Two companies, ABC Inc. and XYZ Inc., both need to compete in the global marketplace in order to survive.
Poor quality can have a significant and detrimental impact on a business. When a company produces goods or offers services that fall short of customer expectations, it can lead to a loss of trust and reputation. Customers who receive subpar products or experiences are less likely to return, and negative word-of-mouth can spread quickly. The cost of fixing quality issues, such as product recalls or addressing customer complaints, can be substantial, affecting a company’s bottom line. Poor quality can also erode employee morale and motivation, as they may feel frustrated by constant problems and customer dissatisfaction. In the competitive marketplace, maintaining high quality standards is essential for long-term success and growth.
Directions
Read “A Tale of Two Companies” in your textbook. Carefully review the information and then respond to these prompts with sufficient detail.
(Beginning of story)
A Tale of Two Companies
Two companies, ABC Inc. and XYZ Inc., both need to compete in the global marketplace in order to survive. As might be expected, over the years competition has become increasingly intense. In order to be more competitive, ABC’s executives undertook a major company-wide cost-cutting initiative. They eliminated quality audits; changed from trusted, proven suppliers to low-bid suppliers; purchased new computer systems; cut back on research and development; and reduced customer service staff.
These cost-cutting strategies did have the desired effect of decreasing the company’s overhead, but they also had the unplanned consequences of disrupting the company’s ability to satisfy customers and reducing the company’s potential to develop new business in the future. The net outcome of all this was unhappy customers, disenchanted employees, and a decline in business. To make matters even worse, the company was still struggling with the poor performance record that caused its executives to want to cut costs in the first place.
The executives of XYZ Inc. also needed to make some changes in order to stay competitive, but they decided to take a different approach. XYZ’s management team set out to identify all of the costs that would disappear if their company improved its performance in key areas. The costs identified included those associated with the following: late deliveries to customers, billing errors, scrap and rework, and accounts payable errors. In other words, XYZ’s executives decided to identify the costs associated with poor quality. Having done so, they were able to begin improvement projects in the areas identified without making cuts in functions essential to competitiveness (e.g., product quality, research and development, customer service).
(End of story)
Specifically, you must address the following rubric criteria:
Poor Quality Activities: Identify all activities that exist only, or primarily, because of poor quality.
Cost Estimate: Explain how to estimate the costs associated with these activities.
Corrective Action: Analyze the results and identify the necessary corrective actions that should be taken.
Defend your answers with additional research, including citations.
What to Submit
The case study should be 1 to 2 pages in length with double spacing, 12-point Times New Roman font, and one-inch margins. Include at least two sources of research cited according to APA format.
Rubric
Poor Quality Activities: Identifies all activities that exist only, or primarily, because of poor quality.
Cost Estimate: Explains how to estimate the costs associated with poor quality.
Corrective Action: Analyzes the results and identifies the corrective action that should be taken.
Clear Communication: Consistently and effectively communicates in an organized way to a specific audience.
Citations and Attributions: Uses citations for ideas requiring attribution, with consistent minor errors.
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