Achieving Quality Production

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Cambridge IGCSE and O Level Business Studies

17 Achieving quality production


Answers to Coursebook activities
Case study (page 231)
a It does not know how many cars and which cars have the fault. Cannot risk not recalling a car that has
the fault because this could damage the company’s reputation and affect future sales.
b Quality is extremely important to Volkswagen. In a very competitive market Volkswagen uses factors
other than price to compete with other car manufacturers, i.e. quality. If it has a reputation for
producing high-quality cars then it will also be able to charge a higher price than its competitors.

Test yourself (page 231)


1 Providing a good/service that meets the needs and wants of consumers.
2 Consumers expect a certain level of quality in the products they buy and often pay more for better
quality. If the quality of a product does not meet the required consumer standard then the customer
will complain, or return the product. If this happens too many times, the reputation of the firm is
damaged and consumers will no longer buy its products. In very competitive markets, consumers know
that if one firm cannot provide them with a quality product, others will.
3 Increases sales/profits, improves brand image, increases customer loyalty, reduces customer complaints
and returns, reduces waste, which reduces costs, lengthens product life cycles, means that wholesalers
and retailers will stock the product and the business can often charge a premium price.

Case study (page 233)


a System of setting agreed quality standards for every stage of production.
b Employees – responsible for making the product and if well-trained and well-motivated likely to produce
quality products. Suppliers – quality of raw materials and components used in production affect the quality
of the finished product. If raw materials or components are poor quality then the finished product will also
be poor quality.
c Premium price – Toyota can charge a higher price for cars than competitors can for similar cars.
Customer loyalty – customers who buy a Toyota car are likely to buy another one when replacing their
car if happy with the quality; helps Toyota to maintain market share. Reduces costs – fewer customer
complaints or returns and less waste reduces costs and increases profits.
d Car market worldwide is very competitive. If Toyota is to maintain or increase its market share it must
satisfy the needs and wants of car buyers. If costs of quality are outweighed by benefits of producing
quality products, e.g. customer loyalty, reduced waste/customer complaints, premium pricing, etc. then
Toyota’s approach to quality and quality assurance is worthwhile.

Test yourself (page 233)


1 Checking the quality of goods through inspection.
2 Quality of the raw materials, components, labour force and capital machinery used directly influences
the quality of the finished product. If any inputs are poor quality it will affect the quality of the finished
product.

Exam-style practice questions (page 234)


1 a Minimum standard of production or service acceptable to consumers. [2]
b 2150 × 2% = 43 [2]

© Cambridge University Press 2018 Chapter 17 Answers to Coursebook activities 1


Cambridge IGCSE and O Level Business Studies

c Checking at the end of the production process (1), fault might have been made at the beginning of
the production process so resources were wasted completing a faulty product (1). Inspection boring
(1), task of inspection is repetitive and inspectors might become demotivated and take less care in
checking the quality of Component Y (1). [Total: 4]
d Introduce quality assurance (1), – raw materials and other resources used in the production process
must meet required standards (1), quality standards to be agreed for every stage of production and
employees responsible for meeting these (1). Introduce CAD and CAM (1) – use computers to design
and control manufacture of components such as Component Y (1), this improves design quality and
CAM reduces human error in the production process (1). [Total: 6]
e The percentage of Component Y found to be defective at the end of the production process increased
from 0.5% to 2% showing that production of these components is not as good in 2012 as it was in 2011
(1). Management should be concerned about this trend because it shows that quality has fallen (1). Or,
the number of Component Y returned from customers has fallen from 4 to 2, even though Zebtech
produced more of these in 2012 than in 2011 (1). Management should be pleased that the inspection
process has improved (1). However, Component Y is used in heart surgery and even one faulty
component getting through the inspection process is not good and could damage Zebtech’s reputation
(1). (Maximum 4 marks for use of data) Management should be concerned because hospitals will
look for a more reliable supplier of the component/ might not buy any other medical equipment from
Zebtech (1) if they are worried about quality. This will decrease Zebtech’s sales and profits (1). [Total: 6]
2 a Providing goods or services that meet the needs and wants of consumers.
b 46 000 × 1.5% = 690
c Improves reputation / brand image, increases sales/profits, can charge higher prices, reduces waste,
reduces customer complaints, easier to introduce new products to market. (1 mark per relevant
reason) [Total: 4]
d Quality of inputs (1), poor-quality raw materials / demotivated employees / problems with
machinery (1), if the quality of any inputs decreases it will affect the quality of PP’s products
(1). Inspection process is boring (1), quality inspectors become demotivated because the work is
repetitive (1), demotivated inspectors are less careful when checking products and allow faulty
products to be despatched to customers (1). [Total: 6]
e Present system not working as well as previously (1), could look at improving the present system (1).
Quality assurance ensures that inputs into the production process are of required quality (1),
minimum standard is set for each stage of production (1), employees are made responsible for the
quality of their work (1). (Maximum 4 marks) Cost of introducing quality assurance, e.g. setting
standards, training employees, improving machinery, etc. (1), is this outweighed by reduction in
faulty goods and customer complaints (1)? [Total: 6]

© Cambridge University Press 2018 Chapter 17 Answers to Coursebook activities 2

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