[email protected] Usefulness of the Product, the Major Importance Lies in the Performance

International Journal for Quality Research 8(4) 481–494 ISSN 1800‐6450 Editors in chief Zdravko Krivokapic Slavko Arsovski Center for Quality Center for Quality Faculty of Mechanical Faculty of Engineering Engineering University of Kragujevac University of Montenegro Serbia Montenegro Editorial board Zora Arsovski Miodrag Bulatovic University of Kragujevac University of Montenegro Serbia Montenegro Vesna Cancer Pavel Castka University of Ljubljana University of Canterbury Slovenia New Zealand Marc-Arthur Diaye Aysegül Akdogan Eker University of Evry -Val Yildiz Technical University d'Essonne Turkey France Bulent Eker Jovan Filipovic Namik Kemal University - University of Belgrade Tekirdag Serbia Turkey Janko Hodolic Jaroslava Hyrlova Faculty of Technical Science University of Pardubice University of Novi Sad Czech Republic Serbia Stanislav Karapetrovic Veijo Kauppinen University of Albert Helsinki University of Technology Canada Finland Alireza Lari Luc Laperriere Fayetteville State University Universite du Quebec a Trois-Rivieres USA Canada Miodrag Lazic Andjelko Lojpur University of Kragujevac University of Montenegro Serbia Montenegro Ramezanali Mahdavinejad Vladimir Modrak University of Tehran Technical University of Kosice Iran Slovakia Bernhard Müller Gordana Nikolic Dresden University of Business School PAR Technology Croatia Germany Duc Truong Pham Milan Perovic University of Birmingham University of Montenegro United Kingdom Montenegro Darko Petkovic Cornelia Petroman University of Zenica University of Agricultural (BIH) Federation of Bosnia and Sciences and Veterinary Herzegovina Medicine of Banat Timisoara Romania Goran Putnik Adolfo Senatore University of Minho University of Salerno Portugal Italy International Journal for Quality Research 8(4) 481–494 ISSN 1800‐6450 Mirko Sokovic Vidoje Vujic University of Ljubljana University of Rijeka Slovenia Croatia Milan Vukcevic Mirjana Pejic Bach University of Montenegro University of Zagreb Montenegro Croatia Sikora Tadeusz Nina Nikolajevna Aniskina Cracow University of Economics Pastukhov State Academy of Industrial Poland Management Russia Martí Casadesús Osvaldo Quelhas University of Girona Universidade Federal Fluminense Spain Brasil Paulo Ávila University of Girona Polytechnic Institute of Porto Portugal Assistant editors Aleksandar Vujovic Miladin Stefanovic Center for Quality Center for Quality Faculty of Mechanical Faculty of Engineering Engineering University of Kragujevac University of Montenegro Serbia Montenegro Technical editors Snezana Nestic CIM Center Faculty of Engineering University of Kragujevac Serbia Indexing International Journal for Quality research UDK- 378.014.3(497.11) Short Scientific Paper (1.03) IMPACT OF PRODUCT QUALITY IN THE BUSINESS OF THE ORGANIZATION Krešimir Buntak 1) Abstract: Quality has become a strategic goal and competition priority 2) Zdenko Adelsberger in the modern economy and certainly a key weapon in the battles to 3) conquer new markets. Also extremely important is to ensure customer Ivan Nađ satisfaction, particularly with regard to ensuring high quality at an affordable price. Besides all that, it is essential to balance the 1) The Polytechnic of alignment of interests, not only of producers and consumers, but of all Varaždin, Croatia interested parties. This means that, besides quality in the sense of [email protected] usefulness of the product, the major importance lies in the performance management of the product realization process with the constant 2) Bluefield d.o.o., Zagreb, optimization of the cost in order to achieve a competitive and Croatia [email protected] reasonable price for the buyer. Along the competitive price, it is important that the manufacturer provides sufficient funding to ensure a 3) Zaštita-Zagreb d.d., lasting and stable development. This relationship and exchange Zagreb, Croatia, between quality and cost belongs to the fields of economics of quality [email protected] and business efficiency. The process of transformation of consumers’ desires and needs into a particular product is known as the cycle of quality. The aim of this paper is to lay the foundations, through analyzing the field of quality economics, for the research on the impact of product quality management on the competitiveness and business of organizations, especially those with an implemented quality management system. Keywords: product quality, economics of quality, quality cycle, quality management system, competitiveness 1. INTRODUCTION from the quality department to all parts of the organization, and even beyond, reaching all the For many years the prevailing approach in the way to the top management and becoming a field of production was the one preferring priority strategic goal of a contemporary