MBA-507 REPORT

Submitted to:
Dr. Asoke Kumar Saha
Course Instructor, Organizational Behavior, East West University, Dhaka.

Managing International Standard in an Organization beside Maintaining Local Laws &Practices.

Submitted By:
ID# 2012-1-95-130 2012-2-95-013 2012-2-95-023 Name Nafis Shams Shefaetul Hoque Bhuiyan Raisul Islam Sajib

Date of Submission: 27th of July, 2012

LETTER OF TRANSMITAL

27th of July, 2012 Dr. Asoke Kumar Saha Course Instructor, Organizational Behavior, East West University, Dhaka. Subject: Submission of MBA 507 report

Dear Sir, In the following pages, we have done our report titled Managing International Standard in an Organization beside Maintaining Local Laws & Practices as MBA507 course requirement. We have enjoyed preparing the project. In preparing this project, we have tried our level best to include all the relevant information and tried to identify different things. As we are beginner, we may make some mistakes. If you have any suggestions, please feel free to contact with our group members. Your valuable suggestions will help us to learn more and it will be very helpful for our future career.

Sincerely YoursID# 2012-1-95-130 2012-2-95-013 2012-2-95-023 Name Nafis Shams Shefaetul Hoque Bhuiyan Raisul Islam Sajib Contact No. Signature ----------------------------------------

Acknowledgement

This report has been an eye-opener for us and we have been fortunate to have the support, assistance and encouragement of a number of individuals while preparing this report, without their support it would be hard to complete this study.

We express our sincere gratitude to our Institutional Supervisor Dr. Asoke Kumar Saha, Course Instructor (Organizational Behavior), East West University, Dhaka for guiding us in completing this study. His words of wisdom will always be remembered, and we are convinced that the knowledge of Organizational Behavior that he has imparted would go a long way through our professional career.

Secondly, we are also obliged to Det Norske Veritas (DNV), a multinational ISO Certification Authority for their valuable time and providing us with the important information. They also shared with us necessary facts about International Standards.

The Labor Act 2006 also helps us to find different solutions.

Our thanks also goes to the team members whose unflagging capacity for creative work and long hours made the project successful under the pressure of deadlines. This report is successfully completed by our entire group members extreme effort. It was not possible for a single person to make the project successful. Moreover we would like to disclose our deepest esteem and gratefulness for our course instructor, Dr. Asoke Kumar Saha, for his extended helping hand and mentorship.

Table of Content
Topic Executive Summary Scope of the Study Literature Review International Standards Local Laws Social & Cultural Practices Managing International Standards Why International Standard is Needed What ISO covers Who Is Responsible for Certification How to be an ISO certified company Advantages of ISO Certification Criticisms of ISO Practicing Local laws & acts Social & Cultural Practices Conclusion Reference 16 17 18 20 10 Page No. 5 6 7

Executive Summary
The world is becoming competitive day by day. Almost every business converts from monopoly to competitive. Competitive market enforces organizations to run it through an effective and efficient management to cope up with contingent world. To cope up with contingent world, continuous improvement is important. To improve continuously; local laws, regulations and practices are not sufficient enough. In the age of globalization, following International Standard is also important. Being an ISO certified company is prestigious for all. It strengthens the domestic economy as well as makes an organization globally competitive. Meet the global standard is the key to success of an organization to be a global leader. However, organizations have to meet the local standards and practices first. Home country and Host country requirements should be given priority. Almost each and every country has some sets of standards for operating in their country. Bangladesh has some standards as like Labor Act 2006, Taxation Law etc. On the otherhand, some common practices should be maintained, which are not set by any laws, acts or written standards. Values and beliefs are what an individual or a group of people believe as far as morals and what is right or wrong. These activities should be maintained for the goodwill of an organization. Organization can show their respect to local, social, and religious values, beliefs, and norms. It also symbolizes the attachment to the society with them. Balancing the local laws, acts, practices with International Standard can make a company successful through competitive advantage. All of the stakeholder can get benefit from it. Manufacturers are the number one benefactors of the use of internationally accepted standards because they can often reduce time-to-market and lower development costs. Global standards facilitate the introduction of products to a broad range of countries. However, manufacturers are not the only ones that benefit. Consumers also benefit since the latest technologies can reach the marketplace more quickly. In addition to time-to-market advantages, international standards increase the probability for consistently safer and higher-quality products. The easier it is for manufacturers to introduce products into these countries, the more choices there will be for consumers. This would lead to healthier, more competitive markets and would increase the quality and availability of products. To get ultimate success, every company should manage international standard besides maintaining local laws, acts and practices to become effective, efficient, profitable, and successful through operational excellence, continuous improvement, and customer satisfaction.
Page | 5

