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

Cost and quality usually have a close, positive relationship in the operations of a business. As the quality of a product increases, usually the cost of producing it also increases, as it requires more expensive inputs and more time to produce. An implication of this is that these products tend to have higher prices as businesses seek to cover their costs.

For example, consider full-service flights such as those sold by QANTAS. Their service is generally of high quality, which justifies a higher ticket price. In contrast, low-cost airlines like Jetstar offer cheaper options with fewer amenities. Jetstar's flexible model allows them to produce lower-quality 'extras' such as food and entertainment, often resulting in a lower overall price for their tickets. Thus, it showcases how different strategies around cost management affect quality perceptions and operations.