IGCSE Business Studies - Achieving Quality Production and Location Details
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Course
Business Studies,
Institution
Fourth Year / 10th Grade
This gives you an in-depth knowledge about 'Why Quality Is Important?'. This includes the two types of quality standards. It gives a more understanding about why quality is important to businesses. To add, there's additional information about how businesses achieve quality production. This document...
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Unit 1
TOPIC(S): Achieving Quality Production & Location Details
PAGE(S): 229— 334
1.1 Why Quality Is Important
💡
Quality standards can be dived into 2 groups:
1. Design standard KEYWORDS:
Helps the business to create the Quality standards : the minimum
best possible product, which standard of production
consumers find more valuable than acceptable to consumer.
other products in the market. Quality : ensuring a good service
2. Process standard that meets the needs and
requirements of its consumer.
Helps the business to produce its
goods and services at a lower cost.
Combining design standards and process standards helps a business gain a competitive advantage
and gain market share.
Quality is important to businesses because it helps them to:
1. Develop a storage brand image
building a strong brand image based on quality makes it easier for a business to introduce
new products to the market
2. Keep customers and attract new customers
a.k.a customer loyalty. When a business has a reputation for producing quality products, it
is easier for it to keep its existing customers and attract new ones
3. Reduce costs, customer complaints and returns
products that do not meet the needs and expectations of customers will be returned. The
product will have to be replaced or the customer may want their money back.
returns from customers increase costs and reduce profit.
if there’s a large amount of customer complaints and returns, the business will have a
damaged reputation → this results to finding it difficult to attract new customers.
4. Charge a premium price
many customers are prepared to pay a higher price for a product that is seen as being of
better quality than similar products on the market.
if a business is able to charge a higher price for its product compared to that of competitors
then this may increase its profitability (e.g. Apple MacBooks)
Unit 1 1
, 5. Encourage wholesalers and retailers to stock the product
most manufactures need middlemen (e.g. wholesalers and retailers) to help distribute their
product to the final consumer. If a product is of good quality then both middlemen will want
to stock the item because they know that consumers will want to buy it.
6. Lengthen product life cycles
products that are good quality will continue to mess the needs of customers. These
products will have a longer life cycle than poor-quality products, which consumers will not
continue to buy.
a product that has a longer life cycle, it will stay in the most profitable maturity stage much
longer.
1.2 How Businesses Achieve Quality Production
💡
Quality control is the traditional method
businesses use to check the quality of KEYWORDS:
products. Businesses employ trained quality
Quality control : checking the
inspectors to check products, usually at the
quality of goods through
end of the production process. Sometimes
inspection.
products are checked at different stages of the
process. Quality assurance : a system of
setting agreed standards for
every stage of production.
Problems of quality control by inspection:
1. the cost of inspecting for quality
2. work can be repetitive and boring → this may demotivate the inspectors, resulting in them not
performing their tasks efficiently.
3. only takes place in the end of the process → problems with quality that occur at the beginning
are not found soon enough, which results to resources being wasted and it should’ve been
rejected much earlier in the production process.
4. the use of quality inspectors take any responsibility for quality away from the employees.
Employees do not see the quality as their responsibility and may not try to sure the quality is
maintained through out the production process.
Problems with quality control have led many businesses to move away from quality control to
quality assurance.
This method focuses on preventing poor Benefits of quality assurance:
quality by:
1. it encourages teamwork and this can act as
1. raw materials, components and other a motivator for employees.
resources are of the required standard
2. it reduces cost of wastage and faulty
before they enter the production process.
products.
2. quality standards are agreed for every
stage of the production process.
Unit 1 2
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