tutor2u ™ GCSE Business Studies Revision Presentations 2004 Organising Production

tutor2u ™ GCSE Business Studies The Production Process

tutor2u ™ GCSE Business Studies Production Process Explained A firm must purchase all the necessary inputs and then transform them into the product (outputs) that it wishes to sell How well-organised a firm is at undertaking this transformation process will determine its success. This is known as the productive efficiency of a firm and it will want to be as efficient as possible in transforming its inputs into outputs Ultimately, the objective of the production process is to create goods and services that meet the needs and wants of customers. The needs and wants of customers will be met if a business can produce the correct number of products, in the shortest possible time, to the best quality and all at a competitive price.

tutor2u ™ GCSE Business Studies Main Stages of Production Production can be categorised into the following stages: Primary Production – where raw materials are extracted and processed for later use in secondary production Secondary Production - transforms primary resources into finished products through manufacturing Tertiary Production – the production and delivery of services

tutor2u ™ GCSE Business Studies Main Inputs into Production Land & raw materials Labour – workforce Capital – machines and equipment Enterprise – ideas, organisation and willingness to take a risk over a product

tutor2u ™ GCSE Business Studies Primary Production Extraction of raw materials, through mining, growing and harvesting For example:  Agriculture  Fishing  Forestry  Oil exploration  Copper mining

tutor2u ™ GCSE Business Studies Secondary v Primary Production Secondary production transforms primary resources into finished products through manufacturing Secondary production therefore involves more “added value” than primary production – which is mainly about extraction and harvesting

tutor2u ™ GCSE Business Studies Tertiary Production - Examples High street bank Travel agent Supermarket Cinema

tutor2u ™ GCSE Business Studies Mass Production What it involves  Large scale production where a business produces large numbers of same item  Little, if any, “customisation” of product Typical features  A standard product (little or no variation in style or quality)  Using standard parts  Built using standard equipment e.g. washing machines

tutor2u ™ GCSE Business Studies Main Methods of Organising Production Job Batch Flow

tutor2u ™ GCSE Business Studies Job Production One-off or small number of items produced Normally made to customers specifications (e.g. wedding cake or building project) Often undertaken by small, specialist businesses Examples:  Architects  Plumbers  Ship builders  Road builders

tutor2u ™ GCSE Business Studies Batch Production What is involved  Similar items are produced together  Each batch goes through one stage of production process before moving onto next stage Aims  Concentrate skills  Achieve better use of equipment and so produce good quality products more economically than manufacturing them individually

tutor2u ™ GCSE Business Studies Flow Method Advantages  Costs per unit of production reduced through improved work and material flow  Suitable for manufacture of large quantities  Capital intensive which means it can work at night and over weekends if necessary with little labour input How flow production is organised  Product moves continuously through production process  When one task is finished next task must start immediately  Therefore, time taken on each task must be same

tutor2u ™ GCSE Business Studies Production and Seasonal Demand Changes in seasonal demand can mean a requirement for:  Lots of stock at particular times of year & little demand at other times  E.g. demand for children’s toys is heavily-focused on pre-Christmas period Implications for producers  May make sense to “build for stock” during periods of quiet demand  Make use of production equipment that would otherwise lie idle Produce of perishable products  Here, production process needs to be designed flexibly  Additional production capacity can be added when close to time when demand increases (e.g. bring in more part-time, temporary employees)