CASE STUDY 1:

United Technologies Uses TQM

Analysis
This case discusses the reasons for success in United Technologies Corp (UTC), a company
based in Hartford, Connecticut. It owns various businesses and industries across the world,
ranging from Sikorsky helicopters to Pratt & Whitney (the aircraft engine and component maker)
Otis elevators, Carrier Air conditioning to Chubb security and lock makers, some of which are
more well-known than UTC itself. So we could imagine this sort of organization would require
and international strategy with a global product group/division structure.

According to the CEO George David, the reason for UTC being the most profitable company in
the world in the 2000s is its TOTAL QUALITY MANAGEMENT (TQM) PROGRAM.

The need for this program rose when the Otis elevator division faced a major problem and
George David decided to assign one of his leading TQM experts, Yuzuru Ito, to head a team of
Otis engineers to investigate why it was performing poorly. For this purpose they developed a
cross functional team to analyze why the elevators were malfunctioning. This team comprised of
all the employees who were related in producing the elevators from managers to production
workers and they created a set of “process” techniques to go about this under Ito’s direction. As a
result, it led to a total redesign of the elevators. And after the launch of these elevators around the
globe they achieved success. This is how they implemented TQM change i.e., evolutionary
change into their entire process. Although the initiative to implement the TQM approach was
more revolutionary in nature because the need for change resulted from the decline faced from
the elevator division, however, once TQM is adopted in any organization, it leads to continuous,
incremental change to improve quality.

Therefore, after this tremendous success David decided to implement TQM techniques in all of
its diverse businesses. Ito was responsible for developing UTC’s TQM system known as
Achieving Competitive Excellence (ACE) to facilitate on-going improvement (incremental
change) in their processes. ACE is a set of tasks and procedures that are used by employees from
the shop floor to top managers to analyze all aspects of the way a product is made to find ways to
improve quality and reliability, to lower the costs of making the products, and especially to find
ways to make the next generation of a particular product perform better or to encourage
technological innovation. Here, changes in the task-role relationships were made and cross-
functional relationships were developed and to increase performance the use of quality circles
are evident.

Apart from that David made every employee in every function and at every level take
responsibility for achieving the incremental, step by step gains that can result in innovative
products. We can deduce that he used a decentralized decision making where authority and
accountability was given even to lower levels. He called these techniques “process disciplines”
and used them to improve the performance of all UTC’s companies.

Evolutionary/Revolutionary Changes:

We identify more evolutionary changes in this case, after the revolutionary adoption of TQM
systems we identify the use of cross functional teams, quality circles and continuous incremental
change, all which are evolutionary changes.

CASE STUDY 2:

Flexible Work Teams at Globe

Analysis

This case discusses the birth of self managedwork teams in Globe Metallurgical Inc. Situated in Beverly,
Ohio, and Selma, Alabama Globe was the first small company to win the Malcolm Baldridge Quality
Award and is one of the most successful steel products manufacturer with a competitive advantage in
product quality, sales and profit growth.

In 1986 the use of flexible work teams began accidently in Globe Metallurgical when it wanted to
introduce new flexible work systems in order to raise profitability. Globe faced high group-level
resistance when the unions refused to relax rigid work rules so that the new technology could be
implemented. As a result it faced a yearlong strike and the company had to close down three of its
furnaces left with 10 mangers and 35 salaried workers to take control of the remaining two furnaces. This
shortage of manpower forced them to find new and efficient ways to keep operations going.

This dilemma paved the way for several possibilities in improving the way work was done, with the
managers and front line workers all working together in the production process, absence of work rules
and job classifications specifying how the furnaces were to be operated, managers experimented with new
ways to operate them and within two week productivity was increased by 20%. Everyday brought news
suggestions taking the form of quality circles. Later, afterseveral trial and error management discovered
that cross functional teams could be made comprised of welders, crane operators, furnace operators,
forklift operators,stokers, furnace tappers and tapper assistants working cooperatively. These flexible
work teams of seven employees, one from each function and who could do the others jobs could
efficiently operate one furnace. Each team was supervised by a team leader who coordinated team work
and schedules with other teams and the management.

