KANDUKURI MALLIKARJUNAREDDY(MBA)

Total Quality Management (TQM)

Total = Quality involves everyone and all activities in the

company.

Quality = Conformance to Requirements

(Meeting Customer Requirements).

Management = Quality can and must be managed.

Total Quality Management is to obtain total quality by involving

everyone’s daily commitment

4

TQM can be explained as follows:

If quality is to satisfy customer’s requirements continually…then

Quality is “fitness for use” (Joseph Juran)

Total Quality is to achieve quality at low cost…then

Kanji

5

So, what is a Service?

A service can be defined as an essentially intangible set of benefits provided by one party to another.

Examples of a service:

Having a haircut

Receiving waiter service at a café

Getting support from a call centre etc.

IT Services

Prof’Services

“Take it or leave it”

Top-Down

Bottom-Up

Specialized

Parallel

Series

Standard

Service

Complex

Service

Simple

Diagnosis

Complex

Diagnosis

“How can we help you”“Menu”

Not a

meaningful choice

Cafeteria

Bank

Branch

FastFoodOutlet

Se

rvic

e Syst

em

Str

uc

ture

Nature of Service Offering

IncMg Services

Repair

SERVICE SECTOR

CONTENTSINTRODUCTION

GDP SHARE OF SERVICE SECTOR

EMPLOYMENT SHARE OF SERVICE SECTOR

EXPORT SHARE OF SERVICE SECTOR

TRADE

INDIAN TOURISM AND HOSPITALITY INDUSTRY

TRANSPORT SERVICE

REAL ESTATE SERVICE AND HOUSING

BUSINESS SERVICE

INTRODUCTION

The tertiary sector of the economy (also known as the service sector) is

one of the three economic sectors,

The others being the secondary sector (approximately the same

as manufacturing)

And the primary sector (agriculture, fishing, and extraction such

as mining)

The basic characteristic of this sector is the production

of services instead of end products

For the last 100 years, there has been a substantial shift from

the primary and secondary sectors to the tertiary sector in

industrialised countries.

CHARACTERISTICS

The National Accounts classification of the services sector incorporates

SERVICE SECTORS SERVICE SECTORS

Transport storage

communication Financing

Insurance Real Estate

Business Service Community, Social and Personal

Service

Trade Hotels and Restaurants

WHAT IS GROSS DOMESTIC PRODUCT ?

In world GDP of US$70.2 trillion in 2011, the share of services was 67.5 per cent, more or less the

same as in 2001. This list includes the major developed countries and Brazil, Russia, India and

China.

Among the top 15 countries with highest overall GDP in 2011, India ranked 9th in overall GDP

and 10th in services GDP.

GDP share of Service Sector

Employment Share in Service Sector

While the share of services in employment for many developed countries is very high and in

many cases higher than the share of services in incomes.

Except China and India, all the other BRICS countries also have a similar pattern. In the Indian

and Chinese cases, there is a wide gap between the two, with gap being wider for India.

China’s share of services in both income and employment is relatively low due to the

domination of the industrial sector, but the gap is also narrower than that of India.

2011-12 [ percent] 2012-13** [ percent]

Hotels and Restaurant 18.0 25.1

Trade 16.6

[6.5]

Hotels 1.5

[2.8]

Transport , Storage and

Communication

7.1

[8.4]

Railways 0.7

[7.5]

Storage 0.1

[9.5]

Communication 0.9

[8.3]

Share and Growth of India’s Service Sector [ At factor Cost]

2011-12 2012-13

Financial, Insurance,

Real Estate and Business

Service

16.6

[11.7]

17.2

[8.6]

Banking and Insurance 5.7

[13.2]

Real Estate and Business

Service

10.8

[10.3]

Community, Social and

Personal GDP

14.0

[6.0]

14.3

[6.8]

Public administration

and Defence

6.1

[5.4]

Other Services 7.9

[6.5]

Construction 8.2

[5.6]

8.2

[5.9]

Total Service 57.7

[8.2]

56.6

[5.2]

Total Service

Incl.Construction

63.9

[7.9]

64.8

[6.5]

Total GDP 100.0

[6.2]

100.0

[5.0]

India’s Share of Services Export in the World

India’s share of services in the world exports of services, which increased

from 0.6 per cent in 1990 to 1.0 % in 2000 and further to 3.3 per cent in 2011,

has been increasing faster than the share of merchandise exports in world

exports.

