Identifying potential market for international best practices consultancy need of frozen seafood processing enterprises from binh thuan to ca mau master project in business administration

TR

NG

IH CM

TP.HCM

UNIVERSITÉ LIBRE DE BRUXELLES

HO CHI MINH CITY OPEN UNIVERSITY

SOLVAY BRUSSELS SCHOOL

MBAVB3

NHAN THI THÚY H NG

“Identifying potential market / for international best practices consultancy needs of Frozen Seafood Processing Enterprises
( from Bình Thu n to Ca Mau)
MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)

Tutor’s Name: Dr. NGUY N

H Chí Minh City
( 2010 )

C TRÍ

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UNDERTAKINGS
By this letter, I would like to confirm that, the research project of identifying “the potential market
for international best practices from Sea food processing Enterprises”, I ,have myself studied all
aspects of research, applied the academic knowledge obtained from MBA program , collect relevant
data, information ,and discussed with my tutor, I undertake that this is my own research ,all information, data and survey results are true and never announced in any other research project.

Ho Chi Minh City, 24 December 2010

Nhan Thi Thúy H ng

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ACKNOWLEGMENT

First of all, I would like to express my deepest gratitude and great appreciation to Dr. Nguyen Duc
Tri, my tutor, for his guidance, valuable advices in developing my thesis.
My gratitude acknowledgement is extending to Universite Libre de Bruxelles-Solvay Business
School and Open University of HCM city, which organized the favorable program and transferred

valuable knowledge and experience to our Vietnam Students.
Special thanks to all professors, lecturer, my classmate, board of coordinator for their support during
my learning time at the MBA program of the Solvay-HOU.

Finally, I would like to express my profound gratitude to my beloved parent for their great love and
endless sacrifice that are never forgotten through my life, to my husband, for all his encouragement
and fully support through my challenge study time that I can not dream of achieving this successfulness without him.

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TUTOR’S COMMENTS
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Ho Chi Minh City, ……December 2010
Tutor

Dr. NGUYEN DUC TRI

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TABLES OF CONTENTS
Undertakings .............................................................................................................................. ii
Acknowledgment ....................................................................................................................... iii
Tutor’s comments ...................................................................................................................... iv
Abbreviation ............................................................................................................................ viii
List of tables and figures ............................................................................................................ ix
Executives summary .................................................................................................................. x
CHAPTER I – INTRODUCTION OF THE PROJECT ............................................................ 1
1.1. Introduction of the final project........................................................................................ 1
1.2. Rational of study ............................................................................................................. 2

1.3. Statement of the problem ................................................................................................. 3
1.4. Research objectives .......................................................................................................... 3
1.5. Scope & limitation ........................................................................................................... 4
1.6. Thesis structure................................................................................................................. 4
CHAPTER II – LITERATURE REVIEW ................................................................................ 6
2.1 Concepts ........................................................................................................................... 6
a. What is Management Consultancy (MC) ...................................................................... 6
b. Why are consultants used: Five generic purposes ......................................................... 7
c. Consulting and Training ................................................................................................ 7
d. What is Quality Management System (QMS) ............................................................... 8
e. What is the objectives and benefit of implementing of QMS, Best Practices ............... 9
f. What is the Cost of quality –Quality is free ...................................................................10
g. What is the principles and building –blocks of Quality management system ...............12
h. Business to Business Market .........................................................................................14
CHAPTER 3: METHODOLOGY .............................................................................................19
3.1

Theoretical framework development................................................................................19

3.1.1 The need .........................................................................................................................19
3.1.2 Problem definitions ........................................................................................................19

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3.1.3 Search for potential consultants .....................................................................................20
3.1.4 Consultancy firm selection ...........................................................................................21
3.1.4.1 Generate trust and good impression in the initial phase ....................................22
3.1.4.2 Price....................................................................................................................23
3.1.4.3 Previous relationship ..........................................................................................23
3.1.4.4 Consultancy firm profile ....................................................................................23
3.1.4.5 Being Introduced by friends, authority ..............................................................23
3.1.4.6 The quality of proposal ......................................................................................24
3.1.5 The Reputation of Consultancy organization ................................................................25
3.2

