Contents
2. Defining the certification industry
3. The ISO 9001 certification segment
4. The Portuguese ISO 9001 market
5. Empresa Internacional de Certificação
5.2. Certification of management systems
2. How can EIC improve its international recognition?
3. How can EIC fight SMEs’ lack of interest from getting certified?
4. How can EIC maintain profitability while facing the downward of ISO 9001 certification prices?
6. Limitations and issues to explore further
List of Acronyms
APCER – Associação Portuguesa de Certificação
BV – Bureau Veritas
CAE – Código de Actividade Económica (Code of Economic Activity)
CASCO – Committee on Conformity Assessment
EIC – Empresa Internacional de Certificação
IAF – International Accreditation Forum
ILAC – International Laboratory Accreditation Cooperation
IPAC – Instituto Português da Acreditação (Portuguese Accreditation Institute)
IPQ – Instituto Português da Qualidade (Portuguese Quality Institute)
ISO – International Organization for Standardization
NACE – Nomenclature statistique des Activités économiques dans la Communauté Européenne (Statistical classification of economic activities in the European Community)
SGS – Société Générale de Surveillance
SMEs – Small & Medium Enterprises
In recent years, quality management has gained great visibility in the business environment. Organizations, in order to cope with the increasing competitiveness, use management strategies that meet the demands of customers, employees and society.
In the area of quality management certification, there is a significant increase in the number of certification bodies, which means that they have to play an important and proactive role in maintaining their current customers and retaining new customers. On the other hand, there is an increasing competition among organizations, which leads to quality certification being considered as a differentiating element among the organizations that work in the different sectors of activity. This case study focuses on the certification of the ISO 9001 Quality Management System of Portuguese organizations certified by a certification body, namely on EIC – Empresa Internacional de Certificação.
EIC is one of the top 4 leading companies within the ISO 9001 certification market in Portugal. Founded in 2000, triggered by the monopolistic existence of its rival APCER – Associação Portuguesa de Certificação, and accredited in Portugal since 2001, EIC offers certifications of quality management systems, products and services. The certificates EIC issues are recognized worldwide and EIC is currently present in Portuguese-speaking African countries such as Angola, Cape Verde and Mozambique.
In 2010, EIC’s operations were going smoothly but the Portuguese ISO 9001 certification market was starting to become saturated when Small & Medium Enterprises (SMEs) lost interest in getting certified therefore boosting its path to international recognition and a downward on the ISO 9001 certification prices. By the end of 2016, EIC was already expanding its international borders through strategic partnerships in order to improve its international recognition. In its future strategic approach, EIC hopes to fight the market saturation and consequent lack of interest from SMEs to get certifications and also hopes to maintain profitability while facing the downward in the ISO 9001 certification prices.
Certification is the issuance by an external and independent entity (certifying entity) of a certificate of conformity after auditing the company or organization and verifying that it meets the requirements specified in the applicable standard of reference. The objective of certification is to allow the company or certified organization to demonstrate to third parties its good practices and credibility, and affirm that it can be a safe and reliable partner. In addition to facilitating access to the markets, periodic audits are real operational analyzes of the various processes, becoming a tool to encourage their continuous improvement. As a result, each company or organization, in accordance with the scope of certification, will see improved: organizational performance, its offer of products or services and its relationship with customers and suppliers. Certification (public demonstration of compliance with a standard) of a management system, service or product, by a third independent entity, has the general and immediate effect – it generates increased confidence in the external environment of the company or institution; it allows to display the reached levels or indexes of quality that translate into clear advantages in relation to the market, namely: in customer loyalty; in the repetition and recommendation of the business; in good operating results; in greater ability to respond quickly and flexibly to opportunities; in the increase of competitive advantages, fruit of improved organizational capabilities. Obtaining the certification also emphasizes transparent and participatory management as the guiding principle of organizations, in a process of continuous improvement and evaluation, with significant advantages in the profitability of resources and cost reduction. The certification industry is an enormous industry, present in various fields, and in constant growth, with new certifications emerging at each day [1].
The certification companies are usually accredited by the accreditation entity in their home country and can be accredited by foreign accreditation entities. Accreditation is the independent evaluation of future certifying bodies to ensure their competence and impartiality against recognized standards [2]. Accreditation entities are established in many countries[1], (see Appendix I for detailed list of countries), and these apply different fees between each other to accredit [3]. For example, it is known that countries like Italy and the United Kingdom charge high prices to companies who wish to get accredited [1]. These accreditation entities, who evaluate each other to make sure they’re competent, sign agreements that assure the acceptance of services and products across national borders, therefore creating a net to endure international trade by deleting technical barriers. These agreements are managed by the International Accreditation Forum (IAF) in the areas of products, management systems, people, services and other similar conformity assessment programs and by the International Laboratory Accreditation Cooperation (ILAC) in the area of inspection and laboratory accreditation [2].
It was in order to facilitate international trade that ISO (International Organization for Standardization) developed international standards that give world-class specifications for services, systems and products to ensure efficiency, safety and quality. ISO has now published 21,515 international standards and related documents covering almost every industry from food safety, to technology, to healthcare and agriculture. Also, ISO’s Committee on Conformity Assessment (CASCO) has produced various standards related to the certification process, which are used by certification bodies. ISO is a non-governmental, independent international organization with a membership of 164 national standards bodies[2]. Alongside its members, it creates groups of experts to share knowledge and develop consensus-based, market relevant, voluntary international standards that support innovation and give solutions to global problems [4].
Nowadays, ISO is the world’s biggest publisher and developer of international standards. Over 20 million businesses worldwide are ISO recognized or certified. The most common ISO standard for certification is ISO 9001 Quality Management Systems. However, there can also be seen significant growth in demand for ISO 22000 Food Safety, ISO 14001 Environmental Management Systems and ISO 27001 Information Security Management [5]. Management systems are systematic frameworks created to manage a company’s procedures, policies and processes and promote ongoing improvement within. The implementation of an effective and proven management system, such as ISO 9001 Quality Management Systems certification, can help to improve a business’s operations, manage risk and endorse stakeholder’s confidence [6].
