Republic of the Philippines

MAILA ROSARIO COLLEGE

Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

COLLEGE OF BUSINESS ADMINISTRATION

MAJOR IN FINANCIAL MANAGEMENT
1st SEMESTER, S.Y. 2021 – 2022
PRELIM COVERAGE

Module in
OPERATIONS MANAGEMENT

MODULE NO.: 04

NAME OF STUDENT: ___________________________________________________

YEAR / SECTION: ______________________________________________________
DATE RECEIVED: ______________________________________________________

INSTRUCTOR: ELEINE T. ALVAREZ

NOTE: Please be cautious in following the given instructions in each activity. Correspondingly, observe
punctuality in accomplishing this module. God bless and happy learning! – INSTRUCTOR
 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

I. OVERVIEW
This module focus is to develop analytical and evaluating skills connected to context
and content about quality and global competitiveness.

II. LEARNING OBJECTIVES

In this learning module, the learner is expected to:
a. Demonstrate knowledge and understanding of quality and global competitiveness
b. Write a specified quality of a product that can be competitive globally

III. GUIDE QUESTIONS

1.What does quality mean?
2. How about competitiveness?
3. How does quality affects the global competitiveness of a product and the
country?

IV. LESSON PROPER

QUALITY

• Means “fitness for use". Can be achieved through ‘product service

features and ‘freedom from deficiencies’
• ‘Product features for manufacturing industries encompass performance,
reliability, durability, ease of use, service ability, aesthetics, customers
choice options, brand company image
• Service features for service industries encompasses accuracy,
timeliness, completeness, friendliness, courtesy, knowledge, reputation
customer needs etc.
• can provide an edge over competitors and is vital in securing economic
success

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 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

• increase in quality of products, services and operations can lower capital

outlay and provide opportunities for expansion into new opportunities
• organizations should realign operations with business strategies to
create new approaches to attract internal and external support

QUALITY MANAGEMENT

• Ensure both ‘quality of design’ and ‘quality of performance’

• New ‘quality’ is all about organization, strategic, for everyone, working as
a system, led by management, reduces cost, work for many and
improvement
• New quality is now called ‘world class quality’ and to achieve the same is
called ‘total quality management’
• TQM is an extensive set of management and control processes designed
to focus the firm on providing goods or services which present the
highest possible impact customer satisfaction

GLOBAL COMPETITIVENESS

• Ability of nation to provide quality products and services at competitive

prices thereby providing adequate returns.
• Competitiveness is the Comparative concept of the ability and
performance of a firm, sub-sector or a country.

QUALITY and GLOBAL COMPETITIVENESS

• Small and big companies which used to compete on local, regional or

national level have now to compete against other companies
throughout the world
• Only those who produce at a world-class quality can compete at a
global level

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 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

• Manufacturing strategy developed quality production doing things ‘right

first time, every time’
• The focus is on ‘best cost’ and ‘best quality’

FACTORS AFFECTING COMPETITIVENESS

1. Cost of Poor Quality (COPQ)
• It is both the direct and indirect costs associated with
the defects generated by a process. The cost varies depending on how
far the product or service goes along the process before being detected.
• It increase overall costs and minimize efficiency.
• It is defined as the costs associated with providing poor quality
products or services.
• Examples are waste, rework, recalls, overtime, turnover, errors,
paperwork, rejects, testing, customer returns, inspections etc.

3 CATEGORIES OF COPQ
▪ APPRAISAL COSTS
o Associated with measuring and monitoring activities
related to quality
o These costs are associated with the suppliers’ and
customers’ evaluation of purchased materials,
processes, products, and services to ensure that they
conform to specifications
o The costs associated with measuring, evaluating or
auditing products or services to assure conformance to
quality standards and performance requirements.
o Includes costs to make sure that the company manages
the product’s quality such as inspection of purchased
material and tests in different part of the process.
o Examples:

- Verification: Checking of incoming material, process

setup, and products against agreed specifications
- Quality audits: Confirmation that the quality system is
functioning correctly
- Supplier rating: Assessment and approval of suppliers of
products and services

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Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

▪ INTERNAL FAILURE COSTS

o Incurred to remedy defects discovered before the
product or service is delivered to the customer
o These costs occur when the results of work fail to reach
design quality standards and are detected before they
are transferred to the customer
o Cost occurred due to failure of the product before being
delivered to customer
o Examples:

- Waste: Performance of unnecessary work or holding of

stock as a result of errors, poor organization, or
communication
- Scrap: Defective product or material that cannot be
repaired, used, or sold
- Rework or rectification: Correction of defective material
or errors
- Failure analysis: Activity required to establish the causes
of internal product or service failure

▪ EXTERNAL FAILURE COSTS

o Incurred to remedy defects discovered by customers
o These costs occur when products or services that fail to
reach design quality standards are not detected until
after transfer to the customer
o When the product fails it can have direct cost
repercussions as well as indirect impact on reputation of
the product
o Examples:

- Repairs and servicing: Of both returned products and

those in the field
- Warranty claims: Failed products that are replaced or
services that are re-performed under a guarantee
- Complaints: All work and costs associated with handling
and servicing customers’ complaints
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 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

- Returns: Handling and investigation of rejected or

recalled products, including transport costs

2. Business government related factors

• The business government related factors for competitiveness were
directed towards short term profit, excessive medical costs and liability.
• The business Government must work together in positive & constructive
partnership, ensuring non-value added cost are minimum
• This requires restructuring of financial, legal and medical systems to
achieve competitiveness in world market

3. Family related factors

▪ Families are the most important human resource development agencies
in order to ensure productive employees and become knowledgeable,
motivated and quick learner.
▪ The first source of value creation within the company is human capital.
In other words, a competitive company is one that is capable of
attracting the best talent and keeping it motivated so that it performs its
tasks in the best possible way.