Research design ................................................................................................................26

3.3

Quantitative study ............................................................................................................31
a.Sampling characteristic.................................................................................................31
b Data collection methods ................................................................................................31
c Data Analysis ...............................................................................................................33

CHAPTER 4: RESULT ANALYSIS ........................................................................................34
4.1

Sample Profile .................................................................................................................34

4.2

Descriptive Analysis ........................................................................................................34
a. Current situation of implementing “Best Practice” of Sea food processing

Enterprises ( Binh Thuan Provine to Ca Mau ) ...............................................................................34
b. The benefit that the enterprises obtain for establishing the Best Practice ......................35
c. Why they need the consultancy service ..........................................................................36
d. How are the client get to known of the consultant firm..................................................38
e. Factors influencing the buying decision process..............................................................38
CHAPTER 5 - RECOMMENDATION AND CONCLUSION ................................................43
A-

A strategic Approach ........................................................................................................43

1. Mission and Vision ...........................................................................................................43
2. Understand Environment factors affect the Sea food processing Enterprises .................43
3. Competitor Analysis .........................................................................................................44
4. Identify critical success factor ............................................................................................44

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5. The client base

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................................................................................................................ 45

6. Consulting firm Image/ profile ..........................................................................................46

7. Growth and expansion

...................................................................................................46

7.1 Size of a consulting firm .............................................................................................46
7.2 Growth and problem of staffing .................................................................................46
7.3 Net works and strategic alliances ................................................................................47
B- The marketing in consulting .............................................................................................47
a. What is to be marketed
b. Marketing approach

..................................................................................................47
....................................................................................................49

2.1 General Marking ..........................................................................................................49
2.1.1 Regard the clients’ needs and requirements as the focal point of all marketing.....49
2.1.2 Each client is unique ...............................................................................................49
2.1.3 Aim at an equally high professional performance in marketing and in execution..49
2.1.4 Understanding the client purchasing process..........................................................49
2.2 Techniques for marketing the consulting firm ............................................................50
2.2.1 Working the referrals ..............................................................................................50
2.2.2 Establish the efficient Consultancy firm website ...................................................50
2.2.3 Marketing during the entry phase ...........................................................................50
2.2.4 Marketing to existing clients...................................................................................51
CONCLUSION..........................................................................................................................52

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ABBREVIATION
ISO

International Organization for standardization

HACCP

Hazard Critical Control Point

BRC

British Retail Consortium

Global GAP

Global Good Agriculture Practice

GMP

Good Manufactory Practice

B2B

Business to Business

QMS

Quality Management system

COQ

Cost of quality

GDP

Gross domestic product

MC

Management Consultancy

VASEP

Vietnam Association of Seafood Exporters and Producers

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LIST OF TABLES AND FIGURES

Table 1: Cost items of non-conformance associated with internal and external failure . ......... 11
Table 2: Collection of Information ............................................................................................ 28
Table 3: Proportion of implementing “Best Practices” ............................................................ 36
Table 4: Proportion of Companies used External consultancy service .................................... 36
Table 5: Proportion of companies will use external consultants for their future best practices ........... 37
Table 6: The reason to use external consultants (%) ................................................................. 38
Table 7: Marketing communication to cause the client awareness (%) .................................... 38
Table 8: Ranking of importance in selection of Consultancy firms .......................................... 39
Table 9: Concept of Consultancy firms Reputation................................................................... 41
Table 10: The consultants working behavior are expected under the client view ..................... 41
Table 11: other expectation from the consultants ...................................................................... 42
-------------------------------------&------------------------------------------------

Figure 1: A model of business buyer behavior ......................................................................... 15
Figure 2: Main influencing on business buying behavior Philip Kotler .................................... 16
Figure 3 : consultancy firm Marketing communication model ................................................. 20
Figure 4: Factors influencing the selection of Consultancy firms ............................................. 21
Figure 5: Concepts of Consultancy firm Reputation ................................................................. 25
Figure 6: The research Process .................................................................................................. 27
Figure 7: International standards of management system ........................................................ 35
Figure 8: Proportion of companies used external consultancy service ..................................... 36
Figure 9: proportion of companies will use external consultants for their future best practices
Figure 11: Ranking of importance in selecting Consultancy firms ........................................... 39

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EXECUTIVES SUMMARY
Management consultancy has been recognized increasingly in VN as a useful professional service
that help managers to analyze and solve practical problems faced by their organizations, improve
organization performance. Vietnam Sea Food processing industry has been contributing to Vietnam
economic growing for the last decade in relation to export revenue. However, to meet the more and
more strictly requirements from major importing countries, VN sea food companies orienting to exporting need to establish, implement the best practices that aimed to assure the food product quality
and hygiene, environment protection and other regulatory demand from importing market.