In this section it’s approached the main trends of the ISO 9001 Quality Management System certification, on an international as well as national level, based on annual published reports by ISO. With this information, it is possible to analyze the trends of the ISO 9001 Quality Management System certification industry and the number of annually issued ISO 9001 certificates in Portugal and in the rest of the world.
On an international level, the certification of the Quality Management System has been of great importance in recent years, with an increase in the number of certificates issued (Appendix II). In 2011 there was a significant decrease in ISO 9001 certificates worldwide [7]. In the year of 2015, 1,033,936 certificates were issued worldwide [8]. In spite of the number of ISO 9001 worldwide certified companies, it is vital to mention that recent studies show a visible stabilisation over the number of certified organisations, hence reflecting a potential market saturation [9]. Indeed, Marimon [2009] affirms that worldwide decertification (non-renewal of certifications) is evident [10].
Furthermore, it is of importance to mention the contribution of the three countries that make up the top 3 of the list of countries with the highest number of organizations certified, according to ISO 9001 (Appendix III) – China with 292,559 issued certificates, Italy with 132,870 and Germany with 52,995. It should be noted that this group of countries accounts for 46.27% of the worldwide number of ISO 9001 certificates [8]. Taking into account China’s evolutionary trend in the number of organizations certified by the Quality Management System, it can be said that China has great potential for growth in the number of organizations with certified quality management systems.
According to a model carried out by Sampaio, Saraiva and Gomes (2014), three groups of European countries can be identified regarding their evolution in the number of ISO 9001 issued certificates (from lowest to highest): Luxembourg, The Netherland, Belgium, Greece, Slovenia, Hungary and Spain present results dictating that there is a decrease in the number of ISO 9001 issued certificates in those countries for the last few years; Sweden, Finland, Portugal, Germany, Denmark, Ireland, Estonia, Poland, Italy, UK and Cyprus represent the group of countries where a stabilisation (or a very soft increase) of the number of companies with ISO 9001 certifications is taking place; and Slovakia, Austria, Bulgaria, Malta, France, Lithuania, Romania, Czech Republic and Latvia indicate the countries with a very significant growth, where the number of companies with certified quality management systems increased substantially in the last few years [9].
In Portugal, the “Instituto Português da Acreditação” (Portuguese Accreditation Institute) – IPAC – is the body that recognizes if the certifying entities have or not the technical capacity to act in the market. These certifying entities, on the other hand, proceed to the conformity assessment and are also responsible for the certification and maintenance of Portuguese organizations [11].
As part of the certification of the quality management system, the number of organizations certified by ISO 9001 in Portugal has grown significantly over the years (Appendix IV). In the year of 2015, 7,498 ISO 9001 certificates were issued in Portugal [8], representing 0.725% of the total number of issued certificates within the year of 2015 on a world scale. Therefore, one can say that Portugal is a country with a very small return on the number of organizations certified by the quality management system, compared to the number of organizations certified worldwide according to ISO 9001. This fact results in an increase of Portuguese companies needing to be internationally recognized, a trend that has been amplified worldwide. Being internationally recognized is important to the certification companies nowadays because it gives them international reputation and makes them commercially more appealing to customers [1].
On the IPAC database, one can have access to the total number of ISO 9001 Quality Management Systems certified companies until the end of 2016, resulting in 5,538 certified companies, mostly large enterprises [12]. This represents a decrease of 26% compared to 2015 due, probably, to the market saturation. A model suggested by Franceschini, Galetto and Cecconi (2006) provides a calculation of new certifications growth, together with the time necessary to reach a certain saturation level. It states that, by looking at the evolution curve for the number of certificates over time, in every country, it is observable a kind of “saturation effect”. According to the authors, following a certain period of rapid growth, a physiologic shatter takes place, signifying that certification loses its connotation when the number of certified companies reaches a certain limit, making certification less attractive for the remaining non-certified organisations [13]. At this stage, there is a reduction of the competitive gap among certified and non-certified organisations, and the number of new enterprises (mostly micro, small & medium enterprises (SMEs) ) potentially interested in seeking certification decreases considerably [9]. Consequently, this has lead to a decrease on the ISO 9001 certification prices in Portugal [1].
Currently in Portugal the accreditation activity is carried out by IPAC, and there are eight accredited certification bodies on ISO 9001 Quality Management Systems [14]:
The 4 big players in the Portuguese ISO 9001 certification industry are APCER, SGS, BV and EIC [1]. APCER (founded in 1996) was the second Portuguese company to issue certificates in Portugal; the first company was the “Instituto Português da Qualidade” (Portuguese Quality Institute) – IPQ – ISO’s current standard body representative in Portugal. IPQ created APCER once they realized that issuing certificates was more complex for IPQ alone to handle. Therefore, APCER was always known as “the new IPQ” and with this purely commercial reputation, APCER managed to control the Portuguese certification market ever since [15]. EIC (founded in 2000) came after to take APCER from a monopolistic market and has been a growing company over the years [1]. Both these companies act internationally through strategic partnerships although APCER is recognized in more countries than EIC [1][15]. SGS (founded in 1878) and BV (founded in 1828) represent two big multinationals present in Portugal and with a business structure slightly different from APCER or EIC. These are large enterprises, scattered all over the globe, accredited from many countries and acting always globally [16][17].
According to each of the 4 major company’s annual report from 2015 and 2016, the ISO 9001 market behaved as following:
| 2015 | 2016 | |||||
| Number of issued certificates | Market share (Appendix V) | Source | Number of issued certificates | Market share (Appendix VI) | Source | |
| APCER | 3,824 | 51% | [18] | 2,876 | 52% | [22] |
| SGS | 1,420 | 19% | [19] | 953 | 17% | [23] |
| EIC | 751 | 10% | [20] | 752 | 14% | [24] |
| BV | 761 | 10% | [21] | 680 | 12% | [25] |
Table 1 – 2015 and 2016 ISO 9001’s market behaviour
Comparing 2015 and 2016’s market share, one can conclude that APCER lost many companies (due to decertification) even though its market share increased by 1%. SGS and BV maintain a strong presence in Portugal and EIC, even though maintained its number of issued ISO 9001 certificates, increased its market share showing leadership over BV in 2016. These oscillations prove, once again, the main trends observed before: the raise in international recognition from Portuguese companies, the certification trivialization and the decrease within ISO 9001 certification prices.
