Abstract

Cost of quality (COQ) is usually understood as the sum of the price paid for prevention of poor quality and the cost incurred due to product and service failure. It is a significant cost driver that firms need to control effectively in order to sustain competitive advantage. Nevertheless, the
literature suggests that only very few firms in fact track and report quality cost data and use it for management control purposes. The lack of the COQ use among the companies is frequently blamed on the implementation difficulties which can easily deter the organizations from undertaking a systematic analysis of their quality costs. In spite of that, there is only
little research-based literature that addresses the practicalities of implementing COQ. Furthermore, none of the research studies so far has gone into the depth of the issue in order to investigate factors that affect the implementation of COQ in organizations.

The main objective of this thesis is thus to thoroughly examine the use, the practicalities and the obstacles in implementing the COQ programs. A worldwide-launched questionnaire was used to gather the data from the quality professionals in the companies of various sizes, industrial sectors and geographical locations. A series of focused semi-structured personal interviews with managers and persons responsible for quality in several multinational companies were carried out in order to add the depth to the investigation, to validate the questionnaire and to verify the results. Graphical representations were generated to analyze the results and to determine the positive and negative impacts of various factors on the COQ implementation. Moreover, the areas on which each specific type of company, industry and department should concentrate in order to maximize the success of the COQ implementation were highlighted. The findings of this thesis can be used by companies to help in developing quality improvement processes and in increasing their effectiveness.