operational strategies: scale and resource mix


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  • Created by: Natasha
  • Created on: 14-01-10 14:49

Operaional Strategies: scale and resource mix

economies of scale

the advatnages that an org gains due to an increase in size. these cause an increase in productive efficiency

internal economies are:

  • technological change
  • specialisation
  • purchasing
  • marketing
  • financial
  • R & D
  • social and welfare
  • managerial and administrative
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diseconomies of scale

the disadvatnage that an org experience due to an increase in size. these cause a decrease in productive efficiency

  • coordination
  • communication
  • motivation
  • technological
  • excessive bureaucracy
  • staff problems
  • less flexibilty
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choosing the optimal mix of resource: capital and labour intensity

the four resources used, known as the factors of production are:

  • enterpirse
  • labur
  • land
  • capital

enterprise and land tend to be unique. however, labour and capital are often interchangeable, so a bus must decide whether its transformation process or production methods will be predominatnly based on the used of capital or the use of labour.

factors influencing the choice between capital-intensive and labour-intensvie production

  • methods of production
  • skills and efficiency of the factors of production
  • relative costs of labour and capital
  • size and financial position of a bus
  • product or service
  • customer
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