business studies unit 2

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Flow production

Flow production- large scale production where each stage is carried out continously on a production line.

Methods of flow production

Specialisation- work is divided into sperate tasks or jobs that allow workers to become skilled at one of them.

Division of Labour- Breaking down a job into small, repetetive tasks. This can be done fast if workers are specialised in each of the seperate tasks.

Computers are often used in flow production to ensure consistent, high standards of quality.

Set up costs for computers controlled flow production are very high so only big companies e.g TOYOTA can use it.

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Lean production

Lean production- Using fewer resources by using them more efficiently

Methods of lean production

Kaizen- Continous improvement of production by encouraging workers to make suggestions for small and frequent improvements.

Just-in-time manufacturing- Ordering supplies so they arrive only when needed and making goods only when ordered by customers, this therefore saves money on buying spare parts and over production.

Lean design- producing new ideas and products as quickly as possible, often using teams of designers and computer aided design. This reduces threat of competitors if designs are launched quickly.

Cell production- production is split into groups of workers or "cells" each making a complete product, this can be used to encourage friendly competition within the work place if a prize is introduced.

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Benefits of business growth

Greater market share- The bigger the market share the more likely retailers will want to stock your product as more people will recognise it.

Increased revenue- A bigger business will therefore have more sales and might have a bigger net profit.

Reduction in unit cost- The price of each product to the business will be lower if the business is bigger, this is because of economies of scale.

Purchasing economies- By large businesses ordering more stock the price for each unit decreases.

Technical economies- Larger businesses can afford mroe advanced machinery which can improve efficientcy or service.

Managerial - Bigger firms can afford to employ more experianced managers

Financial economies- Banks will be more willing to lend money to larger firms as they are more likely to pay it back then smaller firms.

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