You have 40 slices of bread and a big block of cheese. You and two friends have agreed to make the sandwiches for a children’s party. Each sandwich must have butter and cheese in it and be cut into 4 triangles. You have 40 slices of bread and a big block of cheese. The sandwiches must be neatly arranged on two plates and wrapped in cling film. How would you organise this task to ensure it can be completed in the quickest time possible? 3.2.3 Cost-effective operations and competitiveness 3.2.3 Cost-effective operations and competitiveness

Productivity Productivity can be defined as output per worker It can be calculated using the following formula: Output Number of workers A business would look at productivity over a period of time e.g. 1 year and compare with previous years What factors affect how productive you are when doing your homework? What could you do to increase your productivity? 3.2.3 Cost-effective operations and competitiveness

Productivity A car firm produces 100 000 cars per year Worked example: A car firm produces 100 000 cars per year It has a labour force of 1000 workers What is the productivity (output per worker)? Using the formula then: 100 000 cars = 100 cars per worker 1000 workers 3.2.3 Cost-effective operations and competitiveness

Productivity Productivity is extremely important in the car industry. The Chinese have recently moved into the UK car market by taking over the MG brand. Watch this clip from the BBC and see if you can work out the current weekly productivity. As the Chinese invest more money into capital equipment such as the latest technology what do you think will happen to labour productivity ? Production at MG 3.2.3 Cost-effective operations and competitiveness 4

Question time Jersey Jumpers knits machine washable cardigans. It employs 8 machine operators and produces 4000 cardigans a year. What is the labour productivity? 20 cardigans per worker 50 cardigans per worker 200 cardigans per worker 500 cardigans per worker (1 mark) Due to increased demand Jersey Jumpers employs 2 more machine operators and introduces new working practises. As a result output increases to 5800 cardigans a year. What has happened to productivity? Use calculations to help justify your answer. (3 marks) 3.2.3 Cost-effective operations and competitiveness

Keeping costs down What is the link between 3.2.3 Cost-effective operations and competitiveness Keeping costs down A business will set targets linked to keeping unit costs as low as possible whilst not affecting quality. Factors influencing unit costs include: Number of units produced Spreads fixed costs Negotiate discounts with suppliers (bulk buying) Greater use of assets Productivity Efficiency of work force Use of workforce hours Suppliers Cost of inputs Material usage Wastage What is the link between unit cost and profitability? Should businesses be free to take whatever action they see fit to reduce unit cost?

Productivity and lower costs Copy out the following sentence in very neat writing “Peter Piper Picked a Peck of Pickled Peppers” If I was to pay you £1 for every time you copied this out correctly in two minutes how many times do you think you could do it? Would you be motivated by the money? 3.2.3 Cost-effective operations and competitiveness

End 2 Minute Test “Peter Piper Picked a Peck of Pickled Peppers” Your time starts now End

Productivity and Cost Swap your sheets Mark each others Give 1 mark for every time the phrase was written out 100% accurately Who was most productive i.e. wrote it the most time? Who got most points? Can increasing productivity lead to quality problems? Why can this be negative for a business? http://www.youtube.com/watch?v=HnbNcQlzV-4 I love Lucy Chocolate factory 3.2.3 Cost-effective operations and competitiveness

Link between lower costs and competitive prices A business can pass reduced costs onto the consumer through lower prices This is particularly important in competitive markets when a customer can go elsewhere Alternatively, the business might maintain its prices, meaning that lower costs can lead to higher profit margins for every unit sold 3.2.3 Cost-effective operations and competitiveness

Question time 150 Kit Kat bars are consumed around the world every second. Nestle look for ways to increase productivity on an on going basis by investing in Research and Development. What is meant by the term “productivity”? (2 marks) Explain how investment in R & D could lead to increased productivity. (3 marks) Explain one possible benefit to Nestle of improved productivity. (3 marks) 3.2.3 Cost-effective operations and competitiveness