Resource Mix and Economies of scale Flashcards
What is efficiency?
manufacturing products at an acceptable standard whilst reducing time and waste
What are some methods to improve efficiency?
- training
- just in time supplies
- kaizen
- technology
- motivation
- better deals with suppliers
- economies of scale
- refine organisational structure
What are economies of scale?
the efficiency gains from falling unit costs as output increases
What are the 3 economies of scale?
1) Technical
2) Specialisation
3) Purchasing
What is technical economies of scale?
use of specialist equipment or processes to boost productivity through investment which is eventually more cost efficient over time
What is specialisation of workforce economies?
When workers has their own specialised staff instead of other businesses
What is purchasing economies of scale?
Businesses that get a discount for buying large quantities from the suppliers lowering unit cost per unit.
What are dis-economies of scale?
When a business grows so large that the value of cost per unit increases.
What are the dis-economies of scale?
1) poor communication
2) lack of motivation
3) loss of direction and coordination
What is poor communication dis-economies?
expansion creates issues with communication between departments = long chain of command.
What is lack of motivation dis-economies?
more isolated and its harder for workers to feel appreciated
What is loss of direction and coordination dis-economies?
Hard to ensure all the business have a clear goal across all departments since its hard for managers to supervisions.
What is the labour and capital intensive?
labour intensive = production by humans
Capital intensive = production mainly by machines
What are some factors to consider in the resource mix?
available funds mass or niche market? workforce capacity utilisation nature of product skills of staff market share and position quality product design demand and supply