Scope of the Study:

The development and implementation of internationally accepted standards can help promote sound domestic systems and international stability. While a broad range of political, social, legal and institutional factors impinge on financial stability, the focus of the International Standards is on overall management standards which are generally accepted by the international community as being objective and relatively free of national biases. The development, adoption, and successful implementation of international standards yields both national and international benefits. It helps to:

Strengthen domestic economic, financial and statistical systems by encouraging sound regulation and supervision, greater transparency, and more efficient and robust institutions, markets, and infrastructure; and

Promote international stability by facilitating better-informed lending and investment decisions, improving market integrity, and reducing the risks of financial distress and contagion.

It is worth noting, however, that the implementation of international standards in itself is not sufficient to ensure development. Standards are not an end in themselves but a means for promoting sound management systems and sustained growth. They need to be continually reviewed in order to remain relevant in the face of changing circumstances. The relative importance of different standards to individual organizations depends on their structure and other domestic circumstances. Their implementation must fit into a country's overall strategy, level of institutional capacity, and other domestic factors. Beside the International Standard, local laws and practices must be followed. After meet the local requirements, international standard should be implemented. Successful implementation of standards makes an organization effective, efficient and able to cope up with contingent world through operational excellence, continual improvement and customer satisfaction.

Page | 6

Literature Review:
World is becoming competitive day by day. Almost every business converts from monopoly to competitive. Competitive market enforces organizations to run it through an effective and efficient management to cope up with contingent world. To cope up with contingent world, continuous improvement is important. To improve continuously; local laws, regulations and practices are not sufficient enough. In the age of globalization, following International Standard is also important.

There is an organization which calls, International Organization for Standardization. It sets the standards of an organization. Nowadays, the International Organization for Standardization is widely known as ISO. This is an international standard-setting body composed of representatives from various national standards organizations. It has been founded on 23 February 1947; the organization promulgates worldwide proprietary, industrial, and commercial standards. It has its headquarters in Geneva, Switzerland. (International Organization for Standardization, 2012). ISO's main products are international standards. They sets different standards for different types of organizations. Most common ISO standards are: ISO9001: (for Quality Management System): Applicable for all sorts of organization for quality management including Production operation management, Marketing management, Human resources management, Supply chain management, Data management etc. ISO14001: (for Environment Management System): Applicable to the companies, for which environment can be affected. For example: Ship breaking yards, Battery plants etc. ISO22000: (for Food Safety Management System): It is applicable for food manufacturers and suppliers. ISO27001: (for Information Security System): ISS is applicable for Information System providers like ISP, Intranet-Internet-Extranet management teams, Server maintenance departments, and digital firms.
Page | 7

ISO20000: This is a new standard set by ISO. This is applicable only for IT services. OHSAS1800: This standard from ISO ensures Organization Health & Safety. SA8000: Social accountability increases good image for a company. An organization can get this opportunity to follow SA8000 sets by ISO. Moreover there are lots of standards has been set by ISO for different type of organization for effective and efficient management. It enables organizations to increase productivity though operational excellence, continuous improvement and customer satisfaction. (Det Norske Veritas, 2012). Beside ISO standards, there are many more standards has been set by different organization for standardization. Some common organizations are:

American National Standards Institute (ANSI) Deutsches Institut fr Normung, German Institute for Standardization (DIN) British Standards Institution (BSI) Bureau of Indian Standards Canadian Standards Association European Committee for Standardization (CEN) Commonwealth of Independent States (CIS) set of standards (GOST) International healthcare accreditation International Telecommunication Union (ITU) Institute of Environmental Sciences and Technology (IEST)

As there are many organizations for international standards, some standards conflicts with each others. So the most common practice is to follow the standards of ISO to meet the global standards. (Wikipedia, 2012)

Page | 8

Meet the global standard is the key to success of an organization to be a global leader. However, organizations have to meet the local standards and practices first. When local standards conflicts with international standard, organizations should have to follow the operational countrys requirement first. Home country and Host country requirements should be given priority. Almost each and every country has some sets of standards for operating in their country. Bangladesh has some standards as well. Most important standards are: Labor Act 2006 (Bangladesh): Labor act 2006 is the mostly used code of conduct in Bangladesh. This act defines how to manage Human Resources, what rights and benefits must be given to employees of an organization. Beside the human resource policy, it also defines some health & safety issues for a company. (Labor Act, 2006) The Bangladesh Taxation Laws (Adaptation) Order, 1972: This law of Bangladesh sets the VAT and Taxes for business as well as individual taxes. Taxation law varies country to country. Moreover some laws and acts of Bangladesh also sets the standard of Quality management, Environment management, Foods and Health & Safety management etc. An organization must have to obey the local law before practicing International Standards. (Government of Peoples Republic of Bangladesh, 2012).