The study was carried out on sea food companies from Binh Thuan to Ca Mau, on 60 quality in
charge managers using depth interview via phone and structured questionnaire as the instruments
for data collection. Questionnaire was designed to find out the current situation of applying best
practices, their future plan of using professional consultancy service, the organizational buying behavior in selecting the consultancy firms, why they use external consultants, and what are their expectation toward consultants technical expertise, experience and consultant behavior in meeting clients needs.
The finding shows that the selection of consultancy firms is influenced by the reputation of consultancy firms, the quality of their proposal to the clients that meet the organization need. Their concept of reputation lies on the direct technical expertise, knowledge and experience in sea food processing, the value, achievement that the consultancy firms has brought to their previous clients. Furthermore, besides the technical expertise, the clients expectation toward the consultant behavior during the assignment project are willing to share knowledge and experience, the applying of efficiency
methodology and procedures to help the client organization meeting their purpose.
Implication of the study may be used as references for the formulation of marketing strategy and the
basis for future researches in the organizational buying behavior with regard to Best Practice consultancy services.

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CHAPTER I – INTRODUCTION OF THE PROJECT
1.1. Introduction of the final project
Vietnam’s Seafood industry has grown tremendously in the past few years and have greatly
contributed to the national socio-economic development. The seafood industry is expected to
contribute about 30-35 percent of the total GDP of agricultural-forestry-fishery products,
with an annual growth rate of 8-10 percent by 2020 when the sector will export 6.5 million
tones of seafood to earn US$8-9 billion and generate jobs for 5 million workers.
Vietnam targets to produce around 3.2 million-3.5 million tons of raw seafood, for export
processing of 1.5 million tons-1.7 million tons in 2015.
Although engaging in seafood export market later than many countries in the world,
Vietnam’s seafood export has grown quickly thanks to suitable selection of market segments
and application of advanced quality management systems.
For example in 2009 and 2010, Vietnam has been one of 5 largest frozen shrimp export
countries to Japan. It is forecasted that in 2010, Vietnam’s total seafood export value would
reach more than US$4.5 billion.
Currently, Vietnam exports seafood to 164 countries and territories in which EU , US, and
Japan are 3 major markets with such main products as shrimp, pangasius, squid, marine fish
and frozen clam.
According to the Ministry of Agriculture and Rural Development, with the sustainable
development target of seafood processing and export industries by 2015, Vietnam strives to
maintain its export growth rate from 8 - 10% per year, its export value would reach more
than US$6.5 billion. By 2020, Vietnam’s seafood processing and export industries would
have strong brand and reputation in the market with export value at US$ 8 billion.
The ministry also warned that importers would tighten protection measures through trade and
technical barriers, in additional to these trade obstacle , the other issues like difficulties in
obtaining raw materials and low productivity in manufacturing process hinder export

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capacities. Further more, Market regulations will focus on not only food safety but also
environmental protection, social responsibility and protection of resources. Vietnamese
businesses, therefore, need to review management, speed up modernization and quality
control systems in order to raise competitiveness.
(Source: VASEP.COM.VN)

1.2. Rational of study
The application of safety & quality management in sea food processing by using basic
existing international standard, guideline and codes of practice

(such as

HACCP,

GAP/GMP, ISO 9000/01) to facilitate trading among exporting and importing countries
generate possible need from seafood enterprises to get external consultancy services and
training to establish and implement “ Best practice “ as mentioned above .
In addition to these, Environment protection awareness and social responsibility has emerged
a new trend for enterprises that wish to be in compliance with export countries.
To meet with changing external environment factors as social economic, import market
regulation, the implementation of safety and quality management system in chain value from
material sources to manufacturing, distribution to customers are essential factors for sea food
enterprises in exporting orientation.

