Business operations

is the cost benefits that an individual firm can enjoy when it expand

are the cost benefits that an individual firm can enjoy when it expands.
Purchasing, marketing, technical, financial, risk bearing, managerial

Purchasing: Large firms that buy a lot of resources get cheaper rates. (Bulk buying)
Marketing: Marketing costs e.g. adverts are fixed meaning these costs can be spread over more units of output in a larger firm.

Technical: Larger plants are more efficient than smaller ones.For example a larger factory will get more use of their machinery than a smaller one
Financial : Large firms can get cheaper money. E.g.large company can raise money from selling shares, borrow large amounts of money with lower interest rate by putting pressure on banks,

Managerial: As a firm expands it can afford specialist managers meaning efficiency is likely to improve and average costs fall.
Risk bearing: arge firms are more likely to have a range of products and sell it to a variety of markets, this reduces the risk of the business as if one product fails the business will not fail.

are cost benefits that all firms in the industry can enjoy when the industry expands.
Skill labour, Infrastructure, Ancillary and commercial services, Cooperation

Skilled labour: Schools and Colleges are more likely to provide courses required by that industry. Therefore, the business has low training costs
Infrastructure: If a particular industry dominates a region, the roads, railway etc will be shaped to meet that industries need.E.g specialised industrial estate may be developed to help a local IT industry.

A/C services: an established industry in a region will encourage ancillary suppliers in that industry to set up. All firms in the industry will benefit from the service.Schools in an area encourage cleaning businesses to come in so they can benefit from it.
Cooperation: When firms in the same industry are located close to each other they are likely to cooperate with each other so they can all gain. E.g. share costs and benefits from R&D

Diseconomies of scale: refers to rising average costs when a firm becomes too big.
Bureaucracy, Labour relations, control and coordiantion

system of administration that uses a large number of departments and officials If a business becomes too bureaucratic, it means that too many resources are being spent filling forms. Time, employees' efforts, money is spent working on the paperwork. This means decision making is slower and resources are wasted. As a result average costs will start to rise

Labour Relations: If a firm becomes too big, the number of employees increases leading to more opinions. Relations between managers and workers may deteriorate. Conflict may arise, and resources may be wasted resolving conflict eg. court
C and C: A large business may be difficult to control. They may need more supervision, raising the costs.

Lack of finance
Nature of the market - some markets are limited in growth.
Lack of managerial skills
Lack of motivation

Job production: employing all factors to complete one unit of output at a time. Designer Clothes, customised jewelry
Batch production: Completing one operation at a time on all units before performing the next . 50 loaves of brown bread
Flow production: is large scale production of a standard product, where each operation on a unit is performed continuously one after the other usually on a production line.

Labour intensive production is a production method that makes more use of their labour relative to machinery.Example: China where labour is cheap.
Capital intensive production makes more use of machinery relative to labour.

Disads: - Time consuming, - skilled workforce training - Low levels of output- smaller market share- higher costs
ads: + more profit/ higher costs for customer + customer loyalty, meeting customer need, market orientated + motivating/job is interesting + high quality products

Ads: + Higher levels output/efficient+ Unit costs are likely to be lower because output is higher. Workers can be more specialised , with more use of machinery/economies of scale
Diads: - Planning and coordination are more difficult.- not motivatingoring- high staff turnover- more storage needed

Disads: - expensive- high set up costs- not suitable for every business- inflexible: the business cannot change anything with the machine- if machinery breaks down the process will not carry on
Ads: + higher levels of output+ benefit from economies of scale+ Output can be produced very quickly and the speed of production can be be varied to deal with changes in demand

Productivity: rate at which goods are produced and the amount produced in relation to the work time and money needed to produce them
Labour Productivity is the output per worker in a given time period.
Capital productivity: a measure of how well physical capital is used in providing goods and services

Labour productivity = Total output/number of workers
Capital productivity: Total output/capital employed

- Providing incentives to encourage workers to work harder (financial and non financial methods of motiv)
- training to staff to improve their skills
- Encouraging staff to come up with time-saving ideas

Downsizing- Reducing capacity such as laying off workers and closing unprofitable divisions.
Relocation- Relocation can improve efficiency as firms can use cheaper resources such as lower rent, lower wages and lower transport costs

Outsourcing- an agreement in which one company hires another company to be responsible for a planned or existing activity/involves transferring employees and assets.
Lean Production - an approach to management that focuses on cutting out waste, whilst ensuring quality.

