Specialisation - Unit 1

Question 1

What is specialisation?

Answer 1

When Individuals, firms, countries focus on producing a narrow range of goods/services.

Question 2

What is division of labour?

Answer 2

An example of specialisation, whereby individuals or groups within a business concentrate on performing one or a limited range of tasks.

Question 3

(6) Advantages of specialisation:

Answer 3

• Motivation increases as workers benefit from greater pay if they are specialised and also successful
• Increased Productivity (focus), which boosts competitiveness
• Reduces avg. costs
• Ability to benefit from economies of scale (possibly)
• Higher profit margins - ability to raise expenditure on R+D or lower prices
• Higher export earnings (country specialisation) e.g. Oil obtaining in Saudi Arabia

Question 4

(5) Disadvantages of specialisation:

Answer 4

• Boredom - work ethic, productivity and quality fall
• Overspecialisation - lack of flexibility and unable to avoid massive disruption if demand drops - unemployment (structural)
• Highly dependent on other components in the chain of command - disruption easily incurred
• Expensive to initially implement
• A country may become dependent on one export and as soon as demand falls internationally the country may decline - collapse of economy in extreme cases