Quality management

The concept of quality requires a plumber to mend a leaking toilet:

A as soon as possible

B in the simplest way possible

C to a reasonable standard

D with reasonable care

Zayn is the owner of an established business that makes heated gloves. The business has recently experienced an increase in product returns.

Which of the following would help Zayn deal with this problem?

A Giving a bonus to the employee who sews the most gloves each month

B Improving quality checks to ensure every glove heats up correctly

C Researching other types of heated clothing that the business could make

D Segmenting the market by age, gender and lifestyle

Text 3

Primark Ltd

Primark Ltd is a fashion retailer that sells clothing and homeware at prices lower than most other retailers. The company is aware of the importance of consumer law and of having low-cost suppliers.

Primark Ltd started to sell its products online in 2022. After changes in buying habits and pressure from customers, in 2022 Primark Ltd launched an online click and collect service for shoppers.

Primark Ltd is very aware of the need to have ethical suppliers. The following ethical factors are among those important to Primark Ltd:

• giving clothes a longer life by using material from sustainable sources

• encouraging its supply chain to pay a living wage and look after the health and well-being of their workers.

Identify one factor which can affect the quality of a business’ products.

Analyse one impact of consumer law on Primark Ltd.

Analyse one benefit for Primark Ltd of having low-cost suppliers.

Analyse one advantage and one disadvantage to Primark Ltd of offering an online click and collect service for shoppers.

Recommend whether Primark Ltd should continue to offer an online click and collect service for shoppers.

(e*) Evaluate whether Primark Ltd’s use of ethical suppliers comes into conflict with its shareholders’ objectives.

Text 1 Zara

Zara is a global fashion brand based in Spain. Zara is best known for the speed and frequency it can get its new clothing ranges into its online shop and 2270 stores. Approximately 50% of Zara’s clothes are manufactured in Spain; the rest come from other European countries, or from Asia and Africa. Like most firms in 2020, Zara experienced a fall in sales. Zara’s global sales revenues in 2019 were €19 954 million, but in 2020 these fell to €14 129 million. However, during this period Zara’s online sales increased by approximately 75%, as consumer buying habits changed in favour of e-commerce.

Zara can get new clothing designed, manufactured and delivered to its stores within 15 days. It does this by buying fabric in large quantities from suppliers in Europe, which helps keep its variable costs low. This means that it is delivered quickly to its factory in Spain, where it can then be made up into the new designs.

Zara’s highly responsive supply chain is central to its business success. This means it can change its clothing designs on average every two weeks, while competitors change their designs every two or three months.

Explain one production process a business may use when making its products.

Explain one method that a business could use to ensure the quality of its products.

Analyse one reason why keeping variable costs low may reward Zara’s owners.

Calculate the percentage decrease in Zara’s sales revenue between 2019 and 2020.

Show your workings

Answer........

Explain one possible advantage to a business of selling its products via e-commerce.

Identify two roles of the procurement function in a business.

Evaluate the importance to Zara of having reliable suppliers in the supply chain for its clothing.

Text 2

AstraZeneca plc

AstraZeneca plc (AZ) is a multinational pharmaceutical company that operates in over 100 countries around the world. AZ develops treatments for a range of diseases. It sells its medicines and vaccines worldwide. Its headquarters are in Cambridge, England. In 2021 AZ’s sales revenue was £37 417m, from which it made £24 980m gross profit.

AZ has a code of ethics, which is at the centre of everything that it does. The company has approximately 75 000 employees worldwide; 10 000 of these work in its three research and development centres.

AZ uses technology throughout its operations to provide high quality products for its customers. These customers include doctors, hospitals and governments from around the globe.

In the UK, AZ has changed the way it sells its products. Previously, sales staff would visit medical professionals; now it uses a call centre and website where medical professionals can order products and samples. AZ says this means it can now provide a high quality service that meets the needs of its customers at a lower cost.

Identify two ethical considerations a business may have.

State two reasons why quality in the production of goods is important to a business.

Analyse one reason why it is important to AZ that its call centre employees have good product knowledge.

Calculate AZ’s gross profit margin for 2021.

Show your workings

Answer........

Explain one way technology might affect production at AZ.

Analyse one advantage and one disadvantage to AZ of operating as a multinational company.

Recommend whether AZ should continue to operate as a multinational company.

QT Homeware Ltd manufactures small kitchen appliances. The company has recently received a number of emails complaining that its kettles leak.

Which of the following actions would help QT Homeware Ltd deal with this problem?

A Include a cloth to wipe up any leaks in the box of all new kettles

B Launch a promotional campaign in a housekeeping magazine

C Meet with production workers to discuss how to reduce costs

D Physically test every hundredth kettle to ensure it is watertight

Identify one economic factor which may affect a company’s profit.

Analyse the importance of quality in the production of the houses that BD plc produces.

Analyse one advantage to BD plc of obtaining 90% of its raw materials from the UK.

Analyse one advantage and one disadvantage to BD plc of producing components in batches at its factory.

Recommend whether BD plc should continue to produce components in batches at its factory.

* Evaluate how useful break-even analysis is to BD plc’s pricing and promotional decisions.

The concept of ‘quality’ requires a business to:

A produce goods that are better than the competition

B produce goods that are reasonably priced

C provide services that are fit for purpose

D provide services that are value for money

Which of the following would be an example of a quality assurance activity for a car manufacturer?

A Driving every tenth car to test that the brakes are working correctly

B Holding a meeting with production operatives on how to improve the manufacturing process

C Increasing the amount of money that the operations function can spend

D Visually inspecting two cars of each colour for defects in the paintwork