LO3 – production & operations R061 Business and Enterprise

recap 1. Pricing strategy that starts off with a higher price Skimming 2. Two types of market research Primary and secondary 3. Targeting specific groups of people for market research is called… Market segmentation 4. One method of primary research Questionnaires/surveys Observations Focus groups

production Production is the way a business creates its product or service. There are three different types of production in the business world. This will depend on the type of business and how they want to produce their products. Growing businesses may need to increase their production to meet demand from their customers but at the same time staying efficient

Examples: Wembley Stadium, Taylor made clothes, specialist cakes Methods of production There are THREE main methods of production: Job Production Batch production Flow/Mass Production Orders are produced one at a time. Suitable for one off products and is usually a more expensive method. Skilled labour is often used Employees have to be versatile, and flexible tools and equipment are often used Economies of scale are not possible – more that are made, cheaper it gets Examples: Wembley Stadium, Taylor made clothes, specialist cakes Batch production is a method where they produce goods in batches By pre preparing dishes it cuts down on cooking time and waiting times so means that customers are more likely to be satisfied Batch production is quicker than job production and more suited to a fast food restaurant Flow production lowers cost per unit Larger firms can use computers / technology to replace workers on a production line Able to transport bulk materials.

New, unique product so could be job Methods of production HVS may use either: New, unique product so could be job Pro’s and con’s: Job Production Batch production Flow Production Advantages Product usually a high quality Meets individual customer needs Reduced unit cost Can still address customer needs The final product is inexpensive Large quantities can be manufactured Disadvantages Cost of production is much higher Labour intensive Time lost switching between batches De-motivating for staff Work is repetitive Low motivation for staff Increased risk of accidents

logistics The process of moving resources to the right place to meet operational demands moving finished goods to meet customer demands

What could the problems be if HVS need to order products from abroad? Have to wait for delivery of resources Export/import restrictions If exchange rates increase – high costs Regulations – products may be subject to UK or EU standards Cultural – negotiations fail or are delayed because of language and cultural barriers

motivation Motivation is about the ways a business can encourage staff to give their best. Motivated staff care about the success of the business and work better. A motivated workforce results in: increased output caused by extra effort from workers improved quality as staff take a greater pride in their work a higher level of staff retention - workers are keen to stay with the firm and also reluctant to take unnecessary days off work

Increasing motivation Monetary factors Non-monetary factors Some staff work harder if better paid Bonuses – payment for reaching certain targets Overtime – staff are paid for working beyond normal hours Fringe benefits - payments in kind, e.g. a company car or staff discounts job rotation - staff are switched between different tasks to reduce monotony job enlargement - staff are given more tasks to do of similar difficulty job enrichment - staff are given more interesting and challenging tasks empowerment - staff are given the authority to make decisions about how they do their job putting groups of workers in a team who are responsible together for completing a certain task

Motivation - hvs Non - Monetary: Job rotation – switch roles (MOT, service etc) Job enrichment – staff are given more interesting & challenging tasks Monetary: Discounts on the cars the garage sell Bonuses – selling so many cars: THIS WILL HELP STAFF GET ON WITH JOBS QUICKER

Motivation - hvs Staff appraisal could also help motivation – using praise and targets for them to work towards

training Induction is the training given to new workers so that they understand their role and responsibilities and can do their job. Why is training important? Staff should learn new skills throughout the course of their career to stay productive - will increase staff efficiency. There are two main training methods:

Types of training on-the-job training where experienced members of staff explain a job or a skill  off-the-job training where outside experts are paid to explain a job or a skill

Training pro’s and cons HVS are going to have to train – why? New product (electric cars) – likely to be off the job training if nobody knows about them as it is brand new to the company! Need to hire new staff externally so will need to train them up

Training pro’s and cons On the job training Advantages Disadvantages Employees gain confidence through doing the job with a familiar mentor helping Easier to monitor and judge the success of training Cheaper More specific to the needs of the business Internal trainers may not have the required skills to train workers Time constraints may impact on the quality of training Could cause friction in the workplace if training is deemed to be poor

Training pro’s and cons Off the job training Advantages Disadvantages External trainers have experience of training people on a regular basis Specialist external trainers, with knowledge and experience greater than that of people in the business, can be used Workers can be motivated to gain qualifications and new skills Training is often general and not specific to any one business External training is likely to be expensive, with additional travel and accommodation costs Training often involves at least one day off work. Cover needs to be provided and work time is lost