Course Title:

Quality Service Management in Hospitality and Tourism Industry

Course Description:

This course aims to enable the students to recognize and assess quality
management process in a hospitality and tourism related organization and to
evaluate departmental processes and planning strategies.

Course Guide:

This hand-out on Quality Service Management in Hospitality and Tourism

Industry is designed for self-learning of business college students during these trying
times of COVID-19 pandemic.

This hand-out comprises of eight chapters, to wit:

Chapter 1: Historical Development of Total Quality Management

Chapter 2. Concept and Meaning of Total Quality Management
Chapter 3 Total Quality Management in Tourism and the Hotel Industry
Chapter 4.The concept of quality
Chapter 5. Concept of Productivity
Chapter 6. Quality Service Organization
Chapter 7. Deming Chain Reaction
Chapter 8. Principles, practices and Techniques of Quality Management

Each chapter could be learned in a self-paced or individual format and it is the

responsibility of the students to maximize their time and exert with determination in
completing the course with the best learning outcomes. However, contents presented
in this module may not be enough for their learning needs, so it is suggested to
consider reading other references related to the topics. For each chapter, there are
discussion, examples, and exercises as a course requirement to contribute 50% of
students’ grades. Ideally, all of the exercises should be done and compiled to be
submitted during major exams. Students may contact their professor for any concern
or clarifications about the topics, tasks, and outputs to be done.

As to major exams, midterm examination will cover Chapter 1 to Chapter 4

and final examination will cover Chapter 5 to 8.
Course Learning Outcomes:
Having completed the module, the students are anticipated to meet the
following outcomes:
1. Define and explain important macroeconomic variables and be able to find out how
entrepreneur and entrepreneurship affect such economic variables.
2. Identify business opportunities in accordance with country’s economic standing.
3. Make a business plan that will help eliminate unemployment and deflation, and aid
to country’s GDP growth.
4. Present economic analysis or study that will serve as basis of starting up a
business.
5. Observe business operations and determine its impact to the economy.

Course Requirements:
Students are expected to submit the following requirements or outputs during
major exam.

Chapter Chapter Title Requirement/Out

put

1 Historical Development of Total Quality

Management
Concept and Meaning of Total Quality Chapter Exercises
2
Management Midterm Examinations
Total Quality Management in Tourism and
3
the Hotel Industry
4 The concept of quality

5 Concept of Productivity
6 Quality Service Organization Chapter Exercises
7 Deming Chain Reaction Final Examinations
8 Principles, practices and Techniques of
Quality Management
 Chapter 1: Historical Development of Total Quality Management

“quality is never an accident it is always a result of intelligent effort” - John Ruskin

Introduction

This chapter will help student appreciate the historical development of TQM
by understanding how the first initiators mind set in implementing quality
management in their respective fields.

Learning objectives:
At the end of this Chapter the student is expected be to:
 Explain the historical concept of TQM
 Discuss concept of quality
 Identify the Proponents of quality management

Lesson 1: Understanding quality as something good is a very old concept

In an economic sense quality is connected to the very beginnings of human

economic activities — from primitive societies through the span of history up to the
present time. Namely, some sort of specification (later represented as norms and
standards) has always existed with which, in the name of the owner (chief, pharaoh,
king, entrepreneur, etc.) an inspector controlled, approved or rejected the offered
product or service. An extreme corrective method for permanently eliminating
mistakes, i.e. deviations from the required quality of product or service was used by
the Phoenicians: the inspector would file the order for the hands of the worker,
responsible for the bad product, to be cut-off. Although an extreme example, it
demonstrates the great importance given to quality, as the measures for not
complying to instructions and specifications were much more drastic than today’s.
Industrialisation isolated the individual producer (worker) from the product
(satisfaction attained through personal production -- to witness the results of ones
own work, was taken away), and the company from the direct buyer. The historical
development of quality is best shown through examples of America’s economic
development described in several milestones of evolution.

1900-1920: The function of Quality Control

Ford Company (established 1907) introduces automobile production based

on Frederick W. Taylor's (1856-1915) principles of work organisation. Serial
production of automobiles is sufficiently simplified to enable the employment of
unqualified workers and achievement of low production costs. The year 1910
represents the beginnings of quality control -- the function of control, i.e. the process
of separating bad and good products becomes independent, separated from the
function of production.

1920-1945: Statistical Control of Quality

In 1920 Western Electric introduces a new telephone exchange. Due to

serious problems of achieving the required quality (mistakes) a special department
for quality is formed in which are to work George D. Edwards and Walter A.
Shewhart. Edward connects the function of quality control directly with management,
he creates the concept quality assurance. The mathematician, Shewhart
standardises statistical methods for controlling quality. Still valid today, he publishes
his research results in 1930. During 1930 Waldo Vezlau and Joseph V. Talacko
develop the principle of reject classification according to weight — known today as
the Pareto principle. Between 1941 and 1944 Harold F. Dodge and Henry Romig
develop control sample tables.

1950: Total Quality Control (TQC)

In 1945 doctor A. W. Feigenbaum publishes his article, Quality As Management, and

describes the results of usage and development of quality in General Electric, the
first company to use TQC. His book, Total Quality Control, written in 1951, is first
introduced in Europe in 1961. His work attracts many followers, especially in Japan.
A special place in the development of TQC is taken by W. Edwards Deming and J.
M. Juran. Deming continued Shewart's work and in 1938 was the first in the world to
use the sample system method for the National Census Office. In 1946 and 1948
Deming is sent by the American War Ministry to Japan to work on an economic
project. His involvement there attracts special attention; as well as his tour of lectures
to leading Japanese directors in 1950. Not until 1980 - 30 years later, does Deming
gain fame in America. During the Second World War Juran with Deming develop an
educational program for quality management, as well as a documentation basis for
statistical control. His first book, Quality Control Handbook, is published in 1954. He
is invited to Japan to continue and broaden the Deming lectures. Both receive the
highest recognition in Japan. Americans were the pioneers of quality assurance
systems, and the Japanese the first to appreciate and use the advantages of control
systems.

1960: Man becomes a part of quality

Zero Defects Up to 1960 quality belongs to the engineering and management
domain. The employee is just one of many factors in the company — he is not
responsible for quality. In 1961 Philip B. Crosby creates the Zero Defects (ZD)
movement. Namely, early space program research showed that occurring mistakes
were almost exclusively a result of human error. This confirms the need to
concentrate efforts on human resources to secure quality. Crosby develops his
experience into a concept which is based on responsibility of the employee for the
task for which he is delegated. The use of numerous inspectors is excluded and the
principle, doing it correctly for the first time, introduced. Using a practical application
of this method the American company ITT obtains very good results, later on to be
accepted and developed in many successful companies throughout the world.

1975: Quantity as a strategy Japan's competitive edge in relation to American

companies sharpens due to the oil crisis

Quality and reliability of Japanese cars and televisions, in relation to similar American
products, is superior. When buying a new product consumers change their criteria of
choice: retail price plus maintenance price becomes crucial. The poor performance of
American products is initially justified as a result of external factors (Japanese
culture, trade unions, employment). Following the excellent performance of a
Japanese firm in America employing Americans, which achieves like results in quality
as in Japan, these arguments are refuted. This experience shocks American
management, especially in the automobile industry. Programs of change are initiated
to fundamentally alter work methods and the role of the employee in the firm.
Hierarchy levels are reduced from 7 to 3. Development periods shortened from 5 to 3
years. Enhancement programs introduced for all activities.
Chapter Exercises
Lesson Assessment 1. Answer the following questions
1. Why was TQM created?
______________________________________________________________
______________________________________________________________
______________________________________________________________

2. What are the concepts of quality? Discuss briefly.

a.____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
b.___________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
c.____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
d.___________________________________________________________________
_____________________________________________________________________
____________________________________________________________________
e.____________________________________________________________________
___________________________________________________________________
_____________________________________________________________________
3. Identify at least five proponents of Quality Management. Discuss their
contribution.
a.____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
b.___________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
c.____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
d.___________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
e.____________________________________________________________________
_____________________________________________________________________
___________________________________________________________________

Lesson Assignment 1. (Make a reaction paper )

White bond paper A4, Font text Arial, font text size 12, Single Space

1. Watch the movie “The founder” a story about Rey Crook and the
McDonald Brothers, the journey of the biggest fast food chain in the
world, McDonald’s.

2. Watch the documentary of Henry ford- the Birth of Ford Motor

Company.
 Chapter 2 CONCEPT AND MEANING OF TOTAL QUALITY MANAGEMENT

“Cost is more important than quality but quality is the best way to reduce cost” -
Ginichi taguchi

Introduction

This chapter presents introduce the definitions and concept of total quality
management.

Learning Outcomes:
At the end of this module the student will be able to:
 Define the meaning of TQM
 Identify the aspects of quality

Lesson 1: Key terms and concept in TQM

The word quality is derived from Latin (qualitas) and means the characteristic,
property or attribute of a person or thing: trait, character, feature. The word total is
also of Latin origin (totus) and means constituting or comprising the whole: entire,
absolute, sum, aggregate, gross. The word manager is an English word meaning a
person who manages: administrator, executive, superintendent, supervisor, boss,
entrepreneur.

Management is a complicated concept and is concerned with the act or manner of

managing. It describes the process of co-ordination of efficient use of human and
material resources to accomplish given goals.

Management process is concerned with the following functions: planning,

organizing, leading, staffing and controlling. It should, however, be emphasized that
the concept quality used for quality of product and of service has undergone change.

Quality today is defined from two aspects : the production and service aspect and
the consumer aspect.
 Production service aspect quality is defined as a specification of properties or
characteristics which the product or service has to satisfy as a standard.

Standardization is a regulated quality. From this it follows that the intent of quality is
the level attainable representing the highest standards, or conformance to
specification. This definition of quality dominated the industrial revolution and is
typical for mass production.

Definition of quality today is from the aspect of the buyer, consumer, client, guest,
generally speaking, the user of the product and service. As a result of market
development and marketing.

Quality is the level of guaranteed satisfaction needed to satisfy customer

needs and requirements — ability to meet exceeding customers' expectations.
Standards or norms are regulated quality. They regulate elements of quality which
are sought and expected by the buyer.

Quality is best illustrated by the slogan Your Wishes Are Already Satisfied.
Customers' needs, expectations and requirements should, therefore, be foreseen,
specified and satisfied as quality is customer defined. Quality is an on-going process.
Customer requirements are constantly undergoing change. They are becoming
increasingly demanding.

Lesson 2 The meaning of the concept quality

Quality Concept has evolved from its association to production to management.

Today TQM is in fashion and can be defined in various ways.

TQM is a system of enhancing and improving flexibility, effective and efficient

business performance. All employees and all activities from the most menial jobs to
the highest management levels are included. TQM endeavours to secure and create
conditions in which all the employees through a joint effort effectively and efficiently
fully achieve one objective: when, where and how to produce a product and offer a
service to the buyer and consumer. For the first time and each additional time. The
emphasis is, therefore, on quality and adaptability to quality by all employed, culture,
a single and homogenous behaviour, effectiveness, i.e. achieving business
objectives (the best prices and maximum profit) and efficient objective attainment
(lowest incurred costs and best maximum usage of material and human resources).
The concept TQM is based on a process of constant advancement and
improvement and lasting quality and team work, all of which give permanent
improvement.

The system TQM is totally market orientated -- customer driven. In a total quality
system the customer is king. The process begins with the customer (what the
customer wishes) and ends with the customer (a satisfied customer). Every
participant in creating quality is important: every employee works, makes decisions
and is responsible for his task.

The cycle of quality is a complicated process and includes: planning of quality,

quality realization, control and evaluation of the achieved quality and quality
improvement. Said briefly: plan, achieve, check, improve.

Ishikawa, has given a very full definition for the concept quality. In the narrowest
sense quality means: quality of product, and in the widest: quality of work, service,
information, processes, departments, human resources (workers, engineers,
managers), systems, firms, objectives, etc.

