PMI/ACA/03/ASC(14)/001

Rev. No.:0

PGSM
ASSIGNMENT COVER
SECTION A:-

STUDENT ID:- MAL14080

Programme
Module Subject:
Module code:
Name of Lecturer:

MBA PGSM
OPERATIONS MANAGEMENT
OPS 600
MR. THIAKU A/L RAMALINGAM

Assignment title:

ASSIGNMENT 1

Assignment
Submission date

7th March 2015

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(Written approval
from Mantissa office)

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Date:-7th Mar 2015

Introduction
The article is focuses on the c u r r e n t business e n v i r o n m e n t is more co m p e t i t i v e and
challenging than ever before. With advances in internet technologies, improved production
capabilities, increasing complexity i n customers e x p e c t a t i o n . TQM, a concept
originated f r o m the manufacturing sector in Japan (Naoum, 2002) has brought many
improvements in production efficiency. With multi-dimensional demand and
challenges of globalization; organizations are forced to re-engineer their operations
and systems to be more customer centric to improve the service quality to remain
competitive (Yasin et al.,2004;Rodie and Martin, 2001; Tan et al., 2010).
Such a huge economic activity by the service industry involves countless number
of organizations, enterprises and firms. For example health care, transportation,
education, government service, hotels and restaurants, telecommunication,
financial services, social and personal services retail and wholesale organizatio ns.
To compete well and increase their competitive advantage, these organizations
need to be providing high quality and innovative services. Implementation of a
Total Quality Management (TQM) system enhances the innovation process in
organizations due to TQM elements such as continual improvement or customer
focus (Baldwin & Johnson, 1996; Flynn, Schroeder, & Sakakibara, 1994, 1995).
Both TQM and innovation have the same purposes and importance in organizations
performance, especially in service industry. Both of them seek to integrate organization
objectives and functions to satisfy the customers and increase competitive advantage
(Kaynak, 2003). They involve all employees within an organization to be apart from the
management process and business process. Furthermore, both provide a continual
improvement and sustaining development (Oke, 2007; Singh & Smith, 2004;
Talib, Rahman, & Qureshi, 2012). Continuous improvement, achieving customer satisfaction
and open cultureare main shared goals of TQM and innovation (Kaynak, 2003; Kim, Kumar, &
Kumar, 2012; D. Prajogo & Sohal, 2003). Thus relationship between TQM and innovation can
determine the organization performance and its development.
First, as most of empirical studies on TQM-innovation relationship conducted in manufacturing
industry there is still need for more studies on this field in services. Second, the previous
studies concluded contradicted results. Some found TQM has positive influence on innovation.
While others found it has no impact on innovation .Thus, the gap still remains and debate still
continuing concurrently with researches investigating the impact of TQM on innovation. Third,
within the existing literature, no such a conclusion recommended a specific TQM practice that
lead to achieve both quality and innovation together in service organizations. Most of studies
used different sets of TQM practices to examine its impact on innovation in all such as who
examined each of autonomy, consultation, supporting people management practices and
communication. While examined leadership, strategic planning, customer and market focus,
information and analysis human resource focus, process management, supplier partnership
and business results. Fourth, the previous empirical studies assessed impact of TQM practices
in a specific type of innovation in manufacturing industries such as study of Abrunhosa and Sa
dealt technological innovation and study of Prajogo and Sohal(2004) dealt with product
innovation. However so far, no such study targeted the link between TQM practices with all
different types of innovations in services industries.
The main objective of this article is to investigate the nature of the TQM practices and its
association with quality of service and customer satisfaction as perceived by marketing/sales
managers in Malaysias small service organizations.
Importance of TQM for service and customer satisfaction.
The most commonly used method by scholars to research and study on the quality
management principles of an organization is through the use of TQM constructs dimensions

have been widely used by many well-known scholars for the study of quality
management theory and practice. However, problems exist when researchers prefer
to develop their own organizational model instead of using models that have been
previously constructed and tested by preceding scholars.
Two of the models that have been most important in attempting to conceptualize
service quality are the gap model of service quality or SERVQUAL (Parasuraman et al., 1985)
and the Technical/Functional Quality framework (Gro nroos, 2001). Generally, the
SERVQUAL model measures consumers perceptions of service performance (perceived vs.
actual outcomes) for particular service providers (Asubonteng et al., 1996). Definition of
TQM as a management philosophy seeks to improve overall function of an organization is the
most widely considered definition fixes TQM under the management theory.
It can be clearly observed that, management leadership; employee involvement; employee
empowerment; customer focus; and training are human resource HR management practices.
HR, or people management, practices are dominating in services organizations applied TQM.
Rahman (2001) and Rahman & Bullock (2005) categorized TQM practices into two types: soft
and hard. The soft TQM practices are related to the people management practices, while the
hard TQM practices are related to the practical and numerical quality control tools in
manufacturing organizations.
The technical/functional model of service quality is focused on two aspects: the technical
quality which involves what is provided and functional quality which measures how
it is provided (Gro nroos, 2001; Sanchez- Rodriguez and Martinez-Lorente, 2011). For
instance, technical quality might include the effectiveness of a car repair, the
cleanliness of a hotel room, and the effectiveness and quality of diagnoses and medical
procedures at a hospital. To the contrary, functional quality might include the care and
manner of the personnel involved in service delivery processes (Lassar et al., 2000). For the
purpose of this study, the five quality dimensions of the SERVQUAL are adopted as it has
been gaining wide acceptance as a common platform for works in service quality research
and implementation (Asubonteng et al., 1996; Quester and Romaniuk, 1997; Pan and
Kuo, 2010).
Customer satisfaction can be defined as a persons felt state, either pleasure or
discontent, ensuing from comparing a products perceived performance (or outcome) in
relation to the persons expectations (Kotler et al., 1996; Feckova , 2004; Lin et al.,
2010). On the other hand, TQM is based on the idea of customer satisfaction (Feckova ,
2004). Organizations thrive to achieve total quality (i.e. the pursuit of excellence,
zero defects, continuous improvements, etc.) based on the participation of all its
members and aiming at long-term success through customer satisfaction (Melan, 1998,
p. 128). Establishing and achieving customer satisfaction is seen to be the ultimate goal of
every organization.
TQM is not only restricted to product quality performance in the manufacturing sector but it
also covers a wider aspect of quality in the service sector (Samat et al., 2006). Previous
extensive studies have confirmed that the effective implementation of TQM can improve
productivity (Garvin,
1983) and lead to improvements in organizational performances. TQM has become the key
element for improving the performance of companies and satisfaction of customers
(Terziovski, 2006; Sakthivel et al., 2005; Lagrosen, 2001).
In addition, to achieve long-term competitive advantage in a business, a high level of
quality and customer satisfaction must not be ignored; they are the basic building
blocks and cannot be separated in any business operations. Effective implementation of TQM
is the potential source of sustainable competitive advantage (Shenawy et al., 2007; Sohal
and Terziovski, 2000).

