Rationalisation

• Rationalisation is the reorganisation of a business to increase its efficiency
• Rationalisation always increases the size of a business.

  False
• Rationalisation can involve changes in business policy or strategy
• What example is given of a business rationalising by closing branches?

  Barclays Bank
• Businesses may discontinue less profitable products to maximize sales
• Which business stopped selling pet food to increase sales of organic products?

  Boots the Chemist
• The NHS is computerising patient records to increase efficiency.
• Rationalisation can cause uncertainty and resistance from staff
• What two factors are essential for successful rationalisation schemes?

  Clear objectives and means
• Match the outsourcing advantage with its description:

  Reduced staffing costs ↔️ Lower expenses on salaries

  Well-trained staff ↔️ Reduces recruitment costs

  Reduced investment risk ↔️ Avoids investing in new facilities
• Outsourcing always reduces staffing costs for a business.
• Outsourcing reduces workload and stress levels for existing employees
• What is one benefit of reduced capital needs through outsourcing?

  Lower finance costs
• Lower costs from outsourcing increase capital for research and development
• Poor customer service is a potential disadvantage of outsourcing.
• What may happen to employee morale if they fear job losses due to outsourcing?

  Demotivation
• Outsourcing makes it difficult to keep up with improvements in product quality
• Outsourcing is compatible with Just-in-Time (JIT) systems.

  False
• Match the outsourcing term with its definition:

  Outsourcing ↔️ Using outside suppliers for business activities

  Offshoring ↔️ Moving jobs overseas
• Outsourcing can lead to increased efficiency and lowered costs.