TOTAL QUALITY MANAGEMENT

Impact of TQM on Organisational Performance

Abstract

This study purely discusses the impact of TQM on Organisational Performance. In this study I have chosen IKEA as an examplory organisation. In this case study, I will explain that what IKEA has gained after the implementation of Total Quality Management in its business practices. In the end, strong conclusion give us a clear theme that TQM has really a major impact on IKEA's performance.

Introduction

This study purely discusses the impact of TQM on organisational performance. In this study I have selected IKEA as a case study. Before discussing the impact TQM on organisational performance, I am going to give a brief introduction about the organisation (IKEA). This study has important implications for managers. First, it motivates managers (and provides a justification) to invest in the time and resources to implement TQM programmes. Based on the results of this study, the implementation of TQM practices is associated with enhanced organisation performance. Second, evidence from this study signals the importance of developing an environment or “culture” of support to further enhance the performance outcomes of TQM implementation. If employees do not feel there is acknowledgement and support from the organization and from work colleagues, then the implementation of TQM programmes may be sub-optimal.

IKEA Ltd

Company Structure

INGKA Holding BV is the ultimate parent company for all IKEA Group companies including IKEA of Sweden, which owns both IKEA and the Habitat household retail chains in the UK (http://www.ikea.com/). The former sells good-quality, cheap, innovative and stylish furniture (most of which comes in flat-packs), soft furnishings and other home accessories.

Current and Future Developments

At the end of its financial year in August 2008, there were some 253 IKEA stores in 24 countries, visited by 565 million customers — 41 million of whom visited IKEA stores in the UK (http://www.ikea.com/). In July 2009, IKEA opened its first store in the Republic of Ireland, in Dublin. The top five sales countries for IKEA are Germany, the US, France, the UK and Italy.

Financial Results

Turnover for IKEA Ltd in its financial year ending 31st August 2008 was £1.25bn, decreased from £1.31bn in the previous year. Pre-tax profit fell from £77.4m in 2006/2007 to £40.7m in 2007/2008. (http://www.ikea.com/) According to www.bloomberg.com 17th September 2009, IKEA reported its slowest annual sales growth in more than a decade and called 2009 a `challenging' year as consumers cut back on purchases. Sales increased by 1.4% in the year ending 31st August 2009 as it opened 15 new stores (http://www.ikea.com/).

Quality Management

Quality management may be seen in the broader context of a “new workplace culture” and new production methods. Quality is but one aspect of this culture, which calls for changes in management style, production methods, skills and industrial relations. Multiskilling, labour flexibility, employee empowerment, flatter management structures, and an array of production technologies such as just-in-time and value-added-management are part of this new culture. Total quality management (TQM) is increasingly being seen as one possible means of achieving these goals. (Wilkinson, Allen & Snape 1991, 24-31)

Total Quality Management

Total ...