MB ASSIGN

MANAGING BUSINESS

BM027-3-2-MBUS,

INDIVIDUAL ASSIGNMENTHAND OUT: 10 JAN 2011

HAND IN: 07 FEB 2011

LECTURE: DALRENE JOHN

Name: Abdulla Sabah (TP022250)

Assignment Question

Why do you think that many firms fail to recognize the importance of customers

until they are faced with a crisis?

Learning Outcomes

Demonstrate theoretical and applied knowledge of the use of

contemporary benchmarking standards and how these may inform a

repositioning of the organisation to its stakeholders.

Demonstrate critical analysis of the development in international

management standards from a procedural to process based approach to

management and the importance of this in sustaining quality goods and

services.

Justify the recommendation of techniques through which an organisation

may achieve measured business excellence.

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Contents

Assignment Question.............................................................................................................................. i

Contents............................................................................................................................................. ii

1. Introduction...................................................................................................................................1

2. PART-one International standards and Benchmarking with application to Bank of Maldives.......2

3. PART-two process and procedures to provide fair and quality service to the customers...............7

4. PART-three methodologies to measure business excellence in Bank of Maldives........................10

5. Conclusion...................................................................................................................................12

6. References...................................................................................................................................13

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1. Introduction

Bank of Maldives is said to be the people’s bank of Maldives incorporated on 11 th November

1982 and the first bank to be listed in Maldives stock exchange (Ibrahim, 2009).

Auditor’s general report revealed that Bank of Maldives has given 80% of the bank deposits

to a two politician as loans which are against the rules and procedures of central bank

(Naeem, 2008). Due to this bank of Maldives is facing dollar shortages and lending

difficulties and as a result lot of customers has moved to other banks. To resolve this crisis

bank introduced whistle blowing to the bank, sending physical mails directly to the CEO and

adopting corporate governance code to show transparency and quality for the customers

(Annual report, 2009).

This assignment is based on 3 parts. PART-one is how Bank of Maldives can use

international standards for benchmarking during repositioning the organization.

PART-two will explain how Bank of Maldives can use its process and procedures to provide

fair and quality service to avoid incidents such as lending 80% of deposits.

PART-three will explain on techniques how to measure business excellence for

sustainability and development.

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2. PART-one International standards and Benchmarking with application to Bank of Maldives

ISBGS (2008) defines benchmarking as a value of some measure or derived measure, which

is indicative of the relationship between an organisational attribute and the values of that

attribute maintained in a benchmarking repository. It can be internal benchmarking where

example, how is the Bank of Maldives compared to the banking industry standards or

external benchmarking such as, is all the departments in Bank of Maldives performing

equally.

International Organisation for Standards (ISO) is the most common standards used by

manufacturing, service organization. These standards help the customer’s requirements in

the ability of organization to deliver services consistently meeting their needs and expectation

(department of trade, 2010).

ISO 9000 family standards such as ISO 9000, ISO 9001 and ISO 9004 can be used for quality

management system in bank of Maldives. This strategy will help Bank of Maldives to

achieve the goal of being number one retail bank in Maldives by 2015 (Annual report, 2010).

ISO 9000 on Quality Management.

To impellent ISO 9000 standards, Bank of Maldives need to establish a quality management

system based on the following principles.

Principle 1: Customer Focus

In order to apply the standards Bank of Maldives must do a research on customer’s need and

expectation. These needs and expectation must be linked to the company’s objective. Once

the objective is written it has to be communicated throughout the organization so that each

and every employee knows what is to be delivered to the customers. During the operation

bank must analyze the feedbacks from customers to understand the satisfaction achieved.

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However, the policies should not be based only on customers but also other stakeholders such

as employees, owners and the local community must be taken into consideration.

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Principle 2: Leadership

Leadership is to motivate the employees in achieving the objectives. Here it stars from the

establishment of mission. Eg, Bank of Maldives mission is to become financial leader in

South Asian Association for Regional corporation or SARC group (BML, 2010).

So to achieve this leadership, Bank of Maldives must be able to inspire the employees in

achieving the challenging goals at the same time eliminating fears of investors and owners by

showing that the goals can be reached. It also includes providing resources, training and

freedom of responsibility with accountability for employees in achieving the company

mission.

Principle 3: Involvement of people

Involvement of people means allowing the participation of employees from all levels in the

organization. It helps to perform ownership of problem and responsibility.

Eg: Bank of Maldives may want to find why the profit in Penang is dropping. So the

employees from all levels can contribute ideas to mind map and bring solution by sharing the

knowledge and experiences.

Principle 4: Process approach

The first step is to write the activities to be performed in the organization. Activates are

assigned to departments and responsibilities are given to achieve the expected result.

Example if Bank of maldives wants to launch Mobile banking the first thing is to assign the

task to the IT department and provide the resources required. During this process all the

departments must be communicated.

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Principle 5: System approach to management

Understand the interrelated process in the organization to improve efficiency and

effectiveness.

