference in sales turnover in percentage after implementing TQM?
TABLE NO 4.7DIFFERENCE IN SALES TURNOVER
DIFFERENCE IN SALES
TURNOVER
PERCENTAGE
No difference 0%
0-5% 0%
5-10% 5%
10-15% 20%
15-20% 65%
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20-25% 10%
More than 25 % 0%
5% 20%
65%
10%
DIFFERENCE IN SALES TURNOVER
No difference0-5%5-10%10-15%15-20%20-25%More than 25 %
Fig no 4.7 difference in sales turnover
INTERPRETATION:
From the above table it can be inferred that with the implementation of TQM 65% of the sales
turnover result in difference of 15% to 20% whereas 20% of the sales turnover result in
difference of 10% to 15%.
4.8 What is the estimated profit margin difference after applying TQM?
TABLE NO 4.8DIFFERENCE IN PROFIT MARGINS
DIFFERENCE IN PROFIT MARGINS PERCENTAGE
No difference 0%
0-5% 0%
5-10% 15%
10-15% 70%
15-20% 15%
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More than 20% 0%
15%
70%
15%
DIFFERENCE IN PROFIT MARGINS
No difference0-5%5-10%10-15%15-20%More than 20%
Fig no 4.8 difference in profit margins
INTERPRETATION:
From the above table it can be inferred that, 70% of the respondent are agreed that there is a
difference of 10-15% in the profit margins after the implementation of TQM whereas 15% of the
respondent are agreed that there is a difference of 5-10% and 15-20%.
4.9 What is the estimated customer satisfaction difference after applying TQM?
TABLE NO 4.9DIFFERENCE IN CUSTOMER SATISFACTIONDIFFERENCE IN
CUSTOMER
SATISFACTION
PERCENTAGE
No difference 0%
0-5% 5%
5-10% 10%
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10-15% 65%
15-20% 20%
More than 20 % 0%
5%10%
65%
20%
DIFFERENCE IN CUSTOMER SATISFACTION
No difference0-5%5-10%10-15%15-20%More than 20%
Fig no 4.9 difference in customer satisfaction
INTERPRETATION:
From the above table it can be inferred that, 65% of the respondent are agreed that there is a
difference of 10-15% in the customer satisfaction after the implementation of TQM whereas
20% of the respondent are agreed that there is a difference of 15-20%.
4.10 What other benefits does the organization gain with TQM?
TABLE NO 4.10OTHER BENEFITS
OTHER BENEFITS PERCENTAGE
Improve productivity 65%
Improve morale 5%
Less paper 5%
Less waste 10%
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Less rework 10%
Increase market share 5%
65%5%
5%
10%
10% 5%
OTHER BENEFITS
Improve productivityImprove moraleLess paper workLess wasteLess reworkIncrease market share
Fig no 4.10 other benefits
INTERPRETATION:
From the above table it can be inferred that, 65% of the respondent agreed that with the
introduction of TQM productivity has been approved whereas 10% of the employees is in the
opinion of wastage and rework process is cut down.
4.11 What side effects does your organization suffer with TQM?
TABLE NO 4.11SIDE EFFECTS
SIDE EFFECTS PERCENTAGE
Decrease productivity 5%
Weaken morale 5%
More paper 35%
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Higher cost 35%
Higher staff turnover 10%
Others 10%
5%5%
35%
35%
10% 10%
SIDE EFFECTS
Decrease productivityWeaken moraleMore paperHigher costHigher staff turnoverOthers
Fig no 4.11 side effects
INTERPRETATION:
From the above table it can be inferred that, 35% of the respondent is in opinion that
organization is suffering side effect of higher cost and more paper work whereas 10% of the
respondent is in the opinion that organization is suffering side effect of staff turnover and others
effects also.
STATISTICAL TOOL
CHI-SQUARE ANALYSIS ON THE RELATIONSHIP BETWEEN PRICING
STRATEGIES AND QUALITY OF THE PRODUCTS
H0: Pricing strategies doesn’t affect the quality of the products.
H1: Pricing strategies affect the quality of the products.
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Observed Frequency
Responses Skimming Go-pricing Sub-total
Yes 20 50 70
No 20 10 30
Sub-total 40 60 100
Expected Frequency
Responses Skimming Go-pricing Sub-total
Yes 28 42 70
No 12 18 30
Sub-total 40 60 100
O E O-E (O-E)2 (O-E)2/E
20 28 -8 64 2.285
50 42 -8 64 1.523
20 12 8 64 5.333
10 18 -8 64 3.555
Total 12.696
Degree of freedom = (r-1)*(c-1)
= (2-1)*(2-1)
= 1
Tabulated value = 3.841
Calculated Value = 12.696
Hence Tabulated Value is less than calculated value than null hypothesis is rejected.
INTERPRETATION: - This shows that pricing strategies affect the quality of the product.
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FINDINGS,
SUGGESTIONS
&
CONCLUSION
5.1 FINDINGS OF THE STUDY
1) It has been stated that 50% of the product lies between the price range of Rs 0-200, whereas
30% of the products lies between the price range of Rs 200-400, and 15% of the product lies
between the price range of Rs 400-600, and 5% of the products lies between Rs 600-800.
2) It has been analyzed that 55% of the products remains with the same price level as
competitors, whereas 25% of the products are highly charged
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3) Major percentage of the price is being affected by the broker/agency distribution method. As
15% of the products are distributed by direct sales hence it affects more over prices, and 10% of
the product are distributed under online selling having a low factor in the change of price, and
75% of the products are distributed by the brokers/agency having a dramatic change of price.
4) Free sampling is analyzed as the major used promotion policy which affects the price of the
product. Promotional policy of free sampling affects 60% change in the price whereas
advertisement affects only 25% and the policy of introductory price affects only 15%.
5) It is found that Quality Practices of the organization that is applied does have the positive
change such as Flexible Manufacturing is applicable 65% in TQM whereas Benchmarking and
Data warehouse has 15% share in Quality practice of TQM and Customer satisfaction survey has
only 5% in Quality Practice.
6) It is found that after implementing TQM there is a dramatic change in the Sales Turnover
where the difference in sales turnover is 15-20% which gives a very positive representation of
the productivity.
7) Similarly, after the implementation of TQM it can be seen that there is a positive difference in
the profit margin of the organization where it is found that there is change of 10-15% in the
profit margin and this shows a positive growth of the organization and this gives an opportunity
of a new business with the greater profit margins.
8) It has been stated that the rise in customer satisfaction has a positive influence over the sales
of the organization, where 65% of the respondent stated that there is a change of 10-15% in the
satisfaction level of the customer, 20% of the respondent are satisfied with the change of 15-20%
in the satisfaction level of the customer. It is also found that this kind of change can be obtained
only by applying TQM.
9) It is found that application of TQM has a greater impact on the other benefits also such as
65% of the respondent are influenced with the improvement in the productivity, 10% with the
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less wastage, 10% with the less rework, 5% having the improvement in morale, 5% of the
respondent are influenced by the increase in market share of the organization.
10) On the other hand it is also stated that application of TQM is causing side effects to the
organization where in the organization paper work has increased by 35%, higher cost of 35%,
higher staff turnover with 10%.
11) It is also found that the organization are using various price strategy as compared to the
competitor prices with the major share of 55% the organization is keeping same prices as the
competitor have and the organization is charging higher prices for 20% of the products as
compared.
5.2 SUGGESTIONS
There should be a proper department with all the necessary equipments and infrastructure
in TQM department
Training should be conducted according to the various policies, strategies and the
methods to be followed.
There should be more improvement in the latest technological factors regarding TQM
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The organization should get the proper feedback of every employee at a particular period
of time.
Employees should be provided training for the implementation of the various strategies at
every level of organization.
The company should remain updated with the recent changes in the price of raw material
as well as for the finished goods.
The organization should innovate and develop the new products on the regular basis.
The quality of the product should be standardized so that low quality products can be
reduced.
Company is able to introduce new quality models to increase the efficiency and
productivity.
The company should follow a policy where Quality of products can be exported in spite
of domestic trade where they can charge higher prices with higher profits.
The organization should reduce the manpower required with the help of latest
technology of new machineries.
An open co-operative culture has to be created by the management for the successful
implementation of TQM.
Pricing decisions should be taken with the expertise advice with the help of market
research.
The company must from time to time take the help of quality experts.
The company must follow the guidelines issued by the government relating to pricing and
total quality management.
5.3 CONCLUSION
The study conducted at SARWATI OVERSEAS PRIVATE LIMITED, Panipat deals with
analyzing the pricing strategy and total quality management of the organization. The present
study concludes that with the implementation of TQM an organization is able to increase its
productivity, quality of the products. Company is able to sell its product almost with the same
prices of the competitors but with a greater quality, with the implementation of the TQM
company is able to increase its sales turnover as well as the profit margins. Company’s flexible
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manufacturing quality practice proves an edge towards the organizational progress. With the free
sampling promotional policy organization is able to affect the majority percentage of the price of
the product.
