Business Faliure, production up to batch Flashcards
What is business failure
When a business can no longer continue trading due to several factors which can be regarded as internal or external
External factors of business failure
Competition Changes in legislation Changes in customer tastes Economic conditions Changes in market prices
Internal reasons for business failure
Lack of planning
Cash flow problems eg long credit allowence
Failure to innovate
Unforeseen expenditure
Seasonal factors
Lack of skills
Reluctant to change
Labor intensive production
Production relies on using labor resorces
Capital intensive
Production relies on using capitla resorces
Adv for capital intensive production
Greater opportunities for economies of scale
Better quality and speed better productivity
Lower labor costs
Machines are precise can operate 24/7
Dis of capital intensive production
Significant investment required
Delays and cost if machines break down
May generate resistance to change from labor force
Can be inflexible
Adv to labor intensive production
Unit costs could be low in low wage locations
Labor is a flexible resource through mutiskilling and training
Dis of labour intensive production
Problems with employee and employer relationship
Potential hight cost of labor turnover
Need for continuous investment in training
People can be unreliable ( absenteeism)
What is flow production
Producing large volumes of an identical product continuously on a production line.
Advantage to flow production
Unit costs lower due to economies of scale
Products made quickly along production line
Less need for training and skills
All products made the same quality (standardised)
Disadvantage to flow production
Investment in equipment is high
Machines could break
Worker motivation could be low due to competitive tasks but fewer workers needed
Goods mass produces less differentiation for customer
What is batch production
Goods produced in a large number or batches but not continuously
Once batched produced the production line can be adjusted and machinery cleaned for a different batch.
Advantages of batch production
Larger quantities produced than job production but still flexible
Employee focus on one task at once less skills involved cheeper
Less variety of machinery than job production
Bulk buying can be achived EOS
gives customers some choice
Disadvantages of batch production
Takes time to switch production to change batch
Tasks boring and repetitive- demotivating
Size of batch will depend on capacity allowed
Company will have to maintain stocks of raw materials - storage costs
Job production
Involves the production of a single product at a time.
Is often used for one offs or to produce specialist products
Advantages of job production
Specific to customer needs
Interested and motivated workers often using specialist skills
Associated with higher quality
Disadvantages to job production
Individual unit cost may be high
Labour intensive high labour costs
Required close consultation with client
Reliant on high skills
Cell production
Work is organised into teams each team completes one task as the product moves through the production line
Cell production advantages
Improved productivity due to increased motivation(team spirit and added responsibility) snd specialism
Unit cost formula
Total cost/units of output
Labour productivity formula
Output per period/input per time period
Labour and capital intensive production definitions
When labor/machines are primarily used to produce the good or service
Production define
The total amount of output produced in a time period
Define Productivity
The output per unit (person or machine) per hour
Whats efficiency
Making the best possible
Capacity utilisation
Actual output per annum/ max possible output per annum. X100
