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ACC00114 - ENHANCING THE OPERATIONS OF FIRST BANK PLC IN OSUN STATE AND TO DETERMINE THEIR CONTRIBUTION TOWARDS TOTAL QUALITY MANAGEMENT


CHAPTER ONE

INTRODUCTION

  • Background to the study

Management activities in the business world are directed towards achieving an ample share of the industry and ultimately control of, if possible, the direction towards which the industry moves. Towards achieving this, various managerial techniques have to be put in place. The business world is highly competitive. Thus, all businesses must strive towards putting in place, policies that would greatly increase sales volume while maintaining quality and the quality of service delivery.

This trend has been in existence for generations and would continue to be. It has been largely responsible for the various challenges facing captains of industries worldwide; the scramble to ensure that the various goods and services offered by them achieve the highest standard of quality and cost effectiveness. This becomes more critical in light of technological advances that have been put before the customer, an array of goods of very high quality.

Every investor expects dividend from their investor, just as customers expect value for their money. Due to increasing alternatives, it is pertinent for producers to ensure that qualitative and cost-effective goods are produced in order to increase patronage and generate more income. These may however not be possible without a qualitative management technique; hence, the adoption of Total Quality Management (TQM) becomes pertinent.

TQM became a source of unification of visions and ideas across the organization to ensure the successful execution of the mission, even though TQM at that time was a noble idea to the organization. TQM, as adopted by FIRST BANKPLC can be described as the navigational aid for the successful berthing of FIRST BANK PLC at the pinnacle of new generation banks in Nigeria.

Total Quality Management (TQM) is a philosophy and a set of guiding principles that represent the foundation of an excellent organization and to ensure survival of industrial organizations in the competitive economy of today (Besterfield, 1999). Total Quality Management is a technique that underscores the continuous improvement of products and service quality to satisfy customers and enhance bank’s performance. The emergence of Total Quality Management has been one of the most significant developments in the United States of management practice. The focus on the development of Total Quality Management (TQM) systems in the US appears to have begun around 1980 in response to global competition and stiff rivalry in the US manufacturing sector arising from Japan (Easton and Jarrell, 1998). In the last three decades, Total Quality Management has become pervasive and widely accepted in manufacturing, services, government, healthcare and banking sectors of the developed economies (Fotoponlam and Psomas, 2009; Freng et al, 2008, Kaplan et al, 2010, Al-swadi et al, 2012 and Temtime, 2003) assert that continuous attention has been given to TQM in industrialized countries but researchers investigated quality practice in the developing countries in the last ten years.

According to Moballeghi and Moghaddam (2011), there is a growing awareness that a well designed and well executed Total Quality Management Process is one of the most effective routes to increase product and service quality, productivity and the performance of banks. However, many organizations are still mired in “quality confusion”. This scenario is a common phenomenon in Nigeria. Quality control has been identified as one of the critical determinants affecting the performance of most banks in Nigeria. In response to poor quality and substandard banks in wide circulation alongside the attendant adverse effect on the life of the citizens and the economy, Nigerian government established the legal and institutional framework to curb the ugly trend and menace in the country. The government of Nigeria set up regulatory agencies such as the Central Bank of Nigeria to regulate and maintain the external reserves of the country, promote monetary stability and a sound financial environment, and to act as a banker of last resort and financial adviser to the federal government. The Central Bank’s role as lender of last resort and adviser to the federal government has sometimes pushed it into murky regulatory waters. After the end of imperial rule, the desire of the government to become proactive in development of the country became visible especially after the end of the Nigerian civil war, the bank followed the government desire and took a determined effort to supplement any shortfalls in credit allocations to the real sector. The bank soon became involved in lending directly to consumers, contravening its original intention to work through commercial banks in activities involving consumer lending. However, the policy was an offspring of the indigenization policy at the time. Nevertheless, the government, through the Central Bank, has been actively involved in building the nation’s money and equity centers, forming securities regulatory board and the adherence of manufacturing firms to TQM practices have impacted on the bank’s performance in Nigeria.

  • Statement of The Problem

For a long time now, banking institutions in Nigeria have been faced with various problems, top of which are mismanagement and lack of top quality goods. These problems resulted in, for instance, the failure of many banks from the late 1980s into the early 1990s. Customers lost deposits many had worked all their lives for. Other sectors, like the manufacturing sectors, have also been affected by the scourge of mismanagement and disregard for quality.

Many of these organizations, especially those in the banking industry, reorganized themselves after the problems they faced during this period. But they also had to put structures in place to ensure that what caused their initial demise did not reoccur. One of the strategies adopted was Total Quality Management (TQM). The focus was now on the customer and what to do to satisfy them, rather than the ‘bottom line’. The adoption of TQM has gone a long way towards improving management processes and service delivery and has helped restore the confidence of the populace in the banking industry.

  • Research Questions

The research questions are:

  1. To what extent has Total Quality Management (TQM) company influenced the performance of the company FIRST BANK PLC?
  2. Does the application of TQM affect the prices of goods and services, and reaction of customers?
  3. To what extent is FIRST BANK PLC adhere to the principles, methods, etc. of the Total Quality Management (TQM)?
    • Objectives of The Study

The objectives of the study are to:

  1. To examine the effect of TQM on prices of goods and services.
  2. To determine the adherence to the principles and methods of TQM in First Bank PLC.
  3. To access the influence of TQM on the bank’s performance.
    • Statement of The Hypotheses

The following hypotheses shall be tested in the course of investigations:

Hypothesis in this case refers to tentative statement of facts that is subject to empirical validation by testing. The following are the hypotheses to be tested.

  1. Ho: There is no relationship between the application of TQM in First Bank Plc and its market share, and customer satisfaction.

Hi: There is a relationship between the application of TQM in First Bank Plc and its market share, and customer satisfaction.

  1. Ho: A company cannot succeed without the application of Total Quality Management

Hi: A company can succeed without the application of Total Quality Management

  • Significance of The Study

The research work focused on the influence of Total Quality Management on banks’ performance in Nigeria. Although, Oakland (1993) defined Total Quality Management as a way for the management to improve effectiveness, flexibility and competitive advantages for the organization as a whole because it complies with the internal and external customer requirements and the role of banking in Nigeria. With the help of Total Quality Management in banking industry, it improves the quality and efficiency of service rendered.

  • Scope of The Study

The research work is aimed at enhancing the operations of First Bank Plc in Osun state and to determine their contribution towards TQM.

The research study concentrates on First Bank Plc operating within the Osogbo metropolis.

  • Definition of operational terms
  1. Total Quality Management (TQM): is defined as the management of all aspects of quality services provided to customers. This includes concepts, quality of goods, delivery, price or services. It differs from the traditional quality concepts, quality control and quality assurance.
  2. Cause and effect diagram: also known as Fishbone or Ishikawa diagram. This is a graph showing relationship between cause and effect. It is used to identify, explore and graphically display in detail all of the possible causes related to a problem or condition so as to discover its root cause(s).
  • Customer: whoever acquires input to be able to complete a job to an agreed minimum level or standard. The employees are the internal customers of the bank while those they serve are the external customers.
  1. Customer focus: came about the external customer, knowing who the key customers are and how they feel about products and services.
  2. Flow chart: an information model that allows one identify the actual flow or sequence of events in a process that any product or service follow.