The Effect Of Total Quality Management In Enhancing The Profitability Of Business Organization

Project and Seminar Material for Business Administration and Management BAM

The Effect Of Total Quality Management In Enhancing The Profitability Of Business Organization


This study investigates the effect of Total Quality Management (TQM) in enhancing the profitability of business organizations. Variables used to capture Total Quality Management (TQM) are management commitment through leadership, Quality control, inspection, employee training, customer focus, benchmarking as the basis for enhancing product quality. Organizational performance is measured by Customer Satisfaction, Corporate Social responsibility, Cost Reduction, and Employee Satisfaction. We run a series of multiple regressions of organizational performance variables on explanatory variables defining TQM. Our results show that only employment training and empowerment has a significant impact on financial performance and corporate social responsibility; leadership commitment, quality control and inspection have a significant impact on cost reduction. However, none of the TQM practices appear to have a significant effect on customer satisfaction.

Chapter One


1.1 Background of the Study

Distribution in the manufacturing sector can be described as the controlling, moving of physical goods within industrial firms and through channel systems. Distribution envelops the planning and implementation of physical movement of materials and final goods from the production point to the point where it will be used to meet consumer needs at a profit on the side of the marketer. The connection between entrepreneurship and distribution is that any production without progressive, impressive distribution system is 100 percent useless. This is because the produced goods do not gain any utility until the final consumer or the consumer obtains some level of satisfaction after using them.

Distribution channel is the route through which our goods and services cross as they travel from one hand to another (from producer to the consumer). Marketing Mediums stand in place of organized network of agencies and institutions which combine to carry out all the activities required to merge producers with consumers or vice-visa in order to meet the marketing goals by delivering products and their ownership titles to consumers at the right time, marketing channels thus, perform a special kind of service to the society by creating time, place and ownership utilities. Marketers are on a daily basis are turning into channels for a competitive advantage. This increases to maximum control over service level/output, improves the image of a product and generate higher markups, advances dealers loyalty, better future planning, better inventory and merchandising control and stops or prevents resellers from carrying competing brands. Distribution pattern has huge effect on consumer’s patronage because without showcasing and advertising a company’s product, consumers and buyers will not patronize the company. The goal of distribution in an organization, firm or company is to make goods and services available to buyers, customers. In doing so, exchange of ownership takes place in which case, title to a product has to change hands numerous times and physical movement of goods is fired off but not necessarily to accompany the route of ownership flow.

Physical distribution policies are therefore a significant guideline for companies or organizations effective, efficient and productive performance in order to meet and achieve the desired short and long term goals and objectives. Many business firms have failed to achieve their desired goals and objectives even after producing high quality products. These failures have been attributed to unproductive and inefficient strategies and decision making as it relates to physical distribution of goods. The goal of distribution is to make goods to be physically available to the ultimate consumer and buyers at considerable prices. Thus, it is very imperative that the products are distributed in the most efficient manner to reach the ultimate consumer whose patronage ensures the survival of the organization. By so doing, the organization will take pleasure in the consistent high sales turnover and subsequently high profit delivery. Organizations through their managerial functions of planning, prepare well organized ‘policies that enable them to control their internal and external actions. Physical distribution policies in Juhel Nig. Limited Enugu state include’ identification of appropriate location of plant, equipment, depots, and mode of transportation services. It also includes the feeding of good communication system, inventory level and proper packaging of products such that they can be transported and stored without incurring much cost. They work hard to reduce loss and increase satisfactory customers’ service so that the organization will continue to win their loyalty and also remain at its peak. The activities of the physical distribution include foresight, transportation, material handling, material handling, protective packaging, inventory control, order processing market forecasting and customer services. Another researcher puts it that; “physical distribution is an integrated set of activities that deal with managing the movement of products within firms and through marketing channels”. But in the seller’ market which is in most cases a common experience in Nigeria, distribution has taken a back seat among marketing activities. And it has therefore received little attention of marketing executives.

1.2. Statement of Problem

The poor patronage of goods and services in Nigeria has been a cause for serious concern. It has led to the constant poor and under performance of companies; this is because effective patronage is a panacea for growth and development in any organization as no organization grows or develops without patronage of her goods or services. This poor patronage has also led to the reduction of employment in Nigeria thus increasing the unemployment level among Nigerians which has had a negative influence on economic growth and development.

