68 ANSWERS
mot1v1uon fOf the wOflcfon:e. tf non-fmancial lnc.r,tiv• .,..
ACTIVITY 2
CASE STUDY: HUBER
1 ► Calculate the labour productivity In Hoh o1 th1 rour
faotorlea.
Number of Labour
Factory Output amployeea productivity
India 28,500 160 190
Oemiany ~.ooo 270 200
China 79,050 310 266
Brull •e.ooo 200 230
2 ► Which factory 11 Huber llkaly to oloH down?
Huber Is likely to cloae the factory In lndla. Thia factory haa
the low"t laboUr productivity at 190 container■ per worker.
MULTIPLE-CHOICE QUESTIONS
1C, 2C, 3A, •o
CHAPTER REVIEW
CASE STUDY: QHF LTD
1 ► What 11 meant by th• term c1pltal-lnten1lve production?
Capital-Intensive production methods make more use of
machinery relative to labour. In this case, GHF Ltd switched
to more capital-Intensive methods of production by
lnvestlng heavily In new machinery.
2 ► Why w11 Job production Inefficient at QHF Ltd?
Job production Is where a business producea one product
from start to finish before moving on to the next. Each
Item produced Is likely to be different. Job production Is
uaed when order■ are small, such 89 'one-offa'. It Is often
an Inefficient method of production because It Is slow. In
this case, M. Patel had noticed that )ob production was
Inefficient. For example, workers sometimes moved from
one Job to another (II there was a delay In the supply of e
component for example). This would alow down employeH
as they had to make adjustments to their pattern of work,
for example, catch up with what other■ had been doing,
rethink what they were doing and often switch tools and
equipment.
3 ► Why are unit coltl llkely to fall when ualng batch
production?
Once batch production was adopted, with the Introduction
of a amall production line, efficiency Improved. Batch
production usually results In lower unit costa. Thia would
be because some of the fixed coats of production, such
as tools, machinery and equipment, would be spread over
more units of output.
4 ► Dlacu.1 one po11lble Impact on workera of miking
further lmprovementa In productivity 1t OHF Ltd.
GHF Ltd has already made Improvements to productivity
by switching production methods from Job to batch and
Introducing more machinery to make production more
capital Intensive. However, more Improvements are planrted
for the future. It hopes to make further lnveatments In new
technology and Introduce some non-financial methods of
uud, worxn' Jobs may blcoml more ltlter8Stlng. Thi.
WIii be I po1IUve Impact for t h e ~ H ~. ilOfM
mauuree mlglll have I n.g1tlv1 Impact Fo< exampi., tf
mora new machinery IJ Introduced, tome woclcMI migr.t
1011 their )obi. Thia could ha-'9 1 neget,ve lmpeet on 1t11
bu1lneu, par11cularty If w ~ takl Industrial action
6 ► A11e11 the benefltl to QHF Ltd of lwltchlng from Job to
bitch pn,duotlon,
It l1 quilt common lo, 1 bullneu to rNlteh p,oductiOn
method• 111 It grow■ end larger order1 a,e recervld. In tni.a
COIi, OHF Ltd ,witched method• to ra,.. profit me,gtns
by moving from co1tly 'one-off apeclal-projKt wor1c' to
reproducible 1t1ndard products. Thi production menager
Identified problem, with the apeclal on.-off p,ofact. Theo/'
often Involved research, dealgn and lnataltatiOn 0091a that
did not corry over Into another project. For example, one
Job for a large clothes retaller Involved Iota of dealgn work.
In addition, aome of the key parta of the ayatem had to be
outsourced to another bullneu. The Job wu • on.off with
no benefits for the next Job.
Batch production Is generally more efficient. Unit coats art
likely to be lower because output la higher, worklfl can
be more speclellaed and more use la made of machinery.
Production la also flexible because order■ with different
meuurementa, styles or specifications can stlll be met. For
example, In this case, GHF Lid started producing batchet
of ducts using their new production system - a system so
flexible that 60000 variations were poaalble.
As a result of the switch, GHF Ltd became more
competitive. Between 2009 and 2012, GHF Ltd reduced the
omount of special project work from 80 per cent to 10 per
cent. Producing standard systems In batches fllled the gap.
It took a while for the factory to adjust to these changes In
working practices but even In the first year the company
made a small profit. Thia was largely down to an order for
86 standard silent fans.
However, the switch from Job to batch production required
a significant amount of Investment as the business began
to use more capital-Intensive methods of production. GHF
Ltd had to borrow £900000. Thia may have put a flnanclal
strain on the business 1119 It needed to pay Interest on the
debt. However, there la no Information In the case study
that suggests there were any serious flnanclal problems.
To conclude, It seems that the switch In production from
Job to batch was a successful strategy for GHF Ltd.
Coate are down and profit margins should be up. Further
Improvements to productivity ar, planned In the future ao
the bualneaa owners must be pleased with the outcomes.
CHAPTER 42
CASE STUDY: GOLDSTONE HOLDINGS
1 ► How Important w11 1t■ ff Involvement at Goldstone
when trying to mike Improvement,?
Staff Involvement was recognised as being very Important
when Goldstone began making Improvements In Its
operations. As a result of this, more training was organised
Investment In lral~lng Improved staff motivation. If 8 '