TQM in British Airways

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A Report Presented in Partial Fulfillment of the Requirements for the Degree of Masters of Business Administration AMERICAN INTERNATIONAL UNIVERSITY-BANGLADESH (AIUB) A Group Project Report on “TQM in British Airways” Supervised by Dr. MD. Mamun Habib Assistant Professor Faculty of Business Administration Submitted by Tanvir Hossain Tanmoy (10-94043-2) Hossain Muhammad Kamal (10-93752-2) A.N.M Tauhiduzzaman (10-94042-2) Md. Ataul Gani (10-94044-2) Nazmul Karim Talukder (10-94041-2)

Transcript of TQM in British Airways

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A Report Presented in Partial Fulfillment of the Requirements for the Degree of Masters of Business Administration

AMERICAN INTERNATIONAL UNIVERSITY-BANGLADESH (AIUB)

A Group Project Report on

“TQM in British Airways”

Supervised by

Dr. MD. Mamun Habib

Assistant Professor

Faculty of Business Administration

Submitted by

Tanvir Hossain Tanmoy (10-94043-2)

Hossain Muhammad Kamal (10-93752-2)

A.N.M Tauhiduzzaman (10-94042-2)

Md. Ataul Gani (10-94044-2)

Nazmul Karim Talukder (10-94041-2)

Major in Operations Management

Date of submission: 24th July, 2011

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LETTER OF TRANSMITTAL

24th July, 2011

Dr. Md. Mamun Habib Assistant professor,Department of Business AdministrationAmerican International University-Bangladesh, Dhaka.

Permission for submitting the Group Project Report

Dear Sir,

This is our great honor to submit the report of our Total quality Management course in

the British Airways (BA). The report titled “TQM in British Airways” under the

supervision of Dr. Md. Mamun Habib, Assistant Professor, and kind supervision. In this

endeavor, this report seeks to identify how British Airways maintains Total quality

Management in their operations.

We have gathered information as much as possible. We tried to gather secondary data.

Much of our secondary data came from different web sites and partly from Total Quality

Managemant books.

We enjoyed working on this report and hope you will find it innovative.

Thanking you

Sincerely yours,

Tanmoy, Tanvir Hossain Class Id: 10-94043-2 ………………………………..

Hossain, Muhammad KamalClass Id: 10-93752-2 ………………………………..

Tauhiduzzaman, A.N.MClass Id: 10-94042-2 ………………………………..

Gani, Md. AtaulClass Id: 10-94044-2 ………………………………..

Talukder, Nazmul KarimClass Id: 10-94041-2 ………………………………..

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ACKNOWLEDGEMENT

All praises to the Almighty Allah, who has bestowed his kindness upon us by giving us

the opportunity, time, courage, strength and patience to carry out and complete the report

properly.

Firstly, we would like to remember the contribution of our parents for their proper

guidelines. Special thanks goes to our teacher Dr. Md. Mamun Habib, Assistant

Professor, Faculty of Business administration of AIUB who was with us like shadow to

advice us how to work.

Lastly, we also thank all of our friends who helped us instantly or via phone or e-mail.

Group: A24/07/2011

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Table of Contents

PARTICULARS PAGE NO

Cover Page

Letter of Transmittal

Acknowledge

Chapter – 1: Introduction04-05

1.1 Definition of TQM 04

1.2 Scope and delimitation of the Study 05

1.3 Objectives 05

Chapter – 2: Literature Review6-11

2.1 TQM Six basic concept 6-8

2.2 Strategic Grid 8-102.3 Quality Statements 10-11

Chapter – 3: Discussion12-16

3.1 SWOT Analysis of British Airways 12

3.2 TQM Six basic Concepts 13-143.3 Strategic Grid analysis 15

3.4 Quality Statements of British Airways 16

Chapter – 4: Suggestions 17

4.0 Suggestion 17

Chapter – 5: Conclusion 18

5.0 Conclusion 18

Reference

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1.0 Introduction

1.1 Definition of Total Quality Management (TQM)

TQM is a management philosophy, a paradigm, a continuous improvement approach to

doing business through a new management model. The TQM philosophy evolved from

the continuous improvement philosophy with a focus on quality as the main dimension of

business. Under TQM, emphasizing the quality of the product or service predominates.

TQM expands beyond statistical control to embrace a wider scope of management

activities of how we manage people and organizations by focusing on the entire process,

not just simple measurements.

TQM is a comprehensive management process which:

Focuses on meeting owners’/customers’ needs by providing quality services at a cost

that provides value to the owners/customers.

Is driven by the quest for continuous improvement in all operations.

Recognizes that everyone in the organization has owners/customers who are either

internal or external.

Views an organization as an internal system with a common aim rather than as

individual departments acting to maximize their own performances.

Emphasizes teamwork and a high level of participation by all employees.

