2.3 Productive Efficiency Flashcards Preview

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Flashcards in 2.3 Productive Efficiency Deck (41)
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1

Define production

The process of turning inputs into outputs

2

Define productivity

Output per worker

3

Give the formula for productivity

Output
------------
Number of Staff

4

It takes a German worker __ days to produce what an English one can in 5

4

5

Define Human Capital

Knowledge and skills embodied in people that raise productivity

6

Define Physical Capital

Tools and machines that make labour more efficient

7

Define efficiency

Using scarce resources in the most economically productive way through reducing costs and maximising human and physical capital

8

Give 6 factors that can increase productivity

- Human Capital
- Physical Capital
- Infrastructure
- Organisation
- Wages
- Workforce Motivation

9

Explain the relationship between productivity and pay

- Improving production adds is likely to lead to an increase in wages
- An increase in wages is likely to lead to an increase in productivity

10

Explain the relationship between productivity and economic growth

- High productivity increases GDP as it allows for business expansion

11

Explain how increased productivity could disadvantage the economy

COuld increase physical capital intensity and make people redundant

12

Explain how productivity creates a competitive advanatge

- Cost per unit will fall which allows for a lower price, providing a more competitive price
- Added profits spent on R&R
- Increased morale will increase the quality of the good or service

13

Define Capital intensity

Using large amounts of capital for production rather than labour

14

Define Labour Intensity

Using a majority of labour for production

15

Give a reason why Capital Intensity may not be suitable for a dynamic market

ore difficult to reprogramme machines than to retrain staff

16

Define capacity utilisation

A measure of the extent to which a business is using its productive potential

17

Give the formula for Capacity Utilisation

Actual level of output
-------------------------------
Maximum possible output

18

Define Under-Utilisation

Where a firm's demand is too low and they cannot find enough orders

19

Give 4 possible causes of Under-Utilisation

- Seasonal demand
- New competitors
- Changes in fashion
- Wrong balance of the marketing mix

20

Give 3 benefits of Under-Utilisation

- More time for maintenance and staff training
- Less stress for employees
- Can cope with orders well

21

Give 4 disadvantages of Under-Utilisation

- Higher fixed cost per unit
- Can't be fixed by lowering the price of the good
- Spare capacity can portray the image of being poor quality
- Staff can become demoralised

22

Give 5 possible solutions of Under-Utilisation

- Try to find a new business
- Rationalisation
- Short-term work
- Redundancies
- Extending the product range

23

Define Rationalisation

Selling off or shutting down parts of a business

24

Define Over-Utilisation

Where a firm is struggling to cope with demand

25

Give 4 causes of Over-Utilisation

- Seasonal demand
- Competitor dropping out of the market
- Fashion changes
- Successful marketing

26

Give a benefit of over-utilisation

Revenue is high

27

Give 3 disadvantages of Over-Utilisation

- Average costs higher than necessary
- Efficiency low
- The business is not as competitive as it should be

28

Give 4 possible solutions to Over-Utiliastion

- Extra shifts
- Temporary staff
- Outsourcing or subcontracting
- Expansion

29

Define Lean Management

An approach to management that focuses on minimising waste and cost whilst ensuring quality

30

Define Quality Control as a method of production

The traditional method of checking products are adequate to sell after production is finished

31

Define Quality Assurance as a method of production

Ensuring that quality standards are agreed and met throughout the production process

32

Define Total Quality Management as a method of production

Employees all involved in taking responsibility for their team's work

33

Order these 3 methods of production in order of most to least strict (Quality Assurance, Quality Control, Total Quality Management)

Total Quality Management
Quality Assurance
Quality Control

34

Define Kaizen production

Continuous improvement where the whole company strive for improvements constantly

35

Define lead time

The time it takes for a decision to produce a good to its arrival on the market

36

Give 2 ways in which lean production can lead to a competitive advantage

- Gain a first movers advantage
- Allows an advantage in a price elastic market where they wouldn't be able to otherwise

37

Define 'Just in Time Production'

A stock control system that removes the need to store large quantities of stock

38

Give 5 advantages of 'Just in Time Production'

- Reduced rent costs
- Increased capital intensity cuts wages
- Less likelihood of stock perishing
- Allows adaptation to trend changes
- Avoids the buildup of low demand products

39

Give a disadvantage of 'Just in Time Production'

Can't deal with unexpected, high-demand orders

40

How can minimising waste give a business a better perception?

They will have a better reputation which will attract more cutomers

41

How do reduced lead times benefit a business?

Makes the firm more market orientated and allows them to respond to changes in consumer demand