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 hi-technology 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 non-implementation of appropriate corporate strategies and
total quality management.
1.3
OBJECTIVES OF THE STUDY
This
study seeks to the following;
1.
To study what Total Quality
Management means to multinational corporations.
2.
This study seeks to find how
multinational corporations achieve total quality management.
3.
To find whether total quality
management affects demand of products.
1.4
RESEARCH QUESTIONS
The
following research questions were designed to guide the study:
i.
What are the strategies use by
multinational corporations to penetrate different economies?
ii.
How do those strategies influence
total quality management in multinational corporations?
iii.
Does technical training of staff
enhance total quality management?
iv.
How does product quality
affect customers demand?
1.5
HYPOTHESES
The Hypotheses centers on Nigerian Bottling company Plc
being the case study of the research work. The hypotheses are as follows;
i.
That strategy used by the company
affects the organization’s performance.
ii.
That product quality is geared
towards customers/ consumer’s preference and satisfaction.
iii.
That same product quality is
maintained in all branches of the corporation.
1.6
SIGNIFICANCE OF THE STUDY
An academic study, the
outcome of this study will be of great benefit to the multinational
corporations, Government establishments, business organizations and management
of big corporations through the following ways:
Suggest ways through which multinational corporations can
penetrate different economies in order to achieve organizational goals and
objectives efficiently and effectively.
Its findings will help the multinational corporations to
discover the strategies that can be apply in different economies in order to
maintain total quality management in the organization for effective utilization
of opportunities available in the host countries for the growth of their
corporation.
The study would enable management of multinational
corporations to see the effect of product quality maintenance as regard to the
demand of their products.
1.7
SCOPES AND LIMITATION OF THE STUDY
A multinational corporation covers a wide range of areas.
They could engage in oil exploration and exploitation, banking industries,
manufacturing industries etc.
This study will not cover all these areas. As a result the
study will concentrate on manufacturing industry.
Again the study is restricted to the Nigerian bottling
company Plc (coca-cola) Ngwo Enugu, Enugu State.
1.8
DEFINITION OF TERMS
The following definition of technical terms are started
below to enable the reader for easy understanding of the study.
Management
This refers to people who are in charge of an
organization. They work with and through people to achieve organizational
objectives MNCs.
Multinational Corporations: A
firm with foreign subsidiaries, which extend the production and
marketing of the firm’s product beyond the boundaries of any one country.
Total
Quality Management
This is a corporate strategy that focuses on quality of
product during corporate strategic formulation.
Corporate
Strategy
This is integrated plan though which an organization
accomplishes its basic long-term goals.
Free
Trade Area
Market in which nations can trade freely without tariffs
or other trade barriers.
Foreign
Direct Investment
Purchase of share, productive plant and equipment outside
ones own country.
Efficiency
Accomplishment
of a task with speed and accuracy.
Absolute
Advantage
Nations ability to produce a particular product better
than any other nations no matter what be circumstances due to availability of
human and material resources.
Balance
of Payment
Sum of al payments a nation has made to other nations
minus the payments it has received from other nations during a specific period
of time.
Strategic
Management
Process of specifying an organization’s objectives,
developing policies and plans to achieve these objectives and allocating
resources, so as implement the plan.
Globalization
This is a company that manufactures the component parts of
a product in different countries.
Environment
Environment is refers to those entities, which are not
under the control of the organization but whose behaviour affects the
organizational performance.
Parent
Company
The headquarter of a multinational corporation who controls
the activities of their subsidiaries in other countries.
1.9
BRIEF HISTORY OF THE COMPANY UNDER STUDY
The
Nigerian Bottling Company Plc
The Nigerian Bottling Company Plc has its parent company
as coca-cola international company, which was founded in 1892 in Atlanta
Georgia, United States of America (by Asa griggs candler).
The company was incorporated in Nigeria to carry on the
manufacturing and marketing of coca-cola brand of soft drinks it started in
Nigeria in 1953 by holding franchise for coca-cola company of America. This
means that the formula for the concentrates and receipts for the production of
coca-cola soft drinks were not released to the Nigerian Bottling Company, but
the formulae for the mixture of syrup were given to it for bottling the
products in Nigeria.
Nigerian Bottling Company Plc started it’s operations in
Lagos where it established it’s first plant. Later it spread it’s plants and
depots all over the country. Today it has many production plants and marketing
depots dotted over many cities in Nigeria. Such cities include Onitsha, Owrri,
Aba, Enugu, Ibadan, Umuahia, Kano, Apapa, Ikeja and many other places. They
started production by producing only one brand of flavour coke. This was the
major project and is still a brand liked by almost every customers of Nigerian
Bottling Company Plc. As at now, the company has more than twenty brand of
products.
The coca-cola company (Nigerian Bottling company Plc Ngwo
Enugu) offers these products to the customers. Diet coke, Fanta, 5 Alive,
Sprite, Soda Water, Eva table water etc. all these products is produced in
order to compete with their competitors.
The Nigerian Bottling Company has many departments as
follows production, quality assurance, finance, Workshops, human resources,
ware house, sales, depots, maintenance, information system and process system.
The production department is divided into two section. The carbon dioxide
section, which manufactures carbon dioxide for carbonizing soft drinks and the
products section which does the actual production of soft drinks by mixing the
right proportion of syrups to bring the finished products. The Nigerian
Bottling Company is the largest producer of carbon dioxide for the production
of soft drinks in Nigeria. The quality of it’s unequaled efforts plus good
network of distribution account for the success of the company in Nigeria. From
available records, the Nigerian Bottling Company Plc is definitely a
market leader in the soft drinks industry. It is the largest manufacturer and
marketer of soft drinks in Nigeria.
The company has contributed a lot to the growth of the
Nigerian economy. As part of this contribution, the company has branched out
into non-soft drinks business in such area as agriculture and investing in
other manufacturing companies like production of pure water. The coca-cola in
Nigeria is one of successful and growing Multinational Corporation in the
country. The company (coca-cola international company) made 23.1 billion U.S.D
2005, and they make more than 60% of soft drinks consumed in Nigeria.
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