1. Do Now Answer the following.What would be the advantagesof
adding more people to 5 minutesincrease utilisation?At what point
might it causeproblems to keep addingpeople?What might these
problems be?
2. Operational Strategies: Scale and resource mixCHAPTER
12
3. Learning ObjectivesBy the end of the lesson you should be
able to:1. Identify the causes of economies and diseconomies of
scale.2. Assess the importance of economies and diseconomies of
scale3. Understand the advantages and disadvantages of capital and
labour intensive resource mixes.
4. Scale of operation - economies and diseconomies of scale The
size of an organisation will directly influence its ability to
operate efficiently. The point at which a firm is operating at its
most efficient is known as its optimum output and is at the point
were the average cost of production is at its lowest. Before a firm
reaches its optimum output, it will benefit from economies of scale
as it grows, once optimum output is reached and exceeded further
growth will start to cause problems, diseconomies of scale.LO1)
Identify the causes of economies and diseconomies of scale.
5. Economies or diseconomies of scale how does it happen? Match
the correct example to the following: Internal economies of scale
External economies of scale Internal diseconomies of scale External
diseconomies of scaleLO1) Identify the causes of economies and
diseconomies of scale.
6. Which example of economies and diseconomies of scaleLO1)
Identify the causes of economies and diseconomies of scale.
7. Test yourself - What have you learned about economies and
diseconomies of scale? 1. Distinguish between economies and
diseconomies of scale 2. What is meant by the term optimum level of
output? 3. With the use of appropriate examples, explain how a
chain of high street quality Indian restaurants may benefit from
economies of scale. 4. With the use of appropriate examples,
explain how a large distribution business may suffer from
diseconomies of scale.LO2) Assess the importance of economies and
diseconomies of scale
8. Mix of Resources What does a firm regard as its resources?
GROUP 1 GROUP 2 Research and find Research and find information
about capital information about labour intensive industries and
intensive industries and create a Pictionary create a Pictionary
poster. poster. Find relevant advantages Find relevant advantages
and disadvantages. and disadvantages.LO3) Understand the advantages
and disadvantages of capital and labour intensive resource
mixes.
9. TIME TO VOTE! Optimum Resource Mix: Is one approach better
The combination of than the other? capital and human resources
which allows Prepared to explain the for the greatestreasons for
your response. efficiency.
10. Case Study Technology and farming 1. Explain the advantages
and disadvantages to farming of being a capital intensive
businesses. 2. Explain how farming has benefited by moving away
from being labour intensive.LO3) Understand the advantages and
disadvantages of capital and labour intensive resource mixes.
11. Re-cap Learning ObjectivesYou should now be able to:1.
Identify the causes of economies and diseconomies of scale.2.
Assess the importance of economies and diseconomies of scale3.
Understand the advantages and disadvantages of capital and labour
intensive resource mixes.