EIC is a public limited, B2B, company with its headquarters in Lisbon. Established in 2000, it has since become highly accepted in the national market due to its proximity management and strong partnership with its customers. Accredited since 2001 for the certification of quality management systems, products and services (see Appendix VII for a clearer view of EIC’s offered services [26]), its performance has always been guided by accompanying its clients in their needs, either by extending the certification services that it offers that are always accredited, or by extending the countries where it operates. Currently EIC is present in Portuguese-speaking African countries such as Angola, Cape Verde and Mozambique with a view of supporting its clients in the achievement of those markets. The certificates EIC issues are recognized worldwide through IPAC accreditation and the consequent IAF recognition [27].
The process to certificate a Management System is rather complex (see Appendix VIII for the process’s full and detailed explanation of the Management Systems certification) [28]:
Stage 1 – The client expresses its intention to certificate with the EIC.
Stage 2 – The EIC prepares a proposal and sends it to the client together with information on the EIC process and rules.
Stage 3 – The client sends:
Stage 4 – EIC:
Audit Team:
Stage 5 – The audit team audits and prepares report which is delivered to the client at the end of the audit with identification of all findings.
Stage 6 – The client sends to the EIC a response to the report with:
Stage 7 – The audit team:
Stage 8 – The client sends to the EIC the response to the 2nd phase audit report, responding identically, described in the 1st phase.
Stage 9 – The EIC analyzes the documents that constitute the process and makes the decision – issues certificate. Annually, follow-up audits are carried out, which are 12 (1st follow-up) and 24 months (2nd follow-up) as of the last day of the concession audit.
Stage 10 – Preparation of a new certification cycle: at least three months before the end of the validity of the certificate, the EIC prepares a proposal for a new certification cycle, returning to the beginning of this process.
(Incluir um parágrafo que explique a intranet da EIC, o seu papel no processo da certificação bem como a sua contribuição para a comunicação dentro da empresa e consequente gestão de tempo – mencionar que no geral não é bem utilizada)
Some employees regularly experience a number of problems with EIC’s intranet:
Senior management has not focused upon the development of the intranet as a deep information exchange tool. Although some individuals in middle management have realized its potential, senior management currently sees the intranet as an information store within its existing framework.
Since it was founded and until the end of 2016, EIC has been growing substantially even though it faces all the inevitable threats within the certification market. Regarding the niche of the ISO 9001 certification, EIC in 2014 issued 757 certificates, 751 in 2015 and 752 in 2016 finally putting EIC ahead of its ongoing rival – Bureau Veritas [1].
Taking into consideration the trend of international recognition, EIC has been thinking about expanding its international borders through strategic partnerships. These consist in finding a win-win situation for both companies. Although a hard process, it’s easier and less expensive than getting accredited in foreign countries [1].
Regarding the trend of market saturation, EIC has yet to find a solution for the lack of interest from SMEs in getting certifications, therefore leading to a substantial reduction of EIC’s ISO 9001 certification prices. In 2004, EIC could sell an ISO 9001 certificate for 750€ while by the end of 2016 the maximum price EIC could afford asking was around 630€ [1].
As competition grows intense, the need to stand out, maintain and attract new customers becomes vital for the survival of any enterprise. Therefore, the certification industry realized, as time went by, which characteristics a company should have in order to stand out or seem more appealing to customers. One of those characteristics, according to the CEO of EIC – Aline Cortez, was to show an international expansion of their business [1].
Clients seeking a certification don’t seem to know much about this market and it can become hard to choose a company to certify them. Since they all practice, give or take, the same prices nowadays, clients need an extra factor in order to choose their future certifying body. Even though, and apparently not every client seems to understand this, any certifying company accredited legally by their home country can certify worldwide since their certifications are recognized worldwide[3], clients need proof of international expansion since, nowadays, it proves the company is successful enough to expand and in great demand. Therefore, it’s been in the interest of certifying companies worldwide to show an international expansion, either by moving their business to other markets or simply by showing international presence. In order to settle a business anywhere, doesn’t matter if it’s opening a company or expanding, the company needs to get accredited in every country it operates if it wishes to operate entirely in the name of said company. Getting accredited can be an extremely expensive cost for the company, unless the company already has its multinational status and organization. Unfortunately, accreditation prices are not available to the general audience; however experts in the field of certification have an understanding of the most expensive countries to get accredited. To revise, accreditation is the evaluation of future certifying bodies, to ensure they are capable to give out certifications. Like a certification, accreditations exist in various standards according to what the future certifying company wishes to certify. For example, if the future certifying organisation wishes to certify within the ISO 9001 certification, it need to get the specific accreditation – ISO/IEC 17021 Conformity Assessment. All of these different accreditations have different prices and processes [1].
In EIC’s case, getting accredited abroad is not an option mainly due to the costs associated but also because EIC is not ready to undertake the multinational status. Therefore, the two main Portuguese certifying enterprises – APCER and EIC – have been trying to come up with a solution to show clients they operate internationally but without needing to legally expand. Their solution was, in their own terms, to create strategic partnerships and become commercially more appealing to customers by saying “the company is present in x countries”. The problem that arises derives from the need to find a win-win solution to attract foreign enterprises to engage in these strategic partnerships. In a nutshell, even though international presence is not a barrier in the certification industry, it has become crucial to create this “smokescreen” for clients in order to show that the company legally operates in other markets as well [1].
Portugal, as already mentioned before, experienced a rapid growth in the number of ISO 9001 certified companies in the late 1990’s and beginning of the 21st century. When organizations decide to have their quality system audited by an independent agency, they become ISO registered companies (process of certification). Many organizations decide to have their quality systems registered due to the perception that an independent confirmation of conformity adds value. Nonetheless, there are several reasons why firms want to be ISO registered. For example, some firms wish to be registered for the reason that they perceive a quality benefit. However, others might want to reach a preferred supplier status, or merely want to fulfill their customer expectations. Complying with requirements and regulations is one more reason to seek an ISO certification [29].