In a simple way Total Quality management means that the organizations culture is

defined by and supports the constant attainment of stakeholder’s satisfaction through an

integrated system of tools, techniques, and training. This involves the continuous

improvement (kaizen) of organizational processes, resulting in high quality products and

services.

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1.2 Scope and delimitation of the Study:

Among the various departments of British Airways (BA), this report focuses on strategic

planning and implementation and service performance according to total quality

management (TQM) concept. Information has been collected from different websites.

The time frame for conducting this study is limited. Constraint of analyzing with the

primary data may have hindered this study from being comprehensive.

1.3 Objectives

Primary Objectives

Study on the TQM in British Airways.

Secondary Objectives

.

Analyzing the organizational TQM thought at BA.

Analyzing the strategic issues in terms of TQM at BA.

Analyzing their service array from the view of TQM.

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2.0 Literature Review:

2.1 TQM Six basic concept

According to Besterfield(2003), TQM requires six basic concepts:

1. A committed and involved management to provide long-term top-to-bottom

organizational support.

2. An unwavering focuses on the customer, both internally and externally.

3. Effective involvement and utilization of the entire work force.

4. Continuous improvement of the business and production process.

5. Treating suppliers as partners.

6. Establish performance measures for the processes.

These concepts outline an excellent way to run an organization. A brief paragraph on

each of them is given below:

A committed and involved management to provide long-term top-to-bottom

organizational support:

Management must participate in the quality program. A quality council must be

established to develop a clear vision, set long- term goals, and direct the program. Quality

goals are included in the business plan. An annual quality improvement program is

established and involves input from the entire work force. Managers participate on

quality improvement teams and also act as coaches to other teams. TQM is a continual

activity that must be entrenched in the culture-it is not just a one –shot program. TQM

must be communicated to all people.

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An unwavering focuses on the customer, both internally and externally:

The key to an effective TQM program is its focus on the customer. An excellent place to

start is by satisfying internal customers. We must listen to the “voice of the customer”

and emphasize design quality and defect prevention. Do it right the first time and every

time, for customer satisfaction is the most important consideration.

Effective involvement and utilization of the entire work force

TQM is an organization-wide challenge that is everyone’s responsibility. All personnel

must be trained in TQM, statistical process control (SPC), and other appropriate quality

improvement skills so they can effectively participate on project teams. Including internal

customers and, for that matter, internal suppliers on project teams are an excellent

approach. Those affected by the plan must be involved in its development and

implementation. They understand the process better than anyone else. Changing behavior

is the goal. People must be empowered at the lowest possible level to perform processes

in an optimum manner.

Continuous improvement of the business and production process

There must be a continual striving to improve all business and production process.

Quality improvement projects, such as on-time delivery, order entry efficiency, billing

error rate, customer satisfaction, cycle time, scrap reduction, and supplier management,

are good places to begin. Technical techniques such as SPC, benchmarking, quality

function deployment, ISO 9000, and designed experiments are excellent for problem

solving.

Treating suppliers as partners.

On the average 40% of the sales dollar is purchased product or service; therefore, the

supplier quality must be outstanding. A partnering relationship rather than an adversarial

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one must be developed. Both parties have as much to gain or lose based on the success or

failure of the product or service. The focus should be on quality and life-cycle costs

rather than price. Suppliers should be few in number so that true partnering can occur.

Establish performance measures for the processes.

Performance measures such as uptime, percent nonconforming, absenteeism, and

customer satisfaction should be determined for each functional area. These measures

should be posted for everyone to see. Quantitative data are necessary to measure the

continuous quality improvement activity.

The purpose of TQM is to provide a quality product and/or service to customers,

which will, in turn, increase productivity and lower cost. With a higher quality product

and lower price, competitive position in the marketplace will be enhanced. This series of

events will allow the organization to achieve the objectives of profit and growth with

greater ease. In addition, the work force will have job security, which will create a

satisfying place to work. In the next chapter we are trying to analyzing these concepts on

British Airways.

2.2 Strategic Grid

Samuel (2004) analyzed about the Strategic Grid; Strategy to be evolved in quality

management depends on both thinking and planning process. This is explained in

strategic grid below:

Strategic Planning

Good Bad

Strategic

Thinking

Good 1 2

Bad 3 4

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Strategic thinking attempts to determine the ‘what’ of corporate visioning while the

strategic planning looks at ‘how’ to achieve that vision. The various possibilities are

explained as follows:

Quadrant 1:

Strategic thinking and planning is well

done. In this quadrant there is a clear

picture of the organization’s future.

Operational competency is exists. This is

practiced by successful companies

Quadrant 2:

Successful strategic thinking but strategic

planning is poor. There is a clear picture of

the future, while implementation strategy is

ineffective.

