Sunday, 3 January 2010

Production and division of labours

Production and Division of labour Production is the process that changes resources to goods or services. The final objective of production is to satisfy wants. Classification of production: 1) Physical form: goods (tangible) or services (intangible). 2) Producer (capital) goods (bought by producers for production) and consumer goods (to satisfy wants). 3) Private goods or public goods refers to their degree of rivalry and excludability in consumption. Types of production: 1) Primary production: activity that extracts or directly uses the natural resources. 2) Secondary production: activity that turns raw materials into (semi-) finished products. 3) Tertiary production: activity which provide services. The three type of production is interdependent. Primary and secondary producers outputs producers good to other industry while tertiary producers provides services to the other industry. Primary and secondary producers provides consumer good to household (consumer) while tertiary producers provides services to the household. Production provides employment opportunities for resources so that they can earn income and spend on consumption. Also production provides goods and services for consumption or further production. Contribution of different types of production can be shown by the % contribution to total employment and total value of production. Division (specialization) of labour 1) Simple division of labour refers to a worker specializes in producing a particular good. 2) Complex division of labour refers to a worker specializes in a particular production stages in a particular role in teamwork. 3) Regional division of labour refers to a locality specializes to produce a particular good or production stage of a good. (Locality: district/city/province/country/group of countries, etc.) Advantages of division of labour: 1) Employers can assign different workers on different workers depending on his talents, and more products can be produced. Therefore workers can be more productive and productivity is raised. 2) Workers specialize in a particular stage and do the same job repeatedly, then they’ll become more skillful on that production stage and more productive at it. 3) Since workers concentrate only on a small part of work, training time can be saved for production. 4) When workers concentrate on a particular part of job, they need not move around for different production stages and saved time for production. 5) Specialization implies that each worker only needs a few tools for each worker, but not a full set of tools for every worker to produce the whole product by himself. Therefore fewer capital goods are needed. Money (capital) can be saved. 6) If whole set of tools is given to every worker, when a worker is concentrate on a production stage, the remaining tools are idle and scarce tools are wasted. With specialization, tools can be used all the time by the most productive workers, and then capital goods can be used efficiently. 7) Production is broken into simple tasks during specialization, and machines for simple tasks are easier to be designed, and supply of machines increases. Therefore mechanization is reduced, induces technological advancement and improves productivity. 8) When productivity increases, more time is available for leisure and designing new products. As a result, people enjoy larger volume and greater variety of goods for consumption and raises living standards. Disadvantage of division of labour: 1) Works become boring 2) Workers may not realize their contribution and loss satisfaction. 3) Over-independent on different stages: Disruption in one hinders the others. For example, a strike of wharf hinders the transportation of many industries which import raw materials. 4) Workers only learn a particular skill only and do not know other production skills. 5) Greater risk of unemployment if the worker only knows a few skill. 6) Products are standardized under mass production and reduce consumers’ choice and satisfaction. Factors limiting the use of division of labour: 1) When the market size of a product is small, the extent of division of labour is limited (small scale/no division of labour) since small amount of labour and outputs are required only. 2) Nature of products: mass production is not suitable for those required individual creativity. 3) Trade barriers and quotas reduce volume of trade (demand), then scale of division of labour is restricted.

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