Professional Documents
Culture Documents
1.1 - Business Activity
1.1 - Business Activity
0450
1. Monotony in work - A worker has to do the same small task again and again. Therefore, the
job becomes boring and the worker loses interest in his work. Boredom and monotony create
mental fatigue which ultimately spoils the quality of work.
2. Lack of responsibility - A worker performs only a part of the total job. Therefore, no
individual can be held responsible if anything goes wrong. It is very difficult to fix
responsibility for defect in the product.
3. Greater interdependence - Job, work processes and industries become increasingly inter
dependent due to division of labour. Any problem or defect in one part may cause disturbance
and dislocation in the entire process of production.
4. Loss of job pride - Since every worker produces only a small part of the product, he cannot
take pride in ultimate result. Loss of sense of job satisfaction reduces the involvement of
employees.
5. Reduced mobility of labour - Since every worker specializes in one type of work, he may
find it difficult to procure a job in case of unemployment.
6. Decline in craftsmanship - Division of labour and consequent mechanisation of work reduces
the role of worker in the production process. The tradition of craftsmanship may decline and
the creative instincts of workers may remain unsatisfied.
7. Pollution of environment - Division of labour leads to large scale production in factories.
This leads to pollution of air, water and land. Slums develop near industrial areas.
1.1.2 – IMPORTANCE OF SPECIALISATION AND DIVISION OF
LABOUR - ADVANTAGES
1. Right person in the right Job - Every worker is assigned the task for which he is best suited. This helps to
provide, opportunities for the best use of natural talents as a person performs the job which he likes he gets
pleasure in work and becoming an expert in performing the job.
2. Greater Efficiency - Division of labour helps to increase the efficiency of workers due to two reasons.
First, every worker is assigned a job that suits his skills, experience, training and aptitude.
3. Better Quality of Work - Division of labour not only increases the quantity of work it also improves the
quality of production. Better and modern machines and equipment are used. Better quality products help to
increase the goodwill and profits of business.
4. Saving of time - Division of labour helps to avoid waste of time and effort caused by changes from one
type of work to another. The worker does not have to shift from one process to another.
5. Economies of large scale production - Division of labour facilitates mass production. Large scale
production provides economies in the use of resources, such as raw materials, labour, tools etc. Optimum
use of means of production helps to reduce cost of production.
6. Less learning period - Under division of labour a worker needs to learn only a part of the whole task.
Therefore, lesser time and expenditure is involved in training workers.
7. Inventions and Innovations - A worker doing the same task again and again tries to find new and better
ways of doing the job. Small and simple parts of a task can easily be done by machines. Thus, division of
labour increases scope for inventions and innovations.
8. Wider Market - Division of labour makes available cheaper goods of a wide variety. As a result demand
for goods and services increases.
9. Benefits to society - Society is benefited due to (a) reduced cost on account of large scale production (b)
higher productivity which leads to economic growth (c) employment of unskilled workers and (d) better
quality of goods and services for consumers.
1.1.2 – IMPORTANCE OF
SPECIALISATION - ACTIVITY
• Specialisation and Division of Labour – This task will allow you to discuss
the basics of:
• Outcomes of "cottage industry" process with "division of labour" process in How you are
manufacturing a product improving each
• Outcomes of "cottage industry" process with "division of labour" process in time you do the
manufacturing a product task.
• Job satisfaction of both processes How you are
• Construct wholly or specifically a product using one of two processes. reliant on
• The class will need to be split into teams of three or four with at least one team others to finish
working as independent workers and the other teams working as a team where theirs.
each person in that team will do one part of the task for everyone. We will be How solitary
making a dice using scissors, glue and a pen. work is different
• Group 1 – Independent working, create the dice from start to finish each. from group
• Group 2: work.
• Player 1 - Cuts out the dice template for all members. How you might
• Player 2 - Writes the numbers on the dice in elaborate fashion. prefer to do the
• Player 3 - Glues the dice together. other tasks.
• Player 4 - Optional player, quality control and management of tasks.
How it feels to
• When done you will need to measure how long it took to complete the task,
be judged on
groups against individuals, and test the quality of the finished product, Teams
your own or as
against individuals.
a group.
• Use the following dice template, print it out for the students to use.