Quadrant 3:

Good strategic planning but poor strategic

thinking. In this quadrant ongoing

operations are managed successfully. But

the organizations are uncertain about the

future profile.

Quadrant 4:

Strategic thinking and strategic planning

poor. This quadrant depicts the uncertain

vision of the future. Also incompetent in

operational functioning. Companies don’t

survive very long following this strategy.

Companies in Quadrant 4 should bring in tremendous changes in the organization. The

organization need to relook at their organization structure, personnel and methods. People

who have a vision and who would work towards the vision have to be brought into the

organization. Inefficient process and ineffective methods have to be removed.

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Organizations in Quadrant 3 are placed in a situation where manpower is available to

implement the directions. The need is for visionary leaders who can foresee into the

future and be proactive. Organizations in Quadrant 2 have good thinkers but rare doers.

The ideas and visions postulated have to be implemented by the members of the

organization. Quadrant 1 is the ideal situation which every organization needs to aim and

achieve. In our next chapter we analyzed the position of British Airways under this grid

concept.

2.3 Quality Statements

Besterfield (2003) also analyzed the Quality Statements. From his view; in addition

to the core values and concepts, the quality statements include the vision statement,

mission statement, and quality policy statement. Once developed, they are only

occasionally reviewed and updated. They are part of the strategic planning process. The

utilization of the three statements varies considerably from organization to organization.

In fact, small organization may use only the quality policy statement. Additionally, there

may be considerable overlap among the statements. Opinion regarding Vision Statement,

Goals and Objectives of Berterfield (2003) are as follows:

Vision Statement

The vision statement is a short declaration of what an organization aspires to be

tomorrow. It is the ideal state that might never be reached, but which you continually

strive to achieve. Successful visions provide a succinct guideline for decision-making.

Having a concise statement of the desired end provides criteria for sound decision

making.

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Goals and Objectives

Goals and objectives have basically the same meaning. However, it is possible to

differentiate between the two by using goals for long-term planning and objectives for

short-term planning. The goal is to win the war; the objective is to capture the bridge.

Concrete goals are needed to provide a focus, such as improve customer satisfaction,

employee satisfaction, and processes. Goals can force changes in leadership style

from reward and punishment to identifying and improving system problems.

Goals must be based on statistical evidence. Without statistical knowledge of the

system,goals merely reflect the assumption that slogans, exhortations, and hard work

will miraculously change the system. Goals must be definitive, specific, and

understandable, using concrete results rather than behaviors or attitudes. The most

important characteristics of goals is that they be measurable. Only measurable goals

can be evaluated.

Goals must have a plan or method with resources for its achievement. If there is not a

cause-and-effect relationship between the goals and the method, then the goal is not a

valid one. In addition, a specific timeframe or deadline for achieving the goal should

be given.

Goal must be challenging yet achievable. Those individuals, work groups,

departments, and functional areas that are affected by the goals should be involved in

their development. Stretch goals are satisfactory, provided they are based on

benchmark data.

The characteristics of objectives are identical to those given here for goals. They are

operational approaches to attain the goals. We are trying to find the impact of the

quality statements of British Airways in the next part of the report.

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3.0 Discussion

3.1 SWOT Analysis of British Airways

SWOT analysis is a strategic planning method used to evaluate the Strength, Weakness,

Opportunities, and Threats involved in projector in a business venture or project and

identifying the internal and external factors that are favorable and unfavorable to achieve

the organizational objective.

SWOT Analysis of British Airways

Strength

Reputable Brand Name

International Operation

Employee Productivity

Skilled Staff

Heathrow Terminal 5

Customer Loyalty program

Expansion of fleet Aircraft.

Weakness

Cost of Management

Labor strikes and poor employee

relation history

Cost of Flight

Outsourcing

Opportunities

Global Airline Market

Skytrax Quality System

Establishing Manufacturing Unit

Emergence of New Market

Growing Asia-Pacific Market.

Threat

Government Interventions

Labor Market

Rising International Fuel rises

Rapid change in Technology

Consumer Behavior

Global Economic Crisis.

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3.2 TQM Six basic Concepts

1. Management Commitment to TQM principles and methods & long term quality

plans for the Organization

British Airways applied TQM concept in their organization with a long term plan and by

the end of 1999 they started getting benefits of TQM concept. At different times the

management of British Airways took different plans for the improvement of their

company. BA spends a huge amount of money for the development of their employees.

They are merging with other airlines to provide better service. British Airways has

expanded its fleet aircrafts as recently in January 2011, the merger between British

Airways and Iberia will create the world's third-largest airline in terms of annual revenue

and the second largest airline group in Europe. Not only this, but British Airways has also

placed firm orders for 24 Boeing 787s, which will replace the oldest Boeing 767s in the

fleet from 2012. To change the organization culture BA took a very long term and

expensive training program for their managers.