4. Education related factors

▪ Higher is the quality of entry–level employees, the faster they become
productive employees and contribute to competitiveness of the
company.

Global Competitive Index - GCI

An international ranking of countries which uses economic and other
information to list countries in order of their competitive performance

12 Pillars which determine GCI of any country

Institutions Efficiency
Infrastructure Labor Market Efficiency
Macroeconomic Stability Financial Market Sophistication
Health & Primary Education Technological Readiness
Higher Education & Training Market Size
Goods Market Business Sophistication & Innovation

INDICATORS FOR COUNTRY’S COMPETITIVE

1-Standard of living
2-Manufacturing productivity
3-Investment
4-Trade

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 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

➢ The ability of a country to compete in the manufacturing arena directly

influences the quality of life in that country.
➢ The ability to compete translates into the ability to do a better job of
producing quality goods. A nation which produces quality goods is more
likely to be prosperous and provide for its people.

COMPONENTS OF COMPETITIVENESS
1-Investment in R & D
2-Industrial extension
3-Monitoring of best manufacturing practices
4-Investment in high technology infrastructure
5-Technology transfer
6-Industrial exports
7-Education reforms and investment
8-Tax incentives

HUMAN RESOURCES AND COMPETITIVENESS

1-Co-operation among business, labor and Government
2-High quality education and training
3-Employee involvement and empowerment
4-Leadership at all levels
5-Team work

Competitiveness Enhancing Manufacturing Technologies

1-CNC machine tools
2-Flexible manufacturing
3-Computer aided design
4-Automated inspection
5-Material handling robots
6-Automated warehouse equipment
7-Assembly robots

GLOBAL ECONOMIC INTEGRATION

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 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

• During the last decade of 20th century ‘global economic integration’

became a fully institutionalized reality
• The economies of industrialized nations of the world became so
integrated that any environmental factor that affects one nation affects
all other nations in varying degrees
• Though it has promoted global trade and co- operation, economic
downturns in one country can have a ripple effect, which can spread
quickly to other countries.

Global Economic Integration ADVANTAGES

1. As regards trade benefits, global economic integration characteristically
leads to a decrease in the cost of trade, better availability and a broader
selection of goods and services, and efficiency gains that cause greater
purchasing power.

2. In employment, opportunities tend to increase because trade liberalization

causes market expansion, technology sharing, and cross-border investment
flows.

3. Because of tighter economic ties, political cooperation among nations can

improve, which can help resolve clashes peaceably and thus lead to greater
stability.

4. Global economic integration upholds free trade which promotes global

economic growth, generates jobs, makes companies more competitive, and
lowers prices for consumers. Economic integration prompts transnational
companies to invest and install plants in other countries, thereby providing
employment for the people in those nations usually getting them out of
poverty.

5. There are more inflow of information among two countries and cultural
intermingling where each nation learns more about other cultures. Socially,
people have become more open and tolerant towards each other as those
who live in the other parts of the globe are not considered aliens.

6. Many consider swift travel, mass communications, and speedy

dissemination of information, such as through the Internet, as benefits of
economic integration and globalization.

Global Economic Integration DISADVANTAGES

1. Economic integration results in the erosion of national sovereignty.
Members of economic unions are normally mandated to adhere to rules on
trade, monetary policy, and fiscal policy, which are developed by an unelected
external policymaking body.
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 Republic of the Philippines
MAILA ROSARIO COLLEGE
Diversion Road, San Gabriel Village, Tuguegarao City, Cagayan Valley
Contact No. (078) 377 – 249

2. Big multi-national corporations can exploit tax havens in other nations to

avoid paying taxes. They are also accused of social injustice, unfair working
conditions (including slave labor wages, child labor, and prisoners used to
work), as well as lack of concern for environment (such as, mishandling of
natural resources and ecological damage).

3. Transnational companies and multinational corporations are progressively

influencing political decisions. There is thus a threat of these corporations
ruling the globe as they gain more and more power due to economic
integration and globalization.

4. Some claim that economic integration and globalization lead to the

infiltration of communicable diseases. Fatal diseases like HIV/AIDS are
disseminated by tourists even to the remotest corners of the world. Increase
in human trafficking is also attributed to globalization.

5. Globalization and economic integration are said to have made the rich
richer and the non-rich poorer. Global economic integration may be wonderful
for managers, owners, and investors, but ‘hell’ on poor laborers. Although
competition among countries is supposed to drive prices down, in many
cases this is not happening as countries manipulate their currency to get a
price advantage.

6. For developed countries, jobs are lost and moved to lower cost countries.
Laborers in developed countries face pay-cut demands from establishments
who threaten to export jobs. This produces a culture of fear for many middle-
class workers who have slight leverage in this global game.

TO BE SUCCESSFUL IN GLOBAL MARKET

• A manufacturer must be able to outperform foreign competitors in
terms of ‘quality’ and ‘productivity’
• Also the country should have industrial policy aimed at providing
direction and incentives to simulate exports and also simplifying export
financing to help small medium scale manufactures.
• The industrial policy should also simulate education reform and
investment in engineering and science etc.

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