However, organizations may possibly choose to follow the standards, with no formal external supervision since the very existence of the company (therefore being uncertified firms), or on a post-certification period (which can be called decertification). Decertification happens when companies decide not to renovate their certification since they believe that they have, up until that moment, internalized its benefits. Similarly, voluntary decertification occurs when the firm considers that the certification is costly or simply thinks that its benefits are lesser than its costs – this is also the main logical reasoning of uncertified firms. Another example of voluntary decertification is when firms foresee that their certificate will not be renovated. Decertification can also be involuntary when the certification body establishes that the firm no longer meets the requirements to be certified [29].
The Portuguese industry consists of mainly SMEs, where performance and activity are fundamental factors for the country’s development. Portuguese micro, small and medium-sized enterprises account for 99.9% of the Portuguese business fabric but account for less than two-thirds (60.9%) of the Portuguese business sector turnover. Large companies, which account for 0.1% of the total, account for 39.4% [30]. The SMEs’ segment accounts for 99.8% of all businesses in Europe, giving employment to 87 million employees and generating 3.4 million billion Euros in value added for the economy. That is, it employs two-thirds of the total European labor force and generates approximately 58% of the total gross value added of the non-financial market segment. In practical terms, there are almost 20.6 million SMEs in the European Union, making it difficult for each to stand out [31]. It is, therefore, in the interest of every certification company to, once more, gain SMEs’ interest in being certified.
After the sovereign debt crisis, Europe has been subject to deflation. This economic phenomenon is characterized by the general fall in the prices of goods and services, a decline that is persistent over a given period. Most people will think that lowering prices will only have positive implications for their lives. However, the consequences of this scenario for the economy are not positive. This is because the fall in prices leads households to delay their consumption and companies to extend their investment decisions, causing the economy to stagnate. Portugal is one of the countries most vulnerable to the problem and has experienced negative inflation in recent years. With deflation, prices in the future will be lower [32].
In the certification industry, this deflation means a downward in the certification prices. Regarding the niche of the ISO 9001 certification, in 2004 EIC could sell an ISO 9001 certificate for 750€ while by the end of 2016 the maximum price EIC could afford asking was around 630€ [1]. As already mentioned, the deflation causes companies to postpone their financial strategic decisions, therefore this deflation has also been part of the recent lack of interest from SMEs to get certified. This is all a vicious circle that seems to not have an end.
According to Marques (2014), prices in the future will continue getting lower. This means EIC can’t afford to raise their prices and also shouldn’t since competitiveness has been arising at a fast growth [32]. Therefore, it is of maximum urgency to come up with a solution, or possible alternatives, for EIC to keep its business sustainable while applying the trending prices.
EIC is currently in the top 4 leading companies within the ISO 9001 certification market in Portugal. However, EIC is now facing some challenges and needs to overcome them in order to ensure business sustainability. EIC knows that in order to guarantee sustainability, the following questions, related to the current trends, need an answer: How can EIC improve its international recognition? How can EIC fight SMEs’ lack of interest from getting certified? How can EIC maintain profitability while facing the downward of ISO 9001 certification prices?
List of Appendices
APPENDIX I – IAF member list, in accordance with Article II Section 4 of the Bylaws
APPENDIX II – Worldwide evolution of the number of issued ISO 9001 certificates
APPENDIX III – Top 25 worldwide countries with the most ISO 9001 certifications in 2015
APPENDIX IV – Evolution of the number of ISO 9001 certificates issued in Portugal
APPENDIX V – 2015’s Portuguese ISO 9001 certification market share
APPENDIX VI – 2016’s Portuguese ISO 9001 certification market share
APPENDIX VII – EIC’s offered services
APPENDIX VIII – Management System Certification: process’s detailed explanation
Appendix I – IAF member list, in accordance with Article II Section 4 of the Bylaws [3]
Albania, Argentina, Australia & New Zealand, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada, Chile, China, Chinese Taipei, Colombia, Costa Rica, Czech Republic, Denmark, Dubai (UAE), Ecuador, Ethiopia, Egypt, Finland, France, GCC Economies, Germany, Greece, Hong Kong China, India, Iran, Ireland, Italy, Japan, Kenya, Kazakhstan, Korea DPR, Republic of Korea, Kosovo, Luxembourg, The former Yugoslav Republic of Macedonia, Malaysia, Mauritius, Mexico, Morocco, Netherlands, Norway, Pakistan, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Serbia, Singapore, Slovakia, Slovenia, South Africa, Southern Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Tunisia, Turkey, United Kingdom, United States of America, Uruguay, Vietnam
Appendix II – Worldwide evolution of the number of issued ISO 9001 certificates [8]
Appendix III – Top 25 worldwide countries with the most ISO 9001 certifications in 2015 [8]
Appendix IV – Evolution of the number of ISO 9001 certificates issued in Portugal [8]
Appendix V – 2015’s Portuguese ISO 9001 certification market share [18] [19] [20] [21]
Appendix VI – 2016’s Portuguese ISO 9001 certification market share [22] [23] [24] [25]
Appendix VII – EIC’s offered services [26]
Appendix VIII – Management System Certification: process’s detailed explanation [28]
Any organization that has a Management System formally documented and implemented in accordance with the requirements of the Certification Standard (s) may request the EIC to submit a certification proposal. The organization shall have carried out at least an Internal Audit, a Management Review of the System and shall have records that show the implementation of the processes and its established Management System. The EIC collects the necessary information to complete a questionnaire, which will allow the submission of a certification proposal. The proposal is based on the information provided by the organization, taking into account in particular the number of employees, the size and number of places of work and the complexity of its activity. The proposal includes a detailed presentation of prices for all stages of the process for a certification cycle. In evaluating the proposal, the organization shall confirm that its assumptions reflect its Management System, its organization and its activity.
EIC Client
The Customer must acknowledge the acceptance of the EIC Proposal, sending its duly completed “Request for Certification” and indicating the date intended to carry out the audit of the 1st Concession Phase. The EIC undertakes to carry out the audit within a maximum period of 2 months from the date of application, provided that there are no impediments on the part of the Client.
Documentary Analysis
After the application has been submitted, EIC confirms the information provided initially and may request further clarification. Simultaneously, the contract to be established between both parties is sent for signature.
Marking of the 1st Stage of Audit
After confirmation of compliance with the minimum requirements, and in possession of the signed contract, EIC begins the preparation of the 1st Stage of the audit, selecting the audit team and seeking the approval of the Client regarding the date and the constitution of the same.
Audit Preparation
The audit team starts the study of the documentation, and may request additional documents from the Client. Once this phase is completed, the audit plan is sent to the Client. This communication takes place at least 3 days prior to the date of the audit.
1st Phase of the Concession Audit
This phase of the audit aims to analyze:
The 1st Phase Audit will also allow the scheduling and planning of the 2nd phase of the Concession Audit. At the end of the Audit a report is drawn up, the copy of which will remain in the client’s possession. In the case of Nonconformities (NC), the Customer must submit to the EIC a response to the report.
2nd Phase of the Concession Audit
The 2nd phase of the audit is intended to verify the implementation of the Management System in accordance with all the requirements of the standard (s) of reference. The audit takes place on the agreed date, with six months being the maximum term to mediate the 1st and 2nd phases. As in the first stage, the respective report is drawn up, which is presented at the end of the audit, and a copy of it is left to the Client. In the report are recorded the findings, which may be Non-Conformities or Opportunities for Improvement, according to the following definitions:
Non Major Conformity – Absence or failure to implement and / or maintain a requirement of the Reference Standard or Management System, or situation that raises doubts about the ability of the Management System to achieve expected results or compliance with applicable law.
Non Minor Conformity – Potential or unrelated situation of failure, documental or otherwise, of a requirement of the Reference Standard or Management System, not implying a breach of confidence in the Management System in achieving the organization’s expected results or compliance of the Applicable legislation.
Opportunities for Improvement – Other findings that do not fit into the previous definitions that increase the degree of compliance with the referential.
Decision
The EIC, based on the audit report, on the Customer’s response to the evidence provided on the implementation of the corrective actions arising from the non-conformities found and on the opinion of the Audit Team, makes a decision on the Certification.
Certificate
The EIC issues a certificate which clearly identifies the scope of the certification and the sites covered and whose maximum validity is three years and may be renewable. At the same time, the Customer is authorized to use the EIC mark (s).
Follow-up
In a maximum of 12 months and 24 months from the last day of the Concession Audit, the Monitoring Audits are carried out, in order to trigger the mechanism for verifying the maintenance of the Management System. In the case of Non-conformities, the Customer must submit to the EIC a response to the report.
Renovation
At least three months before the end of the validity of the certificate, the EIC shall prepare a proposal for a new certification cycle. The new cycle begins with a Renewal Audit, which has to be performed before the expiration of the validity of the certificate. In the case of Non-conformities, the Customer must submit to the EIC a response to the report. Corrective actions related to Non Major Conformities, detected in a Renewal Audit, have to be implemented to allow a positive decision and the issuance of the new certificate.
Extension or reduction of the scope of certification
During the validity of the certificate, the Customer may, at any time, request the extension or reduction of the scope of the Certification. The request for extension implies an audit, which may coincide with a monitoring provided for in the established program.
In the event of a reduction in scope, the EIC discloses the scope that is no longer certified, of the customer in question, in the list of suspended customers.
Suspension of Certification
The EIC may have to suspend certification to clients who do not fulfill the commitments made in the contract. Likewise, the certified client may voluntarily request the suspension of their certificate. The EIC will make available on its website the list of suspended certificates, provided that the suspensions are longer than one month and as long as they remain.
Annulment
In the failure to solve problems within the determined period, the EIC cancels the Certificates. Until the end of the validity cycle of the certificate, or until one year after the date of cancellation (depending on the later date), the EIC will make available on its website the list of canceled certificates.
Audits with temporarily reduced notice
The EIC may initiate such audits not included in the annual program to Certified Clients (with short notice) in case of changes in the Following Customer Suspension processes and / or to analyze eventual complaints.
Resources
If a client does not accept a decision (s) taken by the EIC, he / she must give formal notice to the President of the EIC, which will initiate the respective actions internally according to the established procedure.
Complaints
Any client may file a complaint as a manifestation of their dissatisfaction, either on the work developed by the EIC or on an EIC Client. The complaint must be addressed to the EIC. The EIC undertakes to review the complaint and to implement the corrective actions deemed convenient, formally responding to all complaint procedures.
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[8] ISO. “The ISO Survey.” 2016.
[9] Sampaio, Paulo Alexandre da Costa Araújo, Pedro Manuel Tavares Lopes de Andrade Saraiva and Ana Catarina Ribeiro Gomes. “ISSO 9001 European Scoreboard: an instrument to measure macroquality”. Total Quality Managment, Vol.25, No 4, 309-318, 2014.
[10] Marimon, F., I. Heras and M. Casadesús. “ISO 9000 and ISO 14000 standards: a projection model for the decline phase”. Total Quality Management and Business Excellence, 20(1), 1-21, 2009.
[11] “O que é a Acreditação?”. IPAC, 2017, http://www.ipac.pt/ipac/funcao.asp
[12] “Base de Dados Nacional – Sistemas de Gestão Certificados.” IPAC, February 23rd 2017, www.ipac.pt/pesquisa/pesq_empcertif.asp
[13] Franceschini, F., M. Galetto and P. Cecconi. “A worldwide analysis of ISO 9000 standard diffusion”. Benchmarking: An International Journal, 13(4), 523-541, 2006.
[14] “Directório de Entidades Acreditadas.” IPAC, 2017, http://www.ipac.pt/pesquisa/acredita.asp
[15] “20 Anos de Compromisso com a Sociedade”. APCER, December 12th 2016, http://www.apcergroup.com/portugal/index.php/pt/newsroom/1803/apcer-20-anos-de-compromisso-com-a-sociedade
[16] “SGS in Brief”. SGS SA, 2017, http://www.sgs.com/en/our-company/about-sgs/sgs-in-brief
[17] “A Nossa História”. Bureau Veritas, 2017, http://www.bureauveritas.pt/home/about-us/our-history
[18] APCER. Relatório de Contas, 2015.