2. Focus on customers- Internal & External

The aim of BA to provide a premium service to all their customers at every touch point,

providing comfort, convenience and reliability. The main focus of British Airways is

their external customer. They are always changing their old aircrafts so that they can

provide better service to their customer. They provide special privileges to their business

class passengers. BA provides special training to customer-facing employees to ensure

customer satisfaction. For their internal customers at different times they tried to develop

different types of payment structure. BA provides training to their employees to increase

productivity & efficiency of the employee.

3. Quality at all levels of the workforce

British Airways has been the first one to start Training centre program therefore its

employees are more productive and well trained in their specific jobs. To provide quality

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service to their customers BA trains all the employees of the company. BA is spending

huge amount of money, effort and time to assure the quality of all levels of their

workforce. They design the training programs based on the tasks.

4. Continuous improvement of the production business process

British Airways is always trying to improve their quality. The target of BA is to provide

premium quality service to their customers. BA is always considering the customer

feedback and opinion with maximum importance and investing to those product and

services to improve product and service quality.

5. Treating suppliers as partners

BA had very long term relation with Boeing. They were a loyal customer of Boeing till

1998. Considering their requirement to provide quality service from 1998 they also

become a customer of Airbus. Now, British Airways a customer of both Boeing and

Airbus. BA is determined to build strong and trusted relationships with their supply

partners.

6. Establish performance measures for the process

British Airways has identified 5 indicators to measures their performance.

Colleagues

Customer

Performance

Excellence

Partnerships

After evaluating these indicators they measure the progress of the process. Then based on

the performance measurement they take further action.

3.3 Strategic Grid analysis

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Strategic Planning

Good Bad

Strategic

Thinking

Good 1 2

Bad 3 4

Fig.: Strategic Grid

Quadrant 2: Successful strategic thinking but strategic planning is poor. Clear picture of

the future, implementation of the strategy is ineffective

The British Airways’ top management always gave emphasize on the continuous

improvement of the organization. They set clear picture of the future but because of

improper implementation of the strategy British Airways did not get the expected result.

Like, Top management of British Airways decided to build booking information system

to help the customer. But, later it was misused to attract customer. As a result BA faced

huge legal procedure and a large amount of penalty.

At different times British Airways developed different plans for improvement but the

plans were not communicated with the employees properly or the information flow was

not proper. It created conflicts between the employees and the management. As a result

BA is facing loss in the current years.

At different time the top management took different steps to expand the business and give

better service to the customer but because of poor implementation plan they were not

fruitful. Like, when they merged with other airlines to expand their business and increase

their market share they faced different problems after implementation. Because, they did

not consider all the factors in their implementation plan. Their vision was good but they

had problem in their strategic planning.

3.4 Quality Statements of British Airways

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Vision Statement

To become the world’s leading global premium airlines.

Strategic Goal and Objectives

They have five strategic goal and objectives:

1. Be the airline of choice for long haul premium customer.

2. Deliver an outstanding service for customers at every touch point.

3. Grow our presence in key global cities.

4. Build on our leading position in London.

5. Meet our customer’s needs and improve margins through new revenue streams.

From their quality statements it seems that to attain their vision they fix up different

dynamic strategic goals and objectives. In a real circumstance it shows they are not much

more successful to meet their targets and the reasons already verifying in the previous

analysis.

4.0 Suggestions

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After analyzing the various internal and external strategic factors would recommend

the British Airways to make their HR department more active in the process of

keeping the employees more motivated and training. It should introduce more flexible

grievances handling programme and adequate compensation plan which keeps the

strikes and blockages far from the process.

BA must diversify by entering into new business ventures and should go for to

manufacture their own manufacturing units so that their dependency on others

decreases more.

It has to keep a regular check on the quality review airlines system in order to attain

and retain its strong position in the dynamics of the environment.

It must have a good and defensive market strategy so that the rivals not out class them

by low fares.

BA has to keep a good review on the chain that where is the loophole or break in the

value chain, is it the customer analysis, employee relations, innovations or any other

factor that is creating a blockage in the progress.

5.0 Conclusion

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To put it in a nutshell, BA is one of the most developed and well established Airlines in

the world today and it has the great potential to increase its market share. There has been

recent merger with Iberia and now it has 55% market share were as Iberia has 45% share

in market. BA has 13.5% stakes currently which shows its credibility. It is also planning

to have its merger with Air India in upcoming years. It has the skilled and developed

labor force which is good sign but they should develop some good solid plans to control

these strikes and picketing.

It has every opportunity to expand more and more by increasing its training units,

establishing its own manufacturing industries and diversify into other transports. BA also

has to develop a good plan to meet all the threats in an appropriate way.

To compete in 2012, this is the target and goals that BA has mentioned in its Annual

Report 2010. BA has a plan and it has classified how to meet these targets in the future.

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