Cost Effective Operations and Competitiveness

1. Cost Effective Operations and Competitiveness Unit 3 Topic 3.2.4

2. Aims for today • To understand the meaning of the term ‘productivity’. • To understand how increasing productivity helps a business to improve competitiveness.

3. To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

4. Cost effective operations • A business needs to ensure it is COST EFFECTIVE – “Producing the most economical outcome for consumers” • It does this by calculating PRODUCTIVITY – “The output per worker over a period of time” To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

5. Productivity Q: If a factory has 100 workers and it produces 500 engines, what is the productivity per person? A: 5 Q: Why may a business consider increasing productivity as a priority? To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

6. The importance of productivity To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

7. Raising Productivity Read pages 50/51 Annotate the mindmap To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

8. New technology & manufacturing To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

9. New technology & services To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

10. Other ways of reducing costs • Improved purchasing – using different suppliers, negotiating better deals etc • Relocation – locally, nationally or internationally • Better design – may lead to cheaper production costs or better quality products that last longer • Cutting overheads – costs not directly related to production such as R&D or marketing. To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

11. Productivity Recap:Exam style questions To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

12. Question 1 1. Ginifer’sis a company which manufactures television sets. Last year, labour productivity rose by 10 per cent. A sales rose by 10 per cent B labour costs rose by 10 per cent C output per worker rose by 10 per cent D output rose by 10 per cent Answer C To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

13. Question 2 2. Belk’s is a company that operates a chain of sandwich shops. It wants to increase the productivity of its workers. Which one of the following is most likely to achieve this? A Opening a new sandwich shop in London B Installing new coffee machines which make coffee faster than old machines C Hiring 20 new workers D Tightening health and safety regulations in the company’s outlets Answer B To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

14. Question 3 3. Bollam’s is a company that owns a chain of health and fitness centres. Which one of the following is most likely to lead to a significant fall in costs for the firm? A fall in the. A number of workers employed by Bollam’s B annual membership fee charged to customers by Bollam’s C number of people applying for jobs at Bollam’s D prices charged by firms in competition with Bollam’s Select one answer. Answer A To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

15. Economies of scale To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.

16. Task 1 • Worksheet 73: Productivity To understand the meaning of the term ‘productivity’ and how it helps a business to improve competitiveness.