4.5 Quality of goods and services

FSW is a multinational company with operations in 6 countries. It manufactures steel for use in the construction industry. Quality assurance is used to ensure quality production. FSW has many stakeholder groups who are interested in its activities. The Managing Director knows FSW’s business creates external costs. She is aware that pressure groups try to influence business decisions. Do you think quality assurance is the best way for a business to achieve quality production? Justify your answer. [6]

KCL manufactures paper which is used in the production of newspapers and books. KCL holds a high level of inventory and buys all its raw materials, including wood, from local suppliers. Quality control is important. The Operations Director is considering ways to increase efficiency in the factory. Pressure groups are trying to influence KCL’s decisions to ensure that the business does not create more external costs than external benefits.

a) Define ‘quality control’ [2]

NFC manufactures shoes using batch production. Quality assurance is used to maintain quality. NFC uses market segmentation. The Marketing Director is reviewing NFC’s product range. He knows there are both benefits and limitations to developing new products. He also knows the promotion of products is important.

c) Outline one advantage and one disadvantage to NFC of using quality assurance. [4] Advantage 1: Disadvantage 2:

Rachel’s business produces and sells chocolate bars. Quality is important. Rachel is a sole trader who received government support when she started up her business. The business operates in a competitive market. Rachel is considering ways to increase sales of her best-selling product. She is also planning to introduce a new chocolate bar. Rachel knows deciding which pricing method to use for a new product is important.

d) Explain two reasons why quality is important to Rachel’s business. [6] Reason 1: Explanation: Reason 2: Explanation: