EDEXCEL GCSE BUSINESS · PAPER 2
Business operations
Making operational decisions · Lesson 1 of 4
Teacher copy - includes the notes for whoever is teaching from it.
From Making Marketing Decisions
Answer from memory before the answers appear.
1. Name the three parts of the design mix.
Function, aesthetics and cost.
2. What is an extension strategy?
An action taken to extend a product's life.
3. What is cost-plus pricing?
Adding a percentage mark-up to the cost of a product.
4. What is competitive advantage?
Anything that makes a business more attractive to customers than its rivals.
Learning Objectives
1. Explain the purpose of business operations.
2. Explain job, batch and flow production, with their advantages and disadvantages.
3. Explain what productivity is.
4. Explain the impact of technology on production: costs, productivity, quality and flexibility.
What Are Business Operations?
Operations are the activities that turn inputs into the goods and services a business sells.
▸ Inputs. Raw materials, components, labour, machinery and energy.
▸ The process. Making, assembling, preparing or delivering the product or service.
▸ Outputs. Finished goods or services, sold to customers.
▸ The aim. To produce products of the right quality, at the right cost, in the right quantity, at the right time.
PART ONE
Production Processes
Job, batch and flow.
Three Production Processes
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Job production One product made at a time, usually to a customer's individual order. Every product is unique - a wedding dress, a bespoke kitchen, a building. |
Batch production A group of identical products made together, then the process switches to a different batch - loaves of bread, then rolls; a batch of red paint, then blue. |
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Flow production Identical products made continuously on a production line, often by machines - cars, cans of drink, chocolate bars. |
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One at a Time, or Thousands a Day?
The two extremes of production.
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Job production: every suit is unique. |
Flow production: identical cars, non-stop. |
Comparing Production Processes
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Feature |
Job |
Batch |
Flow |
|---|---|---|---|
|
Number made |
One at a time |
Groups of identical items |
Huge numbers, continuously |
|
Product |
Unique, made to order |
Same within a batch |
Identical |
|
Cost per unit |
High |
Medium |
Low |
|
Workers |
Highly skilled |
Semi-skilled |
Mostly machines, less skilled |
|
Flexibility |
Very high |
Some |
Very low |
|
Example |
Wedding dress |
Bread |
Cars |
Batch by Batch
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A bakery is the classic example of batch production. It makes a batch of rolls, then switches to croissants, then to loaves. Each batch is identical, but the business can still offer variety - at the cost of time lost changing over between batches. |
Batch production: one batch of rolls, then a batch of croissants. |
Flexibility or Low Cost?
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JOB AND BATCH PRODUCTION |
FLOW PRODUCTION |
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▸ Flexible: products can be changed or customised. ▸ Suits small orders and variety. ▸ Customers get what they want. ▸ But: higher cost per unit. ▸ Skilled staff are expensive. |
▸ Very low cost per unit through economies of scale. ▸ Consistent quality from machines. ▸ Huge output. ▸ But: expensive to set up. ▸ Inflexible: hard to change the product, and boring, repetitive work. |
PART TWO
Technology and Production
How machines and computers change operations.
Productivity
Productivity is the output produced per worker, or per machine, in a period of time.
▸ Example. A bakery worker who makes 400 loaves a day is more productive than one who makes 300.
▸ Why it matters. Higher productivity means more output for the same cost, so the cost of each unit falls.
▸ How to raise it. Better technology, training, and motivated staff.
The Impact of Technology on Production
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Costs Machines are expensive to buy, but reduce labour costs and waste, so cost per unit falls over time. |
Productivity Robots and automated machines work faster and non-stop, producing far more output. |
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Quality Computer-controlled machines make every product to exactly the same standard, with fewer mistakes. |
Flexibility Modern computer-aided machines can be reprogrammed quickly, so even flow production can offer some variety. |
Case Study
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CASE STUDY Morgan: Still Built by Hand The Morgan Motor Company has made cars in Malvern, Worcestershire, since 1910. While most car makers use flow production with thousands of robots, Morgan still builds its cars largely by hand, using skilled craftspeople and, on many models, a frame made partly of ash wood. Customers can choose colours, leather and details for their own car. Output is tiny compared with a mass-market factory and each car costs far more - but customers pay for a hand-built, personalised car that flow production could never offer. |
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1910 Morgan founded in Malvern |
By hand How most of each car is built |
Key Terms
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Operations The activities that turn inputs into goods and services. |
Job production Making one unique product at a time, usually to order. |
|
Batch production Making a group of identical products together before switching to another batch. |
Flow production Making identical products continuously on a production line. |
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Productivity Output per worker or per machine in a period of time. |
Automation Using machines and computers to carry out tasks with little human input. |
Your Task: Which Process?