These imposed strictly food safety and hygiene requirement, environment protection,
sustainable development and social responsibility from the import countries are opening
opportunities for management consultancy and training in these area.
A question is raised to the local seafood processing enterprises: What are real benefit that
enterprise gain in implementing the best practices? How have they planned to meet with these
requirements from importing countries to keep in the business or expand their markets? Do
they achieve the goals by themselves or resort to the assistance from external consultancy
services?
It is hope that this study is providing the insight into the benefit the enterprises obtained from
implementing. Best practices, how they achieve their goal? The needs for using external

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Professional consultancy services from seafood enterprises to implement the best Practices
and identify factors that influence the decision of selecting the consultancy organizations.
An market research is launched that include qualitative and quantitative methods to gather the
necessary information for conclusion and recommendation.
The information is helpful in building marketing strategy for Best Practice consultancy
organization for the seafood processing segmentation.

1.3. Statement of the problem
It is common agreement on the benefit and importance of implementing best practices by the
seafood processing firms in term of reduction of cost of production, productivity,

performance improvement, customers satisfaction, expand market .However, there are several
best practices that need to be applied by the manufacturers depend on their own need, their
own resources, local regulation, importing markets regulation and new trend. Therefore, it is
necessary to identify in which specific international standard that the enterprise plan to
implement in the future? Do they plan to use external consultancies firms to help them to
achieve the organization objectives? Or they are able to do this themselves? And factors that
influence the organizational buying behavior: what are factors to be considered in
purchasing consultancy service?

1.4. Research objectives
The study is designed to provide answer to the above questions, based on which appropriate
marketing strategy for consultancy firms can be developed. The research objectives are:
1. Identify the benefit when successfully applying food safety and quality management
system? And how important it is to implement the Best Practices?
2. To the companies that successfully establish and implement the best practices, how they
achieve these objectives? ( by building the system themselves or resorting to the support
from external consultancy organization )
3. Why do the enterprises need the assistance from the external consultancy service?

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4. Determine the future plan of implementing the best practices from seafood processing
enterprises?

5. Determine factors that influence the decision of selecting the consultancy firm?
6. What are the client’s perceptions for Consultancy service company and consultants
reputation?

1.5. Scope & limitation
Given the limited of resources, time and geography issue, the research only focuses on the
Seafood processing enterprises from Binh Thuan to Ca Mau with the small sample size that
emphasis on qualitative survey by telephone interview.
There is no existing best practices consultancy association in VN, there is no available
database on this field that consequently caused limitation in studying overview of VN
management consultancy business.

1.6. Thesis structure
This study report is presented in five chapters as follow:
Chapter 1 - Introduction provides a brief introduction to Vietnam Sea food industry, the
research problem, core objectives, scope of the study and structure of the research report.
Chapter 2 – Literature Review This chapter presents the literature review , providing some
concept, definition and model of organizational purchasing behavior, management
consultancy overview and specifically Best practices of safety and quality management
principles, based on the literature review, a theoretical framework is developed. This
framework offer the investigate the buying behavior in purchasing consultancy services.
Chapter 3 - Research Methodology introduces the methodology applied in the study, it
includes the theoretical framework development, the research design used to describe the
characteristic of variables of interest. This chapter is covers the general approach and

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construct measurement of the study, the source of primary and secondary information to be
used, data collection method including the design of questionnaire and sampling method.
Chapter 4 - Data Analysis and Findings presents the description of the sample and response
rate of the survey, results of descriptive study.
Chapter 5 – Recommendation and Conclusion summarizes and discusses the key findings
of the research, then suggests recommendations of marketing mix for “best practices”
consultancy service.

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CHAPTER II – LITERATURE REVIEW
This chapter presents the literature review of some relevant concept, definitions and model
that through which the theoretical framework was developed to answer the above research
questions.