Only laws and regulations are not enough for an organization to set the standard. Organization should also practice the usual practices and behaviors in an organization. It depends on the norms, values, beliefs of an organization. Norms, values and beliefs are not set by law; but it has been practices in almost every organizations. By following these norms, beliefs, values; organizations must form their standard Code of Conduct and Policy Manual. (Covey, 2004)

Page | 9

Managing International Standards:

Why International Standard is Needed:
Manufacturers are the number one benefactors of the use of internationally accepted standards because they can often reduce time-to-market and lower development costs. Global standards facilitate the introduction of products to a broad range of countries. However, manufacturers are not the only ones that benefit. Consumers also benefit since the latest technologies can reach the marketplace more quickly. In addition to time-to-market advantages, international standards increase the probability for consistently safer and higherquality products. International standardization is in the best interest of all parties involved. Although some emerging countries will fight it because of economic and political reasons, international standardization will only help their growth in the long run. The easier it is for manufacturers to introduce products into these countries, the more choices there will be for consumers. This would lead to healthier, more competitive markets and would increase the quality and availability of products. Moreover, being an ISO Certified company is a prestigious issue for an organization as well as it can create positive brand image to its stakeholders, which ultimately shows the path to success to an organization.

What ISO covers:

ISO's main products are international standards. They set different standards for different types of organizations. Most common ISO standards are:

Page | 10

ISO9001: (for Quality Management System): Applicable for all sorts of organization for quality management including Production operation management, Marketing management, Human resources management, Supply chain management, Data management etc. ISO14001: (for Environment Management System): Applicable to the companies, for which environment can be affected. For example: Ship breaking yards, Battery plants etc. ISO22000: (for Food Safety Management System): It is applicable for food manufacturers and suppliers. ISO27001: (for Information Security System): ISS is applicable for Information System providers like ISP, Intranet-Internet-Extranet management teams, Server maintenance departments, and digital firms. ISO20000: This is a new standard set by ISO. This is applicable only for IT services. OHSAS1800: This standard from ISO ensures Organization Health & Safety. SA8000: Social accountability increases good image for a company. An organization can get this opportunity to follow SA8000 sets by ISO. Moreover there are lots of standards has been set by ISO for different type of organization for effective and efficient management. It enables organizations to increase productivity though

operational excellence, continuous improvement and customer satisfaction. Who Is Responsible for Certification:
Product certification demonstrates compliance with standards and regulations and is mandatory in order to place a product on the market in many countries. Ultimately, manufacturers are responsible for certification to the required standards. Some countries regulate the process, some allow manufacturers declaration of conformity, and others require third-party independent testing labs to test and certify products.

Page | 11

Certification organizations such as Intertek Testing Services ETL SEMKO, Americas Division, have locations around the globe and know the intricacies of international markets. By using an independent laboratory or certification organization, a manufacturer can be guided through the testing and certification process for each market where it wants to distribute its products. These organizations are up to date on all of the latest standards and because of their global structure have the network in place to allow manufacturers to test products at a local lab for global markets. For independent testing labs, the development of international standards doesnt necessarily change how they do business. The real value of international standards for the testing labs is that the benefits can be passed on to the manufacturers. International standardization allows these testing labs to become true one-stop shops, which can reduce the cost and time for manufacturers to obtain global compliance. A manufacturer that knows its target markets can come to an independent certification organization for all its testing and certification needs. As more international standards are developed, manufacturers will be able to introduce products globally more quickly and efficiently. The movement is towards the ultimate goal of one standard, one test, accepted everywhere as rapidly as the markets and the regulators allow.

