An Effect of the Improvement Activities on the Financial Performance

Chung, Kyu-Suk

Journal of Korean Society for Quality Management > Volume 37(3); 2009 > Article

Journal of Korean Society for Quality Management 2009;37(3): 1-.

개선활동의 재무성과 달성/기여 효과 분석

정규석

강원대학교 경영학과

An Effect of the Improvement Activities on the Financial Performance

Kyu-Suk Chung

Kangwon National University

ABSTRACT

Top Managers are apt to do the decision making on the base of cost-benefit analysis. Therefore the return on quality is indispensable to get the commitment of the top managers on the quality programs. The monetary or tangible effects of the most improvement activities through the suggestion systems and the quality circle activities are computed and reported. In most cases the reported gains are much bigger than the input invested. In spite of the reported high return many top managers are doubtful about the truth of reports because the gains are not translated into the profit on the income statement. This paper discusses about the mechanism of individual improvement activities and analyze the system effect which sum the individual effect and the realization effect on the income statement during that period. This will help the top managers to commit on the quality programs with high confidence.

Key Words: TQM;Effect of the Improvement Activity;Cost of Quality;Financial Effect;