Abstract
The total quality of management is a philosophy of
management that is driven by the constant attainment of
customer satisfaction through the continuous improvement of
all organizational processes. This study examined how
multinational corporations use total quality management to
penetrate different layers of the economy and the effect of
product quality maintenance in the demand of their product.
The major findings from the study show that the studied
multinational corporations take total quality management
seriously because it is what makes their brand unique and
different from any other brand in the market. And the quality
of their product affects the demand of their products. In
conclusion, if multinational corporations ignore the important
of TQM in their corporation, the employees will fail to rethink
what they do and they will fail to be more involved in
workplace decisions thereby creating low quality even
producing below the standard.
1.1 BACKGROUND OF THE STUDY
Multinational Corporation is any organization that odes
manufacturing and marketing in many different countries
William G. (1999). A Multinational Corporation is any firm
with foreign subsidiaries, which extend the production and
marketing of the firm beyond the boundaries of any one
country Eze (1998). The first multinational corporation (MNC)
established with a global orientation grew out of a merger in
1929 between margarine unie, a Dutch Firm and Lever
Brothers, a British Company. The company became Unilever
and it has since become one of the largest companies in the
world with over 500 subsidiaries operating in about sixty
nations throughout the world.
The operation of multinational companies in their host
countries are independent due to the different requirement of
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customers of different countries. They operate autonomously
each catering to the special requirements of it’s own national
market requirement. In pursuing a national responsiveness
strategy, the primary competitive advantage of MNCs was
grounded in its ability to transfer technology, manufacturing
know-how, brand name, identification and marketing and
management skills from country to country. Standardized
administrative procedures helped multinational companies to
minimize their overhead costs in managing subsidiaries in the
host country. They always negotiate with governments of the
host countries before embacking on any production activities,
this will now give them the ability to determine the
opportunities and threat face with their establishment.
During the 1970s, Multinational Corporation began to lose
their effectiveness due to the change in the customers needs.
Competition broke out on a global scale in more and more
companies. Japanese, European and U.S companies pursued
international expansion because their home market can no
more consume the quantity they produce in their countries.
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Many companies changed their operational and corporate
strategy in order to match the requirement of foreign market.
They try to gain household name in their host country by
offering lower prices, higher quality goods, which will be
attractive to the consumers.
Coca-cola, general motors, ford, IBM General Electric, Gulf Oil,
Lever Brother, John Holt, UAC, Julius Berger, RCC and
similar others, which produce consumer goods and
manufacturing of products started using total quality
management in their organization. They started controlling the
economic activities in the developing countries due to hitechnology use by their companies. In the same vein, the
control of most of the meaningful economic activities in
developing countries by multinational corporation give them
very wide jurisdiction on the manipulation of the economic
policies and circumstance of the host countries, Odike (2001).
There are different categories of Multinational Corporations
base on their area of specialization in the business they
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engage in, as well as the way they perform their business
activities strategically. But there is something, which is
common to all multinational corporations. They are companies
or business, which take their capital along with their
technology abroad in order to get sources of cheap labour and
market for the ready consumption of their manufactured
goods. Corporations today are increasingly multinational in
their business activities. Host countries have started to think
the effect of these companies to their environment, the moral
responsibilities they have for them. Fiscal and monetary
policies of the developing countries can be seriously thwarted
or badly influenced by the economic power of these
multinationals; Prasad S.B. (1976). These things in many
instances have brought political and economic disruptions in
many countries like in the Niger Delta of Nigeria.
Globalize strategies offered these multinational corporation
opportunities to choose any strategy to enter any developing
country. They identify the requirement of the market and
analyze the environment (political, cultural, economic etc) in
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order to know the opportunities and threat that are facing
their company. Multinational Corporations exploit differences
in tax rates; choose appropriate entering strategy, which will
maximize the profit of their company. They may decide to use
direct export, indirect export, joint ventures, licensing and
direct investment depend on the human and material
resources that will help to the effective production of the goods
and services of MNCs. As a consequence of these advantages,
it became increasingly difficult for a company that produced
and sold it’s product in only one country to succeed in an
industry populated with aggressive competitors in lent on
achieving global dominance.