How to be an ISO certified company:

ISO does not itself certify organizations. Numerous certification bodies exist, which audit organizations and, upon success, issue ISO 9001 compliance certificates. With the exception of a small number of isolated standards, ISO standards are normally not available free of charge, but for a purchase fee, which has been seen by some as too expensive for small open source projects. The standards are published by ISO, the International Organization for Standardization, and available through National standards bodies. ISO deals with different management principles on which the family of standards is based. ISO deals with the requirements that organizations wishing to meet the standard have to fulfill.
Page | 12

Although commonly referred to as 'ISO 9000' certification, the actual standard to which an organization's quality management system can be certified is ISO 9001:2008. Third party certification bodies like Det Norske Veritas, Bureau Veritas, Conquest, Intertek Testing Services ETL SEMKO, Americas Division etc provide independent confirmation that organizations meet the requirements of ISO. Over a million organizations worldwide are independently certified, making ISO 9001 one of the most widely used management tools in the world today. Many countries have formed accreditation bodies to authorize ("accredit") the certification bodies. Both the accreditation bodies and the certification bodies charge fees for their services. The various accreditation bodies have mutual agreements with each other to ensure that certificates issued by one of the Accredited Certification Bodies (CB) are accepted worldwide. An organization applying for ISO 9001 certification is audited based on an extensive sample of its sites, functions, products, services and processes. The auditor presents a list of problems (defined as "nonconformities", "observations" or "opportunities for improvement") to management. If there are no major nonconformities, the certification body will issue a certificate. Where major nonconformities are identified, the organization will present an improvement plan to the certification body (e.g. corrective action reports showing how the problems will be resolved); once the certification body is satisfied that the organization has carried out sufficient corrective action, it will issue a certificate. The certificate is limited by a certain scope (e.g. production of golf balls) and will display the addresses to which the certificate refers. An ISO 9001 certificate is not a once-and-for-all award, but must be renewed at regular intervals recommended by the certification body, usually once every three years. There are no grades of competence within ISO 9001: either a company is certified (meaning that it is committed to the method and model of quality management described in the standard) or it is

Page | 13

not. In this respect, ISO 9001 certification contrasts with measurement-based quality systems such as the Capability Maturity Model. According to the new rule, companies must have to get the standards of ISO and practice these standards in their daily activities. They should also have to recruit some internal auditors, who will always check either standards are properly followed or not. Third party ISO certification companies will also delegate external auditors to check. After successful external audit, an Organization can be able to hold ISO certificates with a certain validity. Organizations should conduct periodic external audits time to time to continue ISO certificates. (Det Norske Veritas)

Advantages of ISO Certification:

It is widely acknowledged that proper quality management improves business, often having a positive effect on investment, market share, sales growth, sales margins, competitive advantage, and avoidance of litigation. The quality principles in ISO 9000:2000 are also sound, according to Wade and also to Barnes, who says that "ISO 9000 guidelines provide a comprehensive model for quality management systems that can make any company competitive." Implementing ISO often gives the following advantages: Creates a more efficient, effective operation Increases customer satisfaction and retention Reduces audits Enhances marketing Improves employee motivation, awareness, and morale Promotes international trade Increases profit Reduces waste and increases productivity Common tool for standardization.

Page | 14

Criticisms of ISO:
A common criticism of ISO 9000 and 9001 is the amount of money, time, and paperwork required for registration. Critics cites the "inordinate and often unnecessary paperwork

burden" of ISO, and says that "quality managers feel that ISO's overhead and paperwork are excessive and extremely inefficient." According to Barnes, "Opponents claim that it is only for documentation. Proponents believe that if a company has documented its quality systems, then most of the paperwork has already been completed." Wilson suggests that ISO standards "elevate inspection of the correct procedures over broader aspects of quality," and therefore, "the workplace becomes oppressive and quality is not improved." According to Seddon, ISO 9001 promotes specification, control, and procedures rather than understanding and improvement. Wade argues that ISO 9000 is effective as a guideline, but that promoting it as a standard "helps to mislead companies into thinking that certification means better quality [undermining] the need for an organization to set its own quality standards." Paraphrased, Wade's argument is that reliance on the specifications of ISO 9001 does not guarantee a successful quality system. The standard is seen as especially prone to failure when a company is interested in certification before quality. Certifications are in fact often based on customer contractual requirements rather than a desire to actually improve quality. "If you just want the certificate on the wall, chances are you will create a paper system that doesn't have much to do with the way you actually run your business," said ISO's Roger Frost. Certification by an independent auditor is often seen as the problem area, and according to Barnes, "has become a vehicle to increase consulting services." (Wikipedia, 2012)

Page | 15

Practicing Local Laws & Acts:

