1.1.5 Specialisation and the division of labour Flashcards
Specialisation and the division of labour
- Specialisation: the process of an organisation concentrating its labor and resources on a certain TYPE of production to be more efficient and create a comparative advantage for an economy (PMT the production of a limited range of goods by a company/individual/country which means that trade is essential as it is the only way they are able to access all that they need.)
- Division of labour: when labour becomes specialised in a particular part of the production process.
Whilst some resources have many different uses, some may only have one use. Labour can differ greatly in terms of what they can do and what they are good at: some may be good at building things, whilst others may be good at designing computers. Therefore, if a country wants to maximise the amount of goods and services it can produce they need to ensure that all factors of production, including workers, undertake the tasks that they are best at.
Eval: The degree to which specialisation or the division of labour is possible will depend on the nature of the task and the size of the firm.
Adam Smith: specialisation and division of labour
Adam Smith stated the concept of specialisation and the division of labour and showed how it can increase labour productivity (output per worker), allowing firms to increase efficiency and lower their costs of production.
- He visited a factory and observed that the pin making process had been split into 18 different operations. As a result, the company were able to produce 5,000 pins per person employed. If the work had been carried out by workers making the whole pin from start to finish, it would have been less than a few dozen.
Specialisation and the division of labour IN ORGANISING PRODUCTION advantages
● Labour productivity increases - The division of labour enables labour productivity to be increased. Workers will be quicker, better and more efficient as they are concentrating on one thing and so can quickly develop their skills. It also is likely they will have natural abilities or talents in their task.
● Increased quality - This may also lead to a higher quality of goods and services, since workers are more skilled at their jobs.
● Lower long-term costs - It is more cost effective to develop specialist tools, improving speed or quality.
● Saves time/Quicker performance - Time is not wasted moving between jobs and getting out tools etc.
● Training - Workers only need to be trained to do one specific task, rather than many, saving time and money.
Specialisation and the division of labour IN ORGANISING PRODUCTION disadvantages
● Employee wellbeing/boredom - If someone is only doing one specific task, it can make work very boring which will lead to poor quality of work and people leaving the business. Firms can take some action to reduce this, for example by playing music.
● Standardisation/lacking authenticity - There is a reduction of craftsmanship and a much more standardised product because of mechanisation.
● Reliant on efficiency of all stages - If for some reason production in one process is delayed, every other task has to stop until that problem is solved.
● Structural unemployment due to specific skills - The workforce do not have wide industrial training and could therefore suffer from structural unemployment.
Specialising in the production of goods and services to trade extent (Eval)
The degree to which specialisation or the division of labour is possible will depend on the nature of the task and the size of the firm.
Specialising in the production of goods and services TO TRADE advantages
● Boost economy/greater output - The theory of comparative advantage states countries should specialise in producing those goods where they have a lower opportunity cost, and so they are relatively best at producing. This will help them boost their economy. On the whole, there is greater output globally.
Specialising in the production of goods and services TO TRADE disadvantages
● Over-dependant on particular exports - Countries may become over-dependent on one particular export and if this fails their economy may collapse. For example, many developing countries specialise in farming and if crops fail due to weather they will have no income. Areas such as Manchester suffered high unemployment as traditional areas of employment, like shipbuilding, became less important.
● Non-renewable resources - Other countries specialise in non-renewable resources and these could run out, which will result in a huge loss of income for that country. It will also mean the loss of these resources.
● Increased interdependence - There will be high interdependence and this will cause problems if trade is prevented, for example because of war.
● Some say that increased specialisation means there will be more competition to cut costs and therefore wages will fall, but this is not necessarily true. Depends on elasticity of good/service and market share.
Specialisation synoptic point
Specialisation at a global level is important in unit 4.1 and this unit goes into more depth on comparative advantage. At a macroeconomic level, specialisation leads to increased production and increased trade.
Functions of money
The introduction of specialisation in production means that a form of exchange is necessary to allow everyone to access what they need. The earliest method of exchange was barter but this had many problems. These problems led to the development of money which has four key functions:
- A medium of exchange
- A measure of value
- A store of value
- A method for deferred payment
Functions of money: Medium of exchange
It can be used to buy and sell goods and services and is acceptable everywhere. The problem with barter was that people could only trade if there was a double coincidence of wants: where both parties want the good the other party offers. Since money can be used to buy all goods and services, everyone will accept money as they know they can use it to buy what they want.
Functions of money: Measure of value
It can compare the value of two goods, such as a table and a skirt. It is also able to put a value on labour.
Functions of money: Store of value
It is able to keep its value and can be kept for a long time. With barter, goods such as fruits often went out of date and so could not keep their value.
Functions of money: Method for deferred payment
Money can allow for debts to be created. People can therefore pay for things without having money in the present, and can pay for it later. This relies on money storing its value.
