business end of years

FoP's

factors of production

oppurtunity cost

benefit that could've come from an alternative use of the same resource

scarcity

lack of resources needed to satisfy needs and wants

categories of the factors of production

• land

• labour

• capital

• enterprise

fop's - land

natural resources

fop's - labour

physical/mental effort exerted by employees

fop's - capital

man-made resources used in production

fop's - enterprise

the risk taken to organise fop's

division of labour

workers specialising in only one task

categories of goods & services

• consumer goods

• consumer services

• capital goods

g/s - consumer goods

tangible products sold to the public

g/s - consumer services

intangible goods sold to the public

g/s - capital goods

products sold to businesses to aid in production

added value

the value of a product increasing than the cost of its raw materials with every stage of production

categories of added value

• branding

• excellent service quality

• product features/design

• convenience

categories of business classification

• primary

• secondary

• tertiary

business classification - primary

extraction of raw materials from the earth

business classification - secondary

processing of raw materials

business classification- tertiary

providing services to final customers

chain of production

stages of production being connected in order to produce a finished good/service

categories of business sectors

• private sector

• public sector

• mixed economy

business sectors - public sector

owned by the government/state

business sectors - private sector

owned by individuals/businesses

business sectors - mixed economy

owned by both public and private sectors

MDC

more developed country

LDC

less developed country

business objective

a goal for a business that gives workers and managers a clear target

common private business objectives

• business survival

• profit

• returns to shareholders

• growth of the business

• market share

• service to the community

social enterprises

businesses whose main goal are to serve the community that are non-profit

CSR

corporate social responsibility

stakeholder

groups or individuals who are affected by business decisions

types of stakeholders

- internal stakeholders

- external stakeholders

stakeholder - internal stakeholders

people within a business that are affected by it

stakeholder - external stakeholders

people outside the business that are affected by it

trade unions

organisations that defend workers rights

pressure groups

groups that inform businesses of their environmental//societal impacts

sole trader

a business that is run by a single person

unlimited liability

the owner having the same legal identity and therefore full reponsibility to pay any debts if the business fails

limited liability

owners with a separate legal identity so they only lose their original investments wiithout paying for additional losses

PLC

public limited company

stockholder

type of shareholders that are members of the public that privately own shares in a largely public traded company

start-up capital

the business owner providing all of the finances for a business

unincorporated

when the business does not have a legal identity separate from its owner

partnership

unincorporated business owned by two or more people

deed of partnership

legal document which states the rights and obligations of partners

incorparated

when the business has a separate legal identity to its owner

eg: plc & ltd

LTD

private limited company

email

a written and electronic method of communication that could be either internal/external. It is quick and easy to send and can reach multiple recipients.

letter

a written method of communication that is more formal and takes the form of a physical document

memorandum

a method of communication that is usually written but can sometimes be electronic and is always internal

advertising

creating awareness about a product

capital

money invested into a business by the owner

delegation

giving a subordinate a task

depreciation

fall in value of a fixed asset over time

entrepreneur

person who organises and takes the risks for a business venture

external growth

business takes over//merges with another business

factors of production

limited resources needed to produce goods or services

kaizen

continuous improvement

net profit

profit made by a business after all costs have been deducted from sales revenue

opportunity cost

next best alternative given up by choosing another item

organisational structure

levels of management and division of responsibilities within an organisation

partnership agreement

written and legal agreement between business partners

quality control

quality is maintained or improved by random quality check of products at different stages of production

job production

• making one thing at a time

• used for individual, unique products

• when one product is finished, production on another can begin

examples of job production

ships, bridges and wedding cakes

pros of job production

• easier to customise

• high price can be charged

• workers more likely to be motivated

• specifications can start after production

cons of job production

• expensive due to high skillset of staff

• high research, development, administration & transport costs

• variety of tools//instruments needed

• can take a long time to produce

flow production

making of a product is broken down into small, simple tasks

features of flow//mass production

• mass market products

• highly automated

• production is continuous

• mass production of identical products

advantages of flow//mass production

• can sell at competitive prices

• economies of scale (yr11)

disadvantages of flow//mass production

• lots of money invested

• machinery can break down

pros of flow production

• costs are spread out over goods

• cost per item is reduced

• bulk discounts on raw materials

• huge quantities can be produced

• automated - lower labour costs

• machinery can work faster and longer

cons of flow production

• large investment to set up

• no individualisation for customers

• inflexibility with equipment

• repetitive work - low motivation

• breakdowns can be costly

batch production

same equipment to make batches of different products

features of batch production

• combination of job and flow production

• produce limited number of one product, then changeover and make a batch of something else

examples of flow production

• fizzy drinks

• mobile phones

• televisions

examples of batch production

• airplanes

• bread

• milk

Airplanes, Bread, Different Sized Clothing; Milk

pros of batch production

• less waste than job production

• production happens in limited quantities

• mistakes in production only affect that batch

• don’t need to wait for parts of final product for production to begin

• less need for highly skilled staff - low labour costs

• machinery is relatively standardised - reduction in costs

• batches are changed to meet customer requirements

cons of batch production

• requires expensive equipment

• required good management skills

• if one stage faces a delay then entire production is slowed down

• high stock levels

• repetitive work - low motivation

• high costs for small batches

• machinery//workers idle during changeovers

changeover

time switching production from one product to another

which method for which size of production

high - flow

medium - batch

small - job

factors to choice method of production

• skill of employees

• size of market

• size of business

• product being produced

• technology available

• resources available to the business

• finances available to the business

specialisation

worker concentrates on one specific task based on their abilities

economies of scale

cost of producing each unit decreases because you are producing more

why is quality important for a business?

• develops a brands image

• keeps and attracts new customers

• lengthens products life cycle

• reduce costs

• reduce customer complaints

• less goods being returned

• charge a premium price for products

• encourage retailers to stock their products

pros of quality control

• identify poor quality products before they become finished goods

• ensure products meet the requirements of customers - generate more sales and a better reputation

cons of quality control

• required time - waste of raw materials

• costly

• doesn’t check every product

quality

when products are of a good standard

quality assurance

quality is maintained by workers self-checking throughout production process

pros of quality assurance

• quality is a key aspect of everyones job

• no additional quality checkers required - lower labour costs

cons of quality assurance

• whole workforce must support system

• employees require quality checking training

pros of using automation to improve productivity

• technology has no labour costs

• less workforce needed

• technology can run longer than people

cons of using automation to improve productivity

• large initial cost for technology

• technology reduces responsibility - therefore motivation - of employees

• technology can become out of date quickly

just in time

method of production where production only happens when an order is made

JIT

just in time

features of just in time (jit)

• goods are only produced when a customer places an order

• supplies arrive just in time to be used in production

pros of just in time

• stock matches production

• improves cash flow

• less stock wastage

• less production delays

• responds to changes in demand

• closer ties with suppliers

• savings on purchase//storage costs

cons of just in time

• danger of lost sales

• increased volume of traffic on road

• increase in suppliers’ transport costs

• lose bulk buying discounts

• suppliers must be willing and able

• high dependency on suppliers

• less time for quality control on material arrival

• increased ordering and administration costs

• increased order processing costs

• increased chance of production//transport failures

7 phases of the continuous cycle of kaizen

• identify an opportunity

• analyse the process

• develop an optimal solution

• implement the solution

• study the results

• standardise the solution

• plan for future

kaizen improves in several areas such as…

• quality

• cost

• delivery

• management

• safety