What are the costs of maintaining quality?

Cost control and competitive advantage

Businesses seek to achieve high quality and competitive advantage by developing a business culture where employees are motivated and care about their customers, the product and/or service, and the business’ reputation.

Quality management is important to businesses because it helps them to produce high-quality products and services. They need to understand what their customers want, and meet customers’ needs and expectations. This is a way of gaining competitive advantage.

Quality management is also important in relation to costs. Mistakes are expensive, and quality control and quality assurance help businesses to limit additional costs and reduce wastage by aiming to ensure that things are done correctly the first time. For example, quality management can help to:

• reduce waste, eg if a car light is damaged during production, it will have to be scrapped and replaced at additional cost to the business
• reduce employee costs, as replacing the car light will cost the manufacturer additional wages, because an employee must be paid to replace the light

When a business can offer higher quality and lower costs, it gains a competitive advantage over similar businesses. A good-quality product or service helps to build a strong brand image, which can allow a business to grow its market share. If a business has a product or service that gains a good reputation for being of high quality, the business can charge a premium price.