The Importance of Quality (Edexcel IGCSE Business)

Quality and competitive advantage

Spec point — 5.4.1 · The concept of quality and its importance in allowing a business to gain a competitive advantage.

• Quality considers the characteristics and features of a product that satisfy the needs of customers

• Customers may consider products or services to be of good quality if they

  • Look good and are sold by a reputable business or brand
  • Are reliable and durable
  • Are safe and fit for purpose
  • Receive good customer service, including after-sales service

• The quality of a businesses products can provide a competitive advantage

  • Attract and retain loyal customers

    • High quality and minimal defects lowers business costs allowing lower selling prices to better compete with rivals
    • Better quality reduces wastage and returns from unsatisfied customers

  • Build the reputation of the business or brand

    • High quality can be used in promotional activity and provide a unique selling point for businesses in competitive markets
    • Successfully developing a USP for quality can improve business reputation and ease expansion into new markets

• If quality is not maintained, then businesses may be at risk of

  • Losing their competitive advantage and customers to other brands who offer better quality goods/services
  • Experiencing higher costs due to having to replace faulty or defected goods
  • Gaining a poor reputation as customers spread poor reviews about the business to others

• In some countries laws protect consumers so businesses need to ensure that the products they sell are free of faults or defects to avoid harming customers or their reputation

Exam Hint ‘Quality’ does not necessarily mean producing a high-priced, excellent product

How quality is defined depends upon the industry in which the business operates, the product and price. It will also be the subjective opinion of customers

For example, if you buy a low-priced remote controlled toy drone would you expect it to work as well as an expensive toy drone. The answer will probably be based on your expectations of quality and price, but you would want it to work and be free of faults

Approaches to managing quality

Spec point — 5.4.1 · The concept of quality and its importance in the production of goods and the provision of services: • quality control • total quality management (TQM)

Approaches to managing quality

Quality control

• Quality control is a traditional method of **checking quality at the end of the production process **using quality inspectors to find faults

• It** is not possible to achieve perfection** in every production process

  • E.g. There will always be some variation in terms of materials used, production skills applied, reliability of the finished product

Advantages and disadvantages of quality control

Total quality management (TQM)

• Total quality management is a whole-business approach to ensuring quality, with the aim of eliminating problems before they occur

• All employees are involved in ensuring quality is achieved in every business process

• Inefficiency and wastage is removed from every business activity or function - including those that are not directly related to production

• Features of TQM include

  • Teamwork as a key way to solve problems
  • Zero defects, the business culture of ‘getting it right first time’
  • Ongoing monitoring of quality standards using statistical techniques
  • A focus on meeting changing customer needs
  • Committed workers who receive ongoing training

Advantages and disadvantages of TQM