Organisation of the total quality system should be flexible. A special

organizational department (sector or department for Quality Control) through its
overall functioning and responsibility belongs to the highest management ranks. The
task of securing quality (responsibility of the quality manager and one or more
inspectors) consists mostly of co-ordination of responsibility for quality in the areas:
marketing, purchasing, production, development, finance, personnel — everybody in
the firm is responsible for quality.

Concept quality is based on prevention. Activity in achieving quality is, therefore,

mostly concentrated on planning and somewhat less on inspection and control. This
is confirmed by the rule: everyone is responsible for his job and all are directed
towards achieving a mutual objective of total quality as the sum of individual qualities.
Anyone can endanger quality. Responsibility for the defined mistake (deviation,
lapse) can not be transferred onto the quality controller as he is neither the source of
the mistake, nor can he correct it — he can only confirm it.

Quality costs, costs of gaining and retaining quality can be divided into internal and
external costs.

Internal costs: marketing costs, planning costs, product and service design costs,
planning and specification (standards) costs, follow up research costs for mistakes
and lapses, material control, production and service costs, quality improvement
costs, training and education costs (program for achieving quality), mistakes' and
lapses' costs (waste, repair and lost time), and other miscellaneous costs.

Quality is culture. Quality is a process which has the ability to shape the future. The
need for learning is an innate quality of people they are curious.

“Classical systems tend to wear away and destroy their motivation at school and at
work only the best are awarded. Consequently, a large, disproportionate number of
people who would otherwise participate in creative work are eliminated. The present
management system destroys people. Future management systems will not be
hierarchic — one person thinks, others work, instead they will be based on equality,
homogeneity and motivation — everybody thinks, everybody works. The more people
think and work, the more people know and are able to perform better.”

TQM methods and techniques can be applied in all organisations --

manufacturing plants, service organisations, public services, legal and law
enforcement, education, and others. More than ever TQM is being accepted and
becoming a way of thinking and a way of life.

“The serious, necessary, effort needed to change existing ways of understanding

and prevailing attitudes towards work and life should not, however, be
underestimated.”

Quality has to be rewarded. The highest award for quality is the Malcolm
Baldridge National Quality Award established in 1988 following a bill introduced in
1986, named after the USA Secretary of Commerce, Malcolm Baldridge (1981-1987)
who constantly improved the efficiency and effectiveness of the American
government. The award is designated to foster and continually improve quality of
product and of service. It is awarded every year for three categories of enterprises:
marketing companies, service organisations and small firms, and aided by the
American Society for Quality Control.

“Awards are given on the basis of appraisal of the following management elements in
a company: information and analysis, strategic quality planning, development of
management and human resources, management of quality processes and operative
results, customer commitment and requirement fulfilment (each element is
individually assessed). These given elements of quality form the basis of TQM.”
The first hotel company to receive the American award for quality -- Malcolm
Baldridge Quality Award, based on results achieved through a three year
implementation of a TQM process was the Ritz Carlton Hotel Company.

Chapter Exercises
Lesson Assessment. Answer the following questions
1.As a future practitioner of tourism and hospitality industry how will you
define TQM?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_________________________________________________________
2. Define the following terms substantially.

Quality________________________________________________________
Standardization_________________________________________________
Management___________________________________________________
Cycle of quality__________________________________________________
Quality cost ____________________________________________________
3.Explain the importance of giving awards to companies that achieves quality.
Give at least 5 award giving body that awards company with that provides
quality service.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
1._______________________________2.____________________________
3._______________________________4._________________________
5.___________________________________

Assignment. (Make a reaction paper)

White bond paper A4, Font text Arial, font text size 12, Single Space
 1. View the presentation on Five Dimensions of Service Quality. (you

tube)

2. View the presentation on quality Management in the Hospitality

industry. (you tube)

Chapter 3 Total Quality Management in Tourism and the Hotel Industry

“The customer is always right”

Introduction

This chapter presents the application of quality service and unique

characteristics of tourism and hospitality, which distinguish them from physical
goods, and very briefly outlines implications of the nature of these services for
management and marketing strategies.

Learning Outcomes:
At the end of this module the student will be able to:
 Define TQM in hospitality industry.
 Understand the concept of tourism and hospitality service.
 Identify the tourism and hospitality products.

Lesson 1: What is quality service management in hospitality and tourism

industry?
It involves examining all encounters and points of interaction with guests to
identify points of improvement. Total quality management (TQM)
in tourism and hospitality is a process where service expectations are created by the
entire team, with a collaborative approach between management and employees.

Lesson 2: What are tourism and Hospitality?

Tourism has a number of different definitions. It is very difficult to pinpoint a

definition that would give a meaningful and adequate explanation of tourism, because
the concept is fragmented, wide-ranging, and multidimensional.
 Several characteristics of tourism may be identified based on the analysed
definitions:

1. Two main elements: (a) movement, which refers to the journey (travel) to and from
a destination (the dynamic element of tourism); and (b) the overnight stay outside the
permanent residence in various destinations (the static element of tourism)

2. Movement to and from the destination is temporary (temporary change of

residence), short-term, with intention to return

3. Destinations are visited for purposes other than taking up permanent residence or
employment

4. The activities tourists engage in during their journey, and the stay outside the
normal place of residence and work, are distinct from those of the local residents and
working populations of the places visited

Four groups of participants are involved and are influenced by tourism:

(1) tourists,

(2) businesses providing goods and services that the tourist market demands,

(3) the government of the host community,

(4) the host community

Tourism. It is fragmented a fragmented industry. It is made up of various

sectors or sub industries such as:

 transportation,
 accommodation,
 attractions,
 amenities,
 catering,
 entertainment,
 eating and drinking establishments,
 shops,
 activity facilities (leisure and recreation),.

“These sectors provide products and services for individuals or groups of

tourists who travel away from home. Consequently, tourism is an amalgam of the
products and services that its various subsectors make available for tourists. The
provision of these products and services depend. In order to provide overall customer
or guest satisfaction each subsector must provide total quality service to the guest,
one sector that may fail to do so can ruin the overall guest experience. “

Hospitality. It is concerned with the provision of accommodation and catering

(food and beverage) services for guests. It also refers to the reception and
entertainment of travelers, the way they are treated by industry employees (with
empathy, kindness, and friendliness), and an overall concern for the traveler’s well-
being and satisfaction. Tourists are not the only consumers of hospitality services;
local residents also use them.

Lesson 3: What are tourism product and Services?

A tourism product is an amalgam of all goods, activities, and services offered

to tourists by different sectors of the tourism industry in order to satisfy tourist needs
while they are away from home. It includes the journey to and from a destination,
transfer from and to an airport, accommodation, transportation while at the
destination, and everything that a tourist does, sees, and uses on the way to and
from the destination, including purchases of food and drinks, souvenirs,
entertainment, and a very wide range of other services such as financial, medical,
insurance, etc.

A tourism product is often referred to as a tourism destination. However, a

tourism destination is a geographical area a geographical unit visited by a tourist,
which may be a village, town, or city, a district or a region, an island, a country, or a
continent. This geographical unit offers a number of different tourism products for
purchase and consumption.

The major components of the tourism destination are:

1. accessibility, which is a function of distance from tourist markets, and external

transport and communications, which enable a product to be reached;

2. amenities (e.g., catering, entertainment, internal transport, and communications,

which enable the tourist to move around during his or her stay);

3. accommodation;

4. attractions, which may be site attractions (e.g., scenic, historical, natural wonders)
or event attractions (e.g., exhibitions, sporting events, congresses); and
5. activities (e.g., outdoor and indoor recreation activities).

“Tourist activities create demand for an extremely wide range of services in

the course of the journey and stay at destination, classified as direct and indirect
services. The direct services include transportation to and from the chosen
destination (air, sea, land); transportation within a destination and between
destinations; accommodation at the destination (hotels, motels, resorts, home and
farm stays, RV parks, campgrounds, etc.); catering (food and beverage); sightseeing;
shopping; entertainment; recreation; information; and many others. These services
cater directly to tourist needs.”

The indirect services are:

 financial,
 medical,
 insurance,
 retailing,
 wholesaling (travel agent, tour operator),
 cleaning,
 printing,
 telecommunication,
 good water,
 sewerage,
 electricity.

“These services support the provision of direct services. Without indirect

services the provision of direct services would be impossible. As a result, a tourism
product is a service rather than a tangible product.”

Optimum Guest satisfaction of tourism product, equals to quality service

The concept of the tourism product as a composite of various sub products

signifies the importance of the linkages and mutual dependence of all sectors.
Unsatisfactory performance of one sub product (sector) can reflect badly on the
performance of the total product, and on overall tourist experience and satisfaction
with the total product. The nature of the tourism product highlights the complexity and
diversity of the tourism industry, which depends on the interrelationships among all
the sectors delivering tourism products and services. The nature of the tourism
product implies the importance of cooperation between all the sectors in order to
achieve an integrated tourism product and accomplish a major goal, which is tourist
satisfaction.

Chapter Exercise

Activity Questions. Answer the following questions

1. What is the important of TQM to tourism and hospitality industry?

______________________________________________________________
______________________________________________________________
_____________________________________________________________
2. Describe the tourism and hospitality industry. In what way we can ensure
optimum guest satisfaction?
______________________________________________________________
______________________________________________________________
______________________________________________________________
3. What is a tourism product? Innumerate the sectors under tourism industry
______________________________________________________________
______________________________________________________________
______________________________________________________________
4. Innumerate at least five indirect service and explain their role in tourism and
hospitality industry

Assignment. Make a reaction paper

1. Watch any video showcasing quality service for the following sectors of

tourism and hospitality:

 a. hotel b. airline c. Cruise ship

Chapter 4 The Concept of Quality

No quality, no sales. No sales, No profit, No profit, no jobs

Introduction

Increasing attention has been paid to the management and marketing of

tourism, and hospitality, which have been widely recognized as very important
sectors of the service economy. However, a different approach to the management
and marketing of tourism, and hospitality, services than to that of physical goods is
required. These services differ from physical goods in a number of unique
characteristics, which have significant implications for management and marketing
strategies. This chapter presents the various concepts of quality utilized in tourism
and hospitality industry.

Learning Outcomes:
At the end of this module the student will be able to:
 Explain various connotation of the term, quality;
 Discuss ways and means on how these ideas about quality can be used in
the following situations:
a) To prevent accidents or losses in a hotel industry; and.
b) To gain profit or customer satisfaction.
Lesson 1: Quality from the Perspective of Selected Managers
Quality has a lot of connotations partly because “people view quality
subjectively and in relation to offering criteria based on their individual roles in the
production-marketing value chain.” In one study that asked managers of 86 firms in
the eastern United States, they came up with different responses:
1. Perfection
Hotel executives at the Reuters Global Luxury and Fashion Summit
are “shifting away from fancy freebies like lotion and soap and toward expert
service that reflects a real understanding of the guest’s preferences.

For instance, Hyatt’s Andaz invites guests in a relaxed way to sit down
and are offered a complimentary glass of wine or a cup of coffee. The host
then completes the check-in on a tablet computer. When you’re finished
sipping and signing, the host escorts you to your guestroom. Jeff Bezos of
Amazon aptly said, “If you do build a great experience, customers tell each
other about that. Word of mouth is very useful.”

2. Consistency
Consistency means repeatable. A successful hotel general manager
needs to be confident that in any given situation, the hotel staff knows how to
respond and act appropriately. Whether it’s in the morning or afternoon or
evening or whether it’s a weekend or a weekday, rain or shine, and
regardless of whom happens to be working that day (Francine Haliva).