1.1.3 – PURPOSE OF BUSINESS
ACTIVITY
• The purpose of all Businesses is to combine the factors of
production to make products which will satisfy peoples wants. Local, National
and Global
These products can either be goods – physical items such as cars
and shoes which we can touch and see – or they can be services, Primary,
Secondary,
such as insurance, tourism or banking. Tertiary.
• Businesses can be small or large, some businesses employ
Public, Private,
thousands of people with operations in many different countries. Shareholder,
• Businesses can be privately owned or state owned, can e owned by PLC.
one person or by shareholders. Services, Sales,
• Whatever the size and whomever owns them, they all have one Charity, Non-
thing in common, they combine factors of production to make profit.
products which satisfy people’s wants. Single shop,
Franchise,
Chain, Web
based.
Factors of Production
Part time, full
time, occasional
or seasonal
Land Labour Capital Enterprise staffing.
1.1.3 – PURPOSE OF BUSINESS
ACTIVITY
• This may seem like something that is completely normal to us, we are
used to it, we see it all around us from the corner shops to the big
business names. However in undeveloped societies businesses do not Local, National
and Global
exist as such. Everyone attempts to do everything for themselves, the
are self-sufficient. Primary,
• With their own plot of land and by their own efforts, such as hunting Secondary,
Tertiary.
or barter, they attempt to survive and produce enough for their own
needs. This is a very basic existence and living standards will be very Public, Private,
Shareholder,
low.
PLC.
• By a slow process of specialisation, people began to concentrate on
Services, Sales,
what they were best at. They then traded those goods for other goods
Charity, Non-
made by people who have different skills. This is called a market profit.
economy.
Single shop,
• Business activity therefor: Franchise,
• Combines scarce factors of production to produce goods and Chain, Web
services. based.
• Produces goods and services which are needed to satisfy the Part time, full
needs and wants of the population time, occasional
• Employs people as workers and pays them wages to allow them to or seasonal
consume products made by other people. staffing.
1.1.3 – PURPOSE OF BUSINESS
ACTIVITY
• Using the heading choose research three businesses for each business
field and explain the similarities in the field they operate and the
differences. Local, National
and Global
Medical Product sales Manufacturing Providing a Service
Primary,
Global Secondary,
Company 1 Tertiary.
Similarities Public, Private,
Shareholder,
Differences
PLC.
National Services, Sales,
Company 2 Charity, Non-
Similarities profit.
Single shop,
Differences
Franchise,
Local Chain, Web
Company 3 based.
Similarities Part time, full
time, occasional
Differences or seasonal
staffing.
1.1.4 – ADDING AND
INCREASING VALUE
• Added value - The difference between the price of the finished
product/service and the production costs involved in making it. How Branding
• This is because of the work carried out increases the value of the links to value
added
parts and raw materials used. When the product is complete its
How marketing
value and the price it is sold at is more than the value of the factors can change the
of production used to make the product. image of a
• Therefor added value is the increase in value that a business creates product.
by undertaking the production process. What a Loss-
Leader is and how
• Consider the examples of new cars rolling down the production line this affects value
being assembled by robots. The final, completed and shiny new car added when
that comes off the production line has a value (price) that is more money is lost in
the sale price.
than the cost of the sum of the parts. Value has been added. Exactly
The loss of
how much added value is determined by the price that a customer customers through
pays. bad customer
• Alternatively, imagine a celebrity chef preparing a meal at his service even when
the product is
luxury restaurant. Once the cooking is complete, the meal is being good.
served and sold for a high price, substantially more than the cost of How some
buying the ingredients. Value has been added. companies benefit
the wider
community as a
value added.
1.1.4 – ADDING AND
INCREASING VALUE
• You don’t have to use robots or have the culinary skills of Gordon
Ramsay to “add value”. Businesses can also add value by:
• Building a brand – a reputation for quality, value etc. that customers How Branding
are prepared to pay for. Nike trainers sell for much more than Hi-tec, links to value
added
even though the production costs per pair are similar.
How marketing
• Delivering excellent service – high quality, attentive personal service can change the
can make the difference between achieving a high price or a medium image of a
one. product.
• Product features and benefits – additional functionality in different What a Loss-
versions of software can enable a software seller to charge higher Leader is and how
this affects value
prices, different models of cars are designed to achieve the same effect. added when
• Offering convenience – customers will often pay a little more for a money is lost in
product that they can have straightaway, or which saves them time. the sale price.
