Theme 2: Managing Business Activities

Production of a single product.

Labour intensive.

Made up of skilled workers.

Advantages:

• Quality is high because workers are specialised.
• Workers are motivated because work is varied.
• Products can be custom made.
• Production is easy to organise.

Disadvantages:

• High labour costs due to skilled workers.
• Production may be slow - longer lead time.
• A wide range of specialist tools will be needed.
• Expensive - less units are covered over fixed costs

Completing one operation at a time on all units before performing the next. You make more that one product to a certain specification.

Advantages:

• Workers are likely to specialise in one process.
• Unit costs are lower because output is higher.
• Flexible, different orders can be made.
• More use of machinery is made.

Disadvantages:

• Complex machinery is needed
• Careful planning and co-ordination is needed
• Less motivation as workers specialise in one area
• If batches are small, then unit costs will still be high
• Money may be tied into work in progress

Large scale production of a standard product, where each operation on a unit is performed continuously one after the other, usually on a production line.

Advantages:

• Very low unit costs - economies of scale
• Shorty lead time
• Modern plant and machines can allow some flexibility
• Production speed can vary according to demand

Disadvantages:

• Products may be too standardised
• Hige set up costs
• Motivation low
• Breaks can cause capital expenditure

Involves producting a family of products in a small self-contained unit (cell) within a factory.

Advantages:

• Cells use less space
• Flexibility is improved
• Lead times are cut
• Less work-in-progress
• Team working is encouraged

Disadvantages:

• Conflict
• If one cell doesn't finish on time, then the whole production could be longer than expected

This is the amount of output made per given resource.

Factors affecting:

• Specialisation and division of labour
• Education and training
• Motivation
• Working practices
• Labour flexibility
• Capital productivity

Producing a level of output where unit costs are minimised.

Factors affecting:

• Standardisation
• Outsourcing
• Relocating
• Downsizing
• Delayering
• New technology
• Lean production
• Kaizen
• Just In Time

Capital intensive - more machinery relative to labour

Advantages

• Cost effective
• Machinery is precise and consistent
• 24/7
• Easier to manage than people.

Disadvantages:

• Huge set-up costs
• Huge delays and costs if machinery breaks down
• Inflexible - machinery can be highly specialised
• Reduce staff morale

More labour than capital

Advantages:

• More flexible - staff can be retrained
• Cheaper for small-scale production
• Cheaper for large-scale production for places like China and India
• People are creative and they can solve problems

Disadvantages:

• Difficult to manage people
• People are unreliable - can be sick
• People cannot work without holidays
• Need to be motivated to improve performance