Understanding Business Structures and Quality Management

Posted on Oct 31, 2024 in Other subjects

1. What is a Business?

A business is a social organization that performs a set of activities and uses a variety of resources (financial, human, technological, and material) to achieve certain objectives.

2. Types of Businesses Based on Capital Origin

Businesses can be classified according to the origin of their capital as:

  • Public: Capital comes from the government.
  • Private: Capital comes from individuals or private entities.
  • Mixed: Capital comes from both government and private sources.
  • Transnational: Capital comes from abroad, whether private or public.

3. Small Business

A small business is an independent entity created to be profitable, whose annual sales do not exceed a given limit and is formed by a number of people that does not exceed a certain limit.

4. Sole Proprietorship

A sole proprietorship is a business where the company belongs to one person, who assumes all responsibility and meets the obligations of the same name.

5. Factors Affecting Business Functions

Size and location are factors involved in the functions of a business.

6. Family Business

A family business is a new type of farm where the family business is the engine of becoming a productive unit.

7. Functional Areas of a Business

Functional areas are the most important activities in the company, through which goals and objectives are achieved. Some key functional areas include:

  • Marketing: Responsible for advertising, price, place, and product.
  • Finance: Manages the company’s finances, including accounting and the comptroller.
  • Human Resources: Responsible for training, recruitment, hygiene, wages, and salaries.

8. Types of Businesses Based on Activity

  • Commercial: Firms engaged in the purchase and sale of finished products. Distribution channels include wholesalers, retailers, and brokers.
  • Industrial: Engaged in the extraction and processing of natural resources (renewable and nonrenewable), as well as farming.
  • Service: Offer intangible products or services. These can be for-profit or non-profit.
  • Agricultural: Firms that engage in agriculture, forestry, and fishing.

9. Business Classification by Size

  • Micro: 1 to 15 employees
  • Small: 16 to 101 employees
  • Medium: 101 to 250 employees
  • Large: More than 250 employees

Microenterprises in Mexico

In Mexico, 93% of existing companies are microenterprises.

10. Business Classification by Objectives

  • Economic-Operating: Focuses on profits above bank interest, distributing profits to investors, and reinvesting in business growth.
  • Operational: Investigates market needs to create competitive products and services, while maintaining continuous improvement processes.
  • Social: Meets the needs of consumers, covers social security (by public or private agencies), and protects the ecology.
  • Production: Focuses on product engineering, plant engineering, product processing, and storage.

11. Quality Management

11.1 What is Quality?

Fully Meeting Customer Needs: Quality means fully meeting customer needs and expectations, making products and services with zero defects, and responding rapidly to customer requests.

Different Perspectives on Quality

  • Edwards Deming: Quality is a series of questions gripped by continuous improvement.
  • Joseph Juran: Quality is fitness for use to meet customer needs.
  • Philip Crosby: The performance standard for quality is zero defects.

11.2 Quality Gurus

Edwards Deming (1900-1993)

  • Known as the father of the third industrial revolution.
  • Summarized his ideas about quality in his Fourteen Points.
  • Associated with the development of Japan’s quality movement.
  • Three key points from Deming’s ideas: lack of constancy of purpose, mobility of the main administration, and running a company based solely on visible figures.

Joseph M. Juran (1904-2008)

  • One of the most important figures in quality control and modern management.
  • Known as the father of quality management.
  • Developed the concept of Company-Wide Quality Control (CWQC).
  • CWQC is defined as a systematic approach to setting and achievement of quality objectives for the entire company.

Kaoru Ishikawa (1915-1989)

  • Known as the father of scientific analysis in Japan.
  • Chairman of the Musashi Institute of Technology.
  • Key principles of quality: Quality begins with education and ends with education, quality control is the responsibility of all employees in all areas.
  • Defined quality control as a production system that generates economically quality goods or services, consistent with the requirements of consumers.
  • Advocated for the use of statistical methods for quality control.
  • Developed the Ishikawa (fishbone) diagram for cause-and-effect analysis.

Philip B. Crosby (1926-2001)

  • Precursor of quality who defined the performance standard as zero defects.
  • Developed the concept of the Quality Improvement Process (QIP).
  • Believed that quality is not controlled, it is made.

11.3 Quality Control Tools and Techniques

Statistical Methods

  • Three categories: elemental, intermediate, and advanced.
  • Basic statistical methods are applied by all staff, from directors to operatives.
  • Examples of statistical methods: Pareto diagram, cause and effect diagram, stratification, verification leaves, histogram, scatter diagram, and control charts.

Qualitative Techniques

  • Examples: Brainstorming, surveys, interviews, flowcharts.
  • Check Sheet: Used to collect and classify information according to certain categories through annotation and recording of their frequencies in the form of data.
  • Histogram: A presentation of a series of measures classified and arranged in rows and columns.
  • Pareto Diagram: Used to prioritize problems based on their frequency or impact.
  • Cause and Effect Diagram (Fishbone Diagram): Used to solve quality problems by identifying potential causes.
  • Stratification: Classifies the information collected on a quality characteristic.
  • Control Chart: Determines whether a sample of a process is under control or not.

11.4 ISO 9000

What is ISO?

ISO stands for International Organization for Standardization.

ISO 9000 Certification

ISO 9000 certification takes place through a process of audits, conducted by external and internal auditors to the company concerned.

ISO 9000 Standards

ISO 9000 standards are specifically related to quality systems and allow the company to certify that it is certified and has implemented a quality system throughout its structure.