CASE 1 – Creating world class quality standards
Customers expect to be able to buy products that meet certain standards. Standards can be written down and published for use by manufacturers and service providers. They can be used as guidance. BSI stands for British Standards Institution. It was the world’s first Standards body, and is the National Standards Body for the UK. BSI works in three main fields:
. Setting British and international standards
. Product testing
. Quality management systems (QMS)
Standards are based on agreed best practice. Businesses are keen to use standards to show they have a place in global markets. There are thousands of standards covering all manner of goods and services.
A quality product or service does what the customer wants it to do. This may differ from market to market. For instance, a cheap football provides enough `quality’ for a village match. For a league match, a better ball would be needed. Many organizations try to build quality into everything they do. They do this by using a QMS. This provides a framework that helps the business to improve in all areas. BSI helps organizations to identify best practice and translates this into standards. BSI publishes almost 20,000 standards and each year adds 2,000 new or revised standards to this list.
The importance of standards
Standards exist at a number of levels. These include:
* International Standards, (ISO). These need to be agreed between countries, so are the most complex
* European Standards (EN)
* British Standards (BS).
BSI contributes to all three.
Standards help protect consumers’ safety. They also promote research. They promote the sharing of knowledge. They help businesses to compete. In markets where it is hard to compete on price, businesses can use standards to help them compete on quality.
BSI is independent. It works with both the private and public sector. It makes sure that safety and quality standards in the UK and around the world are built into products. BSI also owns the famous Kitemark symbol which you see on many products. It shows that a business has had a product tested to the relevant standard. Schemes cover various products and services. Examples include lighting, 13 amp plugs, motor cycle helmets and car repair garages. The Kitemark shows that the business sees safety and quality as vital. It shows the customer that the product or service has been tested and has reached the relevant Standard. Other symbols are required by law, for instance, CE marking. This shows that a product conforms to certain European Union regulations.
ISO 9001 is a key international standard. It shows that the business uses a QMS. It shows that quality is built into all aspects of operations. This must include all systems, whether inside or outside of the business. It therefore includes suppliers. There are eight quality measures that must be met to gain certification to ISO 9001.
Products include both goods and services. These can be made, operated and sold on a global basis. International standards for them are therefore vita. BSI helps to create these standards. Standards help businesses to build good reputations based on quality, safety and reliability.
Issues for Discussion
- What do you understand by the term `quality’ in relation to a product you buy?
- What is the BSI Kitemark? How might this help you to choose a product to purchase?
- How might meeting the Standard ISO 9001 help a business to gain a competitive advantage over a rival?
- Assume that you have developed a new manufacturing process – how might the BSI help you to develop this process?
Case 2 – Sustainable business at Corus
Corus is the UK’s biggest steel manufacturer. Even so, it still has to compete. In 2004 it launched a programme to make itself more efficient. Part of the program, called ‘Restoring Success’, focuses on recycling steel. The world economy is growing. The demand for steel has increased as more nations such as India and China have grown. Recycling as part of sustainable development has thus become vital. It has become a main concern for Corus.
What is sustainable?
Sustainable development is linked to resources. It means leaving at least as much for the future as we had to start with. This shows respect for the environment. It also shows thought the future. Everyone should try to aim for sustainability. This includes governments, businesses and people.
Steel can be recycled over and over again with no loss of quality. This makes it stand out in terms of sustainability. It is easy to extract steel from waste because of its unique magnetic properties and recycle it from scrap. By recycling steel Corus helps to:
* preserve natural resources
* protect the environment
* meet targets for reducing waste.
Corus is working hard to make the public aware of what can and should be recycled. Steel can be recycled from drink and food cans, lids, paint cans and aerosols. Not everyone knows what can be recycled. For instance, 57% of consumers recycle drinks cans but only 7% recycle aerosols. Corus is working to develop a ‘closed loop’ for steel.
The steel would go from consumers to recycling plants, then into production and back to consumers.
Corus sees that there are two sides to recycling. There are gains, but there can also be extra costs. To keep all of its stakeholders happy, it must balance these. There are effects on :
the planet. Fewer resources are used but energy is needed to recycle
* consumers. They have a smaller carbon footprint but more time is needed to recycle
* employees. More are involved in recycling
*communities. Less waste is stored in landfill but there may be noise from recycling plants.
Gains include lower production costs, governments hitting recycling targets and all of us having a better planet to live on.
