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Business Studies Y 13

This lesson explores the concept of economies of scale and its implications for businesses. Students will learn how economies of scale can lead to cost savings through mass production and bulk purchasing. The lesson will cover internal and external economies of scale, including technical specialization, purchasing power, and geographical advantages. We will also discuss the risks of diseconomies of scale, such as poor motivation and communication. Students will analyze different resource mixes in capital and labor-intensive businesses and consider how these factors influence business success.

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Business Studies Y 13

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  1. Business Studies Y 13

  2. Lesson Objectives • To learn about the impact of economies of scale on a business • To learn that businesses have to have the appropriate scale and resource mix.

  3. Homework • 10 http://www.telegraph.co.uk/finance/financetopics/profiles/8084101/Heinzs-Mr-Bean-has-big-ideas-in-the-can.html

  4. Definition • The saving in cost of production that is due to the mass production(bulk buying) • supermarkets ,Tesco • Independent corner shop.

  5. Video • Economies of scalehttp://www.bbc.co.uk/schools/gcsebitesize/business/production/productioncostsvid.shtml • (4) • Videohttp://news.bbc.co.uk/1/hi/business/7992136.stm • Freight (4)

  6. Economies of scale can mean bigger is Cheaper • Internal economies of scale: • Technical • Specialisation • Purchasing • Financial • Marketing • Risk bearing • (10)

  7. External economies of scale: • Geographical areas • Skilled Labour force • Good infrastructure

  8. Its not all good news • Diseconomies of scale: • Poor motivation • Poor communication • Poor co-ordination • Poor leadership

  9. Choosing the optimal mix of resources • Businesses need to have the Right mix of people machines and materials

  10. Capital Intensive • A capital intensive business uses more machinery and relatively few workers • Eg. The car industry • Advantages: • Disadvantages • (card sort) • (10)

  11. Labour Intensive • A labour firm uses more workers and less machinary. • Eg: NHS • Advantages • Disadvantages • (Card sort) • (10) http://www.tutor2u.net/blog/index.php/business-studies/comments/video-case-study-harris-tweed-prospers-through-innovation-and-international/

  12. Questions • Q1 What are external economies of scale? • Q2 Describe three types of diseconomy of scale. • Q3 give two advantages of capital intensive production methods and two advantages of labour –intensive methods. • (10)

  13. Exam Question AQA • Explain the different types of economy of a scale a business might benefit from if it takes over a rival firm. (10 marks) • (5)

  14. Lawn mower Manufacture • Data Response Activity • (15)

  15. Lesson 4 • To learn terminology linked to economy of scale. • To learn about the operational objectives linked to innovation

  16. Economies of scale • Purchasing • Finance • Risk bearing • These are …….. Economies of scale

  17. Exam Questions • Q1 What are external economies of scale? • Q2 Describe three types of diseconomy of scale. • Q3 give two advantages of capital intensive production methods and two advantages of labour –intensive methods. • (10) • (12 mins)

  18. Innovation means… • Thinking of a new idea or bringing out a product that is different to what is already on the market. • Think of 3 new products in the last 3 years share with partner • (10 mins)

  19. Research and Development • R & D comes up with the new ideas and has to turn them into products or processes..

  20. Case Study • I Padhttp://www.fastcompany.com/1776369/video-how-steve-jobs-vision-inspired-a-decade-of-apple-innovation • Video Apple • http://socialtimes.com/remember-steve-jobs_b80493 • (20) research-Facts about Apple and its products

  21. Innovation is risky • Many Failures for each success • Investment needed • Large profits possible for a new product • Good reputation follows • Some companies rely on having to compete by making new products • Some firms rely on copying others because of cost of R & D • (10)

  22. Innovation affects other Departments • Finance-R&D is expensive-extra capital-production methods may need to change • Marketing-market research needs to be done on whether customers will want the new product-promotional activities will be required. • Human resources-staffing changes-reward programmes.

  23. New Product DevelopmentSix Stages • Idea • Analysis and screening • Development • Value analysis • Test Marketing • Launch • (match sentence) • (10)

  24. Questions • What is meant by research and development? • Give two reasons why R & D is risky • Give two ways that innovation can affect the marketing department • What is value analysis • (15) • Extension exercise 42

  25. Lesson Objectives • To learn about the factors of location for business • To learn key terminology • To learn to apply factors of location to a real situation based on research • To learn key examples from business using seminar presentation

  26. Homework • Explain why some firms think it is important to invest in research and development • Plenary • (5)

  27. Factors of Location • What factors (reasons) do businesses need to consider when deciding where to locate or relocate their business. • Mind map in pairs • Mind map actual

  28. Factors of location • Costs of renting renovating or buying premises • Skilled labour requirement –Training costs • Union Issues-Wage costs • Transport costs • Infrastructure • Quality of local workforce • Taxes • Near to source of supply • Near to customers • Resources/land /Climate • Laws and regulations • Social /environmental and ethical reasons • Quality of life

  29. Two types of Factor • Quantitative Factors • Measured in Financial terms • Qualitative factors • Not measured in pure financial reasons • Pairs seminar -present

  30. Quiz • http://www.tutor2u.net/business/quiz/startuplocation/quiz.html

  31. Homework • Using the notes sheet provided.. • Prepare to talk about …. • Create powerpoint slides to support

  32. Learning objectives • To learn about the factors of location for business • To learn key terminology • To learn to apply factors of location to a real situation based on research • To learn key examples from business using seminar presentation

  33. Feedback • Economies of Scale • Internal • External

  34. Investigate Switch Watches • Where should they locate and why • Plymouth • Newcastle • Barnsley

  35. Seminar • Take a factor of location and report back

  36. Exam Question • One of the major decisions a business can face is where to locate a new factory.What factors would be taken into consideration in the decision making process. 10 marks

  37. Locating Abroad • Why Locate Abroad? • Cut Costs – How? • New International Markets • Avoid Trade Barriers • Improved Transport and Communications • Where do you locate in todays world? • Map the countries.

  38. What are the issues of locating abroad? • Video • Write up

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