Question from the Chartered Institute of Management Accountants, Intermediate Level, Management Accounting - Performance Management, November 2003.
E plc provides a computer upgrading, servicing and repair facility to a variety of business and personal computer users.
The management team has managed the business to date by using a standard costing and budgetary control system. However, the team has recently been discussing the possible use of alternative performance measurement systems, such as the ‘balanced scorecard'.
Another issue which concerns the management of E plc is the quality of the service pro- vided for clients. The operations manager has suggested that the company should introduce total quality management (TQM) but the management team is unsure how to do this and of the likely costs and benefits of its introduction.
Required
1. Explain the concept of the balanced scorecard and how it may be used by E plc to improve performance measurement.
2. a. Briefly explain total quality management in the context of E plc.
b. Discuss the likely costs and benefits that would arise if E plc introduced a TQM policy.