productive efficiency - productivity

Question 1

explain what is meant by productivity

Answer 1

the relationship between outputs and inputs

Question 2

how can you calculate measures of productivity

Answer 2

productivity = output/input

Question 3

what does the calculation for productivity measure?

Answer 3

it measures the efficiency of a business in its ability to convert inputs (resources) into output (products)

Question 4

what is labour productivity?

Answer 4

concerned with the volume of output (units) or value (£) produced by each employee

Question 5

why is labour productivity important?

Answer 5

• labour costs are a significant part of total costs
• business efficiency and profitability are closely linked to productive use of labour
• in order to remain competitive, a business needs to keep its unit costs down

Question 6

what does higher labour productivity mean?

Answer 6

lower labour cost per unit

Question 7

how might a business increase productivity?

Answer 7

• monitoring
• target setting
• rewarding jobs
• ⭐️ team work
• factory layout
• training employees
• division of labour
• ⭐️ better quality raw materials ☞ reduces amount of time wasted on rejected products
• improved organisation of product ☞ less wastage
• ⭐️ motivation - financial or non-financial

Question 8

what does increasing productivity mean for outputs and inputs?

Answer 8

fewer inputs to produce the same output
increased outputs with the same input

Question 9

what are the benefits of productivity?

Answer 9

• ⭐️ may allow products to be produced more quickly, ☞ shorten delivery time ☞ competitive advantage bc customers don’t have to wait for a long time
• helps businesses be competitive in the international market
• ⭐️ a business may have the same output with less units of labour, reducing costs
• if units of labour are reduced, there are less staff to be trained and supervised, reducing the cost further
• pay off your debts sooner to creditors or get a long-term bank loan
• more likely to gain investors (plc)
• manage performance and set objectives (however this can lead to dissatisfied and demotivated staff)