Haliva gave the following 7 ways to improve service at your hotel:

a. Treat every guest like a VIP
b. Make training an everyday priority and not just a one-time event
c. Provide personalized customer service
d. Create a positive start for new employees
e. Update your technology toolbox
f. Take measure of your customer service performance
g. Tie your staff’s actions to the hotel’s overall performance
Companies big and small know the key is consistency. Customers expect the
same treatment no matter where they go.
3. Eliminating Waste
Importance of Waste Management in Hotels include:
a. Using refillable dispensers for soaps, shampoos, and conditioners
 b. Using washable cloth products and dishware instead of disposable ones
c. Using water filters instead of plastic bottles
d. Reducing and reusing supplies packaging materials
e. Reducing the number of paper products

Toyota identified the following seven types of waste as the more important
ones:
a. Waste from overproduction
b. Waste of waiting time
c. Transportation waste
d. Processing waste
e. Inventory waste
f. Waste of motion
g. Waste from product defects

4. Speed of Delivery
“The 30 minutes or it’s free” rule of Domino Pizza

A hot meal (Big Mac) at McDonald’s in 59 seconds!

Domestic deliveries for FedEx wherein you can drop them off in the evening
and have them delivered as early as 8am in some areas.

Internet speed refers to the speed which data or content travels from the
WWW to your home computer, tablet, or smartphone. The speed of this data is
measured in megabits per second (Mbps). One megabit is equal to 1,024 kilobits.
High-speed internet connection known as broadband (broad bandwidth) is
defined by download speeds or at least 200 Kbps.
Download speed refers to the rate that digital data is transferred from the
internet to your computer.
Upload speed is the rate that online data is transferred from your computer to
the internet.
Company’s operate in fast-moving, cyclical markets.
5. Compliance with policies and procedures
Read code of business conduct and ethics of the Radisson Hotel Group.
6. Providing a good, usable product
Margot Whitney (2018) is her article, 10 Smart Hotel Marketing Strategies to
Increase Bookings shared the following:
a. Be easy searchable online
 b. Remarket, remarket, remarket (The abandonment rate for booking hotels
online is 75%)
c. Ensure you’re targeting the right audience
d. Allocate more marketing budgeting during peak booking season
e. Provide incentives to get people interested
f. Build local partnerships
g. Don’t just market the hotel, market the location
h. Ensure your website is both simple and breathtaking
i. Go above and beyond in customer service before, during and after their
stay
j. Build a customer loyalty program

7. Doing it right the first time

The aim of TQM, wrote Paul Uduk (TQM as a Business Philosophy,
2015) as to achieve zero defects (error=free work) in everything done in the
organization. To achieve this means everything must be right, first time,
every time. Peter Drucker has said “a business is not defined by the
company’s name, statutes, or articles of incorporation. It is defined by the
want of the costumer satisfies when he buys a product or service. To satisfy
the costumer is the mission and purpose of every business.” As Marvin Bower
of McKinsey once said, “a successful organization consists of a group of
talented people who like and respect one another.” As J.P. Morgan put it, “the
goal is to be a first-class business in a first-class way.”

Do It Right the First Time (DRIFT) is a theory from managerial accounting

that relates to just-in-time (JIT) inventory where a company only receive
goods as they are needed to cut down on inventory costs and production
management.
8. Delighting or pleasing customers
To adapt to competitive markets, companies pursue extreme product
development (Beer,et. al. of McKinsey & Company), such as:
a. Extreme reliability that will translate to significant product cost reductions
b. Extreme product performance
c. Extreme time market
d. Extreme agility. Agility means the ability to manage changing priorities
 9. Total customer service and satisfaction
Shawn Grimsley defined customer satisfaction as a measure of how
well the expectations of a costumer concerning a product or service
provided by your company have been met.
Customer satisfaction is also defined as a measurement that
determines how happy customers are with a company’s products,
services, and capabilities. Customer satisfaction is an abstract concept
and involves such factors as the quality of the product, the quality of
the service provided, the atmosphere of the location where the product
or service is purchased, and the price or the product service. Businesses
often use customer satisfaction surveys to gauge customer satisfaction.
These surveys are used to gather information about customer satisfaction.
Typical areas addressed in the surveys include:
a) Quality of product or service;
b) Value of product/service relative to price – a function and price;
c) Time issues such a product availability, availability of sales assistance,
time waiting at checkout, and delivery time;
d) Atmosphere of store, such as cleanliness, organization, and enjoyable
shopping environment;
e) Service personnel issues such as politeness, attentiveness and
helpfulness; and
f) Convenience such as location, parking and hours of operation.

Lesson 2: The process for customer satisfaction

The process for customer satisfaction process improvement is as follows:

Step 1 – Reports issue

Step 2 – Investigate issue

Step 3 – Perform corrective action

Step 4 – Customer follow-up

Step 5 – Do root cause analysis

Step 6 – come up with a preventive action

Step 7 – Customer follow –up

Step 8 – Verify effectiveness of the action

 Step 9 – Customer survey

Case in point is Nordstrom. The big idea: Be ready to say “yes” to your
customers, regardless of the request. With this approach, not only will you care
for your customers. They’ll care for you as well. Also, Danny Meyer, a successful
New York restaurateur selects new employees based on what he calls the
“hospitality quotient.” He advocated the principle of “making your customers feel
special – never gets old.”

“Our new guest clerk lent his cuff links to a guest for a crucial meeting.
Instantly, we knew we hired the right guy,” goes the ads of Marriott Hotel.

Chapter Assessment (read the following case study and answer the guide
questions)

Case 1

The Ritz Carlton Hotel

The Ritz Carlton Hotel Company, LLC is one service company with an
exemplary focus on tis people. They train employees to know what they are
supposed to do. How well they are doing, and have the authority to make changes as
a necessary. For example, the role of the housekeeper is not simply to make beds,
but to create a memorable experience for the customer. Each hotel has a director of
human resources and a training manager, who are assisted by the hotel’s quality
leader. Each work area has a department trainer who is responsible for training and
certifying new employees in his or her unit. New employees receive two-days’
orientation in which senior executives personally demonstrate Ritz-Carlton methods
and instill Ritz-Carlton values. Three weeks later, managers monitor the
effectiveness of the instruction and then conducts a follow-up training session. Later,
they must pass written and skill-demonstration tests in order to become certified in
their work areas. Every day, in each work area, each shift supervisor conducts a
quality line-up meeting and briefing session. The workforce, receives continuous
teaching and coaching to refresh skills and improve performance, reinforce the
purpose of the job, and to provide recognition for achievements. Though these and
other mechanisms, workers receive more than 100 hours of quality education aimed
at fostering a commitment to premium service, solving problems, setting goals, and
generating new ideas. Workers are empowered to enlist the aid of others to resolve a
problem swiftly, to spend up to $2,000 to satisfy a guest, to decide the business
terms of a sale, to be involved in setting plans for their particular work area, and to
speak with anyone in the company regarding any problem. The Ritz-Carlton has
improved the turnover of the workforce steadily to well below industry average.
Guide Questions:
1. Cite at least five practices of Ritz-Carlton Hotel that you think makes them
stand out.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
2. Give two examples wherein an employee may spend $2,000 just to please or
satisfy a guest of Ritz-Carlton.
______________________________________________________________
______________________________________________________________

3. What do you think would be the limitations for an employee of Ritz-Carlton to

decide the business terms of a sale and speak with anyone in the company
regarding any work-related problem they are confronted with?
______________________________________________________________
______________________________________________________________
______________________________________________________________

Case 2
Getting to Know Herb Kelleher of Southwest Airlines (Katrina Booker, “Can
Anyone Replace Herb? Fortune April 17, 2000)
The skies are not always friendly, but they do seem to smile for one airline.
Southwest Airlines has continued flying high while other airlines have struggled to
stay aloft. It’s the only U.S. airline that has remained profitable every year since
1973, and it now ranks as the fourth largest in the nation. Analysis credit much of this
achievement to the engaging management style of the company’s unconventional
chairman, Herb Kelleher who was named 1999 CEO of the Year by Chief Executive
magazine. Under his coaching, Southwest has been consistent winner of the service
triple crown – highest customer satisfaction, most on-time flights, and baggage
handling. Kelleher’s employees are far more productive than employees of
competing airlines. Per worker Southwest flies more planes and serves more
passengers than any other airline. Southwest also pitch in wherever needed. Pilots
might work the boarding gate if things back up; ticket agents might haul luggage to
get the plane out on time. When fuel prices accelerated during the Gulf War,
employees even began a voluntary payroll deduction program to defray costs.
Southwest workers (approximately 90 percent of whom are union members) are paid
competitively.
How does Kelleher do it? For starters, he actively avoids hierarchy. He has
managers spend time in the trenches once a month, he de-emphasizes the
importance of rules relative to good judgment, and he promotes the company as a
“family”. The result is the promotion of creativity and employee which ultimately leads
to greater productivity and job satisfaction.
Many analysts believe that the corporate culture is so finely ingrained at
Southwest that the airline will continue its success. According to Kelleher, that culture
“is the hardest thing for competitors to imitate. You can get an airplane. You can get
ticket-counter space, you can get baggage conveyors. But it is our esprit de corps –
the culture, the spirit – that is truly our most valuable competitive asset.”

Guide Questions
1. Imagine employees of Southwest Airlines volunteered a payroll deduction
during the height Gulf War just to defray the cost of fuel. For instance, you are
the manager of a hotel and you are having problems with your payroll due to
lack of clients checking in due to novel corona virus scare. How would you
motivate your employees for them to concede for a payroll deduction
scheme? What mechanisms should you make so that your employees will
agree to such temporary arrangement?
______________________________________________________________
______________________________________________________________

2. What are the pros and cons of treating employees as a “family” in an

organization?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
3. If you happen to be the manager of a hotel, how would you install that kind of
esprit de corps in your organization?
______________________________________________________________
______________________________________________________________

Case 3
Getting to Know Jack Greenberg of McDonald’s (Marilyn Much, “McDonald’s
Ventures from Arches, Asks, “You Want Salsa with That?” Investor’s business
Daily, May 10, 2000)
 Jack M. Greenberg was an accountant at Ernst & young before he came to
McDonald’s to be its chief executive. His accounting background prepared him for
the task of analyzing the McDonald’s product mix ( a combination of hamburgers,
chicken sandwiches, salad, desserts, and the like). He found that some stores growth
was only 1 percent versus 4 percent average of competitors such as Burger King and
Wendy’s. he determined through consumer research that the McDonald’s menu was
stale. The last successful new product was Chicken McNuggets in 1983. Other new
products, such as the McDLT, the McLean, and the Arch Deluxe, had failed to win
customer acceptance. McDonald’s had to focus on new product development. That
process begins with listening to consumers to determine exactly what they want.
What Greenberg decided, based on discussions with McDonald’s customers,
was to change from the old way McDonald’s prepared food to a more modern
custom-designed format called “Made for You.” Instead of preparing a sandwich
ahead of time, wrapping it, and placing it under a heat lamp to stay warm,
McDonald’s stores would put in machinery that would toast buns in 11 seconds and
custom-make sandwiches in just one minute.
A tossed-salad line, Mc Salad shakers, and a fruit-and-yogurt parfaits were
also tested. Greenberg always has his eyes on additional lines like pizza, cold
sandwiches, and more. The latest offering is the new tastes menu with 40 items. He
has to keep ahead of the competitors or risk losing market share. Already Burger
King is planning to install equipment that will heat a bun in eight seconds – a three-
second difference from McDonald’s that will add up over time.
One way McDonald’s hopes to stay ahead of the competition and keep
responding to consumer interests is by opening non-hamburger eateries to appeal to
new markets. The new outlets have names like Chipotle Mexican Grill, Donato’s
Pizza, and Aroma Café. Greenberg says that it’s a good idea to looks outside the
arches for new concepts since the company is close to saturating the U.S. market
with its burger restaurants.

