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 : Presillyn Tan Jie Yin, Fairview International School .
recent update :
|
Economic system
written by Presillyn Tan ✈
Economic System
a)
Market Economy
The first form of
economic system is market economy (also known as capitalist economy, free
enterprise economy or laissez-faire system). In practice, market economy is a
system where all the economics decisions are based on the actions of market
participants (buyers and sellers) without participation and active intervention
from central government. What and how much to produce is determined by price
mechanism and market force. Countries that adopt the capitalist economic system
are developed countries like USA, Japan, and some Europe countries. The advantages and disadvantages of market
economy are:
|
Advantages
|
Disadvantages
|
|
High standard of living.
|
Uneven
distribution of wealth.
|
|
Intense competition provides quality and low price goods.
|
Profit oriented
society.
|
|
Greater choice of products.
|
Exploits on
people who cannot compete.
|
b)
Socialist Economy
Socialist economy is
another form of economic system that exists today. It is also known as
centrally planned system or command system. The concept of socialism is
developed in the early of 1800s as a description of a hypothetical economic
system to be contrasted with the predominant market-based economic system. In
socialism system, the allocation of resources is determined by government only.
It is an economic system that based on individuals’ goodwill toward others and
not on their own self interest. Moreover, society decides what, how, and for
whom to produce. Countries that pursue this type of economic system are former
Soviet Union, Cuba, China, North Korea, and so on. The pros and cons of
socialist are:
|
Advantages
|
Disadvantages
|
|
Equal distribution of wealth.
|
Low standard of
living.
|
|
Need-oriented rather than profit-oriented production.
|
Residents are not
motivated to work.
|
|
No socioeconomic classes.
|
Government may make the wrong decisions.
|
c)
Mixed Economy
The third form of
economic system is mixed economy, an economic system that is made up of
capitalism and socialism. This hybrid form of economic system is comprised of both
private and public sectors. Hence, the allocation of resources in society is
partially determined by the market forces and partially determined by the
government. The mixed economic system is
designed to overcome the defects of both the capitalist and socialist system.
Countries that practice the mixed economic system include Malaysia, Thailand,
Taiwan, South Korea and so on. The advantages and disadvantages of mixed
economy include:
|
Advantages
|
Disadvantages
|
|
Provides fair competition.
|
Unnecessary
government interference.
|
|
Optimum utilization of national resources.
|
Bureaucratic decisions
making process.
|
|
Market prices are well regulated.
|
Government monopolies.
|
Globalisation
written by Presillyn Tan ✈
Globalisation
Nowadays,
the world is flat. This is because globalisation has integrated the universal’s
economics into the international boundary through free trades, capital flows,
migrations, foreign exchanges, quality of product, equality for all, travel and
tourism, external borrowing, ease of transportation, rapid changes of technologies,
e-business and etc.
Globalization is an ongoing trend of integration of regional
economies into a global network of communication and execution. This very
significant trend is greatly raising economies of scale as well as the amount
of capital necessary to compete in the industry.
Firms can participate in
international activities through three basic mechanisms: licensing, export and
foreign direct investment.
Benefits of
Globalisation
A wider pool of potential entrants, a broader
scope of possible substitutes and increased possibilities that firms 's goals
and personalities will differ as well as their perceptions of what their
perceptions of what is strategically important. Free flow of technology appears
to be giving a wide variety of firms including NDC competitors, the ability to
invest in modern, world -scale facilities. For examples, Japanese have become
quite aggressive in selling their technology abroad. Also some firms purchased
technologies are willing to resell it to others at bargain prices. All this
activity tends to promote more global competition.
Drawbacks of Globalisation
Areas like income, factors costs, energy costs,
marketing practices and distribution channels are being narrowed down. This
also facilitating the abandonment of sectors deemed less desirable. Rate of jobless increased due
to selling goods below cost price in order to clear the stocks.
International Trade
written by Presillyn Tan ✈
International Trade
International
trade is the exchange of goods or services across international borders or
territories. If the trades are in the right position, it will bring benefits to
all countries involved, and it can sustain growth and rising living standards.
Economy between countries will increase competition particularly for those
domestic monopolies. The international trade is a powerful force in reducing
poverty and enhances consumers’ choice in product. It allows gaining efficiency
innovation in all industries.International trade provides a comparative advantage to make more profits for an organization.
