BSB61015 - Advanced Diploma of Leadership and Management

Running head: RISK MANAGEMENT
Risk Management
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Assessment 1:
Answer 1:
The following are the four quality management and continuous improvement theories
which ensures sustainability of business organizations:
Total Quality Management:
The theory of total quality management is a quality improvement theory which originated
in the US and has gained acceptance in companies all over the world. Benavides-Velasco,
Quintana-García and Marchante-Lara (2014) defines total quality management or TQM can be
defined as a process which involved creation of an organisational culture which enables
continuous improvement of productivity to ensure satisfaction of customers. The system is based
strongly the principle that preferences of customers are regarded as quality parameters. The firms
strive to operate in ways to ensure production of goods according to the preferences of
customers. Goetsch and Davis (2014) mentions that TQM is directly related to customer
satisfaction, revenue generation and sustainability. Companies today consider the expectations of
customers or clients as quality parameters which enables them to ensure production in line with
the expectations of the latter. This paves way for customer satisfaction and revenue generation.
The companies are able to retain their customers and generate repetitive business, thus ensuing
future generation of revenue. This enables the companies to ensure financial sustainability in the
market. Thus, it can established from the discussion that TQM ensures sustainability.
Six Sigma:
Six Sigma refers to tools and techniques business organisations use to ensure continuous
improvement in production. Pyzdek and Keller (2014) mentions Six Sigma can be defined as the

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business process that identifying and removing the defects within the production system. This
results in minimum variance between the key performance indicators defined by the company
and the actual quality parameters achieved in the manufacturing process. Powell et al. (2017)
point out that six sigma is directly associated with sustainability. This is evident from the fact
that removing defects from the manufacturing process leads to more optimum utilisation of raw
materials. This reduces wastage and the financial loss companies incur henceforth. Secondly,
more optimum utilisation of raw materials reduce the amount of wastes released into the
environment, thus reducing environmental risks and boosting environmental sustainability.
Chugani et al. (2017) support this view by stating that the eradication of defects within the
manufacturing process boosts the level of customer satisfaction, thus rendering the company
higher revenue. Thus, it can be inferred that six sigma can pave ways for financial sustainability
in two ways, first by reducing loss incurred wastage of raw materials as well as their storage and
secondly by boosting revenue generation. Reduction in the wastage of material resources the
level of environmental risks. Thus, it can be summarized that six sigma renders firms with
sustainability.
Kaizen:
Kaizen refers to control of activities to bring about continuous improvement and involve
all employees. von Thiele Schwarz et al. (2017) defines Kaizen as a process which involve in
continuous improvement of the production process following the PDCA model. PDCA model
stands for plan, do, check and act. Hasan and Hossain (2018) mention that compared to six sigma
Kaizen is more employee centric. This is because while sigma lays more emphasis on
manufacturing process, Kaizen places more emphasis on involvement of personnel across
designations to ensure improvement in the entire operation of the firm. Sharma, Sharma and

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Singh (2015) point out that since Kaizen results in higher level of sustainability because it
involves the employees of all designations and covers all areas of operations. This attributes the
firms which high level of utilisation of available resources which includes financial resources,
material resources and human resources. Since Kaizen encompasses all the areas of operations, it
ensure sustainability in all areas.
Lean manufacturing:
Lean manufacturing is a systematic process of minimising wastes while maintaining
productivity. Fercoq, Lamouri, and Carbone (2016) point out that lean management recognises
wastes generated due to overburden or muri and waste created due to excessive work load or
mura. The process of lean manufacturing like TQM takes into account preferences of customers
while manufacturing of products. The five types of wastes generated due to excessive work load
or mura are unnecessary transport, maintaining of excessive inventory, inappropriate allocation
of human resources as well as plants, long waiting time, overproduction, over processing and
manufacturing defects. Martínez-Jurado and Moyano-Fuentes (2014) point out that failure of
finished products to meet customer expectations and create value to the latter ultimately renders
the entire production ineffective, thus resulting in wastage of the resources in the production of
the goods. Thus, they stress on integrating of supply chains which provide firms with raw
materials with the sustainability and quality management. Fullerton et al. (2014) mention here
that supply of appropriate raw materials results in production of raw materials as per customer
expectations, thus minimising waste generation. This reduces the amount of financial resources
companies spend to dispose off wastes and the enables to create more value for customers.
Bølviken and Koskela (2016) supports the view that reduction of wastes create value for the
environment. Moreover, creation of value for customers attribute the companies with high

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revenue and a stable customer base on which they can base their future strategies. Thus, lean
management first, reduces mura and wastage of raw materials, thus ensuing sustainability in
terms of finance and environment respectively. Secondly, the earning of higher revenue and
reduced financial loss due to fall in the wastage of raw materials yield financial sustainability.
Moreover, due to stable customer bases, companies can form future business strategies, thus
gaining market sustainability.
Stakeholder theory:
The stakeholder theory encompasses all the aforementioned theories and stresses on the
obligations of the companies to benefit or create value for the stakeholders. Jensen (2017)
mentions that the business organisations should aim to protect the interests of the stakeholders.
Stakeholders refer to the individuals or groups which are capable of affecting the business
operations and hence the business organisations are obliged to the former. Hörisch, Freeman, and
Schaltegger (2014) mention that stakeholder theory is closely related to quality production and
sustainability. Business organisations should take into account the expectations of the customers,
primary stakeholders while manufacturing products. It can be pointed out that this opinion is
closely related to the concept of TQM. Manufacturing of products in the line of customer
expectations allow the companies to earn immense revenue, thus enabling the companies to give
high returns to the shareholders and attracting more investment. Font, Garay and Jones (2016)
mentions that benefiting customers and investors attributes the business firms with high revenue
and capital respectively, thus attributing financial sustainability to the firms. Lozano, Carpenter
and Huisingh (2015) point out that suppliers of raw materials are important stakeholders because
they provide companies to with raw materials. The companies should ensure timely payment of
their suppliers which would enable the latter provide higher quality of raw materials. This would

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enable the companies manufacture products by minimising the wastes and make maximum usage
of the raw materials. It can be pointed out that in this respect stakeholder theory follows the lean
manufacturing theory (Strand and Freeman 2015). The management and employees are internal
who actually run the company. The former makes the strategies while the latter execute the
strategies, thus leading to high degree of business operations. This ensures optimum usage of
resources and reduction in the disruptions in productivity due to management-employee conflict.
An analysis of the fact discussed above points out that it relates closely to Kaizen. Mansell
(2015) adds here that optimum level of raw materials results in lower amount of wastes, thus
ensuring environmental sustainability, thus protecting interest of society by reducing
environmental pollution. Thus, the discussion can be closed by mentioning that stakeholder
theory ensures sustainability of business organisations.
Answer 2:
The 8 step change model points out to 8 steps in which management of business
organisations can bring about transformational changes in their business operations. The first
step to bring about the about transformational in the organisations is to create urgency. The
management should identify the potential future threats which would demand the change like
installation of advanced technology. The management should enable the lower level employees
to view the requirement to introduce the changes and the business opportunities which the
changes can usher in future like higher level of inter-departmental collaboration (Hornstein
2015). The second step of Kotter’s change model is to form a strong coalition. This means the
management should direct the senior management to lead the change process by involving
people across hierarchies (Smallet al. 2016). The third step to bring about a transformational
change is creation of a vision which means that management bodies should identify the