Vocabulary:

Economies of scale; financial advantages of producing something in very large quantities

Diseconomies of scale: rising average costs when a firm becomes too big

Internal economies of scale: cost benefits that an individual firm can enjoy when it expands

External economies of scale: cost benefits that all firms in the industry can enjoy

Vocational- training, guidance, course that teaches you the skill needed for job

Ancillary- providing necessary support to the primary activities or operation of an organization

Bureaucracy: system of administration that uses a large number of departments and officials

Coordinate: to organize people or things so that they work together well

Production: transformation of resources into final product

Job production: method of production that involves employing all factors to complete one unit of
output at a time

Batch production: method involves completing one operation at a time on all units before performing
the next

Specification: detailed description of how something should be done

Flow production large-scale: production of a standard product where each operation on a unit is
performed continuously one after the other

Process production: form of flow production were material pass through a series of processes to a final
product

conveyer belt long continuous moving band of rubber and metal, used in a place such as a factory or an
airport to move things from one place to another

labor-intensive production production methods that make more use of labour relative to machinery

capital-intensive production production methods that make more use of machinery relative to labor

lead time= time it takes to prepare, make or something

productivity rate -at which goods are produced, and the amount produced, especially in relation to the
work, time and money needed to produce them labour productivity output per worker in a given time
period

flextime system in which people work fixed number of hours each week or month, but can change the
times at which they start and finish each day

lean production approach to production aimed at reducing the quantity of resources used

defective product that has not been made properly or is not working properly
just-in-time production technique that is highly responsive to customer orders and uses very little stock

Galor-made where a product has been signed so that it is exactly right for stockpile large supply of
goods and so use in the future both that are being kept for use or possible someone's needs

sustain to manage to make something continue to exist over a long period of time empowerment when
workers in a company are given more responsibility by being allowed to organise their own work and
make decisions without asking their managers

computer aided design (CAD) use of computers to design products computer

numerically controlled machines (CNCs) machines that carry out the instructions fed by computers

computer aided manufacturing (CAM) where computers link and control the design and production of
goods in manufacturing

computer integrated manufacturing (CIM) use of computers to control the entire production process
labour people employed in a business/ used in production fixed capital stock of human-made
resources, such as machines and tools, used to help make goods and services entrepreneur individual who
organises the other factors of production and risks their own money in a business venture

division of labour specialisation in specifictasks or skills by an individual

morale confidence, enthusiasm and discipline of a person or group at a particular time

quality control making sure that the quality of a product meets specified quality

total quality management (TQM) managerial approach that focuses on quality and aims to improve the
effectiveness, flexibility and competitiveness of the business quality assurance working methods that take
into account customers' wants when

standardizing quality - it often involves guaranteeing that quality standards are met

unique selling point (USP) feature of a product that no other similar products have, used in advertising
Economies of scale:

-large firms can usually produce goods and services more cheaply than small firms

INCREASED FIRM SIZE= AVERAGE COST FALLS

Internal economies of scale:

-purchasing economies-

-large films that but lots of resources get cheaper rates

-supplier discount for firms which buy raw materials and components in bulk

- marketing economies-

Can occur when some marketing costs such as producing a television advert are fixed.

The costs can be spread over more units of output for a larger film

= average costs smaller for a large firm

-technical economies-

-can occur when larger plants are often more efficient than smaller ones.

- can be more specialization and investment in machinery

-large firm make better use of essential resource than a smaller firm

Financial economies-

- Large firms can get cheaper money

- Also have a variety of resources to choose from

Risk-bearing economies-

- Larger firms have a wider product ranges and sell into a wider variety of markets
- Less risk in business
Managerial economies-

Expand and afford specialist managers

External economies of scale:

Skilled labor

- Business concentrated in 1 area, there may be a build up of labor with the skills and work
experience required by that industry.

Infrastructure

- Particular industry dominates region,roads,railways which will shaped to suit that industry's
needs

Ancillary and commercial services:

- Established industry in a region that will encourage ancillary suppliers to set up close by

Cooperation:

- When firms in the same industry are located to each other they are likely to cooperate with
each other so that they can all gain

Bureaucracy:

- Rely on it, if business becomes too bureaucratic, means too many recourses are used in
administration
- Slow decisions
- Lot of paper work

Labour relations

- If firm too big, relations between workers and managers may deteriorate. Management may
fail, workers may become demotivated = CONFLICTS

Control and coordination:

- A very large business may be difficult to control and coordinate thousands of employees, billions
of money, so they need for more supervision= raise costs
OTHER LIMITS TO GROWTH:

Lack of finance

- Business like to grow but not able to raise finance needed to expand
- Growth happens when:
- Investment in resources, property, machinery, labor

Nature of the market:

- Some markets too small to sustain very large companies

- Exe, luxury yachts= few people can buy them

Lack of managerial skill:

- Businesses prevented from growing by owners as the do not have managerial skills required to
run business