The Main Production Methods (CIE IGCSE Business)

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

The main methods of production
   

• 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
Job Production	Manufacturers produce one product at a time as ordered by the customer	High quality product Motivated and highly skilled workers Customised products can be produced	Production is slow Labour costs are high
Flow Production	Continuous manufacturing of standardised products, usually on a production line	Low unit costs due to economies of scale Rapid production Usually highly automated (capital intensive)	Customisation is difficult Capital equipment can be expensive to purchase
Batch Production	Groups of the same product are produced as a batch e.g. 1000 Blueberry muffins	Workers can specialise Production can take place as the previous 'batch' starts running out	Requires careful coordination to avoid shortages Money is tied up in stock Completed products need to be stored

• 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 with Factors Affecting the Choice of Production Method

A business may change production methods as it grows over time

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