Guide Questions
1. Explain briefly the function of consumer research. When is the appropriate
time to conduct consumer research? Could new product development be part
of consumer research? Defend your answer.
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
 2. What are the advantages and disadvantages of opening other line of
business aside from your main line of business?
______________________________________________________________
______________________________________________________________
______________________________________________________________

Case 4
John F. Welch of General Electric (“Charging Ahead: To Keep GE’s Profits
Rising, Welch Pushes Quality Control Plan,” The Wall Street Journal, January
22, 1997)
John F. Welch, retiring chairman of General Electric Co., describes how he
drives his quality program into GE’s far-flung plants: “You can’t behave in a calm,
rational manner. You’ve got to be out there on the lunatic fringe. You have to tell your
people that quality is critical to survival, you have to demand everybody gets trained,
you have to cheerlead, you have to have incentive bonuses, you have to say, “We
must do this.”
GE’s quality program was borrowed from Motorola, Inc. Six Sigma quality is
disciplined method of eliminating virtually all defects from every one of the company’s
products, processes, and transactions. GE has spent over half a billion dollars
training most of its professional workforce in the concepts. Virtually every
professional in the company is now a “Green Belt,” which requires three weeks of
training and a complete Six Stigma project. To get the coveted “black Belt” requires a
minimum four months of training in statistical and other quality-enhancing measures.
The black belts then roam Ge plants full-time to set up quality improvements projects.
The company has trained over 10,000 black belts. In all, GE has invested hundreds
of millions of dollars in training, in specific projects and in computer systems to
analyze and run the quality control program.
The program is producing a variety of benefits, Mr. Welch says, “You
customers are happy with you, you are not firefighting, you are not running a reactive
mode.”
Questions
1. What characteristics or attributes of a leader does John F. Welch tries to
emphasize?
___________________________________________________________
___________________________________________________________
___________________________________________________________
2. What is Six Sigma quality?
 ___________________________________________________________
___________________________________________________________
___________________________________________________________
3. Cite at least 3 quality improvements projects would you recommend to a
hotel manager to improve its services?
___________________________________________________________
___________________________________________________________
___________________________________________________________

Assignment
1. As a manager of a hotel, how will you resolve the following incidents?
Expound your answer.
a. An anonymous caller informed you through your cell phone that a bomb
will explode in 30 minutes in one of the rooms in your hotel.
b. One of your guests took another guest in your hotel as hostage and
threatened to kill the person if his demands are not met.
c. Some of your guests complained severe abdominal pains, vomiting and
nausea and were rushed to the hospital hours after they dined in your
hotel restaurant.
d. You noticed that a celebrity guest is wearing Google glass and were
storing images of your hotel.
e. A guest who travelled to Wuhan City in the Hubie Province of china wants
to check-in in your hotel upon arrival from Macao. While about to enter the
door of your hotel, the guest was coughing, sneezing and trembling and
you immediately suspected that he could have been possibly infected with
the COVID 19 virus.
f. A guest complained to the hotel Manager that he could hardly sleep at
night, hence, he kept on walking around the lobby.
g. An earthquake with a magnitude 6.5 was felt in your hotel building. A
series of aftershocks were then recorded that prompted your guests to
panic and some were already restless due to fear that the building might
collapse.
h. Pres. Duterte announced that he wanted to close down Boracay for six
months for rehabilitation. As a Manager, you are having problems since
your hotel in Boracay had already confirmed online bookings and received
payments from guests abroad a month prior to the order and were
 scheduled to arrive anytime during the week and will certainly be affected
with the directive.
i. A former employee of your hotel barged in at past midnight and then went
to the hotel casino where he fired several gunshots to your guests.

j. A wife claimed that her husband checked-in at your hotel with his
mistress. She went to file a complaint at your office and insisted that she
be allowed to confront her husband in his hotel room.
2. Who is W. Edwards Deming?

Philosophical Elements
1. Customer-driven quality or customer focus
Organizations depend on their customers and therefore should understand
current and future customer needs, should meet customer requirements, and
strive to exceed customer expectations.

2. Leadership
Leaders do the right thing. Managers do the things right. Leaders establish
unity of purpose and direction of the organization. Leaders deal with change.
Managers deal with complexity. Leaders should create and maintain the
internal environment in which people can become fully involved in achieving
the organization’s objects.
3. Continuous improvement
Continua; improvement of the organizations overall performance should be a
permanent objective of the organization.
4. Employee participation and development
5. Quick response
6. Design quality and prevention
7. Management by fact
8. Partnership development
9. Corporate responsibility and citizenship
Generic tools
1. Statistical Process control (SPC) Tools
a. Process flowcharts
b. Check sheets
c. Pareto analysis and histogram
 d. Cause and effect (or fishbone) diagrams
e. Run charts
f. Scatter diagrams
g. Control charts
2. Quality function deployment
Tool of the Quality Control Department
1. Statistical Quality control (SQC) Methods
a. Sampling plans
b. Process capability
c. Taguchi methods
Total quality management is the process of managing the entire organization so
that it excels on all dimensions of products and services that are important to the
customer.

Quality can also be defined from six different perspectives:

1. Transcendent (Judgmental) Perspective
One common notion of quality, often used by consumers, is equated
to superiority or excellence. In 1931, Walter Shewhart, who was one
of the pioneers of quality control, first defined quality as the goodness
of a product or service. This view is referred to as the transcendent
(transcend, “to rise above or to extend notably beyond ordinary
limits”), or judgmental perspective. In this sense, quality is “Both
absolute and universally recognizable, a mark of uncompromising
standards and high achievement.” From this perspective, or to extend
notably beyond ordinary limits”), or judgmental perspective. In this
sense, quality is “Both absolute and universally recognizable, a mark
of uncompromising standards and high achievement.” From this
perspective, quality cannot be precisely defined – you just know it
when you see it. Product excellence is also often associated with
higher prices but we must take note that “high quality is not
necessarily correlated with price.”

“You must have heard of 7-star hotels that demo\\note opulence and
deliver outstanding experiences in hospitality,” wrote Ritika Jean. Take
for instance, the Emirates Palace, Abu Dhabi, UAE. With its private
beach, the hotel defines Arabian fantasy. According to Juan, many of
 the suites, furnished in gold and marble, are luxurious enough to he
favored by Emirati royalty and dignitaries.
The second in the list is Burj Al Arab, Dubai. This landmark structure
stand on a man-made island, 280 meters away from Jumeriah Beach
and is designed to look like a sail. It contains 202 suites, the most
expensive of which the royal two-bedroom suite, which costs nearly
$27,000 per night and comes with an uber sleep technology bed,
elevator, cinema room, library, discreet check-in, butler service, Rolls
Royce chauffeurs, and views of the Arabian Gulf. Repeatedly voted as
the world’s most luxurious hotel, each suite comes with 24-carat gold
iPads, Egyptian linens, designer toiletries and whirlpool baths.

Others in the list includes Town House Galleria, Milan, Laucala Island,
Fiji, The Mark Hotel, New York City with its priciest suite at $86,000 a
night, Hotel Plaza Athenee, Paris, Hotel President Wilson, Geneva,
Rancho Valencia Resort and Spa, California, The Westin Excelsior,
Rome, The Plaza, New York City, The Bouders, Arizona, CuisinArt
Golf Resort and Spa, Anguilla and Marquis Los Cabos, Los Cabos.

2. Product Perspective
Quality is related to the quantity of some product attribute. This
assessment implies that larger numbers of product attributes are
equivalent to higher quality, so designers often try to incorporate more
features into products, whether the customers want them or not.
3. User Perspective
Individuals have different wants and needs and, hence, different
expectations of product. This leads to a user-based definition of
quality - fitness for intended use, or how well the product
performs its intended function.
Think of the deaths in Laguna and Quezon in December 2019
allegedly caused by Lambanog or coconut wine and milk tea
poisoning in Sampaloc, Manila
4. Value Perspective
Quality is based on value, that is, the relationship of product
benefits to price. Consumers no longer buy solely on the basis of
price. They compare the quality of the total package of goods and
 services that a business offers – sometimes called consumer benefit
package – with price and competitive offerings. The customer benefit
package includes the physical product and its quality dimensions like
presale support, such as ease of ordering; rapid, on-time, and
accurate delivery; and post-sale support, such as field service,
warranties, and technical support.
5. Manufacturing Perspective
Simply put, it suggests conformance of specifications.
Specifications are targets and tolerances determined by designers of
goods and services. Targets, are called nominal specifications, are the
ideal values of which production is to strive. Tolerances or allowable
variation are necessary because it is impossible to meet targets all of
the time. In manufacturing, for example, a part dimension might be
specified as “0.236 plus or minus 0.003 cm.” these measurements
would mean that the target, or ideal value, is 0.236 centimeters, and
that the allowable variation is 0.003 centimeters from the target. Thus,
any dimension in the range 0.233 to 0.239 centimeters would conform
to specifications. Likewise, in services, “on-time arrival” for an airplane
is typically defined as being within 15 minutes of the scheduled arrival
time. The target I the scheduled time of arrival, and the tolerance is
specified to be 15 minutes.

6. Customer Perspective
The American National Standards Institute (ANSI) and the American
Society for Quality (ASQ) standardized official definition of quality
terminology in 1978. They defined quality as the totality of features
and characteristics of a product or service that bears on its
ability to satisfy given needs. By the end of the 1980s, many
organizations had begun using simpler, yet powerful, customer-based
definition of quality that remains popular today: meeting or exceeding
customer expectations.

Case 5 – Bright Ideas

Ray Kroc liked Mac and Dick McDonald’s stand in San Bernardino, California
that sold es, and milkshakes – so much that he decided to buy the rights and then
franchise them, creating a huge global company and a vast market for fast food.
 The two McDonald brothers, Dick and Maurice (known by all as Mac), opened
up a restaurant in San Bernardino, California in 1940. It was nothing unusual – a
barbeque and carhop place. as they became more experienced, the McDonald’s
realized that their customers wanted food in a hurry. They didn’t want to be waited
on, necessarily. They just wanted their food quickly. So in December 1948, Dick and
Mac moved into fast food. Their new restaurant was topped by a large neon sign
proclaiming that Speedee the Chef worked there.
It wasn’t a particularly sophisticated sort of place. Dick came up with the idea
of a couple of arches to represent the letter M and put tiles (red and white) on the
walls so that they could be cleaned easily. Customers could drive in and place their
orders at the first window. There weren’t many choices, but by the time they’d driven
to the next window, their order was ready. The customers loved it. It was cheap and
easy; a hamburger costs 15 cents, a malt drink 20 cents, and a pack of fries 10
cents.
The customers flocked in and the McDonald brothers expended their empire.
Eventually they had eight restaurants, all following the same formula. (Only one still
stands, in East Los Angeles.) Their success came to the attention of Ray Croc (1902-
1984), a kitchen equipment salesman who sold marketing rights to milkshake mixers.
“I’ve never waited in line for a hamburger in my whole life,” said Kroc when he visited
the McDonald’s restaurant. “Some way I’ve got to become involved in this.”
In 1954 Kroc bought the American franchise for McDonald’s for $2.7 million,
and in 1961 he bought the world rights. The rest is history. As the McDonald brothers
stepped back into branding mythology, Kroc took over the world.
“It is hard to believe McDonald’s was once a locally owned single site facility
when now it can be found anywhere in the world,” says Ann Marucheck of the
University of North Carolina’s Kenan-Flagler Business School.
Kroc brought dynamism to the chain, combined with his own distinct business
philosophy: “Persistence and determination alone are omnipotent.” “If a corporation
has two executives who think alike, one is unnecessary.” The 100 th McDonald’s
opened in 1959; the first outside the United States in 1967: and, in 1990, bastion fell
when McDonald’s opened in Moscow. Russians couldn’t buy anything in their
supermarkets, but could admire the efficiency of capitalism at work as the entire
foreign community in Moscow ate at McDonald’s.
The ninth restaurant in the McDonald’s chain, and Kroc’s first, was in Des
Plaines, Illinois: McDonald’s headquarters is located nearby at Oak Brook. Todays,
McDonald’s has 24,500 restaurants in 114 countries around the world. A staggering
38 million people eat at a McDonald’s restaurant every single day of the week.
 The formula is astonishingly universal ( international sales account for 60
percent of McDonald’s earnings): limited choice, quick service, and clean
restaurants. While McDonalds successful around the world, there is nothing
particularly original or innovative about what it does. You don’t have to be one of the
Le Roux brothers to save up a tasty cheeseburger.
Instead, McDonald’s does the simple things well. A McDonald’s restaurant in
Nairobi, Kenya looks much the same as in Warsaw, Poland or Battle Creek,
Michigan. (Even so, some allowances are made for local taste, such as lamb burgers
in India and Kosher burgers in Israel.) it is, McDonald’s proclaims, the “most
successful food service organization in the world.”
McDonald’s still possesses the all-conquering self-esteem of a global
powerhouse. Its publicity notes with some regret that, “On any day, even as the
market leader, McDonald’s serves less than one percent of the world’s population.

