Unit 4 Flashcards
How can a firm increase efficiency?
- Staff training
- Improved procedures
- Specialisation
- Reduced wastage
- Improved motivation
Benefits of efficiency?
- Faster developement time for new products
- Increased working capital
- Less waste
- Higher quality
- Improved Motivation
What is the difference between Productivity and Production?
Productivity: Output per worker
Production: Producing goods/services
What is the Kaizan technique (continous improvement)?
Involves all workers trying make small frequent improvements by suggesting small things that could be done better.
Pros:
- Lots of small improvements add up to saved costs.
- Easy to do compared to big management change etc.
Cons
- Relies on commitment of employees.
- Relies on willingness of managers to listen.
What is Just in Time technique?
To Minimize stock holding at each stage of the production process e.g. from delivery of raw material to meeting customer demand.
Pros:
- Stock holdings kept at zero/minimum: Money is saved as stock wont become old, damaged or no longer of value.
- Good relations with Supplier needed: Must know correct quantity, quality and deliver on time. Needs to respond fast to demand changes.
Flaw:
-If materials don’t arrive on time
-If costs more to buy small but frequent amounts from supplier.
-If customer wants product now
-If there is a unexpected rise in demand
What is lean production?
Technique that can be used to increase efficiency of a firm but reduce costs e.g. Kaizen or Just in time.
- Reduces waste of resources in production process
What are the three methods of Production?
-Job Production
-Batch Production
-Flow Production
What is Job Production?
Production of one of a kind items to meet needs of a individual customer e.g. tailor made clothes, specialist cakes, web designs.
- Cheap & easy to set up but expensive to produce
- Often a specialist service
- Time consuming to produce
- Meet specific needs of customers
What is Batch Production?
Identical items produced in groups, passing through the production process at the same time e.g. bread, jeans, garden furniture.
- Cheaper & quicker production of items
- More uniform products
- Variation can be achieved in different batches
What is Flow Production?
Items flow along the production line in a continuous process.
- Suitable for mass production: Large scale, Identical items.
- Uses specialist machinery.
- Employees responsible for each small step along process: Specialisation, Division of labour.
How will the Quality depend on the customers expectations?
- Is it fit for the purpose they bought it for?
- Does it meet minimum standards expected by customer?
- Does customer believe product is worth the money?
What are the two ways Quality can be achieved?
Quality Control: Checking the product at the end of the production process
Quality Assurance: Checking the product at each stage of the production process. This requires employees checking their own work to ensure the product is ‘right the first time’.
How does a business decide where to locate?
Factors:
- Availability of raw materials
- Transport
- Labour
- Costs
- Competition/other businesses
- Technology
- Proximity to the market
- Proximity to supplier
What is a Sole trader and what are the pros/cons?
An individual who runs a business - the simplest form of business.
Pros:
- Cheap/easy to set up
- All profits go to you
- Competitors can’t see your accounts
- Highly motivated
- You are your own boss!
Cons:
- Unlimited liability: All on you! Business goes bankrupt and so do you
- Limited finance: Harder to loan from the bank
- Difficult to find cover when ill
- Small range of expertise: the owner has to do everything or buy expertise.
What is a Partnerships and what are the pros/cons?
Two or more people run a business. each partner takes share of the profit, share decision making yet sleeping partners can exist (ie. invest but don’t run).
Pros:
- Responsibilities are shared
- More expertise
- Simple and flexible
- Competitors can’t see your accounts
- Easier to raise finance than sole trader
Cons:
- Unlimited liability
- Arguments between partners
- If a partner dies/resigns/goes bankrupt the partnership fails
- Trust is a key element