During the 1980s, another source of competitive advantage
began to emerge by using the strategic fit advantages of
related diversification to build stronger competitive positions
in several related global industries simultaneously. Being a
diversified multinational corporation became competitively
superior to being a single – business multinational corporation
in cases where strategic fits existed across global industries.
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Related diversification is most capable of producing
competitive advantage for a multinational company where
expertise in a core technology can be applied in different
industries (at least one of which is global) and where there are
important economies of scope and brand name advantages to
being in a family of related business. It has been indicated
that Honda’s strategies in exploiting gasoline engine
technology and it’s well known name by diversifying into a
variety of products with engines.
First World Multinational Corporations (MNCs) are both the
hope of the Third Word Countries and the source of their
strength. Third World Countries frequently seek to attract
American multinationals for the jobs, they provide and for the
technological transfers they promise. Yet when American
multinational corporations locate in Third World Countries,
many Americans condemns them for exploiting the resources
and workers of the Third World. While MNCs are a means for
improving the standard of living of the underdeveloped
countries. Multinational corporations are blamed for the
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poverty and starvation, such countries suffer. Although
multinational corporations provide jobs in the Third World,
many criticize them for transferring these jobs from the United
States. American MNCs usually pay at least as high wages as
local industries, yet critics blame them for paying the workers
in underdeveloped countries less than they pay American
workers comparable work.
Finally, it is good to differentiate the multinational corporation
from globalization. Since Multinational Corporation is any
company that does manufacturing and marketing in many
different countries, globalization is a company that
manufactures the component parts of a product in different
countries. They use global strategy, which involves integration,
and coordination of the companies strategic moves worldwide
and selling in nations where there are buyers. They produce
these component parts in different countries in order to enjoy
comparative advantages. Hence firms who have global vision
many move into an environment where cost of production will
be low to enable them compete and of course, make expected
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profit. Many industrialized nations are not endowed with
natural resources they would need for production. In order to
overcome this organizations operating in such countries, they
normally invest in those markets where raw materials are
sourced. By this move, they can control the supply and
availability of their production input.
1.2 STATEMENTS OF THE PROBLEMS
The rationale for embarking on this study is to investigate the
Total Quality Management in the multinational corporations.
Multinational corporations are accused of producing low
standard quality products, exploiting the resources and
workers of the third World.
The effective performance of multinational corporations in its
activities requires the cordial relationship among the host
country and the customers as it regard to the quality of their
products for effective and efficient implementation of their
strategies. Finally multinational may find it difficult to operate
in the prevailing economic situation due to non-
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implementation of appropriate corporate strategies and total
quality management.
1.3 OBJECTIVES OF THE STUDY
This study seeks to the following;
1. To study what Total Quality Management means to
multinational corporations.
2. This study seeks to find how multinational
corporations achieve total quality management.
3. To find whether total quality management affects
demand of products.
1.4 RESEARCH QUESTIONS
The following research questions were designed to guide the
study:
i. What are the strategies use by multinational
corporations to penetrate different economies?
ii. How do those strategies influence total quality
management in multinational corporations?
iii. Does technical training of staff enhance total quality
management?
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iv. How does product quality affect customers demand?
1.5 HYPOTHESES
The Hypotheses centers on Nigerian Bottling company Plc
being the case study of the research work. The hypotheses are
as follows;
i. That strategy used by the company affects the
organization’s performance.
ii. That product quality is geared towards customers/
consumer’s preference and satisfaction.
iii. That same product quality is maintained in all
branches of the corporation.
1.6 SIGNIFICANCE OF THE STUDY
An academic study, the outcome of this study will be of
great benefit to the multinational corporations, Government
establishments, business organizations and management of
big corporations through the following ways:
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Suggest ways through which multinational corporations can
penetrate different economies in order to achieve
organizational goals and objectives efficiently and effectively.
Its findings will help the multinational corporations to discover
the strategies that can be apply in different economies in order
to maintain total quality management in the organization for
effective utilization of opportunities available in the host
countries for the growth of their corporation.
The study would enable management of multinational
corporations to see the effect of product quality maintenance
as regard to the demand of their products.
1.7 SCOPES AND LIMITATION OF THE STUDY
A multinational corporation covers a wide range of areas. They
could engage in oil exploration and exploitation, banking
industries, manufacturing industries etc.
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This study will not cover all these areas. As a result the study
will concentrate on manufacturing industry.