• A business that successfully adds value should find that it is able to The loss of
operate profitably. Remember the definition of adding value - where the customers through
bad customer
selling price is greater than the costs of production. service even when
• Do not confuse added value with profit as they are not the same the product is
good.
How some
companies benefit
the wider
community as a
value added.
1.1.4 – ADDING AND INCREASING VALUE
- ACTIVITY
• Discussion – 2 Groups – One for and one against. Even if you are against or
for, you should be able to create an argument for either side for the sake of
arguing. How Branding
• Would you be willing to pay a bit more for a loaf that has been made at links to value
added
home. Can you say the same for clothes, a bicycle, your school bag.
How marketing
can change the
image of a
product.
What a Loss-
Leader is and how
this affects value
added when
money is lost in
the sale price.
The loss of
customers through
bad customer
service even when
the product is
good.
Cheaper, cleaner process, guaranteed quality, How some
100% Profit to the baker, promotes home
industry, morally right, tastes fresher, paying for regulated by health board, package sealed, more companies benefit
time and effort. people involved in work process. the wider
community as a
value added.
1.1.4 – ADDING AND INCREASING VALUE – TASKS -
HOMEWORK
1. Missing words
Adding value means creating a finished product that is worth more to the
customer than the sum of the parts. At Starbucks, 25p of coffee beans, milk How Branding
and flavourings turns into a selling price of £2.50. The £__________of value links to value
added pays for staff, the equipment, the sofas, the rent and still generates a added
generous _______________. Adding value is the ultimate goal of Research How marketing
and Development teams and marketing departments. It generates the surplus can change the
image of a
that pays the bills. product.
The formula for calculating value added is: ________________ - bought-in
What a Loss-
goods and services. Leader is and how
2. Ways to add value (Match the points A – H to the relevant product type
or types) ? this affects value
added when
money is lost in
Product type Ways to add value Ways to add value the sale price.
1. Car manufacturing A. Obtain a E. Carry out the process The loss of
prestigious address faultlessly customers through
2. Biscuit production B. Measure up, F. Excellent design and styling bad customer
then make to fit service even when
3. Running a private C. Offer a short G. Impressive, prestige the product is
hospital lead time packaging good.
4. Making wedding D. Add a technical H. Use low cost materials How some
dresses innovation where they’re not visible to the companies benefit
customer the wider
community as a
value added.
1.1.4 – ADDING AND INCREASING VALUE – TASKS -
HOMEWORK
3. Calculations
Tardew Car Dealers buys a 6 year old Fiesta for £700 cash. One car seat is replaced
and a new exhaust fitted - the parts cost £105. After a thorough clean-up inside and How Branding
out and a squirt of air freshener inside (materials cost: £5), the Fiesta goes onto the links to value
forecourt at £1,495 and is sold for £1,400 a week later. added
I. Calculate the added value How marketing
II. Explain why this added value cannot be treated as pure profit. can change the
image of a
Strength is a cure for baldness based on herbal medicines. It sells in bottles priced at product.
£24 that provide enough for two weeks. A full cure is said to take one year, though What a Loss-
the packaging says that only 50% of users will find the cure effective. Jenny Ireland, Leader is and how
the inventor of Strength, has hired a well-known TV and film actor to promote the this affects value
product on a series of TV commercials. The production process and costs of Strength added when
are a closely guarded secret, but the materials themselves cost no more than 30p - the money is lost in
the sale price.
same as the packaging. Jenny often refers to the ‘huge overheads’ of running the
business, but with sales of 2 million bottles last year, no wonder she has just bought The loss of
herself a Mercedes sports car. customers through
bad customer
a) Calculate the
service even when
III. value added per bottle the product is
IV. total value added in the last year
b) Give one justification Jenny might find to defend the high price she charges for
Strength.
? good.
How some
companies benefit
the wider
community as a
value added.
1.1.4 – ADDING AND INCREASING VALUE – TASKS -
HOMEWORK
6.
affect groups other than consumers [2] ?
Explain what is meant by the term division of labour [2]
1.1.1: BUSINESS ACTIVITY - REVISION
QUESTIONS