business 2.5

What is quality

The features and characteristics of a product that satisfy customer needs

Why is quality important

Attracts and retains customers and improves competitiveness

What is quality control

Checking quality at the end of production

Advantages of quality control

Simple, cheap and uses specialists

Disadvantages of quality control

Waste from rejected goods and does not prevent defects

What is quality assurance

Checking quality throughout production

Advantages of quality assurance

Problems identified early and defects prevented

Disadvantages of quality assurance

Requires training and may slow production

What are quality circles

Groups of workers solving quality issues

Advantages of quality circles

Improves motivation and problem solving

Disadvantages of quality circles

Requires trust and time

What is total quality management

Every worker responsible for maintaining quality

Advantages of TQM

Improves efficiency and continuous improvement

Disadvantages of TQM

Requires training and strong management commitment

What is Kaizen

Continuous small improvements over time

Key feature of Kaizen

Focus on reducing waste

Benefits of Kaizen

Improves efficiency and productivity gradually

Elements of Kaizen

TQM, JIT, teamwork, quality circles, zero defects

Limitations of Kaizen

Requires long

How quality creates competitive advantage

Improves reputation and increases demand

Link between quality and costs

Prevents defects reducing long

How quality affects promotion

Used as a USP

How quality supports expansion

Good reputation helps enter new markets

What is inflation

General rise in prices

What is CPI

Measure of inflation

UK inflation target

Around 2 percent

Impact of inflation on costs

Increases wages and raw material costs

Impact of inflation on borrowing

Interest rates rise increasing costs

Impact of inflation on demand

Reduces consumer spending

Impact of inflation on competitiveness

Makes exports less competitive

Impact of inflation uncertainty

Delays business decisions

What is exchange rate

Value of one currency against another

Reasons exchange rate changes

Demand for currency and economic conditions

Impact of currency appreciation on exports

Makes exports expensive reducing demand

Impact of currency appreciation on imports

Makes imports cheaper lowering costs

Impact of currency depreciation on exports

Makes exports cheaper increasing demand

Impact of currency depreciation on imports

Makes imports more expensive

What is interest rate

Cost of borrowing money

Impact of rising interest rates

Reduces borrowing and investment

Impact on consumers

Reduces spending

Impact on exports

Stronger currency reduces demand

What are direct taxes

Taxes on income

What are indirect taxes

Taxes on spending

Impact of higher taxes on revenue

Reduces demand and sales

Impact of higher taxes on costs

Increases business expenses

Impact on business decisions

Reduces investment

How businesses respond to higher taxes

Relocate or reduce costs

Impact of increased government spending

Boosts demand and growth

Impact of reduced government spending

Weakens demand

What is business cycle

Pattern of economic growth and decline

What is recession

Two consecutive quarters of negative growth

What is boom

Period of strong growth

Impact of recession on business

Lower demand and survival focus

Impact of boom on business

Higher demand and expansion

Problems with boom

Inflation and higher borrowing costs

What is economic uncertainty

Difficulty predicting future conditions

Causes of uncertainty

Economic instability and changing markets

Impact of uncertainty

Reduces investment and slows decisions

How businesses respond to uncertainty

Build reserves and remain flexible

What is legislation

Laws controlling business activity

Main types of legislation

Consumer, employee, environmental, competition, health and safety

What is consumer protection law

Laws protecting customers

Areas covered by consumer law

Safety, quality and information

Impact of consumer protection

Raises costs but improves fairness

What is employee protection law

Laws protecting workers

Areas covered by employee law

Pay, conditions and equality

Impact of employee protection

Increases costs but improves morale

What is environmental protection law

Laws protecting environment

Areas covered by environmental law

Pollution and waste

Impact of environmental laws

Increases costs

Penalties for non compliance

Fines or closure

What is competition policy

Laws preventing unfair competition

Areas of competition policy

Mergers and monopolies

Role of CMA

Blocks mergers and enforces competition laws

What is health and safety law

Laws ensuring safe workplaces

Areas covered by health and safety

Equipment and conditions

Impact of compliance

Increases costs

Consequences of breaking laws

Fines and legal action

What is competition

Level of rivalry between businesses

Impact of competition

Forces improvement in quality and pricing

What is competitive environment

Pressure from competitors

How small businesses respond to competition

Focus on USP and service

What is USP

Unique selling point

What is market size

Total number of buyers and sellers

Characteristics of small markets

Low demand and less competition

Characteristics of large markets

High competition and complexity

Advantages of niche markets

Less competition and specialised demand

Disadvantages of niche markets

Limited growth potential