Improving productivity LO: To understand some of the methods businesses use to increase more products

Productivity Output can be increased if productivity is increased. This is the amount of output that can be achieved by using a set amount of resources. It is usually measured as labour productivity or capital productivity.

Labour productivity This is the output per worker. It is calculated by: Total output No. of workers Example: = 600 per worker = 625 per worker 24

Increasing labour productivity Education and training Improve the motivation of workers Improve working practices Increase labour flexibility

Capital productivity This is the output based on the capital that is put into the business. Calculated by: Total output Capital employed Example: 100,000 = 10 items £10,000

Increasing capital productivity Often increased when new technology is introduced New technology tends to be more efficient Likely to increase if production becomes more capital intensive

Other methods of increasing productivity Downsizing Work study Relocation Outsourcing Lean production

Airbus question Airbus is a European aircraft manufacturer. A number of countries contribute to production. In 2007, Airbus announced 1600 job cuts in the UK. This was part of a general downsizing operation involving 10,000 cuts. It also involved the closure of three plans in France and Germany and plans for outsourcing. Some production is likely to go to China where costs are lower. Louis Gallois was appointed to stabilise the company following production delays and the impact of a falling dollar.

Airbus Questions 1)What is meant by downsizing? (2) 2) Why has Airbus decided to downsize its operations? (4) 3) Airbus plans to outsource some production to China. Discuss what this might mean for the business (6)