Fornell (1992, Journal of Marketing, 56, pp. 6-21) has developed a method of measuring customer satisfaction by using structural equation modelling. He introduces structural models that represent a conceptual network of processes that are aimed at satisfying the customer. The model output is in the form of index measure of customer satisfaction and components of the customer satisfaction process. More recently, Kanji (1998, Total Quality Management, 7, pp. 633-643) has developed the Business Excellence model using customer satisfaction as a critical success factor for the organization. Here, the model measures 14 interrelated latent variables that are based on the modified pyramid model of Kanji and Asker (Kanj, 1996). The model is based on well-established theories and approaches on business excellence criteria and draws on various currently used quality principles including customer satisfaction. In this paper, the authors have used a condensed version of Kanji's generic Business Excellence model to measure organization with the help of 10 interrelated latent variables. A typical example of the Business Excellence Index (BEI) for a group of companies is given using the present method. The authors believe that the BEI methodology given in this paper will help the organization to measure and compare different areas of its business both directly and over time. A high score of BEI achieved by this method will encourage the organization to apply for the Quality Award.
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