Figure
1: Opportunities and threats from international trade
Figure
2: Benefits of International Trade for consumers
PEST Analysis
written by Presillyn Tan ✈
Pest
Analysis
As
soon as the organization ha set its vision, mission and goals, the next stage
in strategy formulation is the strategic analysis. This analysis encompasses the
analysis of the external environment, organizational analysis, industry analysis
and competitive portfolio analysis. The external or environmental factors are
those forces outside the control of a single organization.
PEST
analysis is categorized into four board areas: Political, Economic, Social and
Technological forces. Each of these forces has an impact on the key
stakeholders of the organization, and subsequently provides favorable impact or
unfavorable impact to the organization. For example, a change in the social
trends like demographic patterns or baby boom may have implications to the existence
of new consumers like new born babies.
Political Forces
Political
forces are those factors have governmental relations or dealings, whether it is
at the federal level, state level or the local government level. The political
forces can refer to the laws and legislation or policies adopted by the
government in power. These are factors that can provide favorable or
unfavorable impact on the organization
One
of the main concerns in political forces is political stability. This refers to
the extent in which the country has strong political support from the people or
not. Political stability can provide strong foundations for business
organizations to grow in the long run. One way of ensuring political stability
is to get the voters mandate in the general elections, and reduce extreme
political ideologies that can create instability.
For
example, the succession of Datuk Seri Abdullah Ahmad Badawi as Prime Minister
of Malaysia from Tun Dr Mahathir Mohamed is important in assuring political
stability in the succession of the nation’s leadership. The increasing number
of terrorists and related activities in a country can also cause political
upheaval and thereby reduce attractiveness of businessmen to invest in the
region or country.
Another
impact area of concern in the political factors is the government regulations
and deregulations policies. This is reflected by the new laws and legislations
introduced to curtail the unhealthy activities in the business community. The
introduction of special tariffs and by-laws also has an impact on business
operation, like the service tax reforms introduced to all service organizations
with a minimum sales volume.
Economy Forces
Economic
forces are those factors that are related to the economic development and
growth of a particular country. These are factors like gross national product
(GNP) or gross domestic product (GDP) trends and growth rates, interest rates,
money supply, inflation rates, unemployment rates, wage and price controls,
level of disposable income, stock market trends, import and export factor,
worker productivity, government budgets and many others.
Figure
1 : Key Economic Forces
Social
Forces
The
social forces cover a broad spectrum of factors including cultural,
demographic, and environmental factors. The social and cultural factors may
refer to those forces like societal values, norms, culture, religion, language
and attitudes, that may change or show preferences of one type over another.
In
a country where there are many ethnic groups for example Malaysia, which comprises
ethnic groups like Malays, Chinese, Indians, Iban, Bidayuh, Kadazan, Bajau, and
many others, social factors can pose difficulty when trying to cope with the
changes in the environment. The social values of these ethnic groups are
different to the extent that in trying to cope with the diverse cultures can be
a challenging exercise. For example, the Malays are mainly Muslims, while the
Chinese can be a Buddhist, Taoist, Christian or even Muslims. Similarly the Indians
can be Hindus or Muslims or Christians. In this respect, when there is a
greater awareness among the Muslims for the need to consume ‘halal’ products, business
organizations have to respond effectively to this trend.
Figure
2: Key Social Forces
Technological
Forces
Changes
in technology create new marketing opportunities when they are noticed by
customers. Technology can influence marketing activities by making them more
efficient and effective, such as computers tracking inventory. Advances in
communication technology have made sales representatives more efficient and
effective in their dealings with managers and customers, and the internet has
become the backbone of today’s e-commerce system.
In the last decade, the rate of technological
changes has rapid. This is attributed to the many innovations and invention
developed in an effort to improve the work and life of the community. Technological
advancement as dramatically affected business organizations in terms of their products
and services offered, and also their relations with other stakeholders and
business practices.
One
major revolution in technology is the development of the internet. The internet
has created the demand for e-business or e-commerce and the revolution on
education through e-learning. The internet has also demonstrated the borderless
way of doing business and created the development of the multimedia industry. The
technological revolution is changing the lifestyles and the face of businesses
and competition.