The Greatest Lesson

Insist on consistent quality. Henry Ford mastered mass production of products;

McDonald’s has mastered mass production of service. It has done through strict
adherence to simple beliefs. Quality, cleanliness, and uniformity form the basis of the
McDonald’s brand. Kroc was obsessive about these issues. “It requires a certain kind
of mind to see beauty in a hamburger bun,” he reflected. He was right; no one else
manages to do simple things as well. In effect, the very uniformity of the brank is the
crucial differentiating factor.

Maintain control. Kroc created a culture based on control rather than creativity.
Franchise holders were not expected to think of things by themselves. They were told
what to deliver. In many ways the problems now faced by McDonald’s were tackled
by many other brands some years ago. McDonald’s, for example, is heavily
centralized. Its cade of middle and senior manager tends to have come up through
the ranks. Different voices have been notable in their absence. It has also generally
ignored segmenting its markets. “The old model of just telling people what to do was
exactly the right model for a long, long time,” says currents CEO, Jack Greenberg.
“Now we need a different approach to managing that pays more attention to different
market segments.”
The other vital missing ingredient is innovation. McDonald’s have proved an
unimaginative and generally unsuccessful innovator. ”We have been taking much too
long to develop an idea and get it to the market, then too long to decide whether
much too long to do it or not,” admits Greenberg. While Greenberg accepts that it
must change, whether such a huge organization with such a strong culture can to so
remains open to question.
See the opportunity. Kroc’s genius was seeing the opportunity, in deciding to seize
it, and then in deciding to franchise the concept around the world. After all, the
McDonald brothers had the concept, but had it taken nowhere.

Assignment
1. Write a 1-page reaction for Case 5- Bright Ideas
2. What are the implications of the following events to any of the 6 perspectives
of quality?
a) The Supersonic Jet Concorde or the Iridium satellite phone developed by
Motorola
b) The image that Shangri-La hotel in Ayala, Makati wants to project
c) Your observations about some of the restaurants at your home town or
City
d) Baking a cake or preparing the frosting of a cake or cupcake
3. Read the following internet articles and make a 1-page reaction paper
(Choose 3 from the 8 articles):
a) “5 Wow Customer Service Stories from 5-Star Hotels: Examples Any
Business Can Learn from” by Micah Hazards in Casinos both by Andrew
Winston
b) “What Happens if you are Injured in an Airbnb Rental” and “Don’t Gamble
with your Health: Injury Hazards in Casinos by both Andrew Winston
c) “How to Train Your Hotel to Attend to Guests?” by Riddhi Maniar
d) “Hotels Reacts as Coronavirus Spreads” by Gregg Wallis
e) “The Case for IMF Chief Dominique Strauss-Kahn Being Setup” by Robert
Wenzel
f) “Hotels Guests’ Most Common Complaints & how to Prevent It” by
Victoria Lim
g) “Common Problems for Hotel Guests & What to Do” by Michael Hodson
h) “How to Complain Effectively at a Hotel” by Charlyn Keating
 Chapter 5: The Concept of Productivity

“The Quality of a person’s life is in direct proportion to their commitment to

excellence, regardless to their chosen field on endeavor.” Lombardi

Introduction

Quality management is the act of overseeing all activities and tasks that must
be accomplished to maintain a desired level of excellence. This includes the
determination of a quality policy, creating and implementing quality planning and
assurance, and quality control and quality improvement. Which aims to produce and
provide quality service and product.

Learning Outcomes:
At the end of this module the student will be able to:

 Define the terms, productivity and competitive advantage.

  Compute for partial productivities and total productivity
 Draw a process chart to illustrate the flow of doing housekeeping work in a
hotel room.
.
Lesson 1: Productivity is the measure of efficiency
As reported on October 1887 by William Cooper Procter, Grandson of
the founder of Procter & Gamble, he said to his employees: “The first job we
have is to turn out quality merchandise that consumers will buy and keep on
buying. If we produce it efficiently and economically, we will earn a profit, in
which you will share.” This statement of Procter underscores issues that are
important or critical to managers of manufacturing and service organizations
which are productivity, cost and quality.
1. Productivity is the measure of efficiency which in turn is the amount of
output achieved per unit of input. Productivity may be expressed as
partial measures, multifactor measures or total measures.

Partial measure = output / labor or

= output / capital or

= output / materials or

= output / energy

Multifactor measure= output / (labor + capital + energy) or

= output / (labor + capital + materials)

Total measure = output / inputs or

= (Goods and services produced) / (all resources

used)

Productivity is also called a relative measure. Productivity comparisons can be made

in two ways.
First, a company can compare itself with similar operations within its industry or it can
use industry standards when such data are available.
Another approach is to measure productivity over time within the same operation.

2. The cost of operations.

3. The quality of the goods and services that create satisfaction.

“Quality is job one!” is rallying point of Ford Motor corporation. “The
customer is our top priority” is slogan that would be claimed by the
majority of businesses.

Of these three determinants of profitability, the most significant factor is

determining the long-run success or failure of any organization is quality. This was
affirmed by the conference Board composed of more than 700 CEOs and executives
around the world that “quality is uniquely proportioned to accelerate organizational
growth through better execution and alignment and it also provides the voice of the
customer critical to developing innovative with a competitive edge. Competitive
advantage denotes a firm’s ability to achieve market superiority.

Lesson 2: Operations competitive Dimensions (Chase, Aquilano, Jacobs, 2001)

The brand of the product or service with a reputation for high-quality
generates satisfied and loyal customers that then results with their continued
patronage and favorable endorsement through word-of-mouth advertisement thereby
at times creating new customers. On the other side of spectrum, the consequences
of failing to address quality can be devastating. Consider the following:

In 2009, Toyota motor Company which overtook General Motors the year
before, had a series of “unintended acceleration” incidents, including one
“involving a Lexus ES 350 which led to $2 billion in recalls to replace floor
mats and gas pedal assemblies. Other defects involving antilock braking
systems, the wire cables holding spare tires, and vehicle software were soon
uncovered, resulting in additional recalls and even suspended sales of eight
popular models.”
 Undoubtedly, the most productive and successful companies focus of
increasing a market by staying ahead of the customer and coming up with brand-new
product innovations that will inspire his imagination, rather than by battling for market
share in an already crowded arena.
Peter Drucker, the management expert who followed Deming to Japan in the
1950s said: “Japanese managers do not start out with a desired profit, that is, with a
financial objective in mind. Rather they start out with business objectives and
especially market objectives… the purpose of a business is to create a customer and
to satisfy a customer.”
A product should cater to 3 factors – business, technology and functionality.

The major competitive dimensions that form the competitive position of a

company include the following:
1. Cost – “Make It Cheap” – To successfully compete in this niche, a firm must
be the low-cost producer, but even this does not always guarantee profitability
and success. Competition in this segment is fierce - and so is the failure rate.
After all, there can be only one low-cost producer, which is usually
establishes the selling price in the market.
2. Product quality and reliability – “Make It Good” - The goal of the product
quality s to focus on the requirements of the customer. Overdesigned
products with too much quality will be viewed as prohibitively expensive.
Underdesigned products will lose customers to products that cost a little more
but are perceived by the customers as offering greater value.
3. Delivery speed – “Make It Fast”, Making Hamburgers at McDonald’s and
Wendy’s
4. Delivery reliability – “Deliver It When Promised”
5. Coping with changes in Demand – “change Its Volume” - A company’s
ability to respond to increases and decreases in demand is an important
factor in its ability to complete.

A good example of this is the demand for N95 masks and alcohol at the
height of NCoVi outbreak.

6. Flexibility and the New Product Introduction Speed -_ “Change It” –

Flexibility, from a strategic perspective refers to the ability of a company to
offer a wide variety of products to its customers

McDonald’s (Old Process)

 Raw
material

Cook

Customer places
Assemble
order

Finished
Goods
Deliver

McDonald’s (New Process)

Raw
material

Cook Customer places

order

Work –in-
Process
Assemble Deliver
Wendy’s

Customer
places order

Raw
material
Cook Assemble Deliver

Chili

Chapter Exercise
1. A furniture manufacturing company has provided the following data.
Compare the labor, raw materials and supplies, and total productivity of
1999 and 2000.
1999 2000
Output: Sales value of production Php 22,000 Php 35,000
Input: Labor 10,000 15,000
Raw materials and supplies 8,000 12,500
Capital equipment depreciation 700 1,200
Other 2,200 4,800
Requirement: Compute for a) Partial productivities for labor and raw materials and
supplies for 1999 and 2000 and b) total productivity
 1.Can a restaurant be fast, dependable, and flexible, produce high-quality
products, and still provide poor service from a customer’s perspective?
2.In terms of product development and value package (also called total product
offer which consists of everything that consumers evaluate when deciding
whether to buy something), what can you sat about McDonald’s hamburgers
using the following dimensions:
1. Price
2. Package
3. Store surroundings (atmospheric)
4. Image created by advertising
5. Guarantee
6. Reputation of the producer
7. Brand name and brand equity (brand equity is the combination of factors
such as awareness, loyalty, perceived quality, images, and emotion
people associate with a given brand name)
8. Service
9. Buyer’s past experience
10. Speed of delivery
11. Accessibility of marketer (e.g. on the internet or through their hotline
numbers
12. Product differentiation (the creation of real or perceived product
differences
3. Explain the difference between a) McDonald’s old and new process; and b) that of
Wendy’s
Chapter 6: Quality in Service Organizations

“If you can’t describe what you’re doing as a process, you don’t know what you’re
doing,” Deming.

Introduction

Quality service is created and provided through deferent skill set of individuals
that form the organizational structure of an organization. This chapter provide
insights of quality service in organization by presenting the different contribution of
quality gurus.

Learning Outcomes:
At the end of this module the student will be able to:
  Describe quality dimensions of goods and services.
 Explain the Kano model of customer requirements.
 Cite the contribution of come quality gurus.

Lesson 1: Quality in Service Organizations

Service organizations include all nonmanufacturing organizations such as
hotels, restaurants, academic institutions, financial and legal services, and
transportation except such industries as agriculture, mining and construction.

Common characteristics of service organizations

1. Customer needs and performance standards are often difficult to identify and
measure, primarily because the customers define what they are, and each
customer is different everyone is an expert in services. We all think we know
what we want from a service organization and, by the process of living, we
have a good ideal of experience with the service creation process.
Services are idiosyncratic: What works well in providing one kind of service
may prove disastrous in another.

2. Service organizations typically require a higher degree of customization.

Doctors, lawyers, insurance salespeople, and food service employees must
tailor their services to individual customers.