2.1 Concepts
a. What is Management Consultancy (MC)
Milan Kubr (2003) defines that “Management consulting is an independent
professional advisory service assisting Managers and organizations to achieve organizational

purposes and objectives by solving management and business problems, identifying and
seizing new opportunities, enhancing learning and implementing change. Larry Greiner and
Robert Metzger (1983) claims that management consulting is an advisory service contracted
for and provided to organization by specially trained and qualified persons who assist , in an
objective and independent manner ,the client organization to identify management problems,
analyze such problems , recommend solutions to these problems and help , when requested, in
the implementation of solutions.
Consulting is a temporary service. Clients turn to consultants for help to be
provided over a period of time, in areas where they lack technical expertise or where
additional professional support is temporarily required. This may even be areas where the
required skills are available in the organization but managers or staff specialists can not be
released for a major problem or project. Consultants can not only provide the expertise
required, and give undivided, 100 percent attention to the problem at hand, but will leave the
organization once the job is complete. Even if the relationship is excellent and extends over a
long periods, the client always retain the right to discontinue it.

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b. Why are consultants used: Five generic purposes:
Milan Kubr (2003) has noted that Consulting purposes can be looked at from several angles
and described in various ways. Let us look first at five broad, or generic, purposes pursued by
clients in using consultants, irrespective of the field of intervention and the specific
intervention method used:

-

Achieving organizational purposes and objectives;

-

Solving management and business problems

-

Identifying and seizing new opportunities

-

Enhancing learning

-

Implement changes

In pursuing the generic purposes outlined above, consultants can intervene in many different
ways. Both clients and consultants can choose among so many alternatives that trying to give
an exhaustive and complete picture of these alternatives would be an impossible task.
However, most of the consulting assistance to management will be given in one or more of the
following ten ways:
-

Providing information

-

Providing specialist resources ;

-

Establishing business contacts and linkages;

-

Providing expert opinion

-

Doing diagnostic work,

-

Developing action proposals,

-

Develop systems and methods

-

Planning and managing organizational changes

-

Training and developing management and staff

-

Counseling and coaching

c. Consulting and Training
-

There have, however, been sign of real progress in bridging the gap between consulting,
and training and development, in the field of management.

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Knowledge transfer and learning are among the main purposes of modern consulting. In
choosing working methods and collaborating with the client, the consultant aims to pass
on personal know-how and experience. At the same time, the consultant learns from the
client.

-

Consultants often view training (both informal and formal ) as their key intervention tool

and use it extensively.

-

Some consulting firms have established management development and training centers as
special client service, which can be used in conjunction with consulting assignment or
separately.

d. What is Quality Management System (QMS)
Milan Kubr (2003) has commented that a successful business relies on making profitable sales
to its consumers, it will retain its existing customers and new customers only if it knows their
requirements and delivers products an services that conform to them. This can be done by (1)
ensuring that design process results in outputs that meet customer requirements and that can
be produced cost –effectively; (2) minimizing inefficiencies such as waste and rework; and (3)
ensuring that all activities are directed at satisfying customers ‘needs.
Quality management system is one area of management consultancy. The term “quality” has
suffered over the years by being used to describe attributes such as beauty, goodness,
expensiveness, freshness, and even luxury. So, a car may be described as a “quality car”
when, in reality, it is an expensive or luxurious car. Management consultants should be aware
of the modern concept of quality, which is defined as total conformance to requirements.
These requirements include the total customer requirement, not just a product or service
specification. To manage quality, management and employees should:
•

Recognize the existence of both external and internal customers

•

Fully understand and agree on their customers’ needs and expectations

•

Delivery what was agreed ,without any exception

•

Be efficient as well as effective in meeting agreed customer requirements

•

Continuously seek to improve performance in meeting customer expectations concept