Figure
3: Key Technological Forces
Production Location
written by Presillyn Tan ✈
Production Location
Multinational
corporations (MNCs) are defined as firms that engage in some form of
international business like international trade, licensing, franchising, joint
ventures, acquisition of existing operations, or establishing a new foreign
subsidiary. MNCs have business operation in more than one country. For
instance, the headquarter (HQ) of Apple Inc. is located at California, USA, but
the subsidiaries of Apple were scattered around the world. The global expansion
of business is the vital step to expand the Apple’s market share and its long
run sustainability. Although the global expansion strategy or diversification can
increase the value of MNC, however it is also incur higher level of risk and
uncertainty. Thus, the country risk analysis is essential before expand the
business to overseas. The advantages and disadvantages of doing national and
international business are:
Production location -
National
Production location -
International
Economies of Scale
written by Presillyn Tan ✈
Economies of Scale
Figure 1: Long-Run Average Cost
Figure 1 shows the
long-run average cost (LRAC) of a product. The “U” shape of LRAC is due to the
economies and diseconomies of scale. Economies of scale in production refer to increase
in efficiency of production or decrease in long-run average total costs as
output increases. For instance, if producing 1 million units of iPhone costs
Apple $800 million ($800 each), but producing 3 million units of iPhone costs
the firm $1.8 billion ($600 each). Obviously, from 1 million to 3 million
units, the production of iPhone demonstrates significant economies of scale where
the cost of production has reduced from $800 to $600 per unit. Diseconomies of
scale occur when LRAC increase as output increases. Diseconomies of scale are
due to the following factors:
a)
Monitoring costs generally increase as the size
of the firm increases.
b)
Morale generally decreases as the size of the
firm increases.
There are two types of
economies of scale, internal and external economies of scale. Internal
economies of scale measure how efficient a firm in producing the goods. The
efficiency here refers to how the firm manages to lower down the cost (variable
costs) as it increases the total output. In external economies of scale, the
reduction in unit cost of production is due to external factors (all positive
externalities) like fall in material costs, labor wages and transportation
costs. Thus, external economies of scale will increase the productivity of
whole industry.
Production
written by Presillyn Tan ✈
Production
Production
is the act of an organization to achieve its goal and does so by transferring the
raw materials or inputs into products or services at the lowest cost. In a
manufacturing organization, the production function transforms the raw
materials, labor, capital, machines and facilities used into final products. As
such, productivity implies a concern for both effectiveness and efficiency. The
product is the core of the production. The term “Product” means more than
tangible goods. Products are usually a combination of goods, services, ideas
and even people. Product is a set of features and advantages that have the
capacity to satisfy customer needs and wants, thus delivering valued benefits. The
production activities generally represent a large art of the organization’s
human and financial capital asset.
In
summary, we want to know what factors will influence the effectiveness and
efficiency of individuals, of groups, and of the overall organization. The
factors mostly depend on land, behavior, capital and enterprise. These factors
are used to transform raw materials into goods.
3 Main Production
Methods
v
Job Production
Job
means employment. Employment needs employees. Employee is an individual to
receive payment from employer, by performing services for employers under
single and customizes tasks for specific requirements of a company or
organizations. Normally, there are special requests when hiring an employee. They
require professional skills in certain things, such as, doctoring, accounting,
marketing, nursing, cooking and etc. The characteristic of a job is requiring
substantial interaction with an organization’s customers. The management of an
organization needs to ensure that employees do what it takes to please its
customers.
Job
production or one-off production, involve create custom work for a specific
customer or small bunch of works in quantity. For example, a doctor heals a
patient and gives advices according to their sickness. A doctor uses his expert
skills and knowledge about medicines or sickness to help their patients recover
as best as he can. The satisfaction of the patient is the service and the
attitude from the doctor. The doctor has the responsibility to heal his patient
until he / she recovers or in a good stable health.
v
Batch Production
Batch
production is a manufacturing process of transforming raw materials into
finished goods by using machines, techniques and man power of a manufacturer. Batch
production is a repetition of production. The process of producing the final products
is by going through one stage to the next one by one. Examples of final
products include cars, clothes, breads, films and etc. This method is good
because it reduces unit costs, fulfill the needs of specific customers and
increase output and productivity.
