EDEXCEL GCSE BUSINESS · PAPER 2
Managing quality
Making operational decisions · Lesson 3 of 4
Teacher copy - includes the notes for whoever is teaching from it.
Last Lesson
Answer from memory before the answers appear.
1. What is buffer stock?
The minimum stock kept for emergencies.
2. What is just-in-time?
Ordering stock to arrive exactly when needed, holding little or none.
3. Name three factors in choosing a supplier.
Any three of: quality, delivery, availability, cost, trust.
4. What is lead time?
The time between ordering stock and it arriving.
Learning Objectives
1. Explain what quality means.
2. Explain quality control.
3. Explain quality assurance.
4. Explain the importance of quality in controlling costs and gaining competitive advantage.
What Is Quality?
A quality product meets or exceeds customers' expectations - and does so every time.
▸ Fit for purpose. It does what customers need it to do.
▸ Consistent. Every product is made to the same standard.
▸ Not the same as luxury. A cheap product can be high quality if it meets the expectations of customers who buy it.
▸ Services too. Quality applies to service - speed, friendliness and reliability.
Quality Control or Quality Assurance?
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QUALITY CONTROL |
QUALITY ASSURANCE |
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▸ Checking finished products for faults, usually at the end of production. ▸ Done by specialist inspectors. ▸ Faulty products are thrown away or reworked. ▸ Finds problems after they have happened. ▸ Can be wasteful: materials and time are lost on every faulty product. |
▸ Checking quality at every stage of production. ▸ Every worker is responsible for their own work. ▸ Aims to prevent faults happening in the first place. ▸ Less waste, as faults are caught early. ▸ Needs training, and staff who care about quality. |
Checking Every Detail
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Quality control inspectors check finished products, or a sample of them, before they are sent to customers. It stops faulty products reaching customers - but by the time a fault is found, the materials and time have already been used. |
Quality control: inspecting finished products for faults. |
PART ONE
Why Quality Matters
Quality is about costs as well as customers.
The Importance of Quality
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Controlling costs Fewer faulty products means less waste, fewer returns and less money spent fixing mistakes. |
Competitive advantage A reputation for quality helps a business stand out from rivals and win customers. |
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Premium prices Customers will often pay more for a product they trust to be well made. |
Customer loyalty Customers who get good quality every time come back and recommend the business. |
The Cost of Poor Quality
When quality fails, the costs mount up quickly.
▸ Waste. Faulty products must be scrapped or reworked.
▸ Returns and refunds. Customers return faulty goods and demand their money back.
▸ Product recalls. Dangerous faults can force a business to recall every product sold - extremely expensive.
▸ Reputation. Bad reviews and news stories drive customers away for years.
Case Study
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CASE STUDY The Galaxy Note 7 Recall In August 2016 Samsung launched the Galaxy Note 7 smartphone. Within weeks, reports emerged of phones overheating and catching fire because of faulty batteries. Airlines banned the phone from flights. Samsung recalled millions of phones, and when replacement phones also caught fire, it stopped making the Note 7 altogether in October 2016. The failure cost Samsung billions of dollars and damaged its reputation - a clear example of how poor quality can cost far more than getting it right would have done. |
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2016 Galaxy Note 7 launched and recalled |
Billions The cost of the failure, in US dollars |
Key Terms
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Quality Meeting or exceeding customers' expectations, consistently. |
Quality control Checking finished products for faults. |
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Quality assurance Checking quality at every stage of production to prevent faults. |
Product recall When a business asks customers to return a product because it is faulty or dangerous. |
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Competitive advantage Anything that makes a business more attractive to customers than its rivals. |
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Your Task: Build Quality In
12 minutes
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A sandwich factory has had complaints about missing ingredients and wrong labels. Design a quality assurance system for it: list three checks at different stages of production, and explain how each would prevent the problem rather than just finding it. 1. One check when ingredients arrive. 2. One check during assembly. 3. One check at labelling. 4. How each prevents problems. |
A good answer shows: Three checks at different stages (ingredients arriving, assembly, labelling) with each explained as preventing faults.