[19] SGS. Relatório de Contas, 2015.
[20] EIC. Relatório de Contas, 2015.
[21] BV. Relatório de Contas, 2015.
[22] APCER. Relatório de Contas, 2016.
[23] SGS. Relatório de Contas, 2016.
[24] EIC. Relatório de Contas, 2016.
[25] BV. Relatório de Contas, 2016.
[26] “Certificação”. EIC, 2017.
[27] “Quem somos”. EIC, 2017.
[28] EIC. “Certificação de Sistema de Gestão”. EIC’s document portfolio, 2014.
[29] Cândido, Carlos J.F., Luís M.S. Coelho and Rúben M.T. Peixinho. “The financial impact of a withdraw ISO 9001 Certificate”. International Journal of Operations & Production Management, 36(1), 23-41, 2016.
[30] Paula, Hugo. “INE: PME representavam 99,9% do tecido empresarial português em 2010.” Economia – Jornal de Negócios. Jornal de Negócios, November 2012.
[31] Pinto, Ilídia. “PME representam 99,8% das empresas na Europa.” Dinheiro Vivo, June 2014, https://www.dinheirovivo.pt/empresas/pme-representam-998-das-empresas-na-europa/
[32] Marques, Rute Gonçalves. “Saiba como a deflação pode afetar o seu bolso”. Saldo Positivo – CGD, May 2014, http://saldopositivo.cgd.pt/saiba-como-deflacao-pode-afetar-o-seu-bolso/
The case study was developed for students interested in the fields of strategy, leadership, strategic decision making, quality management or students attending strategic courses related to quality management and/ or enterprise’s sustainability, which incorporate decision making, leadership and strategic innovation as teaching topics. The case gives the opportunity to learn important strategy lessons not only in general, but also within the quality management field. The present case aims to cover the following learning objectives:
In order to boost any given certification company’s international recognition one of two must happen: either it gets accredited in foreign countries or it makes some sort of deal to be able to use a similar stamp of a given foreign country. To be internationally recognized, in this case, means a better reputation and brand associated with the company which leads it to be a more popular choice among future clients. The pros of getting accredited are purely commercial – the company gets a legal “stamp” from the country it gets accredited from and gets the label of a multinational enterprise. The cons are the costs – an accreditation is expensive in the short and long run since it comes with certain “rules” which are different from country to country and the company will have to establish a representative in the countries it gets accredited from. In EIC’s case, getting accredited is not an option mainly due to the costs associated but also because EIC is not ready to undertake the multinational status. According to Tony Baker (2016), for non-multinationals it is very attractive to expand internationally by using partnerships because it is so challenging to set up abroad entirely on the basis of a company’s own resources. The three major advantages of partnering abroad would be: 1- cheaper market entry; 2 – instant local credibility; 3 – reduced local overhead [Baker, 2016]. In line with this reasoning, EIC has been considering engaging in a strategic alliance.
A strategic alliance is a partnership in which two (or more) firms work together to reach objectives that are reciprocally beneficial [Czaja, 2017]. According to Melanie Martin (2017), companies engage in international strategic partnerships because they believe this will lead to increased economic benefits, either by reaching a wider audience through collaboration or by pooling their skills and/ or resources to provide better services or products. Martin (2017) also mentions that, if the companies have a well-built reputation around the globe, creating a high-profile partnership may possibly signal that their offerings have noticeably improved [Martin, 2017].
According to Tony Baker (2016), there are four essential steps to a successful partnering, starting with planning the strategy carefully and deciding what type of partner the company needs (by examining worldwide trends, opportunities, threats, competitors and other major players within the industry), following with seeking and selecting the desired partner, the third step would be negotiating the agreement and the fourth managing the partnership [Baker, 2016]. When negotiating the agreement, it is important to state that the purpose is to form an alliance that will achieve both partners’ objectives. It is a deal for the long-run and either side of the partnership won’t continue working if it doesn’t give them advantages as well.
Going back on the definition of a strategic partnership, partnering is a two-way street: each partner must bring something the other needs [Baker, 2016]. EIC is seeking international recognition but what can EIC offer? Better yet, what can possibly a foreign certification company seek from a Portuguese one? As it was already mentioned, a certification company looking to build its business wherever in the world needs to get accredited in its own country in order to be legit. However, in the case study one can read that accreditations in certain countries, like Italy or the United Kingdom, are very expensive. If EIC were to partner with one small to medium-sized certification company in one of these countries, probably Italy due to its sales generated from the ISO 9001, this company could give out certificates through EIC instead of getting accredited. According to EIC, it is far cheaper to engage in this solution than to get accredited. However, this situation would only work in companies trying to settle in countries where the accreditation is exceptionally expensive. Therefore, EIC would not only get an Italian recognition towards possible clients but would also increase labour work as it would probably engage partially in the certification processes carried out by the Italian company. The Italian company, by partnering with EIC, could finally give out legit certificates.
Although SMEs’ lack of interest from getting a certification has been arising, there are many reasons why a firm should seek a certificate. Certification is, surely, a strategic decision for developing firms in the sense of wiliness to gain and improve market share [Santos, et al., 2011]. Moreover, the certification of quality management systems has been several times proven to attain a firm’s improved emphasis on quality, leading to not as much waste and to a decrease of effort. Several studies show that these factors combined lead to an enhanced profitability consequential from a mixture of lesser cost of production, lower sales expenses and scale economies obtained from better sales volume [Sena Portugal Días and Heras-Saizarbitoria, 2013].
Furthermore, another study conducted also by Sena Portugal Días and Heras-Saizarbitoria (2016) concludes that ISO 9001 has become a demand from the market, therefore resulting in a competitive advantage for firms ISO 9001 certified and they also clarify that without an ISO 9001, firms would not enter and stay in the market. These results originate from several interviews where respondents stated that “ISO is a need to survive in the market” as well as “a ticket to enter the market (notably the international one)” [Sena Portugal Días and Heras-Saizarbitoria, 2016].
