QUALITY CONTROL AS A COMPETITIVE TOOL FOR SMALL SCALE ENTERPRISES IN NIGERIA
The primary objectives of this research is to enable its readers obtain an understanding of the administration of Quality control system in Nigeria. A lot of Quality control management decisions have therefore been directed at keeping pace with all these changes to ensure efficient production of Quality products in and services. Since customers view the price paid for items in terms of their qualities, business firm should ensure that they maintain good quality product for customers’ satisfaction. Quality product gives a firm good image, good reputation, and goodwill.This ensures a good market and an ultimate profit and strong competitive stand among other firms within and outside the country.
TABLE OF CONTENTS
Title Page - - - - - - - - - i
Declaration - - - - - - - - - ii
Approval Page - - - - - - - - - iii
Dedication - - - - - - - - - - iv
Acknowledgement - - - - - - - - - v
Abstract - - - - - - - - - - vi
Table of Content - - - - - - - - vii
CHAPTER ONE: Introduction
1.1 Background of the Essay - - - - - - - 1
1.2 Objective of the Essay- - - - - - 3
1.3 Significance of the Essay - - - - - - - 4
1.4 Scope and limitation of the Essay - - - - - 4
CHAPTER TWO: Literature Review
2.1 Introduction - - -- - - - - - - 6
2.2 The Traditional Concept of Quality - - - - 7
2.3 Concept of Small Scale Enterprises - - - - 10
2.4 Need for Small Scale Enterprises - - - - - 14
2.5 Overview of Total Quality Management.- - - - 15
2.6 TQM: Evolution, Concepts and Prospects - - - 19
2.7 TQM Concept AND Quality Service - - - - 28
2.8 Product Quality in Small Scale Enterprises - - - 31
2.9 Determinants of Service Quality - - - - - 32
2.10 TQM Concept of Quality and Customer Satisfaction - - 34
2.11 Organizational Culture and the Applicability of TQM - - 36
CHAPTER THREE: Summary, Conclusion & Recommendations,
3.0 Introduction- - - - - - - - - 43
3.2 Research Design - - - - - - - 43
3.3 Data Collection Method - - - - - - 44
3.4 Data Analysis - - - - - - - 46
CHAPTER FOUR:Data Presentation and Analysis
4.0 Introduction - - - - - - - 36
4.1 Data Presentation and Analysis - - - - 36
CHAPTER FIVE: Summary, Conclusion &Recommendations
5.1 Summary - - - - - - - - 54
5.2 Conclusion - - - - - - - - 57
5.3 Recommendations - - - - - - - 58
References - - - - - - - - - 61
1.1 BACKGROUND OF THE ESSAY
The dynamic changes in the environment particularly as they affect the tastes and aspirations of consumers, underscore the need to respond effectively to challenges posed by the changes. On account of deregulation of our economy, competition has become a major challenge which chief executives must meet effectively to remain in business. Most managers agree that if an organisation is to be successful, it must change continually in response to significant development, such as customer needs, technological breakthroughs and government regulations (Eke, 2001).
Globalization of market and operations forces organisations to rethink their quality problems and in turn their overall organisational competitiveness. In order to be successful in this global market, organisations should dedicate themselves to improving productivity and quality in a timely and collaborative manner (Dobyns and Crawford, 1994).
In recent times, the concept of customer services has risen to the centre stage of modern business. As a result of this development, the management vocabulary is now replete with all kinds of technologies which are used to describe one and the same thing, customer service. Among these terminologies are customer satisfaction, customer care, customer relations, etc (Nwosu, 1996).
To achieve world class customer service, Total Quality Management (TQM) techniques, supported by management commitment and good organisation will provide objective means of improving quality and hence the overall organisational competitiveness (Christopher, 1994).
Total quality management is among the new techniques which modern organisations now employ with very good effect to secure and keep their customers permanently satisfied. To this end, the Power Holding Company of Nigeria is not expected to be left out of this struggle by organisations, to remain relevant, gain a deeper insight into customers’ expectations of services and the strategies that could be implemented to achieve a closer fit with wants and needs as well as excel in the face of the present competitive environment. Total quality management is therefore a way of managing to improve the effectiveness, efficiency, flexibility and competitiveness of a business as a whole (Christopher, 1994).
