Cost Effective Operations and

Competitiveness

Unit 3 Topic 3.2.4

Aims for today

• To understand the meaning of the term ‘productivity’.

• To understand how increasing productivity helps a business to improve competitiveness.

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

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.

Productivity

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

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?

The importance of productivity

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

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.

New technology & manufacturing

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

New technology & services

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

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.

Productivity Recap:Exam style questions

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

Question 1

1. Ginifer’s is a company which manufactures television sets. Last year, labour productivity rose by 10 per cent.

A sales rose by 10 per centB labour costs rose by 10 per centC output per worker rose by 10 per centD 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.

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 machinesC Hiring 20 new workersD 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.

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’sB annual membership fee charged to customers by

Bollam’sC number of people applying for jobs at Bollam’sD 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.

Economies of scale

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.

Task 1

• Worksheet 73: Productivity

To understand the meaning of the term ‘productivity’ and how it helps a business

to improve competitiveness.