Example when the bank wants to introduce a new product or service they will always

undergo risk analysis. Suppose if Bank of Maldives wants to introduce Mobile banking and

offshore Banking as two projects, both of them must go risk analysis. So if the risk analysis is

conducted by different departments then the company is having duplication of process. The

best way for this is to do the analysis by one department so that the resources are used wisely

and the reports will be more comprehensive.

Principle 6: Continual improvement

Guidelines and rules have to be written to measure improvements on process and product.

This allows companies to adapt flexibility and opportunities.

Example in the 1980’s Bank of Maldives was catering the customers manually. But with the

evolvement of internet, banking process has changed to online banking. This is an

improvement we have seen. Improvements have to be made continuous along with the

technological improvement.

Principle 7: Factual approach to decision making

This will help companies to make decisions based on facts. This can be applied to Bank of

Maldives on decision making by gathering enough data which is accurate.

Example if Bank of Maldives wants to put an ATM in Addu Airport they need to analyze the

population in Addu Airport and study the number of transactions take place in the current

ATM’s in the Airport. Also need to balance review on past experiences to make it more

accurate in making decision to place a new ATM at Addu Airport.

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Principle 8: Mutually beneficial supplier relationships

This will help to strengthen the relationship between partners and suppliers by building

relationship for mutual benefits.

Example Bank of Maldives can establish long term relationship between ATM suppliers and

security providers so that they can give at a lower price at the same time suppliers can benefit

from customer lifetime value. They also can share information between parties for future

plans to get good quality products at a better price.

The followings are the different areas to be surveyed in order to benchmark (APQC,

2010).

Financial Management Accounts payable and expense reimbursement Accounts receivable

Customer credit and invoicing  

Finance organization General accounting and reporting Internal controls Payroll processing Planning and management accounting Sales and order management

HumanCapitalManagemen

t The HR organization (key dashboard of indicators for

HR) Create and manage HR strategy Source, recruit, and select employees    Develop, train, and counsel employees   Reward and retain employees Manage pay, report time, and process payroll taxes Redeploy and retire employees     Manage employee information

Supply Chain Management Supply chain planning Procurement Manufacturing Logistics

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Ares listed on page 5 have to be analyzed and documented as a report. Once the report is

completed then we need to select the best company in the industry to bench mark. It is

important that the company information is up to date (Clevenger, 2008)

Example, Bank of Maldives can select HSBC which is a world ranking bank. Then they have

to compare their survey reports which they have prepared with the information’s from that

bank. Information from HSBC can be gathered from annual reports, news articles and

journals. Ones comparison is over we need to write a new report on HSBC high performance

areas and ways to achieve those up to that level or higher. And then communicate the new

strategies with employees and follow up.

Benchmarking helps companies to keep their customers without switching to the competitors.

Because when a company benchmarks, they are improving their quality to a better which will

make the customers happy and they will remain with the company.

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3. PART-two process and procedures to provide fair and quality service to the customers

Process is a set of activities that are interrelated or interconnected with another. It uses the

resources and converts input into output. Process is interconnected because the output of one

level becomes the input in the next level. Procedure is the ways of carrying out process or

activities and they have steps (Wade, 2001).

Procedures may or may not be documented. But ISO 9001expects companies to document

procedures. This will help companies to provide high quality service with the standardization

of procedural work and making the employees work much clear (Praxiom, 2010). Process

and procedures differs along the hierarchy. Employees at the lower level have a more detailed

and specific written procedures for the process.

The following is an Eg of process and procedures.

Source: http://www.stc.org/ConfProceed/2000/PDFs/00118.pdf

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Process based approach

Bank of Maldives can use service process based management system in providing service to

the public. It starts from providing things right for the first time with the minimum human

errors (John, 2011).

Unlike manufacturing service like banking is more sensitive during the interaction and

communication. If the service is bad then it is possible for the customers to switch to the

competitors.

Source: http://www.zilog.com/docs/qcc1479.pdf

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Bank of Maldives will have procedures for each activity. Here I will explain the

reconciliation process with steps. But procedures have to be written for all the activities in

bank.

Step Description

1 Identify the reconciling items.

2 Reconcile the suspense account for those items selected.

3 Produce vouchers for each reconcile item.

4 Arrange the times in fixed asset order.

5 Record this data in the software for Auditing.

6 Provide the full report at the end of the month to the head of the Department.

So the bank follows the process and procedures then there won’t be any problem. The 80% of

deposits given as loan is because they did not follow the procedures. Auditors report have

highlighted that they have skipped the inspection due to the orders from president office. For

missing the important step in the process of inspection the bank is now facing US$50.3

million as doubtful debts (Haveeru, 2009)

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4. PART-three methodologies to measure business excellence in Bank of Maldives.

Business excellence is a model used to review the company’s performance and understand

target areas to improve (Tidd, 2005).

Source: http://pejuta.com.my/index.php?option=com_content&task=view&id=68

Business excellence model works similar to total quality management (TQM). It works as a

non-prescriptive base with nine criteria divided in to enablers and results where 5 of them are

enablers and 4 results (Pak, 2006).

