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Questions and Answers
What strategies might a company employ during the 'Decline' phase of the product life cycle to manage costs?
What strategies might a company employ during the 'Decline' phase of the product life cycle to manage costs?
- Reduce production volumes and focus on cost-cutting (correct)
- Increase marketing expenditure to boost sales
- Invest in product innovation to revitalize the product
- Expand distribution networks to new markets
Which of the following are key elements of a Quality Control System that ensure compliance with standards?
Which of the following are key elements of a Quality Control System that ensure compliance with standards?
- Customer feedback mechanisms and price adjustments
- Employee training programs and external audits (correct)
- Routine inspections and quality documentation (correct)
- Internal sales metrics and marketing strategies
What is the impact of 'internal and external failure costs' on a company's overall quality expenses?
What is the impact of 'internal and external failure costs' on a company's overall quality expenses?
- They lower costs by improving product acceptance
- They increase overall costs by reducing efficiency (correct)
- They only affect marketing budgets without other consequences
- They have no significant impact on overall costs
What distinguishes 'direct materials' from 'indirect materials' in manufacturing costs?
What distinguishes 'direct materials' from 'indirect materials' in manufacturing costs?
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How does a company's focus on quality enhance its competitive advantage in global markets?
How does a company's focus on quality enhance its competitive advantage in global markets?
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Study Notes
Decline Phase Strategies
- Companies may reduce production costs by consolidating operations or limiting product variations.
- Focus on niche markets or loyal customer segments to sustain sales.
- Implement cost-cutting measures like workforce reductions and reduced marketing expenses.
- Explore alternative distribution channels to maintain product presence at a lower cost.
Quality Control System Elements
- Process Documentation: Comprehensive records of procedures ensure consistency and compliance.
- Quality Standards: Clearly defined performance criteria establish benchmarks for acceptable quality.
- Training and Development: Regular employee training ensures everyone is aware of quality expectations.
- Monitoring and Inspection: Ongoing checks help identify defects and non-conformance early in the process.
- Feedback Mechanisms: Establishing channels for reporting issues supports continuous improvement efforts.
Internal and External Failure Costs Impact
- Internal failure costs arise from defects found before delivery, leading to increased rework and scrap costs.
- External failure costs occur when defects are identified after delivery, resulting in warranty claims and customer dissatisfaction.
- Both types of costs contribute to overall quality expenses, negatively impacting profitability and brand reputation.
Direct vs. Indirect Materials
- Direct Materials: Raw materials directly incorporated into a product, e.g., steel in a car or fabric in clothing.
- Indirect Materials: Supplies needed for production that are not directly traceable to a specific product, e.g., lubricants, cleaning supplies.
Quality as Competitive Advantage
- High-quality products enhance brand reputation, fostering customer loyalty and repeat purchases.
- Emphasis on quality allows companies to command premium pricing, increasing margins.
- Superior quality can differentiate a brand in crowded global markets, making it a preferred choice over competitors.
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