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of quality.
Thus, the most important objective of quality management is to fully satisfy agreed customer
requirements at the lowest overall cost to the organization. But the best companies are those
that aim even higher-to delight and excite their customers. Total quality management system
is a solid overall approach to improving product and service quality, the way of doing things,
and the quality of business and operational system

e. What is the objectives and benefit of implementing of QMS, Best Practices
Milan Kubr( 2003 ) has mentioned that the objectives and benefits of QMS fall into two major

categories-revenue enhancement and cost reduction. Significantly improved product
performance-features, reliability, conformance, durability, serviceability or perceived quality
–should result in increased demand. A reduction in total product cycle time improves
availability and the ability to provide a tailored customer service. Such benefits translate into
increased market share and usually increased revenues. Improved quality control reduces
material cost, direct and indirect labor costs and working capital. Again, reduction in total
product cycle time reduces inventory stock holding costs
Thus, the use of Best practices substantially improves financial and other key broad-based
organizational outcomes. For example, financial investment in adopting QMS is primarily an
investment in education and training for employees and management. QMS requires
employees to be powered to make decisions regarding process and product quality –to be their
own troubleshooters. Therefore, successful QMS implementation results in:
•

Meeting customers’ requirements and ensuring their satisfaction; increasing market
share, revenue and return on assets; reducing internal costs, providing higher employee
satisfaction; understanding better the competition; and developing an effective
competitive strategy

•

Achieving a top –quality performance in all business and operational areas, not just in
product or service quality, through critical and continuous examination of all processes
to remove non-productive activities and waste.

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Involvement of everyone in continuous improvement, not just people directly involved
in the quality function; greater focus work processes and improvements; identification
and solution of problems at lower levels by people close to the work who are
empowered to deal with the problems.

•

Less fire-fighting and rework, and more data-based efforts to eliminate the root causes
of the problems; more up-front effort to clarify requirement and prevent defects and
errors.

•

More open and frequent communication horizontally among people who view and
treat each other as customers and suppliers, better interdepartmental cooperation.

•

Intolerance of, and action taken on, defects and errors that have previously been
ignored.

•

All the above consideration and benefits could be used by consultants in promoting the

quality management approach.

f. What is the Cost of quality –Quality is free
Manager are likely to ask (or at least think) first, how costly a quality improvement.
Conversely, they start thinking about losses, caused by poor quality only when it is too late.
For management consultants, it is important to be well prepared to illustrate the cost of losses
due to poor quality and the cost of preventing such losses. The balance is always positive, but
you have to prove it
The cost of quality includes two components: the cost of attaining quality and the cost of poor
quality. The first component includes cost that add value to the business, while the second
includes cost that add no value to the business. The activities that generate costs in the first
category are planned which means that these cost can be controlled. The costs of the second
category are often due to deficiencies in the way work is carried out in the company, and
represent a real loss to the company. Technically, COQ consists of the cost of conformance
and of non-conformance. Note that for a small investment in prevention, failure and appraisal
costs can be considerately reduced

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Table 1: Cost items of non-conformance associated with internal and external failure
Cost items of internal failure
-

-

-

-

-

Cost items of external failure

In warranty repair – correcting defects

-

Lost opportunities- customers lost

after delivering products

because product is late to market.