The overall openness of the economy reflected by total trade including

services as a percentage of GDP shows a higher degree of openness at 55.0 per

cent in 2011-12 compared to 38.1 per cent in 2004-5.

Trade

Trade with a share of above 15 per cent In India’s GDP in the last seven years

(16.6 per cent in 2011-12).

As per the A.T. Kearney, Global Retail Development Index 2012 report, India

ranked at 5th place remains a high-potential market with accelerated retail

market growth of 15 to 20 per cent expected over the next five years.

The luxury retail sector saw 20 per cent growth last year, with luxury malls

becoming entrenched in Delhi, Mumbai, and Bangalore.

INDIAN TOURISM AND HOSPITALITY INDUSTRY

India has 28 world heritage sites and 25 bio-geographic zones. The country’s big coastline

provides a number of attractive beaches, diverse offerings such as adventure, rural and

wildlife tourism.

India ranked 12th among 184 countries in terms of travel & tourism’s total contribution to

Gross Domestic Product (GDP) in 2012.

The sector’s direct contribution to GDP totalled US$ 34.7 billion in 2012 and is expected to

grow to US$ 40.8 billion in 2013.

Transport Service Shipping

Shipping plays an important role in merchandise trade.

The fortunes of the former depend on the growth of the latter and the prospects of the latter

depend on the efficiency of the former.

About 95 per cent of India’s trade by volume and 68 per cent in terms of value is transported

by sea.

REAL ESTATE SERVICE AND HOUSING

Real estate and dwellings has a share of 5.9 per cent in India’s GDP and a growth of 7.2

percent in 2011-12.

The growth of the real estate services in particular has been impressive consistently at over

25 per cent since 2005-6 with26.3 per cent growth in 2011-12.

Housing is a basic necessity for human life and is the second largest generator of

employment, next only to agriculture.

BUSINESS SERVICE

Business services include services like computer-related services, R&D,

accounting services and legal services, and renting of machinery in order of

importance (shares) as per India’s National Accounts.

The share of business services in India’s GDP, has risen over the years, and

these are also the dynamic services with a combined growth rate f 13.5 per cent

in 2011-12. They grew at around 20 per cent during 2005-6, 2006-7 and 2008-9

but growth decelerated in the next two years due to the global economic

situation.

Hotel scenarioExpected Those taken for granted: Bed, light, clean, space for clothes

Wanted Those asked for: Non-smoking room, room service, a view

Excitement Those unlikely to be asked for but delighted to find: Freeflowers, chocolates

Business scenarioExpected Those taken for granted: Business knowledge, tech

specification, regulatory or statutory regulations

Wanted Those asked for: To be identified through consultation with thecustomer, may allow for some element of negotiation

Excitement Those unlikely to be asked for but delighted to find:Innovative and imaginative ideas

SERVICES IN DIFFERENT SCENARIO

Importance of TQM for services sector

Total Quality Management is the key mantra for the manufacturing

industry, but its benefits have been better realized by intense customer-

oriented service industries — be it fast moving consumer goods (FMCG),

retail, hospitality, telecom or banking.

In service organisations, the TQM challenge lies in establishing smooth

connectivity between business processes so as to retain the customer.

A quality control approach to cover all processes would be beneficial to

every Organisation.. Since in a service industry every aspect of quality is

associated with every employee, quality Control department has a key and

a very important role to play.

Putting in place an effective TQM mechanism in a service industry requires

patience and commitment on the part of the management and the

workforce to satisfy the customer.

Over 60 % of the organization's future revenue will come from the existing

customers.

A 2 percent increase in customer retention has an equivalent impact upon

profitability as a 10 percent reduction in operating costs.

Upto 96% of unhappy customers do not in fact complain, but they are

three times more likely to communicate a bad experience to other

customers than a good one

If a customer complains and the organization responds effectively to the

product or service failure, then the loyalty of the customer can actually

increase

It costs 5 times as much to attract a new customer as it costs to keep an old

one.

BIG GROWTH OF THE SERVICE SECTOR

According to the survey by the Economic Times in 1992, The service sector is a the threshold ofthe high growth . Service and knowledge workers are estimated to constitute 80% of the workforcewith the manufacturing sector contributing to only the rest 20 percent.

According to a recent survey of the top ranking organization in Europe , 89 percent of therespondents said that quality was the primary buying argument for the ultimate customer.

TQM is supported and adopted not only by the manufacturing industries but also by the banks,hospitals, educational institutions, hotels and community development projects.

Quality is a Journey,

not a Destination