With reference to a business you have studied, analyse the relationship between cost and quality in the operations of the business. - HSC - SSCE Business Studies - Question 25 - 2016 - Paper 1

In the operations of a business, there is typically a close, positive relationship between cost and quality. As the quality of a product increases, the cost of producing that product also tends to increase. This is often because higher quality materials and processes are required, thereby elevating production expenses.

For example, consider a company like Qantas that offers full-service flights compared to a low-cost airline such as Jetstar. Jetstar is able to keep prices lower by reducing the overall quality of service, offering fewer amenities, and operating under a no-frills model. Conversely, Qantas may charge higher prices due to its superior quality of service, which includes extras like in-flight meals and entertainment.

Thus, companies must strategically navigate this relationship—balancing their operational costs against the quality they wish to offer, tailoring their services to meet their target market while maximizing profitability.