2.2 - How Businesses Improve Productivity

Question 1

What is efficiency about in business?

Answer 1

Efficiency is about producing goods without wasting any resources, such as time, effort and money.

Question 2

What is productivity about?

Answer 2

Productivity is used to measure efficiency. Productivity is indicated by the increase of output (final product) and the decrease of input (resources used), whilst maintaining the same quality for all products.

Question 3

What is a simple definition GDP (Gross Domestic Product)?

Answer 3

The GDP (Gross Domestic Product) is the total monetary value of all of the finished goods and services within a country.

Question 4

What are the first two ways to improve productivity?

Answer 4

The first two ways to improve productivity:
1. Investment in applications of technology to produce more products of consistent quality in a shorter production time.
2. Increasing R&D spend (Research and Development) to allow businesses to create more unique products that are more difficult to replicate.

Question 5

What are the other two ways to improve productivity (after ‘Increasing R&D spend’)?

Answer 5

The other two ways to improve productivity (after ‘Increasing R&D spend’) are:
3. Capital Investment in Equipment and Facilities (eg. upgrading facilities, redesigning workstations)
4. Just-In-Time Inventory Management Systems, where supplies arrive just as needed for the production schedule and finished products are immediately dispatched or sold to customer.

Question 6

What are the three benefits of Just-In-Time Inventory Management Systems?

Answer 6

Benefits of JIT Inventory Management System include:
- No need to pay for storage
- No out-of-date stock
- No stock loss due to theft

Question 7

What is the potential problem of Just-In-Time Inventory Management Systems?

Answer 7

The potential problem is that, if there is insufficient stock, then efficient inventory control is necessary.

Question 8

What are the final two ways to improve productivity (after ‘JIT Inventory Management Systems’)?

Answer 8

The final two ways to improve productivity (after ‘JIT Inventory Management Systems’) are:
5. Training and upskilling of the workforce to improve business survival and productivity.
6. Adjusting marketing strategies to reach the most amount of people.