company, quantity, i.e. volume or amount of production. By which is a prerequisite for quality to become a preferring the economics of production volume, competition priority 17, pp. 17. In this quality was often in a position of secondary connection, the key to achieving the competitive importance and neglected. It used to be advantage is the interest of the consumer for the determined through inspections (controls) at the product in the target market. Namely, after having end of the production process, when it was already analyzed definitions of quality from that aspect, too late. Such approach had prevailed until the the definition of quality would be conformity of 1940s, when the statistical methods and statistical the product to the requirements of the consumer, quality control were applied for the first time, which in the long run results in the suitability of thanks to the American expert W. A. Shewhart. the product for use. His PDCA (Plan-Do-Check-Act) cycle method, Within the framework of this paper, we are also called Shewhart cycle, nowadays still going to analyze the impact of quality on the represents the prime moving force and initiator of business of the organization, with the special the constant improvement of the system as one of emphasis on this interrelation throughout the field the fundamental requirements of the quality of economics of quality, with the purpose of management system. Quality thus crosses over preparation for the research of the impact of Vol. 6, No. 3, 2012 271 product quality management on the business and goal of a contemporary company, which is a competitiveness of certified companies in the prerequisite for quality to become a competition region. priority 17, pp. 17. In this connection, the key to achieving the competitive advantage is the interest of the consumer for the product in the target 2. IMPACT OF QUALITY ON market. Namely, after having analyzed definitions COMPETITIVENESS AND of quality from that aspect, the definition of BUSINESS OF THE COMPAY quality would be conformity of the product to the requirements of the consumer, which in the long 2.1 Quality and competitiveness run results in the suitability of the product for use. Product quality can be observed through various Although the approach of production volume dimensions, i.e. product features which contribute was still preferred for some time in the period after to its quality as perceived by the consumer. World War II for legitimate reasons of post-war Quality features can be classified into three basic shortages, the conditions were gradually changing groups 17, pp. 30: and quality was gaining a more prominent role. 1. features determining product functionality The Japanese economy is a good example of this, 2. features determining product reliability and as its strategy of the application of quality has durability seriously shaken the American economy lulled 3. features constituting a hedonistic addition to into a sense of superiority, thus ensuring the the product. competitiveness of Japanese economy and products on the global market. In the 1970s it In this concern, Gašparović 7, pp. 11 refers surpassed all its earlier competitors (Figure 1). A to the fact that the functional basis can be period of quality competition was thus started, and explained through different technical features of it did not stop at the product, but spread to the the product, through which the basic needs of the processes and the organization as a whole. This consumer are met, while the hedonistic element has led to the concept of total, utter quality can be explained as a wish to meet the need in a control, which has given rise to a new philosophy pleasant way. Consequently, the company will of total quality control. have to determine the concrete dimension of Quality thus crosses over from the quality quality, i.e. the quality features of the product, as department to all parts of the organization, and well as all the other features which are in the even beyond, reaching all the way to the top consumer’s best interest and are important to him. management and becoming a priority strategic Figure 1: New quality competition 272 K. Buntak, Z. Adelsberger, I. Nađ Garvin 6, pp. 104 proposes eight substantial Since the economic value of quality is nowadays dimensions or types of quality: increasingly accepted as well, it is interesting to 1. performance (primary functional features) – analyze the impact of quality and productivity on referring to the primary technical features of profitability, which is a function of revenue and the product expenses. The basic definition of profit is the following: 2. special quality features (secondary functional features) – referring to the product features PROFIT = REVENUE – EXPENDITURE which constitute

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