After sales support : Solving problem

previous non-conformance delivery,

when product is in use

poor communication

Product Recall – repairing, handling and

-

Customer complaints

investigating recalled products

-

Returned products

Scrap- Lost Material, machine time and

-

Product recall

labor

-

Poor morale – excessive staff

Downgraded product-product sold at

over and reduced efficiency

reduced prices
-

Rework-labor , equipment and materials

used in rework

-

Lost efficiency – effective capacity
diverted to corrective action

-

Customer complaints

-

Liability insurance

-

Administration –meeting and paper work
associated with failure

-

Excess inventory ,because of error

and

poor materials control procedures
-

Obsolete

stock

–storage

,overheads,

scraps as a result of marketing , sales ,
engineering and purchasing errors
-

Overtime-extra hours because of poor
planning or control

-

Excess capacity –the extra capacity
required to rework or replace failure

-

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The cost of non –conformance are the total costs incurred as a result of things not being one
right the first time. They include cost associated with scrap, wastage, repair and rework,
handling of customer complaints, losing market. These costs are usually very large and can
reach 25 % or more of turnover in manufacturing and service. Unfortunately the level of these
cost and the places where they occur are often unknown to most managers. The great majority
of cost (more than 80 per cent in many companies) are associated with failure, either internal
(“not doing things right the first time”) or external see above box.
The cost of conformance are the total costs incurred in ensuring that things are done right the
first time. These include planned inspections and tests, and quality-related education and
training. These cost are typically associated with designing procedure, defining the processes
and process control and can be classified into two groups: the cost of prevention and the cost
of appraisal.
The consultants should explain to clients the major reasons for the need to have data on the
cost of poor quality, other than the general one of reducing costs by improving quality. Saving
in quality costs would have a significant and positive impact on the bottom line results
It is of critical importance to advise the client to introduce a COQ system that will enable the
financial consequences of quality problems to be quantified and area for quality improvement
and cost reduction identified. Also the COQ system should enable management to link quality
improvement efforts to the bottom line by reducing costs or increasing revenue. It would also
show clear link between quality improvement efforts and tangible results in term of cost
reduction, higher sales and profits, and improved productivity. Such a system would provide
customers with solid evidence of what the company is doing to ensure high quality in order to
differentiate it from the competition and increase customer satisfaction.

g. What is the principles and building –blocks of Quality management system:
While the quality management system design and process will be different in different

companies and circumstances, there are some common basic principles and building –blocks
of the system.

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Principles
Principle 1: Focus on customer satisfaction and delight
This principle drives the entire quality management process. Every department and work unit
has customers, whether internal or external. Manager and employees have to be customer –
focused to meet or exceed customer expectations, creating not only customer satisfaction and
loyalty, but delighting them. Emphasis should be placed on improving the practices of
frontline personnel, delivery mechanisms and logistics, customer focus and processing of
customer requests. Measurement of customer satisfaction through surveys, focus groups,
benchmarking and market analysis provides the best evaluation of quality management
results.
Principle 2: Quality improvement requires the strong commitment of top management
The leadership must be committed to TQM and be the driving force behind it. It must create a
vision that will take the organization from its current position to where it wants to be. Top
management must clearly specify which actions will improve quality, they can not delegate
this responsibility. To demonstrate commitment, involvement and leadership, management
must establish and communicate clear corporate values, principles and objectives relevant to
quality; channel resources towards these objectives; invest time in learning about quality
issues; and monitor the progress of any initiatives.

Principles 3: Quality is a strategic issue
Quality should be part of the company‘s goals and strategies and integrated in the way the
organization conducts business, including product and process design, planning and
budgeting. Quality must be also a part of the corporate mission. Therefore, Quality
management system requires, integrated planning systems that coordinate strategic quality
planning with other strategies for products and services. Logistics, distribution, customer
service, manufacturing and sourcing. It also entails streamlining design processes integrating
engineering system. Forming cross –functional teams, and integrating quality design
techniques into process design.

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Nhan Thi Thuy Hang


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MBA Final Project

Principle 4: Employee are key to consistent quality
Employees are natural sources of ideas for ways to improve quality and customer service. The
best companies incorporate quality and customer service into performance appraisal and
reward systems. They encourage full participation and involvement, employee empowerment,
recognition, reward and motivation to instill a dedication to quality at every level. Quality
management also requires a highly skilled, knowledgeable workforce, well trained in its tools
and methods. the process usually begins with awareness training for top managers, followed
by training of mid-level managers and finally of non-managers . Continuing education and
training are integral components of any Quality Management process.
Principle 5: Quality standards and measurement must be customer-driven
Explicit quality standards for performance are essential. The company’s definition of product

and service quality should include the criteria that customers use when they perceive value. A
customer’s product preference is determine by the perceived quality / price ratio of one
product in relation to other competing products. cost of quality is also a useful measure of
performance . Measurement is essential to ensure that planned improvements are implemented
Principle 6: Many programmers and techniques can be used to improve quality
Quality control and improvement must occur continuously in day -to day operations process
simplification is a low cost, low technology way to increase quality and effectiveness, through
focused operations, smooth and continuous material and paperwork, management –by-eye,
synchronization with customers and suppliers, and other techniques. More sophisticated
techniques could also be used, such as statistical quality control, quality circles, suggestion
systems, automation, computer-based design and manufacturing, product design improvement
and benchmarking
Principle 7: All company activities have potential for improving product quality, therefore,
teamwork is vital.
h. Business to Business Market
Business to business markets are when the buyer buy on behalf of their business or
organization. They maybe buy tons of chemicals, new computer system, office paper or

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Nhan Thi Thuy Hang