MULTINATIONAL CORPORATION AND TOTAL QUALITY MANAGEMENT - A STUDY OF NIGERIAN BOTTLING COMPANY PLC NGWO ENUGU

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.


CHAPTER ONE 

INTRODUCTION

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 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.


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 hi-technology 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 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 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.


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 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 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-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?
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:


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.


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
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
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).


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.


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 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.

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Item Type: Project Material  |  Attribute: 84 pages  |  Chapters: 1-5
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