1. 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

2. 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

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

4. 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

5. Question time
Jersey Jumpers knits machine washable cardigans. It employs 8 machine operators and produces 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

6. 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?

7. 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

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

9. 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?
I love Lucy Chocolate factory
3.2.3 Cost-effective operations
and competitiveness

10. 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

11. 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