External Quality Loss Cost Impact On Business Performance

With the deepening development of global economic integration, the enterprises are facing increasingly severe competition in the market situation. The product quality is not only related to production efficiency and self-image, but also related to the interests of the customers. The high or low product quality reflects the company’s core competitiveness."Quality is the survival of the enterprise" this concept has become increasingly more accepted by people from all walks of life. However, in practical work, many enterprises paid insufficient attention to the consequence due to quality problems and lack of the understanding of quality costs, especially the external quality loss cost impact on businesses. The constant exposure of the product quality event reduced consumer confidence in the enterprise. The news about the enterprise crisis and the problems of the development of the enterprises caused by the quality issues are reported constantly.From the existing research results at home and abroad, the majority of literatures mainly focus on quality cost management theory, method. Many researchers from different angles proposed the cost of quality model and the new recommendation of quality cost management. However, the study about quality cost on business performance is relatively very little. The external quality loss cost of the quality cost impact on business performance is even rarer.In order to verify the external quality loss cost impact on business performance, this article combs the relative literatures and uses qualitative and quantitative analysis methods to systematically study the external quality loss cost impact on business performance. Firstly, theoretical analyze the external quality loss cost’s two dimensions, the external dominant quality loss cost and external recessive quality loss cost impacts on business performance. Secondly, take questionnaire survey research method, based on the SPSS software, make correlation analysis and regression analysis of survey data from134valid questionnaires and draw the relevant conclusions. Finally, arrange financial date from2005-2011financial reports of17listed companies of Chinese household electrical appliance industry. Through making correlation analysis and regression analysis to verify questionnaire survey results from another angle.Components of the external quality loss cost impact on firm performance are different. Good product quality and good after-sales service will increase total cost and expense, but it can improve customer satisfaction, increase market share and reputation so as to increase business performance. We hope that company can correctly understand the different effects on business performance of the various elements of the cost of quality and truly implement quality cost management.The logical structure of this paper specifically statement is as follows:First of all, this article provides an overview of the topics of research background, significance, research methods, as well as innovation of this paper. Through outlining the theory of the external quality loss costs impact on business performance, make suitable theoretical concepts for this study.Secondly, through the questionnaire research method and empirical research method to study the impact of the relationship between the external quality loss cost and business performance, derive external dominant quality loss cost on business performance is a positive correlation; external recessive quality loss cost on business performance is a negative correlation. The impacts of the elements of external dominant quality loss cost on business performance are not the same.At last, point out that the external quality loss cost is a viable way to improve business performance. Analyze the existing deficiencies in current quality cost management activities and combine the research conclusions to propose relevant suggestions for the improvement of enterprise quality cost management.