CHAPTER NO.

7
TQM, RESTRUCTURING
AND SELLING OF SICK UNIT

TQM
Total Quality Management was developed by

William Deming.
Definition:

The set of management processes and

systems that create and systems that create
delighted customers through empowered
employees, leading to higher revenue and
lower cost.

Demings Wheel

PDCA CYCLE

Cs of TQM

Pre-requisities/elements
of
TQM
Ethics
Integrity
Trust
Training
Teamwork
Leadership
Communication
Commitment from

top management

Effective

management
Focus on customer
satisfaction
Continuous
improvement
Complete
involvement
Process centered
Strategic and
systematic approach

Importance
of
TQM
Strengthens the competitive position for a
firm.
Higher productivity and low cost
Increase in market share
Processes are eased out and simplified
Better teamwork
Employee participation
Employee satisfaction
Elimination of defects and waste

Barriers to TQM
High cost for implementation
Not suitable for small organizations
Longer time for implementation
Lack of long-term commitment of management
Resistance from employees
Lack of proper training
Long term strategies are ignored
Focus more on profits than customer

satisfaction.

Business Restructuring
Definition:

A change in the business strategy of an

organization resulting in diversification,
closing parts of the business, etc to increase
its long-term profitability.

Need
ofinRestructuring
Adjustment
product mix
Redirection of the firms activities
Deploying the firms surplus funds
Modernization
Risk reduction
Focus on core strengths
Increase in market share
Diversification
Reduce waste and avoid losses

Types of restructuring
Financial restructuring:

restructuring of debts, assets and capital.

Operational restructuring:
restructuring of functional areas like
marketing, product, technology, managerial.

Advantages
Simplify business

and more efficient

Raise additional
funds
Optimum utilization
of resources
Attract more
investors
Reduces errors and
wastage
Innovations

New quality standards

Alter product mix
Lean techniques
Reduce cost
Increase

competitiveness
Focus on corecompetency

Disadvantages
Unemployment in case of downsizing
Increase in training cost in case of reassigning

of duties
Insecurity in mind of employees
Time consuming process
Costlier effort
Not suitable for small organization

Sick industrial
Definition:

A unit or a company which is found at the

end of any financial year to have incurred
accumulated losses equal to or exceeding its
entire net worth.

SICA
Scheme under SICA can provide following

measures:
Financial reconstruction of the company.
Proper management by change or
takeover.
Amalgamation with another company.
Sale or lease of industrial undertaking.

Selling
of
Sick
Unit
If BIFR is of opinion that the sick unit is not
likely to make its net worth exceed the
accumulated losses within a reasonable time
then it is advised to wind up its operations.
The board records and forwards its opinion to

concerned High Court.

On the bases of the opinion of the Board, the

court shall order winding-up or selling-off the

sick industrial unit in accordance with the
provisions of the Companies Act, 1956.