1.2 PROBLEM OF THE STUDY
The role played by the small business has a vital input in the socio-economic and welfare development of any nation cannot be overestimated. There is no doubt that poor quality culture has been the bane of management in Nigeria.
Problems of meeting products specification, often times, product fail to meet the specification required by customers because of assignable causes like; defective materials used, improper setting of equipment, operational errors, manpower etc. it is not worthy of mention that it cost the same amount to produce products units problems of variation in quality of product.
It is against this background that the writer intends to write on the quality control as a competitive tool for small scale enterprises in Nigeria.
1.3 OBJECTIVES OF THE ESSAY
Theobjective of the essay is to examine quality control as a competitive tool for small scale enterprises. The specific objectives are:
a. To examine the prospects of TQM in small scale enterprises.
b. To identify if the culture of small scale enterprises will favour the application of TQM in the organisation.
c. To assess the effect of environmental factors on the application of TQM in small scale enterprises and organization at large.
1.4 RESEARCH QUESTIONS
1. Is quality control a competitive tool for small scale enterprises?
2. What are the prospects of TQM in small scale enterprises?
3. Does the culture of small scale enterprises favour the application of TQM in the organisation?
4. What is the effect of environmental factors on the application of TQM in small scale enterprises and organization at large?
1.5 RESEARCH HYPOTHESIS
Ho: Quality control is not a competitive tool for small scale enterprises.
H1: Quality control is a competitive tool for small scale enterprises.
1.6 SIGNIFICANCE OF THE STUDY
The essay is important because it will make tremendous contribution towards improving the small scale enterprises. In Nigeria generally, some organisations have adopted the concept of TQM with little or no literature and academic research undertaken to stress the importance of quality in an organization.
The essay will help in determining the prospects of TQM in small scale enterprises. This will in no small measure increase performance in terms of profitability and customer satisfaction and thus contribute to knowledge in the field of quality management.
It is hope that this essay will serves as an avenue for managers to adopt the recommendations in handling the TQM for better economic development which will invariably lead to customers’ satisfaction. The essay will also be of immense significance to managers and future researchers who wish to probe further study on the topic
1.7 SCOPE AND LIMITATIONS OF THE ESSAY
This essay work will be confined to the quality control as a competitive tool for small scale enterprises in Nigeria.As a management paradigm based on the principles of total customer satisfaction, employee involvement, and continuous improvement.
Emphasis in a nutshell, shall focus on TQM, as a concept that holds that no matter how well you are already doing you can always do better.
In the course of this essay, the writer encountered some natural limitations which made it difficult but never the less did not affect the result of the essay. In every writes-up finance is supreme the insufficiency of fund hampered the speed and thoroughness of conducting of this essay work. The time limit given for this study deprived the researcher the opportunity of covering all the expected areas of the essay. All these were constraints encountered in the course of the essay.
1.8 DEFINITION OF TERMS
Quality Control:A system of maintaining standards in manufactured products by testing a sample of the output against the specification.
Small Scale Enterprise:Is a business that employs a small number of workers and does not have a high volume of sales.
TRADITIONAL CONCEPT OF QUALITY
There is the need to differentiate between the traditional concept of quality and the TQM concept of quality.
The traditional concept of quality makes quality a function of the attributes of the product or service, for example, a quality product/service is one that meets all the specifications laid down by the provider of the product/service. Within this conception of quality, there is the implied relationship between quality and costs (in short by implication is that the higher the quality, the higher is the cost of product/service.
Nonetheless, Robson (2000) define quality as “meeting the agreed requirements of the customer, now and in the future. Adedeji and Basiru (1989) provide the following systems – oriented definition of quality:
Quality refers to an equilibrium level of functionality possessed by a product or service based on the product’s capability and the customers need.
Quality for a product or service has two aspects (Wakhlu, 1995). The first relates to the features and attributes of the product or service. These ensure that the product meets the needs of its users. The second aspect concerns the absence of deficiencies in the product. The users of products (customers) are satisfied by a product only if it meets their expectations through these attributes.
