Multinational Corporation and Total
Quality Management
ABSTRACT
The total quality of management is a
philosophy of management that is driven by the constant attainment of customer
satisfaction through the continuous improvement of all organizational
processes. This study examined how multinational corporations use total quality
management to penetrate different layers of the economy and the effect of
product quality maintenance in the demand of their product. The major findings
from the study show that the studied multinational corporations take total
quality management seriously because it is what makes their brand unique and
different from any other brand in the market. And the quality of their product
affects the demand of their products. In conclusion, if multinational
corporations ignore the important of TQM in their corporation, the employees
will fail to rethink what they do and they will fail to be more involved in
workplace decisions thereby creating low quality even producing below the
standard.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Multinational Corporation is any
organization that odes manufacturing and marketing in many different countries
William G. (1999). A Multinational Corporation is any firm with foreign
subsidiaries, which extend the production and marketing of the firm beyond the
boundaries of any one country Eze (1998). The first multinational corporation
(MNC) established with a global orientation grew out of a merger in 1929
between margarine unie, a Dutch Firm and Lever Brothers, a British Company. The
company became Unilever and it has since become one of the largest companies in
the world with over 500 subsidiaries operating in about sixty nations
throughout the world. The operation of
multinational companies in their host countries are independent due to the
different requirement of customers of different countries. They operate
autonomously each catering to the special requirements of it’s own national
market requirement. In pursuing a national responsiveness strategy, the primary
competitive advantage of MNCs was grounded in its ability to transfer
technology, manufacturing know-how, brand name, identification and marketing
and management skills from country to country. Standardized administrative
procedures helped multinational companies to minimize their overhead costs in
managing subsidiaries in the host country. They always negotiate with
governments of the host countries before embacking on any production
activities, this will now give them the ability to determine the opportunities
and threat face with their establishment.
During the 1970s, Multinational Corporation began to lose their
effectiveness due to the change in the customers needs. Competition broke out
on a global scale in more and more companies. Japanese, European and U.S
companies pursued international expansion because their home market can no more
consume the quantity they produce in their countries. Many companies changed
their operational and corporate strategy in order to match the requirement of
foreign market. They try to gain household name in their host country by
offering lower prices, higher quality goods, which will be attractive to the
consumers.
Coca-cola, general motors, ford, IBM
General Electric, Gulf Oil, Lever Brother, John Holt, UAC, Julius Berger, RCC
and similar others, which produce consumer goods and manufacturing of products
started using total quality management in their organization. They started
controlling the economic activities in the developing countries due to
hitechnology use by their companies. In the same vein, the control of most of
the meaningful economic activities in developing countries by multinational
corporation give them very wide jurisdiction on the manipulation of the
economic policies and circumstance of the host countries, Odike (2001).
There
are different categories of Multinational Corporations base on their area of
specialization in the business they engage in, as well as the way they perform
their business activities strategically. But there is something, which is
common to all multinational corporations. They are companies or business, which
take their capital along with their technology abroad in order to get sources
of cheap labour and market for the ready consumption of their manufactured
goods. Corporations today are increasingly multinational in their business
activities. Host countries have started to think the effect of these companies
to their environment, the moral responsibilities they have for them. Fiscal and
monetary policies of the developing countries can be seriously thwarted or
badly influenced by the economic power of these multinationals; Prasad S.B.
(1976). These things in many instances have brought political and economic
disruptions in many countries like in the Niger Delta of Nigeria. Globalize strategies offered these
multinational corporation opportunities to choose any strategy to enter any
developing country. They identify the requirement of the market and analyze the
environment (political, cultural, economic etc) in order to know the
opportunities and threat that are facing their company. Multinational
Corporations exploit differences in tax rates; choose appropriate entering
strategy, which will maximize the profit of their company. They may decide to
use direct export, indirect export, joint ventures, licensing and direct investment
depend on the human and material
resources that will help to the
effective production of the goods and services of MNCs. As a consequence of
these advantages, it became increasingly difficult for a company that produced
and sold it’s product in only one country to succeed in an industry populated
with aggressive competitors in lent on achieving global dominance. During the 1980s, another source of
competitive advantage began to emerge by using the strategic fit advantages of
related diversification to build stronger competitive positions in several
related global industries simultaneously. Being a diversified multinational
corporation became competitively superior to being a single – business
multinational corporation in cases where strategic fits existed across global
industries.
Related diversification is most capable
of producing competitive advantage for a multinational company where expertise
in a core technology can be applied in different industries (at least one of
which is global) and where there are important economies of scope and brand
name advantages to being in a family of related business. It has been indicated
that Honda’s strategies in exploiting gasoline engine technology and it’s well
known name by diversifying into a variety of products with engines.
First World Multinational Corporations
(MNCs) are both the hope of the Third Word Countries and the source of their
strength. Third World Countries frequently seek to attract American
multinationals for the jobs, they provide and for the technological transfers
they promise. Yet when American multinational corporations locate in Third
World Countries, many Americans condemns them for exploiting the resources and
workers of the Third World. While MNCs are a means for improving the standard
of living of the underdeveloped countries. Multinational corporations are
blamed for the poverty and starvation, such countries suffer. Although
multinational corporations provide jobs in the Third World, many criticize them
for transferring these jobs from the United States. American MNCs usually pay
at least as high wages as local industries, yet critics blame them for paying
the workers in underdeveloped countries less than they pay American workers
comparable work.
Finally, it is good to differentiate the
multinational corporation from globalization. Since Multinational Corporation
is any company that does manufacturing and marketing in many different
countries, globalization is a company that manufactures the component parts of
a product in different countries. They use global strategy, which involves
integration, and coordination of the companies strategic moves worldwide and
selling in nations where there are buyers. They produce these component parts
in different countries in order to enjoy comparative advantages. Hence firms
who have global vision many move into an environment where cost of production
will be low to enable them compete and of course, make expected profit. Many
industrialized nations are not endowed with natural resources they would need
for production. In order to overcome this organizations operating in such
countries, they normally invest in those markets where raw materials are
sourced. By this move, they can control the supply and availability of their
production input.
1.2 STATEMENTS OF THE PROBLEMS
The rationale for embarking on this
study is to investigate the Total Quality Management in the multinational
corporations. Multinational corporations are accused of producing low standard
quality products, exploiting the resources and workers of the third World. The effective performance of multinational
corporations in its activities requires the cordial relationship among the host
country and the customers as it regard to the quality of their products for
effective and efficient implementation of their strategies. Finally,
multinational may find it difficult to operate in the prevailing economic situation
due to no implementation of appropriate corporate strategies and total quality
management.
Multinational Corporation and Total Quality Management
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