v
Flow Production
If the product is
going to penetrate a mass market, then flow production is an alternative method
for the product to be produced efficiently and effectively. Flow production is
a continuous movement on one operation through the production process without
stopping. The task of the work is that, once the first flow of production is
finished, the next flow must start immediately. Therefore, the timer of the
flow production must be the same. The production industry involves using this
method such as, Coca-Cola, cooking oil, canned foods and so much more. Flow
production needs intensive capital to use a high quantity of machinery and man
power to assembly in front line. The manufactures who are using this method can
achieve their economies of scale easily. The operation of the flow production
can operate for 24 hours, which can lower the cost per unit of production
|
Economic system
written on Sunday, January 13, 2013 @ 3:09 PM ✈
Economic System
a)
Market Economy
The first form of
economic system is market economy (also known as capitalist economy, free
enterprise economy or laissez-faire system). In practice, market economy is a
system where all the economics decisions are based on the actions of market
participants (buyers and sellers) without participation and active intervention
from central government. What and how much to produce is determined by price
mechanism and market force. Countries that adopt the capitalist economic system
are developed countries like USA, Japan, and some Europe countries. The advantages and disadvantages of market
economy are:
|
Advantages
|
Disadvantages
|
|
High standard of living.
|
Uneven
distribution of wealth.
|
|
Intense competition provides quality and low price goods.
|
Profit oriented
society.
|
|
Greater choice of products.
|
Exploits on
people who cannot compete.
|
b)
Socialist Economy
Socialist economy is
another form of economic system that exists today. It is also known as
centrally planned system or command system. The concept of socialism is
developed in the early of 1800s as a description of a hypothetical economic
system to be contrasted with the predominant market-based economic system. In
socialism system, the allocation of resources is determined by government only.
It is an economic system that based on individuals’ goodwill toward others and
not on their own self interest. Moreover, society decides what, how, and for
whom to produce. Countries that pursue this type of economic system are former
Soviet Union, Cuba, China, North Korea, and so on. The pros and cons of
socialist are:
|
Advantages
|
Disadvantages
|
|
Equal distribution of wealth.
|
Low standard of
living.
|
|
Need-oriented rather than profit-oriented production.
|
Residents are not
motivated to work.
|
|
No socioeconomic classes.
|
Government may make the wrong decisions.
|
c)
Mixed Economy
The third form of
economic system is mixed economy, an economic system that is made up of
capitalism and socialism. This hybrid form of economic system is comprised of both
private and public sectors. Hence, the allocation of resources in society is
partially determined by the market forces and partially determined by the
government. The mixed economic system is
designed to overcome the defects of both the capitalist and socialist system.
Countries that practice the mixed economic system include Malaysia, Thailand,
Taiwan, South Korea and so on. The advantages and disadvantages of mixed
economy include:
|
Advantages
|
Disadvantages
|
|
Provides fair competition.
|
Unnecessary
government interference.
|
|
Optimum utilization of national resources.
|
Bureaucratic decisions
making process.
|
|
Market prices are well regulated.
|
Government monopolies.
|
Globalisation
written on @ 3:03 PM ✈
Globalisation
Nowadays,
the world is flat. This is because globalisation has integrated the universal’s
economics into the international boundary through free trades, capital flows,
migrations, foreign exchanges, quality of product, equality for all, travel and
tourism, external borrowing, ease of transportation, rapid changes of technologies,
e-business and etc.
Globalization is an ongoing trend of integration of regional
economies into a global network of communication and execution. This very
significant trend is greatly raising economies of scale as well as the amount
of capital necessary to compete in the industry.
Firms can participate in
international activities through three basic mechanisms: licensing, export and
foreign direct investment.
Benefits of
Globalisation
A wider pool of potential entrants, a broader
scope of possible substitutes and increased possibilities that firms 's goals
and personalities will differ as well as their perceptions of what their
perceptions of what is strategically important. Free flow of technology appears
to be giving a wide variety of firms including NDC competitors, the ability to
invest in modern, world -scale facilities. For examples, Japanese have become
quite aggressive in selling their technology abroad. Also some firms purchased
technologies are willing to resell it to others at bargain prices. All this
activity tends to promote more global competition.
Drawbacks of Globalisation
Areas like income, factors costs, energy costs,
marketing practices and distribution channels are being narrowed down. This
also facilitating the abandonment of sectors deemed less desirable. Rate of jobless increased due
to selling goods below cost price in order to clear the stocks.
International Trade
written on @ 10:52 AM ✈
International Trade
International
trade is the exchange of goods or services across international borders or
territories. If the trades are in the right position, it will bring benefits to
all countries involved, and it can sustain growth and rising living standards.
Economy between countries will increase competition particularly for those
domestic monopolies. The international trade is a powerful force in reducing
poverty and enhances consumers’ choice in product. It allows gaining efficiency
innovation in all industries.International trade provides a comparative advantage to make more profits for an organization.