Financial: improved productivity-more output -costs lowered-increased sales-revenue, profit, market share. Disads - costs are higher new machinery
Competitiveness: higher productivity-more efficient-gain competitive edge - more competitive - increased market share, higher profile - attract customers
Workforce: improved labor productivity - motivation - new machinery - job lost
Customers: Lower costs - low prices - better product/service

approach to management that focuses on cutting out waste whilst ensuring quality. THis approach can be applied to all aspects of a business - from design, through production to distribution
Raises productivity, Reduces costs and cuts lead times, Reduces the number of defective products, mproves reliability and speeds up product design

JIT: Highly responsive to customer orders and uses very little stock holding
Kaizen: of continuous improvement through elimination of wastes (time, stock, unnecessary movement). Workers have disussion to find solutions, factory floor is reorganized by repositioning machines

+ Lower inventories costs
+ Minimise warehouse needs
+ Eliminates wastes
+ Accurate an on time+ more space
+ strong relationships with suppliers
+ Improve efficiency- Increase business profitability

- Hold the stock, money is tied up and therefore wasted.
- Not able to meet unexpected demand
- Higher administrative costs (organisation, planning)
- Losing benefit of economies of scale, as you are not bulk buying
- huge reliability on suppliers

Increased productivityR
educed amount of spaces needed
Work-in-progress reduced
Improved layout of the factory floor may allow some jobs to be combined thus freeing the employees to carry out other jobs
Lead time reduced

- Not uited for all businesses, some employees aren't skilled enough for descion making and solutions, can stress them out, lead to bad/slow descion making
- In large business it can cause problems in labour relations, conflicts
Kaizen - 5S

5S: Sort, Set in order, Shine, Standardise, Sustain
Principles: Standardisation Teamworking Empowerment Suggestion Schemes Quality Circles Multi Skilling (Q STEMS)

Financial Benefits
Improved Competitiveness
Positive environmental effects
Improved customer service

Agriculture- Tractors, mechanical harvesters, grain drying machines and automatic feeding systems have raised productivity, Drones, GM crops
Mining: New cutting machinery, Minesense Solution (decrease of energy, water

Robots: programmed to do tasks that are unpleasant, dangerous or difficult. quick and accurate and can work non stop.
+ repetitive, sometimes dangerous tasks involving.- Avoids human error- accurate and performs at a constant rate.- operate 24-7
- Staff may lose their job, expensive, , Products may have to be standardised

Computer aided design (CAD) is the use of computer software to design new products in 3D. Once production is finalised, these designs are sent to computer aided manufacture (CAM) machines to be formed.

Ideas can be drawn and developed quickly
Designs can be viewed from all angles and with a range of materials
Some testing and consumer feedback can be done before costly production takes place
It becomes easier to design and test a range of ideas

Expensive to set up
Computers can fail
Needs a skilled workforce
Difficult to keep up with constantly changing and improving technology

Computer aided manufacturing is where computers link and control the design and production of goods in manufacturing. CAM can assist all of production including planning, management, transportation and storage

Speeds up production
minimises waste because CAM only uses the exact amount of raw materials needed and less energy

Computer numerically controlled machines (CNCS) are machines that carry out the instructions fed by computers.
CNCS can be programmed by computer to carry out certain tasks for example: cutting, milling, drilling, welding, sewing and printing.

Can carry out repetitive tasks without human error.
This reduces waste

Computer integrated manufacturing is using computers for the entire production process.

Banking/Financial services: ATMS/Online Banking/ EFTPOS machine
Travel industry: Electronic air tickets
Marketing/Advertising:Social media,Market research easier, Data can be gathered online-core convenient for customers and more data is gathered.
Retailing: EFTPOS, E-commerce - online shopping

cost, productivity, quality and flexibility