The study concluded that the distribution method of brokers/agency is the best suitable method to
promote the product of the organization which also affects the price of the product after the
implementation of the TQM the customer satisfaction level has undergone a significant change.
Even the TQM implementation results in improvement in productivity as well as less wastage
and less rework required.
The price of the product mainly remains in between the range of Rs 0-200. The company’s main
pricing strategy is go-pricing that is the price prevalent in the industry. Besides the successful
implementation of the TQM in the organization the company suffers from paper wastage, high
expert cost, and even the high cost for staff turnover. The study also concludes the major benefits
and drawbacks of implementing TQM.
The company follows go-pricing strategy and penetration pricing policy. The company follows
flexible manufacturing; benchmarking and data warehouse quality practices.
5.4 FUTURE DIRECTIONS.
This study has covered different aspects of Pricing Strategy and Total Quality Management of
the organization.
It has been studied from both prospective – pricing strategies and total quality management
techniques.
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The study has been done on employee responses in aspects of feedback given at the end of
training session but still there are many related areas which could be taken as future direction of
the study & that would be follow up.
This study is based out on coverage of basic idea about all the marketing issues related to pricing
strategies and total quality management but further more studies can be done in context with
focusing on any one particular area like best pricing policies followed by the organization or
impact of total quality management in the context of Indian industries.
More studies can be done in the context of quality standards issued by the legal regulatory from
time to time.
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1) Ahmet Beskese, Ufuk Cebeci, (2001) "Total quality management and ISO 9000 applications
in Turkey", The TQM Magazine, Vol. 13 Iss: 1, pp.69 – 74
2) Andreas Hinterhuber, (2008) "Customer value-based pricing strategies: why companies
resist", Journal of Business Strategy, Vol. 29 Iss: 4, pp.41 – 50
3) Azizan Abdullah, (2010) "Measuring TQM implementation: a case study of Malaysian
SMEs", Measuring Business Excellence, Vol. 14 Iss: 3, pp.3 - 15
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4) Daniel I. Prajogo, Amrik S. Sohal, (2004) "Transitioning from total quality management to
total innovation management: An Australian case", International Journal of Quality &
Reliability Management, Vol. 21 Iss: 8, pp.861 – 875
5) Daniel I. Prajogo, Christopher M. McDermott, (2005) "The relationship between total quality
management practices and organizational culture", International Journal of Operations &
Production Management, Vol. 25 Iss: 11, pp.1101 – 1122
6) E. Soltani, J. Gennard, R.B. van der Meer, T. Williams, (2004) "HR performance evaluation
in the context of TQM: A review of the literature", International Journal of Quality &
Reliability Management, Vol. 21 Iss: 4, pp.377 – 396
7) Faisal Talib, Zillur Rahman, M.N. Qureshi, (2011) "Analysis of interaction among the
barriers to total quality management implementation using interpretive structural modeling
approach", Benchmarking: An International Journal, Vol. 18 Iss: 4, pp.563 – 587
8) Faisal Talib, Zillur Rahman, M.N. Qureshi, (2011) "Assessing the awareness of total quality
management in Indian service industries: An empirical investigation", Asian Journal on
Quality, Vol. 12 Iss: 3, pp.228 – 243
9) G. Karuppusami, R. Gandhinathan, (2006) "Pareto analysis of critical success factors of total
quality management: A literature review and analysis", The TQM Magazine, Vol. 18 Iss: 4,
pp.372 – 385
10) George J. Avlonitis, Kostis A. Indounas, (2005) "Pricing objectives and pricing methods in
the services sector", Journal of Services Marketing, Vol. 19 Iss: 1, pp.47 – 57
11) H.C. Lau, M.A. Idris, (2001) "The soft foundation of the critical success factors on TQM
implementation in Malaysia", The TQM Magazine, Vol. 13 Iss: 1, pp.51 – 62
12) Jaideep Motwani, (2001) "Critical factors and performance measures of TQM", The TQM
Magazine, Vol. 13 Iss: 4, pp.292 – 300
13) K. Subrahmanya Bhat, Jagadeesh Rajashekhar, (2009) "An empirical study of barriers to
TQM implementation in Indian industries", The TQM Journal, Vol. 21 Iss: 3, pp.261 – 272