Meet the global standard is the key to success of an organization to be a global leader. However, organizations have to meet the local standards and practices first. Home country and Host country requirements should be given priority. Almost each and every country has some sets of standards for operating in their country. Bangladesh has some standards as well. Bangladesh Code is the compilation of amended, substituted and authentic version of all existing Acts of Parliament, Ordinances and Presidents Orders in force in Bangladesh printed in chronological order. The first Act in the Bangladesh Code is accumulated from 11th September, 1836 and the first Act title is The Districts Act, 1836.Total 956 Acts, Ordinances and Presidents Orders have been compiled in the Bangladesh Code from September, 1836 to January, 2007. Now laws of Bangladesh are available in websites. Anyone can be able to know the laws and acts of Bangladesh from the homepage of Ministry of Law which is http://bdlaws.minlaw.gov.bd/?menu=faq. PDF contains only the 38 volumes of Bangladesh Code those have been published in January, 2007. Any update on laws after January, 2007 is incorporated in the HTML format in the website. In Bangladesh practicing local laws and acts are mandatory. If any laws or acts of Bangladesh conflicts with International Standard, Local laws and Acts are being practiced. Most commonly used act in the organization is Labor Act, 2006, which is a complete Code of Conduct for an organization. Taxation laws are also being practices, which is one of the major sources of fund in annual budget of Bangladesh.

Page | 16

Social & Cultural Practices:

Organizations must have to follow local laws and regulations. Besides that they should have to follow the international standards to be a global leader. However, some common practices should be maintained, which are not set by any laws, acts or written standards. Values and beliefs are what an individual or a group of people believe as far as morals and what is right or wrong. The way a person is raised plays a big part on what their values and beliefs will be. Most common force factors of peoples norms, values and beliefs are: Religious Belief Usual Practices Family Trend Social Status Societal Practice National Practice Peer Factors Moral and Ethical Judgment Education

These force factors makes some activities as usual practices. These activities should be maintained for the goodwill of an organization. Organization can show their respect to local, social, and religious values, beliefs, and norms. It also symbolizes the attachment to the society with them. (Covey, 2004)

Page | 17

Conclusion:
Balancing the local laws, acts, practices with International Standard can make a company successful through competitive advantage. All of the stakeholder can get benefit from it. Manufacturers are the number one benefactors of the use of internationally accepted standards because they can often reduce time-to-market and lower development costs. Global standards facilitate the introduction of products to a broad range of countries. However, manufacturers are not the only ones that benefit. Consumers also benefit since the latest technologies can reach the marketplace more quickly. In addition to time-to-market advantages, international standards increase the probability for consistently safer and higher-quality products. The easier it is for manufacturers to introduce products into these countries, the more choices there will be for consumers. This would lead to healthier, more competitive markets and would increase the quality and availability of products. Managing International Standards can: Create employee satisfaction Balance effectiveness and efficiency Control quality Attract more local and global customers Make a company sound socially Create positive brand image Increase sales Lead an organization to the way of success

On the otherhand, maintaining local compliances, laws, acts can: Save a company from legal compliances Make a company able to justify their activities Enable a company to show their respect to the nation.

Page | 18

Furthermore, practicing local/ social/ religious/ national norms, values, beliefs can: Make job satisfaction among employees Enable a company to show their respect to the nation, which creates positive image. Develop employee relation and industry relation Can avoid labor strikes Helps an organization to run smoothly.

From above discussion, it is clear that, managing international standards besides maintaining local laws, acts, and practices can lead a company successfully. To get ultimate success, every company should manage international standard besides maintaining local laws, acts and practices to become effective, efficient, profitable, and successful through operational excellence, continuous improvement, and customer satisfaction.

Page | 19

Reference:
Bangladesh Labor Act, 2006.

Covey, Stephen R., (2004), Impact of Norms, Values and Beliefs in your organization, Key to Success for an Organization, Prentice-Hall, Tata McGrew Hill, Singapore. Pp79-80.

Det Norske Veritas, (2012), Managing Risk, International Standards of an Organization, DNV, India, Kolkata.

Government of Peoples Republic of Bangladesh, (2012), Laws of Bangladesh, e-source, Web retrieved on 21th Jul, 2012, found at < http://bdlaws.minlaw.gov.bd/?menu=faq>

International Organization for Standardization, (2012), Popular Standards, Web retrieved on 21th Jul, 2012, found at < http://www.iso.org>

Saddon, (2012), Cross Reference, Chrone.com, Web retrieved on 21th Jul, 2012, found at < http://smallbusiness.chron.com/internal-external-forces-influence-employee-behavior2806.html>

Wade & Barnes, (2012), Cross Reference, Chrone.com, Web retrieved on 21th Jul, 2012, found at < http://smallbusiness.chron.com/internal-external-forces-influence-employee -behavior-2806.html>

Wikipedia, (2012), International Organization for Standardization, Web retrieved on 21th Jul, 2012, found at < http://en.wikipedia.org/wiki/International_Organization_for_ Standardization>

Page | 20