2.4 Resource Management (Done)

Question 1

How do you work out the capital productivity ratio?

Answer 1

Output divided by amount of capital (machines, etc) employed in a given period.

Question 2

What factors influence productivity?

Answer 2

• Specialisation and division of labour.
• Education and training.
• Motivation of workers.
• Working practices (how labour is organised/managed, factory layout).
• Labour flexibility (workers’ ability to perform different jobs).
• Capital productivity (new technology increases productivity).

Question 3

What is the division of labour?

Answer 3

Where workers specialise in certain tasks and skills.

Question 4

What does increased productivity mean for a business?

Answer 4

=more output with same level of resources—> lower costs—> can charge lower prices than rivals—> win more customers—> increased market share.

Question 5

What factors influence efficiency?

Answer 5

• Introducing standardisation (using uniform resources and activities).
• Outsourcing (work is given to specialists outside the business).
• Relocating (lower costs, lower rent, lower wages, etc).
• Downsizing (involves reducing capacity, e.g. laying off workers).
• Delayering (Involves removing layers of the organisational structure).
• Investing in new technology (new machinery can be quicker, etc).
• Lean production (aims to use fewer resources in production).
• Kaizen (Involves improving quality or reducing waste).
• Just-in-time production (minimising or eliminating amount of stock held).

Question 6

What are two advantages of introducing standardisation?

Answer 6

• Bulk purchases can be made—> may be able to exploit E of S.
• Efficiency will improve if there are standard components.

Question 7

What is a disadvantage of introducing standardisation?

Answer 7

Standardisation is somewhat inflexible because it makes customisation more difficult and design more challenging.

Question 8

What are two advantages of outsourcing?

Answer 8

• can improve efficiency.

- can be cheaper.

Question 9

What are three advantages of investing in new technology?

Answer 9

• can improve efficiency.
• might be capable of more tasks.
• may be quicker—> can produce more output in a given period.

Question 10

What is a disadvantage of investing in new technology?

Answer 10

Workers may be laid-off and the remaining workers’ morale might get worse.

Question 11

What are three advantages of capital intensive strategies?

Answer 11

• generally more cost-effective if large quantities are produced.
• machinery can operate 24/7.
• machinery is easier to manage than people.

Question 12

What are three drawbacks of capital intensive strategies?

Answer 12

• huge set-up costs.
• huge delays and costs if machinery breaks down.
• often poses a threat to the workforce and could reduce morale.

Question 13

What are the three advantages of labour intensive strategies?

Answer 13

• generally more flexible than capital-can be retrained for example.
• cheaper for small-scale production.
• people are creative and can therefore solve problems and make improvements.

Question 14

What are the drawbacks of labour intensive strategies?

Answer 14

• people are more difficult to manage than machines- may need motivation.
• people can be unreliable. They may be sick or leave suddenly.
• people cannot work without breaks and holidays.

Question 15

What is capacity utilisation?

Answer 15

The use that a business makes of its resources.

Question 16

What is the formula for capacity utilisation?

Answer 16

Current output/maximum possible output X 100

Question 17

Why might a business be under-utilising capacity?

Answer 17

If it has experienced a drop in demand (this could be due to increased competition in the market.

Question 18

What are three drawbacks of under-utilisation?

Answer 18

• not making the most of its resources.
• it may be operating inefficiently because its unit costs are not minimised.
• operating with too much spare capacity may affect the morale of workers.

Question 19

What are two benefits of under-utilisation?

Answer 19

• a business would be able to cope more easily with sudden increases in demand.
• when working below full capacity there is likely to be less work-related stress—> this is likely to reduce sickness and absenteeism.

Question 20

What are four drawbacks of over-utilisation?

Answer 20

• The pressure of constantly working at full capacity can put a strain on some of the resources.
• Can cause stress and tiredness to the workforce.
• Machines may be overworked to breaking point (can be expensive).
• A business may not be able to respond to an increase in demand.

Question 21

What are two benefits of over-utilisation?

Answer 21

• Average costs will be lower because fixed costs will be spread across more units of output —> improves competitiveness, etc.
• Staff motivation might be good if workers feel secure in their jobs.

Question 22

What are the five ways of improving capacity utilisation?

Answer 22

• Reduce capacity (getting rid of resources that the business can do without).
• Increase sales (selling more output= need to produce more).
• Increase usage (e.g. for train operators, encouraging off-peak travel).
• Outsourcing (where capital equipment has low utilisation rates it might be more efficient for the business to sub-contract or outsource the work)
• Redeployment (if a business has too many resources in one part of the business, it may be possible to deploy them in another part. E.g. a bank asking some employees to work in another branch for a short period).