14) Katerina D. Gotzamani, George D. Tsiotras, (2001) "An empirical study of the ISO 9000
standards’ contribution towards total quality management", International Journal of
Operations & Production Management, Vol. 21 Iss: 10, pp.1326 – 1342
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15) M.T. Hides, Z. Irani, I. Polychronakis, J.M. Sharp, (2000) "Facilitating total quality through
effective project management", International Journal of Quality & Reliability Management,
Vol. 17 Iss: 4/5, pp.407 – 422
16) Manu Carricano, Jean-Francois Trinquecoste, Juan-Antonio Mondejar, (2010) "The rise of
the pricing function: origins and perspectives", Journal of Product & Brand Management,
Vol. 19 Iss: 7, pp.468 – 476
17) Mohammad Talha, (2004) "Total quality management (TQM): an overview", Bottom Line:
Managing Library Finances, Vol. 17 Iss: 1, pp.15 – 19
18) Naceur Jabnoun, (2000) "Restructuring for TQM: a review", The TQM Magazine, Vol. 12
Iss: 6, pp.395 – 399
19) Pei-Lee Teh, Keng-Boon Ooi, Chen-Chen Yong, (2008) "Does TQM impact on role
stressors? A conceptual model", Industrial Management & Data Systems, Vol. 108 Iss: 8,
pp.1029 – 1044
20) Raj Kumar, Dixit Garg, T.K. Garg, (2009) "Total quality management in Indian industries:
relevance, analysis and directions", The TQM Journal, Vol. 21 Iss: 6, pp.607 – 622
21) Raj Kumar, Dixit Garg, T.K. Garg, (2011) "TQM success factors in North Indian
manufacturing and service industries", The TQM Journal, Vol. 23 Iss: 1, pp.36 – 46
22) Rodney McAdam, Joan Henderson, (2004) "Influencing the future of TQM: internal and
external driving factors", International Journal of Quality & Reliability Management, Vol. 21
Iss: 1, pp.51 – 71
23) Sangeeta Sahney, D.K. Banwet, S. Karunes, (2004) "Conceptualizing total quality
management in higher education", The TQM Magazine, Vol. 16 Iss: 2, pp.145 – 159
24) Zhihai Zhang, Ab Waszink, Jacob Wijngaard, (2000) "An instrument for measuring TQM
implementation for Chinese manufacturing companies", International Journal of Quality &
Reliability Management, Vol. 17 Iss: 7, pp.730 – 755
BOOKS:
Philips Kotler, “Marketing Management”
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Kothari .C.R ”Business research methodology” , New Age International publisher
Stephan R. Covey ,”Seven Habits of Highly Effective People”
Stephan Robbins, Organizational Behavior
Weihrich & Koontz, (2000) “Essentials of management”, Tata Mcgraw Hill
Chawla Deepak, “Business Research methodology” ,Vikas Publishing House
WEBSITES:
www. sarwati overseas.com, viewed on 6 aug 2012
www.cci.in/survey reports, viewed on 25 aug 2012
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PRICING AND TOTAL QUALITY MANAGEMENT
QUESTIONAIRE
Q1 What is the price range of the product?
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0-200 200-400 400-600 600-800
Q2 What is the strategy of the company to sell product as compared to the competitor prices?
Higher prices lower prices same prices
Q3 What is the pricing strategy followed by the organization?
Skimming penetration go-pricing marginal pricing cost plus
Q4 How does the method of distribution affect the price?
Direct sales brokers/agency online sales
Q5 How does the promotion policy affect the price of the product?
Free sampling advertisement introductory price
Q6 Does the organization apply TQM?
Yes No
Q7 Does the nature of the product affect the price?
Yes No
Q8 Does the customer expect a certain price range?
Yes No
Q9 what are the quality practices organization are applying for?
Customer satisfaction survey quality function deployment benchmarking
Data warehouse balanced scoreboard flexible manufacturing
Q10 Is there any difference in sales turnover in percentage after implementing TQM?
No difference 0-5% 5-10% 10-15% 15-20% 20-25%
>25%
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Q11 What is the estimated profit margin difference after applying TQM?
No difference 0-5% 5-10% 10-15% 15-20% >20%
Q12 What is the estimated customer satisfaction difference after applying TQM?
No difference 0-5% 5-10% 10-15% 15-20% >20%
Q12 What other benefits does the organization gain with TQM?
Improve Productivity
Improve morale
Less paper
Less waste
Less rework
Increase market share
Q13 What side effects does the organization suffer with TQM?
Decrease Productivity
Weaken morale
More paper
Higher Cost
Higher staff turnover
Others
Details of person completing this Questionnaire:
NAME
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ORGANISATION
POSITION
AGE
INCOME GROUPS
COUNTRY
PHONE
FAX
EMAIL ADDRESS
COMMENTS
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