Figure
1: Opportunities and threats from international trade
Figure
2: Benefits of International Trade for consumers
PEST Analysis
written on @ 10:31 AM ✈
Pest
Analysis
As
soon as the organization ha set its vision, mission and goals, the next stage
in strategy formulation is the strategic analysis. This analysis encompasses the
analysis of the external environment, organizational analysis, industry analysis
and competitive portfolio analysis. The external or environmental factors are
those forces outside the control of a single organization.
PEST
analysis is categorized into four board areas: Political, Economic, Social and
Technological forces. Each of these forces has an impact on the key
stakeholders of the organization, and subsequently provides favorable impact or
unfavorable impact to the organization. For example, a change in the social
trends like demographic patterns or baby boom may have implications to the existence
of new consumers like new born babies.
Political Forces
Political
forces are those factors have governmental relations or dealings, whether it is
at the federal level, state level or the local government level. The political
forces can refer to the laws and legislation or policies adopted by the
government in power. These are factors that can provide favorable or
unfavorable impact on the organization
One
of the main concerns in political forces is political stability. This refers to
the extent in which the country has strong political support from the people or
not. Political stability can provide strong foundations for business
organizations to grow in the long run. One way of ensuring political stability
is to get the voters mandate in the general elections, and reduce extreme
political ideologies that can create instability.
For
example, the succession of Datuk Seri Abdullah Ahmad Badawi as Prime Minister
of Malaysia from Tun Dr Mahathir Mohamed is important in assuring political
stability in the succession of the nation’s leadership. The increasing number
of terrorists and related activities in a country can also cause political
upheaval and thereby reduce attractiveness of businessmen to invest in the
region or country.
Another
impact area of concern in the political factors is the government regulations
and deregulations policies. This is reflected by the new laws and legislations
introduced to curtail the unhealthy activities in the business community. The
introduction of special tariffs and by-laws also has an impact on business
operation, like the service tax reforms introduced to all service organizations
with a minimum sales volume.
Economy Forces
Economic
forces are those factors that are related to the economic development and
growth of a particular country. These are factors like gross national product
(GNP) or gross domestic product (GDP) trends and growth rates, interest rates,
money supply, inflation rates, unemployment rates, wage and price controls,
level of disposable income, stock market trends, import and export factor,
worker productivity, government budgets and many others.
Figure
1 : Key Economic Forces
Social
Forces
The
social forces cover a broad spectrum of factors including cultural,
demographic, and environmental factors. The social and cultural factors may
refer to those forces like societal values, norms, culture, religion, language
and attitudes, that may change or show preferences of one type over another.
In
a country where there are many ethnic groups for example Malaysia, which comprises
ethnic groups like Malays, Chinese, Indians, Iban, Bidayuh, Kadazan, Bajau, and
many others, social factors can pose difficulty when trying to cope with the
changes in the environment. The social values of these ethnic groups are
different to the extent that in trying to cope with the diverse cultures can be
a challenging exercise. For example, the Malays are mainly Muslims, while the
Chinese can be a Buddhist, Taoist, Christian or even Muslims. Similarly the Indians
can be Hindus or Muslims or Christians. In this respect, when there is a
greater awareness among the Muslims for the need to consume ‘halal’ products, business
organizations have to respond effectively to this trend.
Figure
2: Key Social Forces
Technological
Forces
Changes
in technology create new marketing opportunities when they are noticed by
customers. Technology can influence marketing activities by making them more
efficient and effective, such as computers tracking inventory. Advances in
communication technology have made sales representatives more efficient and
effective in their dealings with managers and customers, and the internet has
become the backbone of today’s e-commerce system.
In the last decade, the rate of technological
changes has rapid. This is attributed to the many innovations and invention
developed in an effort to improve the work and life of the community. Technological
advancement as dramatically affected business organizations in terms of their products
and services offered, and also their relations with other stakeholders and
business practices.
One
major revolution in technology is the development of the internet. The internet
has created the demand for e-business or e-commerce and the revolution on
education through e-learning. The internet has also demonstrated the borderless
way of doing business and created the development of the multimedia industry. The
technological revolution is changing the lifestyles and the face of businesses
and competition.
