Business Principles

Making the right decisions requires both common sense and skill. Knowing what customers want is critical to business success and to achieving effectiveness. What kind of sleeping bags, for example, will best satisfy the needs of the Inglish family when they take their summer vacation in the mountains? In the early days of manufacturing, customers bought whatever was available because there were few brands, colors, and styles from which to select.

Today, the choices for most products have increased because many businesses provide similar products. Consumers can usually choose among the products offered by both domestic and foreign firms. Domestic goods (products made by firms in the United States) must compete with foreign goods (products made by
firms in other countries).

Businesses today focus efforts on gathering information from consumers, studying their buying habits, testing new products with prospective customers, and adding new features to existing products. New designs, different materials and colors, understandable instructions, and ease of product use are features customers
like. Large businesses spend millions of dollars examining customers’ preferences.

Equally important, businesses also invest heavily in keeping customers satisfied after products are sold. Product guarantees and follow-up with customers to make sure the product is working well help keep customers loyal.

To meet their needs, customers increasingly are concerned about the quality of products they buy. They want
them to work well and last a long time.

A growing emphasis of American producers is to improve the quality of the products they produce. Japanese car makers are an excellent example of how foreign producers captured a large portion of the market worldwide by providing customers with reliable and attractive cars. In the past, American car producers were not meeting quality needs as well as Japanese producers in the view of many buyers. Too many new cars had defects that required numerous trips to car dealers to correct.

On the other hand, Japanese cars had fewer initial problems and required little service.

American producers learned important lessons about quality from the Japanese. Today, American car producers are building products that are equaling their Japanese and European counterparts. American car manufacturers and producers of many other products vigorously stress to their workers the importance of
using procedures that result in the highest quality. The concept is called total quality management (TQM), which is a commitment to excellence that is accomplished by teamwork and continual improvement of work procedures and products. Where TQM is practiced, managers and employees receive a great deal of training on the topic of quality from experts. The result is a return to what customers want—well-made products.