1. F4 - THE IMPORTANCE AND BENEFITS OF QUALITY MANAGEMENT

2. 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.

3. 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.

4. 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)
How well the firm has designed the manufacturing process
How well designed the product is (the product’s USP)

5. 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.

6. 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

7. Benefits of improving quality
Gaining a competitive advantage
Increasing sales volume
Creating a USP
More scope to increase selling price
Greater opportunity for pricing flexibility
Cost reductions
Greater brand loyalty and reputation

8. Difficulties of improving quality
Difficult to convince people there’s a problem
Difficulties in agreeing the best solution
Quality systems give greater responsibility to staff – may require changes in how they are managed or their approach – may not go down well
Resistance to change
Costly and time-consuming
Keeping pace with customer views on quality may be difficult
Expense (a business must ultimately decide if the improvements to quality will outweigh the costs)
Training
Quality systems
Information systems
Testing
Inspection
Installing equipment