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Unformatted text preview: Chapter 07 - Managing Quality and Time to Create Value 7-1 CHAPTER 7 Managing Quality and Time to Create Value ANSWERS TO REVIEW QUESTIONS 7.1 Refer to the list of key terms at the end of the chapter and the glossary. 7.2 Several decades ago, high quality was a means of establishing a competitive advantage. However, now high quality is considered to be a competitive necessity. Quality does not just happen; it is the result of conscious management decisions. Just like cost, measuring and evaluating quality is necessary to ensure that high quality is being maintained. 7.3 Some feel that now managing time is at the same stage as managing quality was 10 to 20 years ago – soon it will be a competitive necessity, but it may be a source of competitive advantage now. Organizations that are able to meet customer needs more quickly (and with high quality) may have an advantage, but superior time performance does not just happen. It, too, is the result of applying management focus and techniques. 7.4 TQM advocates believe that investments in improved quality will always pay off because customers will prefer to buy from a quality supplier and they should be willing to pay premium prices. 7.5 ROQ advocates believe there is an optimum level of quality, beyond which the costs of achieving higher quality exceed the benefits (higher prices) of higher quality. According to ROQ, organizations should seek to maximize profitability, not quality. TQM, on the other hand, presumes that increases in quality always increases profitability. 7.6 Quality dimensions are (1) product or service attributes and (2) customer service before and after the sale. 7.7 Perhaps the major difference between tangible and intangible product features are the ease and reliability with which organizations can measure achievement of those features. 7.8 High degrees in variation of performance of process activities usually leads to variation in product attributes, which are important contributors to quality. High variation itself usually means that there is a greater chance of product attributes being well below expectations. Chapter 07 - Managing Quality and Time to Create Value 7-2 7.9 Lead indicators of quality reflect current process activities that the organization believes will affect the quality of products and services as perceived by customers. Diagnostic information about quality may be lead indicators of quality, but also may measure customer perceptions about quality that has resulted. Diagnostic information identifies or helps identify causes of poor quality. 7.10 Customer satisfaction and quality are closely related because high degrees of quality, as defined by the customer, could result in high customer satisfaction....
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This note was uploaded on 04/01/2010 for the course ACCT 1 taught by Professor Bono during the Spring '10 term at Illinois State.
- Spring '10