The Main Production Methods (Cambridge (CIE) O Level Business Studies)
Revision Note
Written by: Danielle Maguire
Reviewed by: Steve Vorster
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
Method | Explanation | Advantages | Disadvantages |
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Job Production |
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Flow Production |
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Batch Production |
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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
Examiner Tips and Tricks
Carefully consider the needs of the customers to which a business sells when recommending a suitable method of production. Where the selling price is a key driver of consumer demand, flow production (where unit costs are minimised) is likely to be very suitable. Where demand is driven by quality or where customisation is required, job or batch production are likely to be better choices.
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