3. The output of many service systems is intangible hence service quality can
only be assessed against customer’s subjective, nebulous expectations, and
past experiences.
Quality Dimensions of Goods and Services
David A. Garvin suggested that products have multiple dimensions of quality:
1. Performance. A product’s primary operating characteristics. Using an
automobile as an example, characteristics would include such things as
acceleration, braking distance, steering, and handling.
2. Features. The “bells and whistles” of a product. A car may have power
options, a CD player, iPod connections, satellite radio, and antilock brakes.
3. Reliability. The probability of a product’s surviving over a specified period of
time under stated conditions of use. A hot and cold shower in a hotel room for
instance.
 4. Conformance. The degree to which physical and performance characteristics
of a product match pre-established standards. The ability of a hotel building to
withstand a tremor of 7.0 earthquake since it conformed to building code and
fire safety requirements.
5. Durability. The amount of use one gets from a product before it physically
deteriorates or until replacement is preferable. Examples of this would
elevators and escalators in hotels and the long wear of upholstery fabrics,,
say in hotel beds.
6. Serviceability. The speed, courtesy, and competence of repair work. For
instance, the internet connection or the TV remote control in your room
apparently does not seem to work and you called the front desk and a hotel
staff is sent immediately to help you connect to the internet or watch TV.
7. Aesthetics. How a product looks, feels, sounds, tastes, or smells. The hotel’s
pastry shop displays cakes and confectionaries that prompts you to buy the
product.

Lesson 2: The Kano Model of Customer Requirements.

Noriaki Kano, professor emeritus of the Tokyo University of Science, suggested
segmenting customer’s requirements into three groups:
1. Dissatisfiers (“must have”). Basic requirements that customers expected in
a product or service. In a hotel’s restaurant, for instance, halal foods must be
served. In an automobile, a radio, heater, aircon, and basic safety features
are examples which are generally not stated by customers but assumed as
given. If these features are not present, the customer id dissatisfied.
2. Satisfiers (“wants”). Requirements that customers expressly say they want.
Many car buyers want for example, a navigation system. Although these
requirements are generally not expected, fulfilling them creates satisfaction.
3. Exciters/ delighters (“never thought of”). New or innovative feature that
customers do not expect or even anticipate but love once they have them.
Gathering the Voice of the Customer
1. Comment cards and formal surveys
2. Focus groups. Key questions that one might ask include: what do you like
about the product or service? What pleases or delights you? What do you
dislike? What problems have you encountered? If you had the ability, how
would you change the product or service? A focus group is a panel of
individuals (customers or non-customers) who answers questions about a
company’s products and services as well as those of competitors. This
 interview approach allows a company to carefully select the composition of
the panel and probe panel members about important issues, such has
comparing experiences with expectations, in depth..
3. Direct customer contact. Hearing issues and complaints firsthand is often
an eye-opening experience.
4. Field Intelligence.
5. Complaints
6. Internet and social media monitoring.

St. Luke’s Hospital of Kansas City customer-Contact Requirements (source:

Malcolm Baldridge National Quality Award Application Summary, 2003, Courtesy of
St. Luke’s Heath System
1. Greet patients//guests by introducing yourself, address patient/s guests by
last name, say, Mr. Brown, unless otherwise told by the patient or guest.
2. Ask sincerely, “How may I help you?”
3. Knock, request permission o enter the room, and explain what you are going
to do.
4. Complete initial assessment on all patients within eight hours.
5. Acknowledge all patients/guests request, and be accountable to follow-up.
6. Address all complaints within 24 hours or less.
7. Introduce any replacement caregiver.
8. Promote family-centered care; listen thoughtfully to all patients/guests, and
provide timely communication to the appropriate person(s) for action.
9. Respect and acknowledge diversity, culture, and values, of your patients,
their family, visitors, and your co-workers.
10. Maintain confidentiality of all information.
11. Know, or have access to, legal and regulatory requirements and standards of
care related to your specific responsibilities.
12. Thank you customers for choosing Saint Luke’s Hospital

Why many customer satisfaction efforts fail?

1. Poor measurement schemes. Just tracking the percentage of “satisfied and
very satisfied” customers on a five-point Likert scale little actionable
information. Many surveys provide biased results because few dissatisfied
customers respond, or the surveys lack adequate sample sizes or
randomization.
 2. Failure to identify appropriate quality dimensions. Many surveys address
issues the company thinks are important, now what customers think. This
error results from a lack of capturing or getting reliable information about
customer needs and expectations.
3. Failure to weight dimensions appropriately.
4. Lack of comparison with leading competitors. Quality and perception of
quality is relative. Without appropriate comparative data, competitors may be
improving much faster than an organization realizes.
5. Failure to measure potential and former customers. Without an
understanding of why non-customers do not do business with a company, or
more importantly, why customers leave, an organization risks losing market
share to competitors and may be headed for closure.
6. Confusing loyalty with satisfaction. Customer retention and loyalty provide
an indication of the organization’s future; satisfaction only relates to the
present.

Chapter Exercises 6

Assignment

1. Consider the following customer expectations for a fast-food (quick-

service) restaurant. Classify them as dissatisfies, satisfiers, or
exciters/delighters. Justify your reasoning (Adapted from Evans and
Lindsay, 2014)
a. _____ Special prices on certain days or after 7:30 in the evening
b. _____ Food is safe to eat
c. _____ Hot food is served hot
d. _____ Service is friendly
e. _____ Background music
 f. _____ Playland for children
g. _____ Restaurant is clean inside
h. _____ food is fresh
i. _____ A “one-bite” money-back guarantee
j. _____ Orders can be phoned in for pickup at a separate window

Chapter Case study 1

Rosie’s Pizzeria (Adapted from Brian Cundiff of La Rosa’s Inc. for providing the
foundation for this fictionalized case, as cited by Evans Lindsay (2014)
Rosie’s Pizzeria is a privately-held chain of pizzerias with over 50 locations in
the Midwest that offers full-service dine-in, carryout, and home delivery. Rosie’s
competes against such national chains as Pizza Hut, papa John’s, and other local
restaurants, yet holds a 45 to 50 percent share on its market area. As part of a new
strategic planning process, Rosie’s identified growth as a key to strategic goal.
Because the local market was essentially saturated, however, the executive
management team worked on strategies for growing the company for three years and
produced no tangible results. One of the reasons for the impasse was the lack of
sound, factual data. The executive management team had developed three growth
strategies, but could not agree on which one to follow because of a lack of a fact-
based foundation for the decision.
A project team was formed to tackle this issue, and was given complete
latitude to make any recommendation for an Italian/pizzeria concept based on
customer needs and expectations. The team consisted of the marketing director
(team leader), two executive vice presidents, the director of operations, two franchise
owners, an external strategic partner, and the CEO, who was the team sponsor. The
team felt it was necessary to fully understand the voice of the customer. To do this,
they ventured out into the community to ask consumers to express their needs and
expectations trough their experiences. The team completed numerous in-depth, one-
on-one interviews with consumers both inside and outside of their current market
area to provide examples of dining incidents these individuals had experienced,
seeking “the good, the bad, and the ugly.” Here are some responses from customers
of current competitors and potential competitors in other markets.
1. “So there I was, like herded cattle, standing on the hard concrete floor, cold
wind blasting my ankles every time the door opened, waiting and waiting for
our name to be called.”
2. “And then I saw a dirty ray being slopped around a dirty table!”
 3. “The Manager said, “That’s not a gnat, that’s black pepper,” so I said I know
the difference between black pepper and gnat, black pepper doesn’t have
little wings on it!”
4. “When they’re that age, going to the bathroom is a full-contact sport – they’re
reaching and grabbing at everything, and you’re trying to keep them from
touching anything because the bathroom is so dirty.”

Questions for discussion

1. What were the customers actually saying in the four responses given in this
case? Translate them into customer requirements using actionable business
language.
2. In addition to your responses to question 1, the voice of the customer process
identified the following customer requirements; food and drink at their proper
temperature, fresh food, meeting the unique needs of adult quests as well as
families, exceeding service expectations, an easy to read and understand
menu, and caring staff. Suggest how these customer requirements can be
translated into production and service delivery processes and activities.

Chapter 7: The Deming Legacy

“An tawo nga dilkalidad, may tuhay nga abilidad nga may kalidad” JDP

Introduction

A leader in total quality management is a person who inspires, by appropriate

means, sufficient competence to influence a group of individuals to become willing
followers in the achievement of organizational goals. This chapter will tackle the
legacy of Deming and other quality philosophers and their contributions.

Learning Outcomes:
At the end of this module the student will be able to:
1. Describe the importance of the Deming chain reaction.
2. Enumerate and briefly describe the Deming’s 14 points
 3. Name other quality philosophers and their contributions

Lesson 1: The Deming Chain Reaction

Improve quality

Costs decrease of less

rework, fewer mistakes,
fewer delays and snags,
and better use of time and
materials

Productivity improves

Capture the market with

better quality and lower
prices

Productivity improves

Lesson 2: Deming’s 14 Points Provide jobs and more

jobs
1. Create a vision and demonstrate commitment
An organization must define its value, mission and vision of the future to
provide long-term direction for its management and employees. As Deming
pointed out, “quality begins with the intent, which is fixed by management.”

Company philosophy often called the company creed usually accompanies

or appear within the mission statement. It reflects or specifies the basic
beliefs, values, aspirations, and philosophical priorities to which strategic
decision makers are committed in managing the company.

Vision statement is developed to express the aspirations of the

executive leadership.
A mission statement expresses an answer to the question “What
business are we in?”

A vision statement I often a single sentence, designed to be memorable:

Federal Express: “Our vision is to change the way we all connect other in the
Mew Network Economy.”

Lexmark: “Customers for Life.”

Johnson & Johnson:

“We believe our first responsibility is to the doctors, nurses and patients, to
mothers and father and all others who use our products and services. In
meeting their needs everything we do must be of high quality. We must
constantly strive to reduce our costs in order to maintain reasonable prices.
Customers’ orders must be serviced promptly and accurately. Our suppliers
and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us
throughout the world everyone must be considered as an individual. We must
respect their dignity and recognize their merit. They must have a sense of
security in their jobs. Compensation must feel free to make suggestions and
complaints. There must be equal opportunity for employment, development
and advancement for those qualified. We must provide competent
management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the
world community as well. We must be good citizens – support good works
and charities and bear our fair share taxes. We must encourage civic
improvements and better health and education. We must maintain in good
order the property we are privileged to use, protecting the environment and
natural resources.

Our final responsibility is to our stockholders. Business must make a sound

profit. We must experiment with new ideas. Research must be carried on,
innovative programs developed and mistakes paid for. New equipment must
be purchased, new facilities provided and new products launched. Reserves
must be created to provide for adverse times. When we operate according to
these principles, the stockholders should realize a fair return.

Microsoft: “A computer on every desk, and in every home, running on

Microsoft software.”

Disneyland: “Bally shoes set you apart. They are the perfect shoe to
complement your lifestyle. Bally shoes project an image European style and
elegance that ensures one is not just dressed, but well-dressed.”

Principles on Nissan Motor Manufacturing (UK) Ltd.

