7.2 Specialisation Advantages Flashcards
Advantage: An increase in output
An increase in output. This is because firms and workers concentrate on producing what they are good at. As a consequence this allows for more of a good/service to be produced enabling more consumption to take place in an economy.
Advantage: A wider range of goods/services become available
A wider range of goods/services become available. This is because by focusing on producing one type of good or service, firms can slightly vary production to widen their offering of products e.g. Dyson vacuums. This improves the range of goods and services available to consumers.
Advantage: An increase in allocative efficiency
An increase in allocative efficiency. This is because resources are allocated where they are best suited and thus used efficiently rather than being wasted producing goods/services where expertise or resources is lacking.
Advantage: Better use of labour which increases productivity
Better use of labour which increases productivity. This is because workers become very good at producing certain goods and services increasing the output produced in a given time period. This reduces the costs of production of firms and could lead to higher wages for staff.
Advantage: Improvement in quality
Improvement in quality. This is because workers and firms, through performing the same task numerous times, become so good that the quality of the final product increases. Workers take pride in their work, showing in final product quality leading to a potential increase in sales and revenues for the firm
Disadvantage: The problems of finite resources
The problem of finite resources. This is because resources required in production may run out where firms and countries that rely on specialisation would suffer greatly from lost revenue and reduced economic growth.
Diasadvantage: Changes in fashion/tastes
Changes in fashion/tastes. This is because a firm that specialises in producing a product/service that i reliant on fashionable demand will suffer from lost revenue it fashion and/or tastes change. This is a great risk of not diversifying for a firm.
Disadvantages: De-indiustriliastion
De-industrialisation. This is because if through specialisation, another country becomes able to produce the same goods/services at a lower cost, therefore possessing a cost advantage, industries in he initial country would decline and unemployment would increase greatly.**
Disadvantages: Over-reliant on good weather
Over reliant on good weather. For example, tourist dependent economies that rely on good weather will suffer if the weather is worse than expected. The impact on revenues and profitability could be severe leading to redundancy or worst case scenario, the firm shutting down.
Disadvantages: National interdependence
National interdependence. This is because trade is a fundamental part of specialisation working effectively, however if there is conflict between trading partners (war or political instability) this could threaten the benefits of specialisation through reduced exports of goods made and imports of goods required.