Note: The key is prevention - "check the sandwich at the end" is quality control, not assurance.
Can I...?
☐ Explain what quality means.
☐ Explain quality control.
☐ Explain quality assurance.
☐ Compare quality control and quality assurance.
☐ Explain how quality controls costs.
☐ Explain how quality gives a competitive advantage.
☐ Explain the costs of poor quality.
Summary
✓ Quality means meeting customers' expectations, every time.
✓ Quality control checks finished products; quality assurance builds quality into every stage.
✓ High quality controls costs and gives a competitive advantage.
✓ Poor quality brings waste, returns, recalls and damaged reputation.
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EXAM FOCUS Explain one benefit to a business of using quality assurance rather than quality control. (3 marks) The difference is when quality is checked: control finds faults at the end, assurance prevents them throughout. Link your answer to costs or reputation. |
Exam Practice: Managing Quality
Answer all questions. Use the context of the business in the question where one is given. · 20 minutes
▸ Question 1 · 1 mark · Define. Define the term 'quality control'.
▸ Question 2 · 2 marks · Outline. Outline one cost to a business of poor quality.
▸ Question 3 · 3 marks · Explain. Explain one benefit to a business of using quality assurance rather than quality control.
▸ Question 4 · 6 marks · Analyse. Analyse the impact of poor quality on SmartHome Ltd.
Question 1 · 1 mark · Define
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“Define the term 'quality control'.” |
HOW TO ANSWER IT Command word: Define. Worth 1 mark, so plan before writing.
Question 1 · mark scheme
1 mark available. Award a mark for each point made.
▸ Inspecting finished products / checking for faults at the end. 1 mark
▸ Model answer. Checking finished products for faults, usually at the end of the production process.
Question 2 · 2 marks · Outline
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“Outline one cost to a business of poor quality.” |
HOW TO ANSWER IT Command word: Outline. Worth 2 marks, so plan before writing.
Question 2 · mark scheme
2 marks available. Award a mark for each point made.
▸ A cost identified, e.g. waste / returns / recalls / reputation. 1 mark
▸ Developed. 1 mark
▸ Model answer. The business may have to recall products (1), which is very expensive and damages customers' trust in the brand (1).
Question 3 · 3 marks · Explain
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“Explain one benefit to a business of using quality assurance rather than quality control.” |
HOW TO ANSWER IT Command word: Explain. Worth 3 marks, so plan before writing.
Question 3 · mark scheme
3 marks available. Award a mark for each point made.
▸ A benefit identified, e.g. less waste / lower costs / staff responsibility / fewer faults reach customers. 1 mark
▸ First linked point of explanation. 1 mark
▸ Second linked point of explanation. 1 mark
▸ Model answer. It reduces waste (1). Faults are prevented or caught at each stage, rather than found only once the product is finished (1). This means fewer materials and less time are wasted on faulty products, lowering the business's costs (1).
Question 4 · 6 marks · Analyse
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“Analyse the impact of poor quality on SmartHome Ltd.” — SmartHome Ltd makes wireless doorbells. It uses quality control, with inspectors checking one in every 50 doorbells at the end of the production line. Last year 4% of doorbells… |
HOW TO ANSWER IT Command word: Analyse. Worth 6 marks, so plan before writing.
Question 4 · mark scheme
6 marks available. Award a mark for each point made.
▸ AO2 (Application, 3 marks): uses the context - 1 in 50 checks, 4% returns, 4.5 to 3.2 stars. Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning about costs, reputation and sales. Level 1-3
▸ Model answer. A 4% return rate means SmartHome is refunding or replacing many doorbells, which increases its costs, as each faulty doorbell is paid for twice - once to make and again to replace. Because inspectors only check one in every 50 doorbells, faulty products are reaching customers. The fall in online reviews from 4.5 to 3.2 stars will also affect sales. Customers read reviews before buying, so a low rating will push them towards competitors. This means SmartHome's sales and revenue are likely to fall at the same time as its costs rise, reducing its profit.