Costs and benefits
It is possible to weigh up costs and benefits. A monetary value can be put on them. Businesses want gains to outweigh costs. Corus gains from recycling. Socially. Corus gains a good reputation. There is reduced impact on the environment, lower energy use and less waste. There are also costs. These include the cost of recycling and of collecting and sorting waste steel. Corus has created a number of targets to help measure its success. These are called Key Performance Indicators. They include
- Corus’ UK energy use being reduced to less than 1997 levels
- an increase in the steel recycling rate to 55%.
Corus works to recycle as much as it can. This helps towards greater sustainability. It shows concern for all its stakeholders. Consumers can also help by recycling as much as they can.
Issues for Discussion
- What is sustainability and whose responsibility is it?
- Describe three actions that an individual can take to support sustainability and two actions that a business can take?
- Steel lends itself to recycling. What actions could be taken to increase public awareness of steel recycling?
- Recommend actions that individuals and businesses can take to enhance the closed loop ‘steel to steel’ recycling process.
- Recommend ways in which the benefits of steel recycling can be increased compared to the costs of recycling steel.
Case 3 – International trade
For centuries Britain has been a country that relies on international trade. We purchase goods and services from other countries and in return we sell them goods and services produced here. An import is a purchase by UK citizens from overseas. An export is a sale by UK citizens to a member of another country.
Visible and invisible trade items
For the purpose of classification we call the tangible goods that we trade visible items. We call the services that we trade invisible items. Exports bring currency into the UK whereas imports lead to an outflows of currency.
The UK has always done well on her invisible account. This is because we developed a world-wide reputation for commercial services. Some of our major invisible earnings come from the following:
* Selling insurance policies through Lloyd’s.
* Bank services to foreigners,
* Tourists spending money in the UK.
On the news every month we hear that the UK has made a surplus on invisible trade showing that we have sold more invisible services than we have bought. The accounts for a particular month might show:
* Invisible exports ?100 billion
* Invisible imports ?80 billion
* Invisible surplus f20 billion
At the same time the UK frequently makes a loss on her visible trade.
A typical current account showing the UK’s trading with the rest of the world in a given period, may therefore look like the following:
Visible exports 500 Invisible exports 400 Total exports 900
Visible imports 650 Invisible imports 200 Total imports 850
Visible balance -150 Invisible balance 200 Current balance 50
The current account of the UK balance of payments gives a good guide to current trading in visible and invisibles with the rest of the world.
Issues for Discussion
- Analyze the case at length
Case 4 – Embracing and pursuing change
AEGON UK is part of one of the world’s largest pension and insurance groups. The AEGON Group has over 27,000 employees. It has over 25 million customers worldwide. In the UK it has grown its customer base. It has also bought other businesses. Its aim is to become ‘the best lone;-term savings and protection business within the UK’. To achieve this, it is keen to change in order to improve. AEGON also needed to raise its profile in the UK. The companies which it bought, such as Scottish Equitable, tended to keep their own brand image. AEGON therefore needed to build on the global strength of the Group.
External factors are those outside the control of the business. It is vital for businesses to be aware of these changes. Changes that have affected AEGON include:
* people are living longer so need better pensions
* the insurance industry has had a poor reputation. In some cases the wrong products for people’s needs were sold. This is called miss-selling. As a result, the Financial Services Authority (FSA) made regulation tighter.
* financial products can be hard for people to grasp
Investment returns have been less than predicted. Many people have therefore not ended up with the sums that they had hoped for
There is a lot of competition in the industry.
Government imposed price controls reduced profitability. Also. AEGON was not a well-known brand. It needed to be better known before consumers would see it as a good place for long-term investment. AEGON went through a ‘discovery’ phase. This was to find out what it needed to do to reach its aim. It set out to find out:
* what the brand stood for in the UK
- what they wanted it to stand for
- how they were going to reach this.
A brand audit was used. This looked at AEGON both from within and outside. This information could then be used to plan change.
Creating a culture
The culture of an organization refers to the way that it works. AEGON created a culture of change. AEGON needed to do well financially. This was linked to raising awareness of the brand and building on AEGON’s global strength. This meant:
* financial services in simpler forms that customers could grasp
* a workforce improved through training and development. This would b•, better able to manage change
* a more distinct market presence.
AEGON developed a framework to help all its staff support its brand values.
AEGON used a number of methods to achieve the
* external promotional campaigns
* the new Chief Executive (C1 O) talked to the media about the need for change
* new and innovative products were launched,
AEGON’s success can be seen through the record results, increased new business and growth in earnings.
AEGON recognized a need to give itself a greater market presence. The change has made the organization much more customer focused. As a result it is more effective.
Issues for discussion.
- What are the external factors influencing the change. Discuss
- Identify the reasons for change
- Creating a new culture is a key part of the change process
- Carry out the implementation of the above.