productive efficiency - productivity Flashcards
1
Q
explain what is meant by productivity
A
the relationship between outputs and inputs
2
Q
how can you calculate measures of productivity
A
productivity = output/input
3
Q
what does the calculation for productivity measure?
A
it measures the efficiency of a business in its ability to convert inputs (resources) into output (products)
4
Q
what is labour productivity?
A
concerned with the volume of output (units) or value (£) produced by each employee
5
Q
why is labour productivity important?
A
- labour costs are a significant part of total costs
- business efficiency and profitability are closely linked to productive use of labour
- in order to remain competitive, a business needs to keep its unit costs down
6
Q
what does higher labour productivity mean?
A
lower labour cost per unit
7
Q
how might a business increase productivity?
A
- monitoring
- target setting
- rewarding jobs
- ⭐️ team work
- factory layout
- training employees
- division of labour
- ⭐️ better quality raw materials ☞ reduces amount of time wasted on rejected products
- improved organisation of product ☞ less wastage
- ⭐️ motivation - financial or non-financial
8
Q
what does increasing productivity mean for outputs and inputs?
A
fewer inputs to produce the same output
increased outputs with the same input
9
Q
what are the benefits of productivity?
A
- ⭐️ may allow products to be produced more quickly, ☞ shorten delivery time ☞ competitive advantage bc customers don’t have to wait for a long time
- helps businesses be competitive in the international market
- ⭐️ a business may have the same output with less units of labour, reducing costs
- if units of labour are reduced, there are less staff to be trained and supervised, reducing the cost further
- pay off your debts sooner to creditors or get a long-term bank loan
- more likely to gain investors (plc)
- manage performance and set objectives (however this can lead to dissatisfied and demotivated staff)
