2.4 Resource Management (Done) Flashcards
How do you work out the capital productivity ratio?
Output divided by amount of capital (machines, etc) employed in a given period.
What factors influence productivity?
- 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).
What is the division of labour?
Where workers specialise in certain tasks and skills.
What does increased productivity mean for a business?
=more output with same level of resources—> lower costs—> can charge lower prices than rivals—> win more customers—> increased market share.
What factors influence efficiency?
- 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).
What are two advantages of introducing standardisation?
- Bulk purchases can be made—> may be able to exploit E of S.
- Efficiency will improve if there are standard components.
What is a disadvantage of introducing standardisation?
Standardisation is somewhat inflexible because it makes customisation more difficult and design more challenging.
What are two advantages of outsourcing?
- can improve efficiency.
- can be cheaper.
What are three advantages of investing in new technology?
- can improve efficiency.
- might be capable of more tasks.
- may be quicker—> can produce more output in a given period.
What is a disadvantage of investing in new technology?
Workers may be laid-off and the remaining workers’ morale might get worse.
What are three advantages of capital intensive strategies?
- generally more cost-effective if large quantities are produced.
- machinery can operate 24/7.
- machinery is easier to manage than people.
What are three drawbacks of capital intensive strategies?
- huge set-up costs.
- huge delays and costs if machinery breaks down.
- often poses a threat to the workforce and could reduce morale.
What are the three advantages of labour intensive strategies?
- 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.
What are the drawbacks of labour intensive strategies?
- 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.
What is capacity utilisation?
The use that a business makes of its resources.
What is the formula for capacity utilisation?
Current output/maximum possible output X 100
Why might a business be under-utilising capacity?
If it has experienced a drop in demand (this could be due to increased competition in the market.
What are three drawbacks of under-utilisation?
- 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.
What are two benefits of under-utilisation?
- 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.
What are four drawbacks of over-utilisation?
- 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.
What are two benefits of over-utilisation?
- 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.
What are the five ways of improving capacity utilisation?
- 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).
