Efficiency

Question 1

Whats efficiency?

Answer 1

Efficiency is about making the best possible use of resources. Efficient firms maximise outputs from given inputs, and so minimise their costs. By improving efficiency a business can reduce its costs and improve its competitiveness.

Question 2

Whats production?

Answer 2

Production is the total amount made by a business in a given time period.

Question 3

Whats productivity?

Answer 3

Productivity measures how much each employee makes over a period of time. It is calculated by dividing total output by the number of workers.

Question 4

What does staff productivity depend on?

Answer 4

Staff productivity depends on:
skills
quality of machines available
effective management

Question 5

What can productivity be improved through?

Answer 5

Productivity can be improved through:
training
investment in equipment
better management of staff
- Training and investment cost money in the short term, but can raise long-term productivity.

Question 6

As well as improving productivity, a business can cut costs by?

Answer 6

Reducing overheads such as administration, eg making some support staff redundant. Customer service may suffer as a result of this.
Relocation to countries where staff with appropriate skills can be hired at lower wages.
Improving management so staff are motivated to work harder, or are better used.
Redesigning the product so an item is easier and cheaper to make.

Question 7

What is lean production?

Answer 7

Lean production is a set of measures that aim to reduce waste during production. Waste reduction methods, such as just in time ordering of stock, will increase efficiency.