1.3. Objective of the Study

The major aim of the study is to examine the effects of distribution pattern on consumers’ patronage in Nigeria.

Other specific objectives of the study would be as follows;

  1. To examine the types of distribution pattern evident in Nigeria.
  2. To determine if distribution pattern influences growth and development of an organization.
  3. To examine the problems associated with distribution of goods in Nigeria.
  4. To examine the relationship between distribution and patronage in Nigeria.
  5. To recommend ways of improving the distribution of goods in Nigeria to enhance patronage.

1.4 Research Question

In line with the objective of the study, the following are the research question:-

  1. What is the effect of distribution pattern on customer patronage in Nigeria?
  2. What are the types of distribution pattern evident in Nigeria?
  3. Does distribution pattern influence growth and development of an organization?
  4. What are the problems associated with distribution of goods in Nigeria?
  5. What is the relationship between distribution and patronage in Nigeria?
  6. What are the ways of improving the distribution of goods in Nigeria to enhance patronage?

1.5. Research Hypothesis

  1. H0: Distribution pattern does not affect customer patronage
    H1: Distribution pattern affects customer patronage
  2. H0: Distribution pattern influences the profitability of an organization.
    H2: Distribution pattern does not influence the profitability of an Organization.

1.6. Scope of Study

(a) Content Scope

The study will examine the effects of distribution patterns on consumer patronage, a case study of Juhel Nigeria Limited comprising of the Pharmaceutical, Beverage and Petroleum dispensing units. The study will specifically examine the various distribution channels and intermediaries used by the firm in conveying its products from the manufacturing plant to the final user/consumers. The major distribution processes will be examined critically as well as substantiating the positive effect on the consumer patronage, Wholesalers and Retailers.

(b) Geographical Scope

The research will be carried out in Enugu, Anambra State Nigeria, South East geographical zone using JUHEL Nigeria Limited as the case study.

1.7. Significance of Study

The study would be of immense importance to captains of industries, managers and directors of organizations as it would reveal the effect of distribution pattern on the patronage of customers. The study would also benefit students, scholars or researchers who are interested in further studies on distribution pattern and how it affects customer patronage and organizational productivity and profitability in Nigeria.

1.8. Limitation of the Study

Financial constraint- Insufficient fund due to the present state of the economy will in a way impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic/paid work. This consequently, will cut down on the time devoted for the research work.

1.9. Definition of Terms


Distribution means to spread the product throughout the marketplace such that a large number of people can buy it, put differently, it could also depicts increased visibility of the products.

Distribution Pattern

Distribution pattern refers to the way goods are spread out or arranged over an area.

Distribution Channels

Channel of distribution is simply the way or mode through which goods and services are made available to the market. According to E. Jerome Mc McCarthy, “A channel of distribution is any group of firms or individuals who participate in how of goods and services moves from producer to final user or consumer”. Levi Chukwura Ezeaku sees channels of distribution as “The different avenues open to any producer whereby he can get his product into the hands of those who need them”.

1.10 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain the effect of total quality management in enhancing the profitability of business organization.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of TQM in enhancing the profitability of a business organization.

5.2 Summary

The study examined the effect of total quality management in enhancing the profitability of business organization – An empirical study of selected breweries in Lagos State, Nigeria: The study revealed that there is positive and significant relationship between total quality management and increasing organizational return on investment.

There is also a significant relationship between total quality management contributing to the achievement of lowering the level of product wastage and the level of product wastage and increases in customer satisfaction.

5.3 Conclusion

The increase in demand of quality products and sophistication of customers have virtually re-written the rules of competition and forced organizations to focus on quality. All management levels involvement in the implementation of TQM in an organization increases cohesive teamwork, effective communication and quality attainment and other things. Management challenges disrupting the TQM implementation should be tackled by the management team and not by individual alone. Frequent employee training will help management in various ways like, a)It will help in acquisition of new knowledge and technology that will aid better performance in the organization. It will help increase the level of individual and organizational competence.

5.4 Recommendations

Organization should see TQM as a continuous project which should not be ignored.

Management at all levels should join hand in the implementation of TQM in the organization inorder to achieve their goal target and satisfy its customers.

All management challenges should be treated by teams of the employees and not be individual self-solution.
organization should engage in frequent employee training in order to foster its quality attainment.

All the TQM principles must be implemented in order to achieve organizational goal targets.

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