Future Business Leaders of America (FBLA) Business Management Practice Test

Which principle considers both quality and price when awarding business?

1. Total quality management

2. Maslow's hierarchy of needs

3. Scientific management

4. The Hawthorne effect

The correct answer is: Total quality management

Total quality management (TQM) is the principle that emphasizes the importance of quality in all aspects of an organization, combining it with the consideration of cost-effectiveness. TQM focuses on continuous improvement, customer satisfaction, and the involvement of all employees in the quality process. When awarding business, organizations practicing TQM evaluate potential suppliers and partners not only based on the price of their goods or services but also on the quality they provide. This approach ensures that the business decisions lead to high value and satisfaction, both for the organization and its customers. By balancing quality with price, TQM fosters long-term relationships with suppliers who commit to excellence, ultimately benefiting the organization’s overall productivity and market competitiveness. The other principles listed do not specifically connect quality and price in the context of business awards. For instance, Maslow's hierarchy of needs pertains to psychological motivation rather than business decision-making criteria. Scientific management focuses more on improving work efficiency and productivity through systematic analysis and optimization of tasks. The Hawthorne effect relates to changes in behavior due to awareness of being observed, which does not pertain to decision-making involving quality and price.