Also Cândio, Coelho and Peixinho (2016), again, mention that the overall studies suggest certification to be a source of competitive advantage, and only a narrow number of studies conclude the opposite [Cândio, et al., 2016]. Now, according to Barney and Clark (2007), a competitive advantage can only be achieved through ownership and usage of resources that are valuable, rare, inimitable and non-substitutable [Barney and Clark, 2007]. If ISO 9001 certification is considered a resource, it can be discussed that such certification is a valuable, rare, a rather difficult resource to imitate and unique. Therefore, this Quality Management System is probably going to contribute determinedly to performance improvement, cost reduction and differentiation in the post-certification period [Cândio, et al., 2016]. This could be a reason to motivate SMEs to seek an ISO 9001 certificate if certification companies use advertisement or other means to spread the information so SMEs get informed.
Another solution to motivate SMEs into getting a certification derives from the Portuguese government and its state’s public tenders. There are already a small number of public tenders that admit only certified companies. The solution begins with the state, in a transversal way, requiring certified companies for all its public tenders. Once this solution is implemented, other regulatory bodies, depending on the area of activity (e.g. ASAE – Autoridade de Segurança Alimentar e Económica), should start to require only certified companies for all firms involved in their processes. For the regulatory bodies, this change would mean a certainty in the quality and assured effectiveness of the companies involved, while it would also serve as a motivation for companies that do not possess certificates.
Since EIC can’t raise the ISO 9001 certificates’ prices, the solution derives from finding alternatives in order to maintain profitability. In other words, the unit price of EIC’s incoming monetary source can’t be altered, but the amount of work done can. However, EIC’s employees can’t just start working over hours just because the economy is stagnated. Therefore, the concept of “working smarter” not “working harder” should be applicable here. This concept derives from the definition of time management, which also states that one can get more work done in less time, even when pressures are high and time is tight, if he works smarter, nor harder. This can be accomplished by planning and organizing the time between specific activities in order to better manage the time one’s working, while increasing effectiveness [“What Is Time Management?: Working Smarter To Enhance Productivity”].
Some strategies of time management suggest finding time slots where organisations are not using time well. Within the case of EIC, there’s a lot of time “wasted” in the period before and after certifications, due to the sending of information back and forward with the client and waiting for documents to be either signed or approved. Therefore, it would be within EIC’s interest to use and alter their intranet in a way that they can use it to better communicate with the client as well as improve time management within the organisation. Fortunately, we are living in a technology era that has facilitated the growth in systems designed to manage organizational information. Said technologies include document management systems, relational and object oriented databases, information retrieval engines, electronic publishing systems, agents and push technologies, groupware and workflow systems, brainstorming tools, help-desk applications, mining tools, data warehousing and intranets [Skok and Kalmanovitch, 2005]. According to. Skok and Kalmanovitch (2005), there are several ways an intranet can enhance productivity:
Nevertheless, intranets need to be closely controlled or they may also transfer false information, knowledge and/ or propaganda [Skok and Kalmanovitch, 2005]. Currently, EIC’s intranet is used to retain some data and information and has been developed as a general tool for comprehending audits-specific issues. The analysis of EIC’s current intranet suggests that EIC’s future strategy should include the development of an intranet in a connectionist mode, while addressing consciousness and facility of use.
The intranet would play a vital role in helping auditors to manage, document and archive audits information. It would also serve as a guide for clients and auditors to complete all the required documentation associated with an audit. The main purpose of the intranet should be to make EIC more flexible, responsive and to improve its team-work, processes and continuity between auditors working on audits and certification processes.
There are several case studies on information systems and information portals and how they can help organizations with the storage, capture, integration and retrieval of information, indicative of how information systems portals can defeat contract and project management ambiguity by improving the usage of information communication [Hussain, et. al, 2009]. According to Hussain (2009) an intranet should integrate the use of various information technologies and software, and should be built upon three aspects: user interfaces, application functions supported by process models and database/ storage [Hussain, et. al, 2009]. Therefore, the intranet proposed for EIC to develop (or improvement of the existing one) would consist of new and better intranet technologies, information technologies, and specialist software all together to create a portfolio of technologies. This would enable EIC to improve contract and audits’ management’s performance. The intranet would also provide a standardized approach for contracts’ development, knowledge retrieval, data storage and management. A variety of information to aid EIC’s employees with management of certifications would be available and communicated both internally and externally (with the clients), therefore creating also an extranet. The intranet would link and integrate the specific business processes vital to the management of certifications to the documentation required so that auditors know what actions must be followed and the documentation needed to be completed for each stage of the certification process. The intranet could also integrate a financial management to support the management of certifications.
In a simpler, more structured manner and based on Bitrix software (an intranets building software) the main tools to incorporate in this new or improved intranet for EIC should contain [Bitrix, 2011]:
These are suggestions to improve the current intranet while maintaining the current features. With this improved intranet, EIC would be able to save time in several day-to-day simple tasks that would generally consume more time than needed, especially in the time-periods before and after a certification where the information flow arises in e-mails, sending documents back and forward and constantly being in communication with the client. As it was mentioned in the case study, EIC’s compressed certification process consists of 10 stages. With the new improved intranet, the 1st until the 4th stage would be compressed into one, since these are stages of massively back and forward flow of information, as well as stages 6 to 9. Therefore, with the new and improved intranet, EIC’s process of certification would consist of 4 stages now, a reduction in more than half of its previous process. This would lead to a better management of time in order to enable EIC to use their human resources (auditors) to be involved in other projects previously unavailable due to lack of time. This would result in a raise of EIC’s monetary income, while applying the trending certification prices.
Another solution to save on extra costs derives from the fact that, as mentioned in the case study, EIC sometimes needs to outsource auditors when there aren’t auditors working for EIC capable of certifying certain NACE codes or when the certification is within a specific industry. In those moments, EIC is forced to outsource a capable auditor, which represents and added cost to EIC. An option to reduce these costs could be to make a strategic partnership with universities and professional schools. In 2007, an American university signed a working agreement with a Logistics Certification Institute. This agreement created unique opportunities for the students and benefited the university by exposing their programs to a much wider and interested audience. The university was able to offer courses with a practical side – work experience. Students had the ability to earn college credits (credit hours towards a college degree) while working, they gained working experience in the industry and the ability to become certified auditors in the future, through the Logistics Institute. This opportunity was part of a unique strategic relationship that opened doors for the U.S. University’s students to obtain positions with various firms, gain business recognition and develop valuable networking opportunities with leaders in the logistic industry [LaRocco, 2007]. Within the same frame, it could be valuable for EIC to establish strategic partnerships with universities or professional schools, within the industries where there’s a lack of knowledgeable auditors, respecting these same benefits the partnership between the U.S. University and the Logistics Certification Institute used – working hours towards credit hours and the ability to become a certified auditor in the future through EIC.
