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Specialisation
Levels: AS, A Level Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

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Specialisation is when we concentrate on a product or task

What is Specialisation?
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What is specialisation? - research question

Specialisation happens at all levels:

1.The specialization of tasks within extended families in many of the world’s poorest
countries

2.Within businesses and organizations

3.In a country – Bangladesh is a major producer and exporter of textiles; Norway is a

leading oil exporter. And Ghana is one of the biggest producers of cocoa in the world.

4.In a region of a country – for many years the West Midlands has been a centre for
motor car assembly, there has been huge investment in recent years in the Mini plant at
Oxford

What are the possible gains from specialization?

By concentrating on what people and businesses do best rather than relying on self
sufficiency:

1. Higher output: Total production of goods and services is raised and quality can be
improved

2. Variety; Consumers have access to a greater variety of higher quality products

3. A bigger market: Specialisation and global trade increase the size of the market
offering opportunities for economies of scale

4. Competition and lower prices: Increased competition acts as an incentive to

minimise costs, keep prices down and therefore maintains low inflation

Division of Labour
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Revision on the division of labour

The Division of Labour

The division of labour occurs where production is broken down into many separate
tasks. Division of labour raises output per person as people become proficient through
constant repetition of a task – “learning by doing”. This gain in productivity helps to
lower cost per unit and ought to lead to lower prices for consumers.

What are the Main Limitations of the Division of Labour?

1. Unrewarding, repetitive work that requires little skill lowers motivation and hits
productivity. Workers begin to take less pride in their work and quality suffers. We
often see dissatisfied workers becoming less punctual at work and the rate of
absenteeism increases.

2. Many people may choose to move to less boring jobs creating a problem of high
worker turnover for businesses. The employee turnover rate for the UK is around
12% per year, nearly one worker in seven changes jobs every twelve months. The
highest labour turnover is found in retailing, hotels, catering and leisure, call centres
and among other lower-paid private sector services groups

3. Some workers receive little training and may not be able to find alternative jobs if
they find themselves out of work - they may then suffer structural unemployment.

4. Another disadvantage is that mass-produced standardized goods lack variety for

consumers

Real-world examples of industries that make extensive use of division of labour:

Vehicle assembly

Construction industry

Smartphone assembly

Advantages from specialisation (division) of labour:

Higher productivity and efficiency – e.g. rising output per person hour

Lower unit costs leading to higher profits

Encourages investment in specific capital – economies of scale

Disadvantages from specialisation (division) of labour:

Risk of worker alienation

Risk of disruptions to production process

Risk of structural unemployment due to occupational immobility

Advantages for a country specializing in goods and services to trade

Allows a country to make full use of their economic resources

Increases the scale of production – leads to lower costs and prices

Surplus can be exported, an injection into the circular flow of income

Disadvantages for a country specializing in goods and services to trade

World prices for a product might fall leading to declining revenues

Risk of over-specializing and structural unemployment

Might lead to over-extraction of a country’s natural resources

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JOB BOARD

Teacher of Business (with some Economics)

Immanuel College, Bushey, Herts

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Economics Study notes Specialisation Productivity Division of labour

David Ricardo Adam Smith Supply-side policies Productive efficiency

Production possibility frontier (PPF) Long-run Aggregate Supply Curve (LRAS)

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Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has
over twenty years experience as Head of Economics at leading schools. He
writes extensively and is a contributor and presenter on CPD conferences in the
UK and overseas.

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