AQA A-level Business © Hodder & Stoughton Limited 2015 4.4 Improving quality AQA A-level Business © Hodder & Stoughton Limited 2015

AQA A-level Business © Hodder & Stoughton Limited 2015 Learning outcomes What you need to know Why quality is important and how businesses can improve it The benefits and difficulties of improving quality, and the consequences of poor quality AQA A-level Business © Hodder & Stoughton Limited 2015

Overview of key concepts Quality is all about customer satisfaction. Quality is important because if affects a customer’s perception on the business – therefore it can affect present and future sales. There are several ways businesses can ensure quality is achieved – either through quality control systems or quality assurance systems. AQA A-level Business © Hodder & Stoughton Limited 2015

AQA A-level Business © Hodder & Stoughton Limited 2015 Quality Definition: ‘Is a measure of excellence which is free from defects or significant variations. A product or service whose features consistently allow it to satisfy (or delight) customers.’ Quality is a matter of personal opinion – so it is subjective and can vary from one customer to another. AQA A-level Business © Hodder & Stoughton Limited 2015

AQA A-level Business © Hodder & Stoughton Limited 2015 Quality The quality of a product depends on its ability to meet customer requirements consistently. This will depend upon: How well the needs have been defined (from market research. See Unit 3) How well the firm has designed the manufacturing process (Unit 4.3) How well designed the product is (the product’s USP. See Unit 3) AQA A-level Business © Hodder & Stoughton Limited 2015

Quality – tangible and intangible Image and brand Reputation Exclusiveness This could be a brand name like iPhone Appearance Reliability Durability Functions (added extras) After-sales service Repair and maintenance needs VW has a reputation for quality in all of the above AQA A-level Business © Hodder & Stoughton Limited 2015

Benefits of quality Gaining a competitive advantage – if a business can create a product that is of higher quality than its competitors through a patented method, this will give them a CA Impact on sales – if product meets customers’ demands then demand should rise (JLP) Creating a USP – unique selling point can increase demand (The Ritz afternoon tea – tangible and intangible quality) Impact on selling price – USP means higher prices will be charged; ‘perceived quality’ (M&S, Waitrose, Harrods, Hotel Chocolat) Pricing flexibility – can charge higher prices or have a range of products for different target customers enabling business to have a range of quality products for each size of purse. (British Airways) Cost reductions – less waste and therefore reduced costs which can be passed on to customers. Firms reputation – not having a quality system in place can damage reputation.

Methods of improving quality There are lots of benefits to having quality goods or services for sale. However businesses need to decide how to improve the quality of their products as the different systems have pros and cons. Two quality management systems are: Quality control Quality assurance A quality system is the approach used by an organisation to achieve quality. Most quality systems can be classified as either quality control of quality assurance. Issues with any quality system Costs – it is a costly business, especially admin costs Training – the whole workforce may have to have a change of culture and training Disruption to production – can cause major disruption when being implemented

AQA A-level Business © Hodder & Stoughton Limited 2015 Quality control Definition: A system that uses inspections to check the quality of work at stages of the manufacturing process. AQA A-level Business © Hodder & Stoughton Limited 2015

Benefits of inspection Quality checks at the end can stop faulty goods reaching customers Inspectors can spot common problems and put them right It is a more secure system than one that trusts every worker to do his or her job properly

Drawbacks of inspection Does not encourage team responsibility Expensive to operate Responsibility rests with inspectors, therefore staff take no responsibility, which could reduce motivation