Six TQM dimensions were measured, namely leadership, customer focus, strategic
planning, information and analysis, process management and human resource focus. These
TQM dimensions were chiefly conceptualized from the studies of Zhang (2000), and
Prajogo and Sohal (2003). Each of these TQM practices was measured via a five-item,
five-point Likert-type scale, ranging from strongly disagree to strongly agree. Factor
analysis and reliability analysis were performed in order to determine the data
reliability for the independent variables (i.e. TQM practices) and the dependent variables
(i.e. service quality and customer satisfaction). Multiple regression analysis was conducted
to examine the relationship between TQM practices and service quality as well as the
association between TQM practices and customer satisfaction.
Training and educating managers and staff eases the implementation of TQM system. Many
authors emphasized on training and education as a vital TQM practices. Sandru and Sandru
(2009) claim that mangers, employees and workers need to be familiar with the tools and
techniques of TQM in order to success the implementation. In general, the main purpose of
this study was to examine the nature of the relationship between TQM practices and
customer satisfaction, as well as the link between TQM practices and service quality
as perceived by marketing/sales managers within the small service businesses context
in Malaysia. The results obtained from the multiple regression analysis shows that TQM
has a significant positive impact on service quality and customer satisfaction
From the theoretical point of view, this article highlighted the vital parts of TQM practices
in the small service businesses within the Malaysia context. Moreover, it provides
contribution to the literature in terms of the association between TQM practices and
service quality as well as the link between TQM practices and customer satisfaction.
Senior management of small business firms may then work on changing the
dimensions of TQM that fosters the quality of service and customer satisfaction in their
respective firms.
TQM in which it reinforces the widely held belief that leadership, customer focus, and
information and analysis, are positively related with customer satisfaction. Therefore, these
TQM practices should be taken into consideration by the management of the small
service business organizations. Information and analysis can be improved using a proper
information channel that can disseminate accurate information which can be easily
understood by all levels of employees and this in turn will help in improving customer
satisfaction. Customer focus meanwhile can be increased by focusing on the requirements
and needs of the clients.
Several limitations of this study should be noted in order to determine the possible future
research opportunities. First, the time sequence of the relationships between the
variables could not be determined since cross-sectional data were used. Thus, the findings of
this study should not be concluded as proof of the causal relationships. In view of
that, it is suggested that longitudinal research designs should be carried out in the future.
Second, this study was solely confined to small service business industry. Service
industry depends heavily on its people to produce intangible services while manufacturing
industry focuses on producing tangible physical products. Hence, different management
practices and quality improvement programs may be needed in order to cater to the
different nature of these industries. Third, the study was focused on small-size industry. It
is suggested that medium-size firms should be covered in future research. A comparison
could be made with respect to the association between TQM practices and the size of
the organizations. Fourth, the constructs of customer satisfaction and service quality in this
research were measured from the internal point of view, i.e. employees of the
organizations. It is suggested that future research should be conducted from the external
point of view (i.e. customers or publics point of view) in order to complement the
results obtained. As such, the generalizability of the present findings could be further
evaluated.

Conclusions
In conclusion, the literature related to TQM, customer satisfaction and service quality is
reviewed in a systematic order. The chapter starts with brief history of the TQM. Review of
TQM literature suggests that absolute customer focus is the core component of TQM
philosophy. Available literature suggests that top management support is one of the most
critical success factors of TQM, however in developing countries mostly top management is
not committed to TQM implementation.
Though there is significant heterogeneity in defining customer satisfaction, it has been
concluded that affective processes are the main antecedents of satisfaction and from the
economic psychology perspective, cumulative satisfaction is more important. Relationship
between customer satisfaction and service quality is established in which service quality is an
ancestor of customer satisfaction. Various models of service quality are presented.
The link between TQM practices and service quality as well as the relationship between
TQM practices and customer satisfaction as perceived by the marketing/sales managers of
the small businesses companies in Malaysia. Results have shown that only three out of
six dimensions of TQM practices (i.e. leadership, customer focus and information and analysis)
have certain degree of positive effect on customer satisfaction. TQM practices are significantly
and positively linked to the customer satisfaction and service quality of the small
service business firms.
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