Quality

Question 1

advantages of quality

Answer 1

1. differentiate from rivals and strengthen brand image - add value with sustainable competitive advantage so increase prices and hence profit margins
2. greater customer satisfaction - meeting their expectations so higher repeat purchases and customer loyalty, greater sales in LT
3. reduces costs of paying compensation and customer returns - can keep prices low and competitive which increases sales
4. promote positive word of mouth and recommendations - improves brand image and reputation and lowers marketing costs, increasing profits
5. employee motivation - increase retention which reduces turnover and hence recruitment costs

*whenever saying higher revenue or lower costs will lead to higher profit, always throw in a quick condition - depending on if costs stay constant; depending on if revenues stay constant

Question 2

what, in general, might be a barrier to quality?

Answer 2

1. if firm is close to full capacity
2. costs of quality VS benefits in that particular market (customer expectations)
3. offshored/outsourced functions

Question 3

what does globalisation mean for quality?

Answer 3

customers being exposed to higher quality foreign products means there is more competitive pressure on domestic firms to meet their higher expectations of quality

Question 4

quality assurance

Answer 4

setting quality standards for and designing quality into the product and all stages of the production, from design to distribution, to PREVENT defects.

Self-checking and culture of zero defects

QA: PREVENT, QC: DETECTION+REJECTION

Question 5

what is the concept of quality chains?

Answer 5

each department carrying out a different function in the production process is thought of as being an internal customer to each other, and each department is responsible for meeting the quality expectations of their internal customer. Promotes accountability

Question 6

benchmarking

Answer 6

Comparing a business against the performance standards of the best businesses in the same industry to
identify areas that need to be improved to match their quality standards

Question 7

pros of TQM

Answer 7

same as pros of QA

Question 8

pros of benchmarking

Answer 8

1. more effective way of improving quality standards than without external comparisons (see what you’re up against) - ensures you are actually being more competitive which is more likely to increases sales and market share
2. customer-centric approach to identify BPI - meeting needs ensures customer satisfaction thus higher loyalty and lower PED

BPI- benchmark performance indicators

Question 9

cons of benchmarking

Answer 9

1. merely copying restricts innovation - may damage reputation if consumers see you as unoriginal, will not buy yours leading to lower sales and market share in the long run
2. obtaining up to date info from other businesses may be hard
3. costs of comparison excercise may not be outweighed by improvements made

1- can eval 1 by saying they may still buy if prices are lower as some consumers care more about this

Question 11

steps of benchmarking

Answer 11

1. identify BPI based on customer needs
2. measure performance in these areas
3. identify best in the industry and use their BPI data to establish weaknesses
4. set standards for improvement and change processes
5. re-measure performance

Question 12

quality control VS quality assurance

Answer 12

inspecting the end product to detect then reject defected products before they reach the consumer

meeting quality standards at ALL stages of production to build quality in, thus preventing defects from occurring in the first place

Question 13

how can quality be assessed?

Answer 13

if a physical product - compare against standards for size, weight, durability

if a service - compare against qualitative indicators of how customers are dealt with, response times, number of errors

Question 14

describe the QC process

Answer 14

inspect samples of the finished good at the end of the production process using inspectors, then reject defect before they reach customer

Question 15

compared to price competition, quality is a…

Answer 15

SUSTAINABLE COMPETITIVE ADVANTAGE! price cuts cannot be sustained due to price wars and costs not being covered

Question 16

pros of QC

Answer 16

1. stop defects from reaching the consumer - higher levels of satisfaction for meeting expectations, thus increased repeat custom

OR will reduce the costs of replacements/compensation which increases profits

2. minimise disruption to production - higher productivity which could reduce unit costs and thus prices

**do NOT say that QC will reduce wastage costs because the defects are still occurring! You can only reference the fact that compensation and refund costs will fall, or that the costs of negative publicity will fall

Question 17

cons of quality control

Answer 17

1. inspection is monotonous - fatigued and work less effectively - miss defects so they reach consumers, which will reduce satisfaction and damage reputation
2. reduces personal accountability for quality work - increase defects, which increases costs of wastage and hence reduces profits
3. workers may resent inspectors so become demotivated - less committed to reducing defects OR may increase turnover and hence recruitment costs
4. defects don’t reach customer but still occur - increases wastage costs, reducing margins

hard to identify source of defect and prevent it from occurring again -

Question 18

pros of QA

Answer 18

apart from general benefits of quality:

1. job enrichment - inclusive as everyone is responsible for quality (Herzberg) - motivating so lower labour turnover
2. identify source of quality issues and improve so fewer defects occur - reduce wastage costs, keep prices low and increase competitiveness
3. lower cost than QC - no external inspector/engineers so frees up cash to invest in xyz which could lead to _______
4. having QA framework can gain accreditation like ISO 9000 - market to differentiate and add value, thus charge premium prices and increase margins

Question 19

eval: QA or QC?

Answer 19

both! QA better as it is more effective by targeting the root of quality issues and preventing defects from ocurring, but sometimes QA systems can fail so QC can catch defects that slip by

Question 20

definition of quality

Answer 20

Not necessarily using the highest quality materials to the highest standards, but meeting customer’s expectations and fulfilling a product’s intended purpose.

Quality is always relative to the product’s price and consumer expectations.

Question 21

cons of QA

Answer 21

1. cost of training to follow quality processes - may force prices to be increased thus reducing sales and market share
2. slows down production as standards need to be met at every stage - lower productivity could increase unit costs thus reduce margins
3. **resistance **if employees don’t want additional responsibility - reduce motivation, so less committed to high quality and increases defects

** important: NEVER say an increase in price WILL reduce sales revenue as this depends entirely on PED. Better to say SALES fall (volume)

Question 22

benchmarking eval

Answer 22

1. is not one-off - continuous process in dynamic business environment
2. workforce participation is important - creativity and motivation
3. depends on availability of info (some firms less transparent about processes)
4. whether this provides any benefit would depend on how different the business actually is compared to the best performing firms - if very close, not much to improve so cost will not justify benefit

Question 23

TQM

Answer 23

cultural approach to quality that involves all employees and departments in quality improvement, promoting individual accountability for the quality of their own work and promoting ‘zero defects’

uses quality chains - idea of internal customers

** key to understand that TQM involves ALL departments and not just operations

Question 24

pros of TQM

Answer 24

1. defects less likely to occur - increase quality and customer satisfaction, and repeat purchase and loyalty
2. differentiate from rivals - competitive advantage that adds value, so can charge premium price and increase margins
3. increase employee motivation with job enrichment - all are responsible so may increase job satisfaction and retention thus lower recruitment costs

OR increase employee motivation - which increases job satisfaction and retention (AN) BUT some may resent extra responsibility so demotivated and less committed (DAN)

Question 25

cons of TQM

Answer 25

1. cost of training - may force higher prices which reduces sales and market share
2. time to develop TQM culture
3. employee resistance towards extra responsibility - demotivation so less productivity

Question 26

TQM eval

Answer 26

1. only works if EVERYONE is committed to idea
2. only works if management is democratic and willing to empower workforce with authority to check the quality of their work
3. requires significant culture change - only LT results as employees need to readjust their entire approach to work
4. appropriate training must be given to every worker to ensure they understand the commitment and change in attitude required, and to reduce uncertainty and resistance to change

Question 27

eval for improving quality in general (all methods)

Answer 27

1. benefits outweigh costs in the LR with a stronger brand image and sustainable source of competitive advantage compared to prices
2. is important in increasingly globalisaed markets
3. consumers expect higher quality due to better info online
4. higher incomes will raise consumer expectations of quality