Production
Production is the process of converting inputs such as land labour and capital into
outputs such as saleable goods and service. For example shoes and cell phones.
The decline of secondary sector and the growth of tertiary sector in many countries
have made the term to include production of goods and services from all businesses in
the primary, secondary and tertiary sectors.
Managing resources to produce goods and services
The production process.
Operations management involves managing business resources (inputs) throughout
production process so as to produce finished goods, services and components (output)
that can be sold to other businesses or customers.
CAMBRIDGE IGCSE BUSINESS STUDIES NOTES Page 1
, Operations management must:
Use the resources in a cost-effective and efficient manner
Manage inventory effectively
Produce the required output to meet customer demands
Meet the quality standards expected by customers
Differences between Production and Productivity
Production
Production involves changing inputs into output.
It can be measured by the number of units produced in a given period of time; this is
the level of production.
Productivity
Productivity is a measure of how efficiently the inputs are changed into output.
It is the output measured against the inputs used to produce it.
The formula is:
Businesses often measure the labour productivity to see how efficient their employees
are in producing output. The formula for it is:
Benefits of increasing efficiency and how to increase it:
Businesses look to increase productivity, as the output will increase per employee and so
the average costs of production will fall.
How to improve labour productivity
Increasing output with the same number of employees.
Keeping output at the same level but with fewer employees.
To increase total output with the same number of employees means that, on average,
each employee need to produce a greater output.
This means they must become more productive.
CAMBRIDGE IGCSE BUSINESS STUDIES NOTES Page 2
Production is the process of converting inputs such as land labour and capital into
outputs such as saleable goods and service. For example shoes and cell phones.
The decline of secondary sector and the growth of tertiary sector in many countries
have made the term to include production of goods and services from all businesses in
the primary, secondary and tertiary sectors.
Managing resources to produce goods and services
The production process.
Operations management involves managing business resources (inputs) throughout
production process so as to produce finished goods, services and components (output)
that can be sold to other businesses or customers.
CAMBRIDGE IGCSE BUSINESS STUDIES NOTES Page 1
, Operations management must:
Use the resources in a cost-effective and efficient manner
Manage inventory effectively
Produce the required output to meet customer demands
Meet the quality standards expected by customers
Differences between Production and Productivity
Production
Production involves changing inputs into output.
It can be measured by the number of units produced in a given period of time; this is
the level of production.
Productivity
Productivity is a measure of how efficiently the inputs are changed into output.
It is the output measured against the inputs used to produce it.
The formula is:
Businesses often measure the labour productivity to see how efficient their employees
are in producing output. The formula for it is:
Benefits of increasing efficiency and how to increase it:
Businesses look to increase productivity, as the output will increase per employee and so
the average costs of production will fall.
How to improve labour productivity
Increasing output with the same number of employees.
Keeping output at the same level but with fewer employees.
To increase total output with the same number of employees means that, on average,
each employee need to produce a greater output.
This means they must become more productive.
CAMBRIDGE IGCSE BUSINESS STUDIES NOTES Page 2
