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Topic 5.2 Business Management Cheat Sheet for First Assessment 2024.
Job production
Creating a product from start to finish that is tailor made to meet customer requirements – usually one-off or unique items (e.g. violin, painting) |
Only one person or group’s job to complete entire product |
Small firms are likely to use job production |
Advantages and Disadvantages of Job production
Advantages |
High quality and uniqueness
High motivation of workers
More flexibility |
Disadvantages |
Labor intensive and expensive
Time consuming due to customer requirements
Long working-capital cycle (due to slow production)
Minimal economies of scale |
Batch production
Producing limited number of identical products (batch) at a time (e.g. chocolates, CPUs, breeding) |
Usually used when level of demand is not clear and the business produces a range of products |
Advantages and Disadvantages of Batch Production
Advantages |
Technical and purchasing economies of scale
Specialisation – better quality and productivity
Variety – reduce risks of producing single product |
Disadvantages |
Inflexibility – can’t stop once started
Storage costs
Boredom – reduced motivation |
Flow/mass production
Continuous production process of standardized products |
Flow/mass are usually interchangeable |
Generally capital intensive |
Flow production: sequence of steps to create product (e.g. newspapers/magazine) |
Mass production: manufacturing large amounts of standardised products (e.g. Chips) |
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Advantages and Disadvantages of Flow/Mass
Advantages |
High production scale at low cost due to economies of scale
Initial high costs is spread over high volume of units
Standardized quality (assuming low defect rate)
Low cost for workers |
Disadvantages |
Low motivation
Breakdowns cause major delays
Inflexible – no reworking or customization
High initial set-up, running, and replacement costs
Requires effective storage |
Cell production
Modern adaptation of assembly line |
Parts of production are delegated to teams or cells for completion |
Any member of team can contribute to the task |
Cells work independently but rely on each other to achieve targets |
Advantages and Disadvantages of Cell Production
Advantages |
Certain degree of autonomy in decision making
Improved standards of quality
↳ Greater sense of responsibility and accountability in team
Higher levels of motivation (team working, empowerment, etc.)
Specialization |
Disadvantages |
Output may be lower
Higher chances for intra- and intergroup tension and conflict
Capital intensive to initiate and sustain |
Labour and capital intensity
Labour intensive |
Greater proportion of labour cost than capital cost
Job production and service sector is often labour intensive
Offers personalised service but may have more HR issues |
Capital intensive |
High proportion of capital costs compared to labor cost
Leads to increased levels of output and productivity
Needs sufficient demand to justify capital investment
Homogenous products; may have no USP
Standardisation means low profit margins and high fixed costs |
Choice depends on:
Relative cost and substitution
Market size
Aims and objectives of the organization
Combining methods of production
Businesses usually combine the different methods of production, e.g. Burger King: uses batch production (making burgers in batches) and job production (customizable burgers for customers).
Possibility of customization, flexibility, and lower costs |
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