productivity

• What is productivity a measurement of?

  Efficiency of turning inputs into output
• What is the most common measure of productivity?

  Labour productivity
• How is labour productivity calculated?

  Output per period divided by number of employees
• What is capital productivity?

  Output divided by capital employed
• If a factory produces 1000 bicycles with 100 workers, what is the productivity?


  10 bicycles per worker per day
• How can productivity in retailing be measured?

  Through sales per square foot
• If a department store has sales of £3,000,000 in a week and a shop size of 20,000 square feet, what are the sales per square foot?

  £150
• What are the methods to improve productivity in manufacturing?

  • Technology
  • Lean production
  • Training
  • Workplace reorganisation
• What does full capacity mean in a business context?

  All production factors used at optimum efficiency
• How is spare capacity measured?

  Output as a percentage of total capacity
• If a factory can produce 2000 car exhausts but only produces 1700, what is the spare capacity?

  300 exhausts
• What percentage of full capacity is a factory operating at if it produces 1700 out of 2000 exhausts?

  85%
• What are the advantages of high productivity?

  • Increased capacity utilisation
  • Increased economies of scale
  • Increased competitiveness
  • Lower unit costs
  • Performance bonuses for workers
• What can significant spare capacity lead to in a business?

  Demotivation of staff
• What are some costs associated with significant spare capacity?

  Redundancy payments and reorganisation costs
• How does spare capacity affect profits?

  It reduces profits and limits capital
• What happens to producer goods with underutilisation?

  They continue to depreciate
• What are the options for resolving problems of spare capacity?

  • Subcontracting production
  • Rationalisation
  • Increasing the use of assets
• What is subcontracting in the context of spare capacity?

  Getting another business to produce goods
• What is a potential downside of subcontracting?

  Lack of control over quality
• What does rationalisation involve?

  Focusing on core products and services
• What is a risk associated with rationalisation?

  Loss of customers due to reduced offerings
• How can businesses increase the use of their assets?

  By subletting shop floor space
• What does "making your assets sweat" refer to?

  Increasing the use of investment goods
• Why might businesses choose to ride out spare capacity issues?

  They expect market demand to recover
• What are the problems associated with working at full capacity?

  • Possible fall in quality
  • Lack of flexibility
  • More breakdowns/machine failures
  • Pressure on staff
• What is the concept of capacity utilisation?

  Using production factors at their optimum level
• How can spare capacity be reduced?

  By creating new demand
• What is the relationship between productivity and efficiency?

  Higher productivity indicates greater efficiency
• What is the impact of high productivity on unit costs?

  It lowers unit costs
• How does increased competitiveness relate to productivity?

  Higher productivity leads to increased competitiveness
• Capacity Utilization


  Percentage of available resources used to produce goods and services, calculated by dividing actual production by total capacity and multiplying by 100.
• Capacity Utilization Evaluation


  Businesses should evaluate capacity utilization to identify opportunities for improvement, ensure efficiency, and make informed decisions. Stakeholders' needs and concerns should be considered to ensure a balanced approach.
• Stakeholder Conflicts


  Stakeholders may have conflicting goals, priorities, and beliefs, leading to tensions and inefficiencies. Effective conflict resolution strategies can help mitigate these conflicts and promote mutually beneficial outcomes.
• Productivity


  The impact of productivity on a business and its stakeholders is significant, with benefits including increased efficiency, competitiveness, and revenue. Productivity is crucial for staying ahead in a rapidly changing market and ultimately benefiting society as a whole.