Again the study is restricted to the Nigerian bottling company
Plc (coca-cola) Ngwo Enugu, Enugu State.
1.8 DEFINITION OF TERMS
The following definition of technical terms are started below to
enable the reader for easy understanding of the study.
Management
This refers to people who are in charge of an organization.
They work with and through people to achieve organizational
objectives MNCs.
Multinational Corporations: A firm with foreign subsidiaries,
which extend the production and marketing of the firm’s
product beyond the boundaries of any one country.
Total Quality Management
This is a corporate strategy that focuses on quality of product
during corporate strategic formulation.
Corporate Strategy
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This is integrated plan though which an organization
accomplishes its basic long-term goals.
Free Trade Area
Market in which nations can trade freely without tariffs or
other trade barriers.
Foreign Direct Investment
Purchase of share, productive plant and equipment outside
ones own country.
Efficiency
Accomplishment of a task with speed and accuracy.
Absolute Advantage
Nations ability to produce a particular product better than any
other nations no matter what be circumstances due to
availability of human and material resources.
Balance of Payment
Sum of al payments a nation has made to other nations minus
the payments it has received from other nations during a
specific period of time.
Strategic Management
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Process of specifying an organization’s objectives, developing
policies and plans to achieve these objectives and allocating
resources, so as implement the plan.
Globalization
This is a company that manufactures the component parts of
a product in different countries.
Environment
Environment is refers to those entities, which are not under
the control of the organization but whose behaviour affects the
organizational performance.
Parent Company
The headquarter of a multinational corporation who controls
the activities of their subsidiaries in other countries.
1.9 BRIEF HISTORY OF THE COMPANY UNDER STUDY
The Nigerian Bottling Company Plc
The Nigerian Bottling Company Plc has its parent company as
coca-cola international company, which was founded in 1892
in Atlanta Georgia, United States of America (by Asa griggs
candler).
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The company was incorporated in Nigeria to carry on the
manufacturing and marketing of coca-cola brand of soft drinks
it started in Nigeria in 1953 by holding franchise for coca-cola
company of America. This means that the formula for the
concentrates and receipts for the production of coca-cola soft
drinks were not released to the Nigerian Bottling Company,
but the formulae for the mixture of syrup were given to it for
bottling the products in Nigeria.
Nigerian Bottling Company Plc started it’s operations in Lagos
where it established it’s first plant. Later it spread it’s plants
and depots all over the country. Today it has many production
plants and marketing depots dotted over many cities in
Nigeria. Such cities include Onitsha, Owrri, Aba, Enugu,
Ibadan, Umuahia, Kano, Apapa, Ikeja and many other places.
They started production by producing only one brand of
flavour coke. This was the major project and is still a brand
liked by almost every customers of Nigerian Bottling Company
Plc. As at now, the company has more than twenty brand of
products.
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The coca-cola company (Nigerian Bottling company Plc Ngwo
Enugu) offers these products to the customers. Diet coke,
Fanta, 5 Alive, Sprite, Soda Water, Eva table water etc. all
these products is produced in order to compete with their
competitors.
The Nigerian Bottling Company has many departments as
follows production, quality assurance, finance, Workshops,
human resources, ware house, sales, depots, maintenance,
information system and process system. The production
department is divided into two section. The carbon dioxide
section, which manufactures carbon dioxide for carbonizing
soft drinks and the products section which does the actual
production of soft drinks by mixing the right proportion of
syrups to bring the finished products. The Nigerian Bottling
Company is the largest producer of carbon dioxide for the
production of soft drinks in Nigeria. The quality of it’s
unequaled efforts plus good network of distribution account
for the success of the company in Nigeria. From available
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records, the Nigerian Bottling Company Plc is definitely a
market leader in the soft drinks industry. It is the largest
manufacturer and marketer of soft drinks in Nigeria.
The company has contributed a lot to the growth of the
Nigerian economy. As part of this contribution, the company
has branched out into non-soft drinks business in such area
as agriculture and investing in other manufacturing
companies like production of pure water. The coca-cola in
Nigeria is one of successful and growing Multinational
Corporation in the country. The company (coca-cola
international company) made 23.1 billion U.S.D 2005, and
they make more than 60% of soft drinks consumed in Nigeria.