The use of these quality circles, cross functional flexible work teams brought about sucessful evolutionary
change that Globe found it could operate all five furnaces using these self managed work teams with only
120 employees as compared to 350 required before the strike. This resulted in downsizing of the
workforces which the union feared to begin with. Several Employees lost their jobs but those who
remained gained the benefit of profit sharing plans that successful TQM programs can provide. As a
result , Globe enjoys majority share of the specialty metals market in the United States.

Evolutionary Changes:

The use of Flexible work teams/Self-managed teams also conducting the role of quality circles are all
evolutionary changes.

Revolutionary Changes:

The high level of group resistance resulting in a yearlong strike led the company to take drastic measures
to continue operations and also loss of jobs after the strike i.e, downsizing may be considered as
revolutionary changes that took place.

CASE STUDY 3:
How to Stay on Top in the Greeting Card Business

Analysis

This case study focuses on the re-engineering of Hallmark Cards business processes. Based in
Kansas City, Missouri, Hallmark, sells 55% of the 8 billion greeting cards sold in the United
States. In the 1990s Hallmark faced a major threat from the entrance of new but smaller
competitors offering cheaper newer kinds of specialty greeting cards. In response to this threat
hallmark decided to examine how things were currently being done and what changes were
needed to be made.

It began with placing 100 managers into teams to analyze hallmark’s competitors, the changing
customer needs, the organizational structure the company was using to coordinate its acitivties
and the ways the company was developing ,distributing and marketing its cards that is , its basic
business processes.

Shockingly it was discovered that although hallmark had the world’s largest creative staff with
more than 700 artists and writers who design more than 24000 new cards each year, it wa staking
over three years to get a new card to market. Once an artist designed a card and writer came up
with an appropriate rhyme or message, it took an average of three years for the card to be
produced ,packaged and shipped to retailers. Information on changing customer needs , a vitals
input into decisions about what cards should be designed , took many months to reach artists.
The delay made it difficult to respond quickly to its competitors.

The 100 team managers gave top management 100 recommendations for changes that would
allow the company to do its work more quickly and effectively . These recommendations called
for a complete change in the way the company organized its basic business processes. It called
for revolutionary change,the need for Re-engineering of their business processes. It began with
restructuring of its activites. It had previously been using a functional structure where artists
worked separately from writers, and both artists and writers worked separately from materials
management, printing and manufacturing personnel. From the time a card went from the creative
staff to the printing department , 25 handoffs (work exhanges between functions) were needed to
produce the final product, and 90% of the time work was simply sitting in sombody’s in or out
basket. As a result hallmark switched to cross functional team structure. People from different
fucntions were grouped into teams responsible for producing a specific kind of card.

To eliminate the need for handoffs between departmens each team is responsible for for all
apsects of the design process . This was done by the introduction of self managed work teams .
To resude the need for handoffs within a team, all the team members work together from the
beginning to plan the steps in the design process, and all are responsible for reviewing the
success of the their efforts. To help each team evaluate its efforts and to give each team the
information it needs about customer desires, Hallmark introduced a computerized point-of-sales
merchandizing system in each of its hallmark Card stores , so each team has instant feedback on
what and how many kinds of cards are selling. Each team can now continuously experiment with
new card designs to attract more customers.

The effects of these changes have been dramatic . Cards are introduced in less than one year, ans
some reach the market in a matter of months.Quality has increased as each team focuses on
improving its cards and costs have fallen because the new work system is so efficient.

Increased competition from the internet , in particular the increasing use of free online greetings
from yahoo! And other companies , is putting pressure on hallmarn in the 2000s .Its managers
are cureently seeking to increase its online presence in order to fight back m and are once again
reengineering its processes to make the company a leader in the e-card business as well.

Evloutionary /Revolutionary Changes:

In this case, drastic change was brought about due to unnecessary handoffs, this required
implementation of reengineering of the entire business process.

It was forced change which leads to transformational change which led to evolutionary change,
the use of flexible work teams and quality circles, all related to Total Quality Management.

Re-engineering

Restructuring
Self managed teams.