People Principles
(All Other Objectives Can Only be Achieved by People)
Selection Hire the highest caliber people; look for technical capabilities
and emphasize attitude.
Responsibility Maximize the responsibility; staff by devolving decision making

Teamwork Recognize and encourage individual contributions, with

everyone working toward the same objectives.
Flexibility Expand the role of the individual: multiskilled, no job
description, generic job titles
Kaizen Continuously seek 100.1 percent improvements; give
“ownership of change.”
Communications “every day, face to face.”
Training Establish individual “continuous development programs
Single status Treat everyone as a “first class” citizen; eliminate all illogical
differences
Trade unionism Establish single union agreement emphasizing the common
objective for a successful enterprise
Key corporate Principles
Quality Building profitability the highest quality car sold in Europe
Customer Achieve target of No. 1 customer satisfaction in Europe
Volume Always achieve required volume
New Products Deliver on time, at required quality, within cost
Suppliers Establish long-term relationship with single-source suppliers;
aim for zero defects and just-in-time delivery
Production Use “most appropriate” technology; develop predictable “best
method” of doing job: build in quality
 Engineering Design “quality” and “ease of working” into the product and
facilities; establish “simultaneous engineering” to reduce
development time

2. Learn new philosophy

To survive in today’s competitive environment, companies must take a
customer-driven approach to quality. We are in a new economic age
3. Understand Inspection
Deming encouraged workers to take responsibility for their work,
rather than leave the problems for someone else down the production line. He
advocated more in-process inspection and the use of statistical tools that
would help to eliminate post-production inspection. This, inspection should be
used as an information-gathering tool for improvement, not as a means of
“assuring” quality. Deming succinctly said, “Quality comes not from inspection
but from improvement of the production process.”
4. Stop making decisions purely on the basis of cost
Deming recognized that the direct costs associated with poor quality
materials that arise during production or during warranty periods, as well as
the loss of customer goodwill, can far exceed the cost “savings” perceived by
purchasing. Deming also urged businesses to establish long-term
relationships with fewer suppliers leading to loyalty and opportunities for
mutual improvement. Constantly changing suppliers solely on the basis of
price increases the variation in the material supplied to production, because
each suppliers process is different. In contrast, a reduced supply base
decreases the variation coming in the process, thus reducing scrap, rework,
and the need for adjustment to accommodate this variation. Also, a long-term
relationship strengthens the supplier-customer bond, allows the supplier to
produce greater quantity, improves communication with the customer, and
therefore enhances opportunities for process improvement. While Deming
acknowledged that it is not always practical to use a single supplier, he insists
that the company work closely with suppliers in order to convey their needs
effectively and help the vendor improve the quality of goods while reducing
overall cost to the buyer. Today’s emphasis on supply chain management
(SCM) aim to minimize total supply chain costs and develop stronger
partnership with suppliers.
5. Improve constantly and forever
Improved design of goods and services from understanding customer
needs and continual market surveys and other sources of feedback, and from
understanding the manufacturing services and delivery process. Continuous
improvement is recognized as a necessary means for survival in a highly
competitive and global business environment.

The Deming Cycle which is also widely known as the PDCA or PDSA
cycle, for “plan, do, check or study, act and analyze,” works something
like this:
a. Plan the product with the help of consumer research. And design it.
b. Make the product and analyze it.
c. Market the product.
d. Test how the quality, price and features of the item are received by
consumers, both those who buy the product and those who choose not to
buy it.

Detailed Steps in the Deming Cycle Plan:

1. Define the process: its start, end, and what it does.
2. Describe the process: list the key tasks performed and sequence of steps,
people involved, equipment used, environmental conditions, word
methods, and materials used.
3. Describe the players: external and internal customers and suppliers, and
process operators.
4. Define customer expectation: what the customer wants, when, and where,
for both external and internal customers.
5. Determine what historical data are available on process performance, or
what data need to be collected to better understand the process.
6. Described the perceived problems associated with the process; for
instance, failure to meet customer expectations, excessive variation, long
cycle times, and so on.
7. Identify the primary causes of the problems and their impacts on process
performance.
8. Develop potential changes or solutions to the process, and evaluate how
these changes or solutions will address the primary causes.
9. Select the most promising solution(s).
 Do
1. Conduct a pilot study or experiment to test the impact of the potential
solution(s).
2. Identify measures to understand how many changes or solutions are
successful in addressing the perceived problems.
3.
Study
1. Examine the results of the pilot study or experiment
2. Determine whether process performance has improved.
3. Identify further experimentation that may be necessary.

Act
1. Select the best change or solution.
2. Develop an implementation plan: what needs to be done, who should be
involved and when the plan should be accomplished.
3. Standardize the solution, for example, by writing new standard operating
procedures.
4. Establish a process to monitor and control process performance.

Incorporating the Deming Cycle in a Process Improvement Model

(From Bethesda Hospital, USA)

1
Start

PLAN
Review the
current situation

Describe the
DO
process

Explore cause
theories
CHECK

Collect and
analyze data
 “If you can’t describe what you’re doing as a process, you don’t know what
you’re doing,” observed Deming.

“Continuous improvement is not about the things you do well – that’s work.
Continuous improvement is about removing the things that get in the way you work.
The headaches, the things that slow you down, that’s what continuous improvement
is all about,” adds Bruce Hamilton.

Lesson 3 : Custom Improvement Methodologies

Creativity is seeing things in new novel ways. In the Toyota production

system, a key concept is soikufu – creative thinking or inventive ideas which mean
capitalizing on worker suggestions.

A creative problem-solving (CPS) concepts pioneered by Alex Osborn and

refined by Sidney Pames consists of the following steps:
1. Understanding the “mess”
2. Finding facts
3. Identifying specific problems
4. Generating ideas
5. Developing solutions
6. Implementing solutions

Other custom improvement methodologies include:

1. FADE – Focus, analyze, develop and execute. This was used by some
hospitals and the U.S. Coast Guard
2. DRIVE – Define the problem, Recognize the cause, Identify the solution,
Verify the actions, and Evaluate the results. This was used by Park Place
Lexus, the first automobile dealership to receive the Baldridge Award.
3. DMAIC – Define, Measure, Analyze, Improve, and Control.
4. Six Sigma – a business improvement approach that seeks to find and
eliminate causes of defects and errors in manufacturing and service
processes by focusing on outputs that are critical to customer and a clear
financial return for the organization.
6. Institute training
People are an organization’s most valuable resource; they want to do
a good job and require training to do it well. Not only does training improve
quality and productivity, but it adds to worker morale, and demonstrates to
workers that the company is dedicated to investing their future. Training must
transcend such basic job skills as running a machine or following the script
when talking to customers. Training should include tools for diagnosing,
analyzing, and solving quality problems and identifying improvement
opportunities.

Training refers to learning of job-related competencies, knowledge, skills,

and behaviors as applied to da-to-day activities (Noe, 2017).

Development refers to training as well as formal education, job experience

and assessment of personality, skills and abilities that help employees
prepare for future jobs or positions (Noe, 2017).

7. Institute leadership
Uduk (2015) wrote that no firm can succeed without a good leader.
David Ogilvy viewed the leader’s primary role as “providing an environment in
which creative people can do useful work.” Max Dupree in his book on
leadership said that the function of the leader is “to give others the space to
be what they can be.” He also said that “the first responsibility of the leader is
to define reality, while the last is to say thank you.” Warren Bennis has said
that what is pivotal for the leader is “to have an overreacting vision, to set an
example of passion, curiosity, integrity, and daring for the others in the
organization.”

The job of management is leadership, not supervision. Supervision is

simply overseeing and directing work; leadership means providing guidance
to help employees perform better. “The aim of leadership should be to help
people, machines and gadgets to do a better job.”

The following leadership principles of Rudolph W. Giuliani are useful:

a. First things first
b. Prepare relentlessly
c. Everyone’ accountable, all of the time
 d. Surround yourself with great people
e. Reflect. Then decide
f. Underpromise and overdeliver
g. Develop and communicate strong beliefs
h. Be your own man
i. Loyalty: The vital virtue
j. Weddings discretionary, funerals mandatory
k. Stand to bullies
l. Study, Read, Learn independently
m. Organize around a purpose
n. Bribe only those who will stay bribed

8. Drive out fear

Fear is manifested in many ways; fear of failure, fear of the unknown,
fear of relinquishing control, and fear of change. No system can work without
the mutual respect of managers and workers. Workers are often afraid to
report quality problems because they might not meet their quotas, their
incentive pay might be reduced, or they might be blamed for problems in the
system. Managers are also afraid to cooperate with other departments,
because the other managers receive higher performance ratings and
bonuses, or because they fear takeovers or reorganizations. A Japanese
manager, well versed in quality management, isn’t interested in “good news”
because it is unlikely to reveal opportunities for improvement. He is interested
only in “bad news”, which often a gold mine of improvement possibilities.

9. Optimize the efforts of teams

Teamwork helps to break down barriers between departments,
and individuals. Barriers between functional areas occur when
managers hear they might lose power. Internal competition for raises
and performance ratings inhibits teamwork and cooperation which
leads to poor quality.

10. Eliminate exhortations

Posters, slogans, and motivational programs usually focus
solely on behavioral change. Some organizations assume that all
quality problems are due to the workforce and overlook major source of
 problems – the systems that management designs. A well-designed
system that provides workers with the right tools and environment will
lead to higher levels of trust and motivation than slogans and goals can
achieve. Such exhortations only create adversarial relationships
because the bulk of the causes of low quality and low productivity
belong to the system and thus le beyond the power of the workforce.

11. Eliminate numerical quotas and management by objective (MBO)

Many organizations manage by goals and arbitrary objectives.
Standards and quotas do not encourage improvement, particularly if
rewards or performance appraisals are tied to meeting quotas. Workers
may short-cut quality to reach to goal. Then once a goal is reached,
little incentive remains for workers to continue; they will often do no
more than they are asked to. Arbitrary goals, such as increasing sales
by 5 percent next year or decreasing costs next qu7arter by 10
percent, have no meaning without a method to achieve them. Deming
acknowledged that goals are useful, but numerical goals set for others
without incorporating a method to reach the goal generate frustration
and resentment. Management must thus understand the system and
continually try to improve it, rather than focus on short-term goals.

Management by objective is a system of goal setting and

implementation that involves a cycle of discussion, review, and
evaluation of objectives among top and middle level managers,
supervisors, and employees.

12. Remove barriers to pride in workmanship

People on the factory and even management were often treated
as, in Deming’s words, “a commodity.” Factory workers are often given
monotonous tasks; provided with interior machines, tools or materials;
told to run defective items to meet sales pressures; and report
supervisors who know little about the job – and then are blamed when
problems occur. Effective organizations need to understand the factors
that motivate and engage workers and build an environment in which
 workers take pride in what they do, understand the meaning of their
work, and are rewarded for their accomplishments.

Suzaki (1987) noted that people who take pride in their

workplace will be more likely to produce high quality products.
By practicing the principle of “a place for everything, and everything in
tis place,” a sense of standardized operations will be developed.

13. Encourage education and self-improvement

Point 6 refers to training in specific job skills; Point 13 refers to
continuing broad education for self-development. Organizations must
invest in their people at all levels to ensure success in the long term.