Figure
3: Key Technological Forces
Production Location
written on @ 8:45 AM ✈
Production Location
Multinational
corporations (MNCs) are defined as firms that engage in some form of
international business like international trade, licensing, franchising, joint
ventures, acquisition of existing operations, or establishing a new foreign
subsidiary. MNCs have business operation in more than one country. For
instance, the headquarter (HQ) of Apple Inc. is located at California, USA, but
the subsidiaries of Apple were scattered around the world. The global expansion
of business is the vital step to expand the Apple’s market share and its long
run sustainability. Although the global expansion strategy or diversification can
increase the value of MNC, however it is also incur higher level of risk and
uncertainty. Thus, the country risk analysis is essential before expand the
business to overseas. The advantages and disadvantages of doing national and
international business are:
Production location -
National
Production location -
International
Economies of Scale
written on @ 8:40 AM ✈
Economies of Scale
Figure 1: Long-Run Average Cost
Figure 1 shows the
long-run average cost (LRAC) of a product. The “U” shape of LRAC is due to the
economies and diseconomies of scale. Economies of scale in production refer to increase
in efficiency of production or decrease in long-run average total costs as
output increases. For instance, if producing 1 million units of iPhone costs
Apple $800 million ($800 each), but producing 3 million units of iPhone costs
the firm $1.8 billion ($600 each). Obviously, from 1 million to 3 million
units, the production of iPhone demonstrates significant economies of scale where
the cost of production has reduced from $800 to $600 per unit. Diseconomies of
scale occur when LRAC increase as output increases. Diseconomies of scale are
due to the following factors:
a)
Monitoring costs generally increase as the size
of the firm increases.
b)
Morale generally decreases as the size of the
firm increases.
There are two types of
economies of scale, internal and external economies of scale. Internal
economies of scale measure how efficient a firm in producing the goods. The
efficiency here refers to how the firm manages to lower down the cost (variable
costs) as it increases the total output. In external economies of scale, the
reduction in unit cost of production is due to external factors (all positive
externalities) like fall in material costs, labor wages and transportation
costs. Thus, external economies of scale will increase the productivity of
whole industry.
Production
written on @ 8:31 AM ✈
Production
Production
is the act of an organization to achieve its goal and does so by transferring the
raw materials or inputs into products or services at the lowest cost. In a
manufacturing organization, the production function transforms the raw
materials, labor, capital, machines and facilities used into final products. As
such, productivity implies a concern for both effectiveness and efficiency. The
product is the core of the production. The term “Product” means more than
tangible goods. Products are usually a combination of goods, services, ideas
and even people. Product is a set of features and advantages that have the
capacity to satisfy customer needs and wants, thus delivering valued benefits. The
production activities generally represent a large art of the organization’s
human and financial capital asset.
In
summary, we want to know what factors will influence the effectiveness and
efficiency of individuals, of groups, and of the overall organization. The
factors mostly depend on land, behavior, capital and enterprise. These factors
are used to transform raw materials into goods.
3 Main Production
Methods
v
Job Production
Job
means employment. Employment needs employees. Employee is an individual to
receive payment from employer, by performing services for employers under
single and customizes tasks for specific requirements of a company or
organizations. Normally, there are special requests when hiring an employee. They
require professional skills in certain things, such as, doctoring, accounting,
marketing, nursing, cooking and etc. The characteristic of a job is requiring
substantial interaction with an organization’s customers. The management of an
organization needs to ensure that employees do what it takes to please its
customers.
Job
production or one-off production, involve create custom work for a specific
customer or small bunch of works in quantity. For example, a doctor heals a
patient and gives advices according to their sickness. A doctor uses his expert
skills and knowledge about medicines or sickness to help their patients recover
as best as he can. The satisfaction of the patient is the service and the
attitude from the doctor. The doctor has the responsibility to heal his patient
until he / she recovers or in a good stable health.
v
Batch Production
Batch
production is a manufacturing process of transforming raw materials into
finished goods by using machines, techniques and man power of a manufacturer. Batch
production is a repetition of production. The process of producing the final products
is by going through one stage to the next one by one. Examples of final
products include cars, clothes, breads, films and etc. This method is good
because it reduces unit costs, fulfill the needs of specific customers and
increase output and productivity.
v
Flow Production
If the product is
going to penetrate a mass market, then flow production is an alternative method
for the product to be produced efficiently and effectively. Flow production is
a continuous movement on one operation through the production process without
stopping. The task of the work is that, once the first flow of production is
finished, the next flow must start immediately. Therefore, the timer of the
flow production must be the same. The production industry involves using this
method such as, Coca-Cola, cooking oil, canned foods and so much more. Flow
production needs intensive capital to use a high quantity of machinery and man
power to assembly in front line. The manufactures who are using this method can
achieve their economies of scale easily. The operation of the flow production
can operate for 24 hours, which can lower the cost per unit of production
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