Organisations owe their success to good service quality. Companies that differentiate on the basis of service, can ask higher prices for comparative products or services and achieve superior profit margins. These same companies are more resistant in economic down turns and experience greater growth in economic boom periods (Horovits and Panak, 2002). They also have, on average, lower advertising cost, lower sick level rates and consequently, service quality excellence, has become the most Recent ‘buzz’ phrase in management circles and the strategic objective of many major firms. Companies, who find it difficult to compete on the basis of price or technology, find service quality an attractive option.
It is an attractive option because unlike most strategies, a strategy based on excellent service quality is nearly impossible to imitate or duplicate. “Service quality converts a company from a anonymous object into a familiar face (Horovitx and Panak, 2002).
CONCEPT OF SMALL SCALE ENTERPRISES
2.3.1 Definitions of Small Scale Enterprises
There is hardly any unique, universally accepted definition of small scale enterprises because the classification of business into small or large scale is a subjective and qualitative judgment (Ekpenyoung and Nyong, 1992). Rather each country tends to define this category of enterprises based usually on the peculiar needs of public policies. Even with a country, the definition changes over time, depending on circumstances and specific objectives of institution. There are, however some common indicator in most definitions, namely, the size of capital investment (fixed asset), value of annual turnover (gross output) and number of paid employment. The popularity of the three indicators derives largely from their ease of measurement.
In Nigeria, the definition of small scale enterprises also varies from time to time and according to institutions, for instance, the Central Bank of Nigeria (CBN) monetary policy circular No22 of 1988 defined small scale enterprises (excluding general commerce) as enterprises in which total investment (including land and working capital) did not exceed N500, 000 and or the annual turnover did not exceed N5.0 million (Inang and Ukpong, 1992).
Following the persistent depreciation in the exchange rate of the naira, the annual turnover not exceeding N500,000 and for merchant bank loan, those enterprises, for purpose of commercial bank loans, as those enterprises with enterprises with capital investment not exceeding N2 million (excluding cost of land) or a maximum of N5 million. The National Economic Reconstruction Fund (NERFUND) put the ceiling for small scale maximum size of capital investment has been raised to N5.0 million and the turnover to N25.0 million since 1990. In the 1990 budget, the federal government of Nigeria defined small scale industries at N10 million. Section 376(2) of the companies and allied matters degree of 1990 defined a “small company” as one with: (Inang and Ukpong, 1992).
Annual turnover of not more than N2 million
Net assets value of not more than N1 million
For the purpose of this study, a small scale enterprises is defined as an enterprises whose total cost, excluding cost of land but including working capital is above N1 million but not exceeding N10 million. This is the new national definitions as contained in the CBN monetary and credit policy guideline for 1993 fiscal years.
The centre for industrial research and development at the Obafemi Awolowo University ile- ife, defined small scale as, those enterprises with total asset in capital equipment plant and working capital not exceeding N250,000 and employing not more than 50 full time workers, and also the Nigerian Industrial Development Bank (NIDB) defined small scale enterprises with project cost (investment and working capital) not exceeding N750,000 while it defines as medium scale, those businesses in the range of N750,000 to N3.0 million. (Obitayo, 1991)
2.3.2 Characteristics/Features of Small Scale Business
Apart from the matter of size, small business has three distinguishing characteristics:
2. Capital Requirement.
3. Local Operations.
1. Management: The management of small business unit is generally co-coordinated by the owner. As an owner manager, he is in a position to make his own decision. As a small operation outfit, the owner uses both an investor and employer. This gives him total freedom of action.
2. Capital Requirements: The amount of capital required is relatively small compared to units that are required by bigger firms. The capital required is supplied by one or at most by a few individuals.
3. Local Operation: For the smallest firms, the area of operation is local. The employer and employees often live in the community in which the business is located. This does not mean, however that all small firms serve only local market; some go beyond their areas of operation by seeking collects for their products or services in other parts of the country or even export.
2.3.3 Sources of Financing Small Scale Enterprises
There are four main sources of enterprises financing open to small scale enterprises in Nigeria. These are as follows:
(1) Formal financial institutions such as commercial banks, merchant bank, saving banks, insurance companies, and the development banks.
(2) Informal financial institution consisting of money lenders, landlords, credit and saving association friends and relations
(3) Personal saving and
(4) Other financing scheme – SME Apex loan scheme, National Economic Reconstruction Bank (NERFUND), Nigerian Export and Import Bank (NEXIM), etc.