14. Take action

Any cultural change begins with top management and includes
everyone. As Deming has said, “Without a standard there is no logical
basis for making a decision or taking action.” Put everybody in the
company to work to accomplish the transformation. The transformation
is everyone’s job.
Lesson 3: Other Quality Philosophers
The Juran Philosophy
Joseph Juran (1904-2008) was born in Romania and came to
the United States in 1912. He joined Western electric in the 1920s as it
pioneered in the development of statistical methods for quality.
Ling Deming, Juran taught quality principles to the Japanese in
the 1950s and was a principal force in their quality reorganization. Among the
steps taken by Japanese organizations as a result of Juran’s leadership were:
1. Directing quality from the senior management level
2. Training the entire management hierarchy in quality principles
3. Striving to improve quality at a revolutionary rate
4. Reporting progress on quality goals to executive levels
5. Involving the workforce in quality
6. Revising the reward and recognition structure to include quality
Juran focus on three major quality processes, called the Quality Trilogy:

1. Quality planning – the process of preparing to meet quality goals

2. Quality control – the process of meeting goals during operations
3. Quality improvement – the process of breaking through to
unpreceded levels of performance

The Crosby Philosophy

Philipi B. Crosby (1926-2001) was corporate vice president for quality
and International Telephone and telegraph (ITT) for 14 years after working his
way up from line inspector. His first book, Quality is Free, sold about one
million copies and as responsible for bringing quality to the attention of top
corporate managers in the United States.
Crosby’s Absolutes of Quality Management include the following
points:
1. Quality means conformance to requirements, not elegance.
Quality is judged solely on whether requirements have been met;
nonconformance is the absence of quality. Once requirements are
established, then one can take measurements to determine
conformance to those requirements.
2. There is no such thing as a quality problem.
Problems originate in functional departments like accounting,
manufacturing, design, technical support, etc. the burden of
responsibility for solving them falls on these functional departments
and not in the quality department. The role of quality department
should be to measure conformance, report results, and provide
leadership and support to drive quality improvement.
3. There is no such thing as the economics of quality; doing the job right
the first time is always cheaper. Quality is free; what costs money are
all actions that involve not doing jobs right the first time.
4. The only performance standard is “Zero Defects” (ZD).
The theme of ZD is to do it right the first time. That means
concentrating on preventing defects rather than just finding and fixing
them.
People are conditioned to believed that error is inevitable; thus
they do not only accept error, they anticipate it. It does not bother us to
make a few errors in our work … to err is human.
Most human errors is caused by lack of attention rather lack of
knowledge. Lack of attention is created when we assume that error is
inevitable. If we consider this conditions carefully, and pledge
ourselves to make a constant conscious effort to do our jobs right the
first time, we will take a giant step forward eliminating the waste of
rework, scrap, and repair that increases cost and reduces individual
opportunity.
A. V. Feigenbaum
Feigenbaum is best known for coining the phrase total quality control
which is defined as “an effective system for integrating the quality
development, quality maintenance, and quality improvement efforts of the
various groups in an organization so as to enable production and service at
the most economical levels which allow full customer satisfaction.
Feigenbaum’s philosophy is summarized in his Three Steps to quality:
1. Quality leadership
A continuous management emphasis is grounded on sound planning
rather than reaction to failures. Management must maintain a constant
focus and lead the quality effort.
2. Modern quality technology
The traditional quality department cannot resolve 80 percent to 90
percent of quality problems. This task requires the integration of office
staff as well as engineers and shop-floor workers in the process who
continually evaluate and implement new techniques to satisfy customers
in the future.
3. Organizational commitment
In the workplace, it refers to the bond of that the employees
experience with their organization. Employees who are committed,
 generally feel a connection to the organization, feel that they fit in, and
feel that they understand the goals in the organization.

Kaoru Ishikawa
Dr. Ishikawa influenced the development of a participative, bottom-up view of
quality, which became the trademark of the Japanese approach to quality
management.
Some key elements of his philosophy are as follows:

1. Quality begins with education and ends with education

2. The first step in quality is to know the requirements of customers
3. The ideal state of quality control occurs when inspection is no longer
necessary
4. Remove the root cause, not the symptoms
5. Quality control is the responsibility of all workers and all divisions
6. Do not confuse the means with the objectives
7. Put quality first and set your sights on long-term profits
8. Marketing is the entrance and exit of quality
9. Top management must not show anger when facts are presented by
subordinates
10. Ninety-five percent of problems in a company can be solved with simple tools
for analysis and problem solving
11. Data without dispersion information (that is, variability) are false data

Assignment
1. Prepare a one-page vision and mission statement for your prospective
hotel that you would put up someday.
2. List five potentially vulnerable areas of a firm without a stated company
mission.
3. Assume that you want to open a coffee shop in your home town or city
List down the processes that you will undertake following the Deming
Cycle.
 Chapter 8: Principle, Practices and Techniques of Quality Management

“Quality is Free” Crosby

Introduction

The concept of Total Quality Management can be found right in its name: The
word “total” implies that all employees in the organization, from development to
production to fulfilment, are obligated to improve operations. And “management”
insinuates that this methodology should be a focused effort. Leadership should
provide funding, training, staffing, and clearly defined goals to actively manage
product and service quality on an ongoing basis.

Learning Outcomes:
At the end of this module the student will be able to:

 Differentiate the following terms: principles, practices and techniques.

 Define quality management system.
 Explain the quality management principles
 Describe the SERVEQUAL Model
 Use SERVEQUAL Instrument to asses quality service performance of any
lodging establishment in your home town or City.

Lesson 1 Principles, Practices and Techniques

Principles are the foundation of the philosophy.
Practices are activities by which the principles are implemented.
Techniques are tools and approaches that help managers and workers make the
practices effective.

Lesson 2: Quality Management System

Quality management systems (QMS) is a mechanism for managing and
continuously improving core processes to achieve maximum customer satisfaction at
the lowest overall cost to the organization.
Its objectives are:
1. Higher product conformity and less variation
2. Fewer defects, waste, rework and human error
3. Improved productivity, efficiency and effectiveness
Quality policy is a formal document that demonstrates a commitment to
achieving high quality and meeting customer expectations.
Quality manual serves as a permanent reference for implementing and
maintaining the system.
Internal audit is a maintenance tool which focus on identifying whether
documented procedures are being followed and are effective, and reporting the
issues to management for corrective action.
Internal audits generally include a review of process records, training records,
complaints, corrective actions, and previous audit reports.

Lesson 3: Quality Management Principles

1. Customer Focus
2. Leadership
3. Involvement of people
People at all levels are the essence of an organization and their full
involvement enables their abilities to be used for the organization’s benefit.
4. Process approach
A desired result is achieved more efficiently when activities and related
resources are managed as a process.
5. System approach to management
Identifying, understanding and managing interrelated processes as a system
contribute to the organization’s effectiveness and efficiency in achieving its
objectives.
6. Continual improvement
7. Factual approach to design making
Effective decisions are based on the analysis of data and information.
8. Mutually beneficial supplier relationship
An organization and its suppliers are interdependent and a mutually beneficial
relationship enhances the ability of both to create value.

Beyond Quality Management: Managing for Performance Excellence

1. The Malcolm Baldridge Award
2. European Quality Award
 3. Canadian Awards for Business Excellence
4. Australian Business Excellence Award
5. Quality Awards in China

Lesson 4 SERVQUAL Model

The service quality Model or SERQUAL Model also referred as the RATER
Model was developed and implemented by the American marketing gurus Valerie
Zeithaml, A. Parasuraman and Leonard Berry in 1988 based on expectation-
perception gap model. It is a multi-item scale developed to sees customer perception
of service quality. The scale has five constructs as follows:
1. Tangibles – physical facilities, equipment, staff appearance and attitude,
materials, manuals and information systems. The atmosphere also called
service scopes influences directly both employees and customers in
physiological, psychological, sociological, cognitive and emotional ways
(Sureschander, 2001).
2. Reliability – ability to perform service dependability, accurately and credibly.
This requires consistency in the implementation of services and respects
commitment as well as keeps promises to customers.
3. Responsiveness – willingness to help and respond to customer needs. It’s
the ability to solve the problem fast, deal with customer.
4. Assurance – ability of staff to inspire confidence and trust
5. Empathy – the extent to which caring individualized service is given.

SERVQUAL represents service quality as the discrepancy or gap between a

customer’s expectations for a service offering and the customer’s perceptions of the
service received.

Lesson 5: THE SERQUAL INSTRUMENT (Parasuraman, Zeithaml and berry,

1988)
Directions:
This survey deals with your opinions of ___________ services. Please show
the extent to which firms offering ____________ services should possess the
features described by each statement. Do this by picking one of the seven numbers
next to each statement. If you strongly agree that these firms should possess a
feature, circle the number 7. If you strongly disagree that these firms should possess
a feature, circle 1. If your feelings are not strong, circle one of the numbers in the
middle. There are no right or wrong answers – all we are interested in is a number
that best shows your expectations about firms offering ___________ services.

EXPECTED SERVICE
Dimension 7 6 5 4 3 2 1
Tangibles
1. They should have up-to-date
equipment.
2. Their physical facilities should
be visually appealing
3. Their employees should be well
dressed and appear neat
4. The appearance of the physical
facilities of these firms should
be in keeping with the type of
services provided.
Reliability
5. When these firms promise to do
something by a certain time,
they should do so.
6. When customers have
problems, these firms should be
sympathetic and reassuring.
7. These firms should dependable.
8. They shoulf provide their
services at the time they
promised to do so.
9. They should keep their records
accurately.
Responsiveness
10. They shouldn’t be expected to
tell customers exactly when
services will be performed.
11. It is not realistic for customers to
expect prompt service from
employees of these firms.
12. Their employees don’t always
have to be willing to help
customers.
13. It is okay if they are too busy to
respond to customer requests
promptly
Assurance
14. Customers should be able to
trust employees of these firms.
 15. Customers should be able to
feel safe in their transactions
with these firms employees.
16. Their employees should be
polite.
17. Their employees should get
adequate support from these
firms to do their jobs well.
Empathy
18. These firms should not be
expected to give customers
individual attention.
19. Employees of these firms
cannot be expected to give
customers personal attention.
20. It is unrealistic to expect
employees to know what the
needs of their customers are.
21. It is unrealistic to expect these
firms to have their customers’
best interest at heart.
22. They shouldn’t be expected to
have operating hours
convenient to all their
customers.
Sub-Total
GRAND TOTAL

Directions: The following set of statements relate to your feelings about XYZ. For
each statement, please show the extent to which you believe XYZ has the feature
described by the statement. Once again, circling, a 7 means that you strongly agree
that XYZ has that feature, and circling a 1 means that you strongly disagree. You
may circle any of the numbers in the middle that show how strong your feelings are.
There are no right or wrong answers – all we are interested in is a number that best
shows your perceptions about XYZ.

EXPERIENCED OR PERCEIVED SERVICE

Dimension 7 6 5 4 3 2 1
Tangibles
1. XYZ has up-to-date equipment.
2. XYZ’s physical facilities are
visually appealing.
3. XYZ’s employees are well-
dressed and appear neat.
4. The appearance of the physical
 facilities of XYZ is in keeping
with the type of services
provided.
Reliability
5. When XYZ promises to do
something by a certain time, it
does so.
6. When you have problems, XYZ
is sympathetic and reassuring.
7. XYZ is dependable.
8. XYZ provides their services at
the time they promise to do so.
9. XYZ keeps their records
accurately.
Responsiveness
10. XYZ does not tell customer
exactly when services will be
performed.
11. You do not receive prompt
service from XYZ’s employees
12. Their employees don’t always
have to be willing to help
customers.
13. It is okay if they are too busy to
respond to customer requests
promptly.
Assurance
14. Customers should be able to
trust employees of these firms.
15. Customers should be able to
feel safe in their transactions
with these firms’ employees
16. Their employees should be
polite.
17. Employees get adequate
support from XYZ to do their
jobs well.
Empathy
18. XYZ does not give you
individual attention.
19. Employees of XYZ dot not give
you personal attention.
20. Employees of XYZ do not know
what your needs are.
21. XYZ does not have your best
interest at heart.
22. XYZ does not have operating
hours convenient to all their
customers.
Sub-Total
GRAND TOTAL

Ratings on the negative statements should be reverse-scored prior to

data analysis.

If EXPECTATIONS were Exceeded, that is, ES< PS, QUALITY

SURPRISE
If EXPECTATIONS were met, that is, ES = PS, SATISFACTORY
QUALITY
If EXPECTATIONS were not met, that is, ES < PS, UNACCEPTABLE
QUALITY

Chapter Assessment

1. Classify the following customers’ requirements using the five key dimensions
of service quality – reliability, assurance, tangibles, empathy, or
responsiveness. (Adapted from Kioumars Paryani, Ali Masoudi, and Elizabeth
A. Cudney, “QFD Application in the Hospitality Industry: A Hotel Case Study,
“Quality Management Journal 17, No. 1 (2010) pp. 7-28, as cited by Evans
and Lindsay (2014).
a. _____ Hotel equipment is always functioning.
b. _____ Hotel Staff is knowledgeable to answer guest’s questions
c. _____ Hotel has comfortable beds, furniture, and fittings
d. _____ Guests feel safe as services are delivered to their rooms
e. _____ Hotel services are provided as promised
f. _____ Hotel has well-dressed staff
g. _____ Hotel staff is always willing to help guests
h. _____ Hotel Furnishings appear to be clean and shiny
i. _____ Guests receive individual attention
j. _____ Guests feel that Hotel Services are provided at a competitive and
affordable price