This section concludes with recommendations that have been supported by the previous analysis, phrased clearly and in actionable format.
Along this dissertation there were some limitations that prevented it to carry out a deeper analysis. The first limitation was the lack of publicly available data concerning the competitiveness within the Portuguese certification market namely the list of all organizations that have received services from certification companies operating in Portugal. Consulting that would have allowed to make a more detailed and accurate quantitative measurement of the impact of each certification company in Portugal. Additionally, and even though the majority of the presented data throughout this dissertation was retrieved from non published internal reports given by EIC, a relevant part of the remaining data was collected through the standards means: EIC’s website, EIC’s competitors’ websites, public reports and news.
The second limitation represents the lack of information about the global field of certification, namely each country’s financial statements within the field, the cost of accreditation in each country and information necessary to build the global competitiveness within the ISO 9001 certification market. This limitation, even though it’s understandable given that the analysis of the ISO 9001 certification market represents a very niche field within the entire certification industry, resulted in not having a deep analysis of the future decision related to the strategic international partnerships.
In the future, it could be utterly interesting and impactful to further understand EIC’s presence in the Portuguese certification market. It should be collected data from all the organizations that have received services from EIC in order to assess the impact and position EIC transmits not only in Portugal but also in each country it operates. Additionally, it could be very valuable to keep track of the evolution of EIC’s revenue model, not only to understand its financial sustainability in the short and long term, but also to understand how EIC positions itself in comparison to its competitors.
[Baker, 2016] – Baker, Tony. “International strategic partnerships”. Market Access Worldwide, 2016.
This article explains the advantages of creating an international strategic alliance and, in detail, the steps to a successful partnering. It advices on how to plan the strategy, the selection procedure, it shares knowledge on how to carry out the process, explains the different types of partnerships and gives tips on the management of the partnership once it’s established.
[Barney and Clark, 2007] – Barney, J.B. and D.N. Clark. “Resource-Based Theory.” Oxford: Oxford University, 2007.
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[Bitrix, 2011] – Bitrix. “New release of Bitrix intranet 10.0 with task& time management, CRM, mobile interfaces and integration with Microsoft, Google and Apple”. PR Newswire, PR Newswire Europe¸April 2011.
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[Cândio, et al., 2016] – Cândido, Carlos J.F., Luís M.S. Coelho and Rúben M.T. Peixinho. “The financial impact of a withdraw ISO 9001 Certificate”. International Journal of Operations & Production Management, 36(1), 23-41, 2016.
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[Czaja, 2017] – Cazaja, Je’. “Examples of successful strategic alliances” Chron, 2017.
Czaja writes, in this article, the definition of a strategic alliance as well as known cases of successful strategic alliances and their chosen strategies. It explains in detail the decision making process within each of these successful alliances (four examples) which ultimately lead to an understanding of the leading factors of success.
[Hussain, et. al, 2009] – Hussain, Zahid, Kevin Barber and Naveed Hussain. “An intranet based system as an enabler in effective project management and implementation of quality standards: a case study”. Journal of Engineering and Technology Management, 26, 196-210, 2009.
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[LaRocco, 2007] – LaRocco, Michael. “U.S. university signs working agreement with Logistics Institute”. Canadian Sailings, 2007.
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[Martin, 2017] – Martin, Melanie J. “What is global strategic partnership?”. Chron, 2017.
In this article, the reader gets an understanding of the concept of global strategic partnership. This article also explains the main advantages of partnering as well as the motives for doing so. It stresses out how important it is that the two companies work side by side to achieve their desirable goals.
[Santos, et al., 2011] – Santos, Gilberto, Fátima Mendes and Joaquim Barbosa. “Certification and integration of management systems: the experience os Portuguese small and medium enterprises”. Journal of Cleaner Production, 19, 2011.
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[Sena Portugal Días and Heras-Saizarbitoria, 2013] – Sena Portugal Días, Acina A. and Inaki Heras-Saizarbitoria. “ISO 9001and business performance: a quantitative study in portuguese organizations”. Review of International Comparative Management, Volume 14, Issue 1, March 2013.
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[Sena Portugal Días and Heras-Saizarbitoria, 2016] – Sena Portugal Días, Acina A. and Inaki Heras-Saizarbitoria. “ISO 9001 performance: a holistic and mixed-method analysis”. Review of International Comparative Management, Volume 17, Issue 2, May 2016.
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[Skok and Kalmanovitch, 2005] – Skok, Walter and Caroline Kalmanovitch. “Evaluating the role and effectiveness of an intranet in facilitating knowledge management: a case study at Surrey County Council”. Information & Management, 42, 731-744, 2005.
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[“What Is Time Management?: Working Smarter To Enhance Productivity”] – “What Is Time Management?: Working Smarter To Enhance Productivity”. Mindtools.Com, 2017, https://www.mindtools.com/pages/article/newHTE_00.htm.
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[1] “Accreditation Body Membership of IAF is open to bodies that conduct and administer programmes by which they accredit bodies for certification/registration of quality systems, products, services, personnel, environmental management systems as well as other programmes of conformity assessment. Accreditation body members must declare their common intention to join the IAF Multilateral Recognition Agreement (MLA) recognising the equivalence of other members’ accreditations to their own” (IAF Members and Signatories, 2017)
[2] ISO’s standard body representative in Portugal is IPQ – Instituto Português da Qualidade
[3] Once a company is accredited in their home country it can certify anywhere in the world, sporadically and when requested by the client. This doesn’t mean the company can move anywhere and not get accredited in the country the company pretends to move to. It means that, with headquarters in a given country, some employers can travel do desired country, certify and its certification will be recognized.
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