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Improving Quality to Improve Profits

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Improving Quality to Improve Profits

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Improving Quality to Improve Profits

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BUS 642: Business Research Methods & Tools
Prof. Donna Wall
September 10, 2012


Improving Quality to Improve Profit

Public companies continuously experience pressure to increase profits for shareholders. One method of increasing profits is to reduce expenses. One expense Schlumberger management believes is totally within the company’s control is the first pass yield of their products. Specifically, Schlumberger management believed that raising the first pass yield of their product to at least 99% would result in at least a 1% increase in profit. As Fawcett & Calantone (2000) point out “quality’s relevance extends to its ability to reduce costs of defective work. Crosby estimated that the cost of quality are equivalent to 15 to 20 percent of sales revenue and argued that if quality were improved, total cost would inevitably fall, increasing firms profitability” (par. 22). As a result, Schlumberger management authorized a study to validate their hypothesis and determine specific focus areas to place resources that will maximize the effort for achieving results. To start the validation, the research team decided to utilize the specific research process charted in Business Research Methods written by Cooper and Schindler. As Cooper and Schindler (2011) point out “good research generates dependable data that are derived by professionally conducted practices and that can be used reliably for decision making” (p. 12). Cooper and Schindler (2011) go on to state “good research follows the standard scientific method: systematic, empirically based procedures for generating replicable research” (p. 12). As a result, this particular study will follow the process of clearly define the purpose, provide process details, thoroughly plan the research design, provide high ethical standards, reveal any limitations honestly, provide adequate analysis for the decision makers, present findings unambiguously, justify...