How Bank of Maldives can use this model is by comparing the bank against the model. The

impact or results of services on people, customers and the society have to be found out. And

also on Enablers - leadership, policy and strategy, people management, resources and process

management. This assessment must be done very carefully since these are the areas which

will be compared in the model.

Understanding the organization is system is important when analyzing the Bank. This means

we cannot take departments as a single entity. Then score the organization on each criterion.

Eg: if the Bank process and procedures are well documented with ISO standards then it may

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get 30% and the banks expectation is 90% we need to bring improvement to the existing

procedures. So the management can bring up plans such as redesigning work and procedures

for improving quality.

Improvements can be brought up by establishing a culture. Example Bank employees can

exchange knowledge on job so that new employees and low performance workers can

improve. Ones a culture is created, direct action on the system have to be taken to for

necessary changes (Seddom, 2009).

The arrow with result is due to the enablers and the result helps the company to innovate and

better in terms of quality products and services. The assessment is endless and diagram below

show a diagrammatic presentation of what is explain previously.

Source: http://www.systemsthinking.co.uk/6-3.asp

Business excellence in general will help the management to understand the performance of

the bank and to improve before it drops under customer’s expectation. Crisis happens when

the performance drop under expectation and it will take a long time for the management to

take the business to normal.

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5. Conclusion

We have seen process and procedures, benchmarking and business excellence. In each of

them the main focus is customers and how to improve quality to keep the business

sustainable.

If the process and procedures are not good then the customers will switch to the competitors

because the process is complex and customers don not like to wait for time consuming

services or products with quality. Or if we benchmark a wrong company then we will be

providing not the service customers expecting.

So if the process and procedures, benchmarking standards or business excellence are written

and practiced to give best for the customer there won’t be any need to remind the customers

even if there is a crisis since everything was created by keeping customers as the main focus.

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6. References

Market Survey Repots

Annual report.(2010). BML strategic objectives [online]. Available from http://www.bankofmaldives.com.mv/SiteCollectionDocuments/Annual_Report_2008_English.pdf [Accessed: 27/02/2011]

Department of trade. (2010). Quality Management System [online].United Kingdom: trade

Available from

http://www.businessballs.com/dtiresources/quality_management_systems_QMS.pdf

[Accessed: 30/01/2011]

Ibrahim, A.(2009). Chairman’s Review [online]. Male’: BML. Available from

hhttp://www.bankofmaldives.com.mv/Information/Documents/BML_Report_2009

%20%28English%29.pdf [Accessed: 27/01/2011]

Naeem, I. (2008). Bank of Maldives audit report 2008 [online].Male’: Audit office Available

from http://www.audit.gov.mv/dv/agreports.php [Accessed: 27/01/2011]

Online Video

Clevenger,B.(2008). Benchmarking standards - voltage and Prime95. .[Online video].

September 16th. Available from: http://www.tomshardware.com/forum/245374-29-

benchmarking-standards-voltage-prime95 [Accessed: 1st February 2011]

Websites

APQC. (2010). Open Standards Benchmarking Assessments.[Online].Available from http://www.apqc.org/open-standards-benchmarking-assessments . [Accessed on 1st February 2011]

BML. (2010). Company Background. [Online].Available from http://www.bankofmaldives.com.mv/InvestorRelations/cb/Pages/default.aspx. [Accessed on 27th Jan 2011]

Haveeru.(2009) Audit report reveals BML in dire straits.[online] Available from

http://www.haveeru.com.mv/english/details/25587 [Accessed: 30/01/2011]

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IBGS. (2008) International Software Benchmarking Standards Group [online] Available

fro

mhttp://www.isbsg.org/isbsgnew.nsf/WebPages/C7B3FCC5CE6308F7CA25745800

13F206/$file/ISBSG%20Benchmark%20Standard%20V1.0%20Draft.pdf

[Accessed: 30/01/2011]

Pak,S.(2006).Business Excellence Model. [Online].Available from

http://www.saferpak.com/business_excellence.htm .[Accessed on 3rd February

2011]

Praxiom.(2010). ISO 9000, 9001, AND 9004: Quality Management Definitions. [Online].Available from http://www.praxiom.com/iso-definition.htm .[Accessed on 1st February 2011]

Seddom, J.(2009). System thinking for service organization. [Online].Available from

http://www.systemsthinking.co.uk/6-3.asp .[Accessed on 3rd February 2011]

Tidd,J.(2005). Managing Innovation Tools. [Online].Available from http://www.managing-innovation.com/tools/Business%20Excellence%20Model.pdf .[Accessed on 3rd February 2011]

Wade, J. (2001). Comments on the definition of process, procedure and work instruction.[Online].Available from http://www.bin.co.uk/PPWI.pdf . [Accessed on 1st February 2011]

Lecture Notes

John, D. (2011). Process based approach, BM027-3-2. [Lecture notes] Service Process

Approach. Managing Business Module. UCTI, business, Room L1-1, 22nd

November 2010

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