Free «Business Guide to World Trading System» Essay Sample

Business Guide to World Trading System


The success of all organizations depends on many factors and elements, including the quality and style of management. One aspect of management is quality management of operations and there are many ways to ensure that an organization delivers high standards in this area of management. One of the many ways to ensure quality management is for an organization to secure the ISO 9000 certification, because obtaining one would mean that the organization meets all the standards and guidelines in adequately serving the needs and demands of its consumers. Furthermore, the ISO 9000 certification “requires companies implementing this standard to comply certain requirements geared toward customer satisfaction” (Blokdjik, 2008, p. 55). Aside from meeting the standards set by the International Organization Standardization (ISO), the certification presents various benefits and advantages not only to consumers but to the entire organization as well. In this report, the ISO 9000 certification will be explored, including the standards that it requires and guidelines it demands from organizations, as well as its benefits and advantages to the organization, the consumers, and the manufacturers in developing economies.

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ISO 9000 Certification

The ISO is an international organization that is responsible for creating standards that could be applied or implemented in various areas of the organization. The ISO, which is a non-governmental organization, enforces its standards in over one hundred fifty-six countries, which means that organizations in these countries need to comply with its standards (Marquis, 2010). “The scope of the [ISO] covers standardization in all fields except electrical and electronic engineering standards… form the specialized system for worldwide standardization” (Hinkelman & Putzi, 2005, p. 106). One of the most important standards demanded by the ISO is the ISO 9000. The ISO 9000, which was completed in 1987, is a series of standards in quality management that was created as a response to pressure and criticisms from the military about the standards implemented in organizations, specifically the automobile industry. The ISO 9000 series covers different aspects of the organization, such as: (1) management responsibility, (2) quality system, (3) contract review, (4) design control, (5) document control, (6) purchasing, (7) purchaser supplied product, (8) product identification and traceability, (9) process control, (10) inspecting and testing, (11) inspection, measuring, and test equipment, (12) inspection and test status, (13) control of nonconforming product, (14) corrective action, (15) handling, storage, packaging, and delivery, (16) quality records, (17) internal quality audits, (18) training, (19) servicing, and (20) statistical techniques (Harrington, 1995, p. 175).

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Although the ISO 9000 covers various areas of quality management, the most important part of the documents include ISO 9001, because it encompasses various standards that the management should meet in order to ensure quality management of the organization. ISO 9001 also includes “generic characteristics of management practice, usefully standardized, giving mutual benefits to producers and users alike” (Ho, 1999, p. 202). While ISO 9001 covers major management practices that would help organizations meet the standards encapsulated in ISO 9002, 9003, and 9004, designing, manufacturing, and services; ISO 9002, on the other hand, covers all the standards and guidelines in the area of production. Moreover, ISO 9003 is concerned with testing and final inspection, and ISO 9004 is primarily a guideline for auditing (Harrington, 1995). If an organization is able to meet all the standards in the ISO 9000 series, then the ISO grants them certification. The certification means that, based on thorough inspection and evaluation of an organization’s performance, it meets the standards set by the ISO. The certification could also be used as a proof of the organization’s commitment to meeting the high standards of quality and to assure consumers that the organization is committed to providing quality products and services.

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Although the ISO 9000 certification is an advantage to organizations, it also has its drawbacks. “One ISO 9000 certification drawback concerns the documentation requirements and the internal assessment of procedures during the audit period” (Bergoffen, 2007, p. 8). The problem is attributed to the fact that monitoring an organization’s operations is difficult, because businesses like the construction and automobile industries are difficult and tedious to monitor. In addition, a study conducted by Lye, Ofori, and Savage (2010) proves that the effort it takes for organizations to meet the standards set by the ISO reduces the company’s competitiveness, because the standards focus more on ensuring quality instead of gaining competitive advantage. Another disadvantage is that the organization’s expenses increase due to the cost and volume of materials and resources the organization would purchase in order to meet quality standards in production. Other disadvantages that were identified in the study include extended time for operations and limited productivity due to the time, effort, and manpower required to meet the ISO standards (Lye, Ofori & Savage, 2010).

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Although there are disadvantages to the need for organizations to meet the ISO standards, the advantages outweigh the drawbacks. Essentially, the ISO standards serve as a means for organizations to keep themselves in check. “ISO certification used in a thoughtful way may be a useful step in a company’s efforts ‘to do things right’ and thus contribute to the company’s TQM [Total Quality Management] development” (Dahlgaard, Kristensen, & Kanji, 2005, p. 55). In addition, the ISO certification could be used as an instrument in organizing all operations and processes within the organization, because it serves as a guide for the management in making its major decisions. The ISO certification is also advantageous to manufacturers in developing countries. The economic gap between the developing and developed countries is not only determined by socio-economic differences, the standards and views on quality in industry and commerce also differ. Small- or large-scale organizations in developing countries mostly fail to cope with the standards of organizations in developed countries due to lack of resources and adequate management practices. For these businesses to establish trade with companies in developed countries, they must meet the standards of ISO 9000 and, if they acquire certification, they will be more likely to arrange trade and imports. The ISO certification serves as a guarantee to companies that businesses in developing countries can meet not only their quota but also the level of quality that is at part of their own (Lock, 1998).

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Manufacturers in developing countries could use the ISO 9000 certification in many ways. For instance, the certification could be used to disclose information about the organization. Majority of the problems concerning standards and quality for manufacturers in developing countries are related to environmental issues. Foreign investors would need to make sure that manufacturers follow environmental guidelines before they choose to invest and establish trades or partnerships (World Bank Group, 1999). In a way, the ISO 9000 certification is a means of marketing because it serves as a proof that manufacturers in developing countries are dependable. “There is growing awareness among manufacturing and service companies in the developing world of the important role which quality management systems play in marketing their products” (Commonwealth Secretariat, 1999, p. 98). Aside from certification as a marketing strategy, it also provides a means for manufacturers to prove that they are dedicated to quality management. The main problem with acquiring certification in developing countries is that not many organizations exist in these regions to inspect them and administer the ISO 9000 certification. Therefore, not many manufacturers obtain the ISO 9000 certification because they wait for certifying firms until they are available to inspect operations. The process then becomes a long-term goal for manufacturers because, aside from waiting for certifying firms to be available, they also have to work on meeting the standards for longer periods of time due to lack of resources.

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The problems and challenges that manufacturers in developing countries face when acquiring the ISO 9000 certification – waiting for certifying firms to be available in inspecting their operations, the need for massive resources to meet those standards, and the time required for manufacturers to meet those standards, among others – may seem to be part of the test. And if manufacturers are able to meet them, then it proves as a testament to their dedication in ensuring quality standards of operations. Consequently, when manufacturers acquire certification, purchasers and foreign investors view them as assets to their own business (Commonwealth Secretariat, 1999). Overall, the marketability and dependability of a manufacturer looking to trade with foreign organizations depend on its capacity to meet the ISO 9000 certification standards and requirements.

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Overall, the ISO 9000 certification serves as a guideline or blueprint for organizations to follow in order to ensure that they implement high quality standards and practices in all areas and levels of management. To manufacturers in developing countries, the certification not only proves that they are able to meet those standards and requirements despite their limited resources but also that they are dedicated and responsible enough in making sure that their firms are at par with the services of manufacturers in developed countries. This makes the manufacturers bankable and dependable, allowing them to attract attention from foreign investors.

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