The Main Production Methods (Cambridge (CIE) IGCSE Business)

Different Types of Production Processes

• Businesses can organise their production processes in a variety of ways

• The method of production used by a business will depend upon a number of factors

  • The level of output required to be produced

  • The nature of the product

  • Whether the product is standardised or customised

  • The level of automation used in production

Assessing the Methods of Production

Recommending an Appropriate Production Method

• Small scale businesses often use job or batch production as they lack the resources for flow production

• Large scale businesses are more likely to use flow production to meet high demand for their products

• Several factors may influence a businesses decision as to which type of production methods is used 

Diagram: factors affecting the choice of production method

Explanation of factors

The level of demand

• High demand may justify investment in flow production

The nature of the target market

• Price-sensitive markets may require high volume, standardised products

• High quality customised products require job production

The nature of the product

• It may only be possible to produce certain products using one method, e.g. sports stadiums require job production

The comparative costs of labour and capital

• Large firms minimise labour costs by investing in automation

• Cheap labour allows for labour-intensive production methods which generates the use of job or batch production

The nature of the firm itself

• Small firms lack funds to invest in flow production

New technologies

• As technologies become cheaper smaller firms can afford equipment previously inaccessible to them and increase their level of flow production

The goals of the business

• Firms seeking to maximise market growth and profitability may invest in flow production

• Small firms may use job production methods to create unique selling points e.g. ‘hand-made’

Government policies

• The government may stimulate economic growth by offering subsidies and tax breaks for investment in technology