10 minutes
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Choose the best production process for each and explain why: a custom-built garden shed; 50,000 identical cans of cola a day; 200 birthday cards in each of 20 designs; a portrait painting; frozen pizzas in six flavours. 1. Choose job, batch or flow. 2. Explain your choice. |
A good answer shows: Job for the shed and the portrait, flow for the cola, batch for the cards and the pizzas, each with a reason about quantity, variety and cost.
Note: Pizzas are debatable - flow within a flavour, batch between flavours. Reward a justified answer.
Can I...?
☐ Explain what operations are.
☐ Explain job production.
☐ Explain batch production.
☐ Explain flow production.
☐ Compare the three processes.
☐ Explain productivity.
☐ Explain how technology affects costs and productivity.
☐ Explain how technology affects quality and flexibility.
Summary
✓ Job production: unique products, high cost, very flexible.
✓ Batch production: groups of identical products, some flexibility.
✓ Flow production: identical products continuously, low unit cost, inflexible.
✓ Technology affects costs, productivity, quality and flexibility.
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EXAM FOCUS Explain one impact on a business of introducing automated machinery into its production. (3 marks) Technology questions have two sides: high set-up costs now, lower unit costs and better quality later. Use the business's context to decide which matters more. |
Exam Practice: Business Operations
Answer all questions. Use the context of the business in the question where one is given. · 20 minutes
▸ Question 1 · 1 mark · Define. Define the term 'batch production'.
▸ Question 2 · 2 marks · Outline. Outline one disadvantage of flow production.
▸ Question 3 · 3 marks · Explain. Explain one impact on a business of introducing automated machinery into its production.
▸ Question 4 · 6 marks · Analyse. Analyse the impact on Oak & Grain Ltd of changing from job production to flow production to meet the retailer's order.
Question 1 · 1 mark · Define
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“Define the term 'batch production'.” |
HOW TO ANSWER IT Command word: Define. Worth 1 mark, so plan before writing.
Question 1 · mark scheme
1 mark available. Award a mark for each point made.
▸ Groups of identical products made together. 1 mark
▸ Model answer. Making a group of identical products together before switching to make a different group.
Question 2 · 2 marks · Outline
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“Outline one disadvantage of flow production.” |
HOW TO ANSWER IT Command word: Outline. Worth 2 marks, so plan before writing.
Question 2 · mark scheme
2 marks available. Award a mark for each point made.
▸ A disadvantage identified, e.g. inflexible / high set-up cost / repetitive work. 1 mark
▸ Developed. 1 mark
▸ Model answer. It is inflexible (1), so it is difficult and expensive to change the product to meet different customer needs (1).
Question 3 · 3 marks · Explain
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“Explain one impact on a business of introducing automated machinery into its production.” |
HOW TO ANSWER IT Command word: Explain. Worth 3 marks, so plan before writing.
Question 3 · mark scheme
3 marks available. Award a mark for each point made.
▸ An impact identified, e.g. higher productivity / lower unit cost / consistent quality / high set-up cost. 1 mark
▸ First linked point of explanation. 1 mark
▸ Second linked point of explanation. 1 mark
▸ Model answer. Productivity would increase (1). Machines can work faster than people and without breaks (1). This means more is produced for the same cost, so the cost per unit falls and the business could lower prices or increase profit (1).
Question 4 · 6 marks · Analyse
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“Analyse the impact on Oak & Grain Ltd of changing from job production to flow production to meet the retailer's order.” — Oak & Grain Ltd makes wooden dining tables using job production. Each table is made to the customer's exact size and choice of wood by skilled carpenters, taking about two weeks… |
HOW TO ANSWER IT Command word: Analyse. Worth 6 marks, so plan before writing.
Question 4 · mark scheme
6 marks available. Award a mark for each point made.
▸ AO2 (Application, 3 marks): uses the context - made-to-order tables, £1,500 vs £400, 2,000 tables, skilled carpenters. Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning about costs, output and flexibility. Level 1-3
▸ Model answer. Flow production would let Oak & Grain make 2,000 identical tables far more quickly, using machines to cut and assemble each one. The cost per table would fall sharply, which is essential because the retailer will only pay £400, compared with £1,500 for a made-to-order table. This could greatly increase its total revenue. However, setting up a production line would be very expensive, and Oak & Grain's skilled carpenters may not be needed, or may leave. It would also lose flexibility: it could no longer make each table to the customer's size and wood choice, which is its current unique selling point. This means it risks losing its existing premium customers while depending heavily on one large retailer.