Structural Factors
Organisations and Businesses
Industrial organisations can take the following forms: 1. Public company - This is a company which is listed on the Stock Exchange and the public can purchase shares in the company 2. Private company - This is owned by a select few and a large majority of the shares may be owned by one person 3. Partnership - This organisation is owned in conjunction by two or more people 4. Sole trader - A single person organises and is responsible for the business When setting up an organisation to produce goods or services, the requirements needed are: 1. Land 2. Capital 3. Labour Land is the first essential need for production. It refers to natural resources obtained from the land to be used to produce the products, such as timber, oil, minerals. It also refers to the land on which the factory will be built or organisation located. The location of an industry is critical to its development and success. Factors that influence a successful selection of a site for a new factory/industry are as follows:
Capital does not refer to money alone, however, it is required initially to set up an industry by providing the buildings, raw materials, machinery, transport systems and equipment, etc.. Items which are used to produce the articles that are in demand, are referred to as capital goods. Companies can finance their operation from various funds:
Labour refers to the use of human resources in all forms and at all levels, from management, through research, design, development and production, to final delivery of the product. Labour is one of the highest cost factors for the proprietor of any firm. Additional costs for labour include:
People must be employed with a broad range of skills to match the activities required. Most companies have an organised structure which is dependent upon the size of the organisation, type of good produced and the manufacturing processes being used. Management Structures For any management structure to be effective, communication is essential, as is a clearly defined chain of command. Communication can be in the form of a meeting, one on one chat, email, phone call, fax, letter, etc. In smaller organisations, a few staff may have several roles. However, in all organisation structures, the flow of the information may come from the top down, or up from the bottom. This is dependent upon the leadership style of management (e.g. casual or authoritarian). Finance Companies can finance the operations from various means;
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Marketing and Sales
For profit to be forthcoming, goods and services must be sold to the public. These goods should be of the highest quality; this is only achieved through competition of other similar businesses.
Marketing finds out if there is a justifiable market for the product. It is then the job of the Sales teams to establish markets for the product being produced and to arrange their distribution to consumers in a saleable manner. Sales The selling of the product or service is fundamental to the survival of the company. All other factors such as marketing, finance or management, are in place to support and generate the sale of the company's product. If the sales of a product drop consistently over a period of time, then this must be investigated. This is usually carried out by the marketing research department through surveys, etc. Various ways to regain sales are: · Reduce cost of product · Promotion of product (new advertising campaign) · Redesign product · Repackaging of product · Market testing to determine quantities sought by customers |
Marketing
Marketing is essential to make a company product known to potential customers. There are various marketing strategies that can be used, including: · Advertising (definition: the act of producing adverts for commercial services e.g.. Tv, newspaper, magazine, radio, cinema). NOTE advertising is only ONE form of marketing. · Letterbox leaflets · Showrooms and product displays at trade shows and exhibitions · Displays at shopping centres · Salespeople visiting potential customers · Outdoor billboards · Point of sale displays · Competitions with the product as a prize · Use of the 5 Ps The Marketing Mix The 5P's of Marketing are: o Product o Price o Place o Promotions o People (and services) |
Product - Generally speaking, the companies that are growing most quickly are those that are spending the most money for product research and development. The success of a company's product line depends upon decision in the following areas:
Price - In addition to product, place and promotion, the marketer must also select the proper price at which the goods must be sold. Some factors involved in this decision are competitors' actions, existing practices on markdowns and discounts, target profits, and legal restrictions.
Services - refers to the customer service that is provided at the point of sale and after the product has been sold and distributed. With many customer outlets offering similar products at similar prices, and consumers are becoming more knowledgeable about the products they buy, consumers are moving away from the influence of price and convenience to the service they receive. Consumers want to talk to staff that know about the products they are selling and would prefer to spend a little more if they receive quality service before and after they have purchased the product. After sales service can take the form of advice, training in use, warranties, spare parts and repair facilities once they take the product home.
- selecting the right product.
- knowing when to add new products to the line
- dropping products from the line at the right time
- branding and packaging
- what sort of wholesale and retail institutions should be used?
- should the goods be marketed through multiple outlets or, in the case of consumer goods, through a few exclusive stores?
- where should the outlets be located?
- would a consumer product do best in discount, low-priced stores, or in high prestige, well-serviced stores?
- how should the goods be shipped and warehoused to ensure their availability when the customer wants them?
Price - In addition to product, place and promotion, the marketer must also select the proper price at which the goods must be sold. Some factors involved in this decision are competitors' actions, existing practices on markdowns and discounts, target profits, and legal restrictions.
Services - refers to the customer service that is provided at the point of sale and after the product has been sold and distributed. With many customer outlets offering similar products at similar prices, and consumers are becoming more knowledgeable about the products they buy, consumers are moving away from the influence of price and convenience to the service they receive. Consumers want to talk to staff that know about the products they are selling and would prefer to spend a little more if they receive quality service before and after they have purchased the product. After sales service can take the form of advice, training in use, warranties, spare parts and repair facilities once they take the product home.
Production & Efficiency
Manufacturing Processes
Products are now being made in many different ways, and it is not possible to give one description of the manufacturing process. The suitability of each process depends entirely on demand for the product. There are four basic types of production methods used today and they are: · Line Assembly Production · One-off Production · Batch Production · Continuous Production Line Assembly Production This process of manufacturing is organised for large amounts of production, when the customer requires a steady supply of the same product. Based on a system which moves the product through the factory from the start to the finish of the process. People/ machines are positioned at stations along the way, each working on one single step process. The high cost of setting up the line must be paid for by many goods to be sold. Therefore, you must be confident in the continual need for the product. MULTIMEDIA EXAMPLE: production and printing of a Newspaper, production of an animation |
One Off Production
This is a manufacturing process where the customer and/or designer requires a unique article. There is usually customer input regarding the design and materials used. The designer of the article in most cases is the craftsman or manufacture of the article. Generally, this is an expensive method to use as little money can be derived for labour, materials or equipment. Each item is essentially hand crafted requiring adjustments of machinery or special materials and assembly techniques. MULTIMEDIA EXAMPLE: Recording/editing of a Music track in a Studio or the dolly specifically made to create the bullet time fx in the Matrix movie. |
Batch Production
This process involves the manufacture of a specified number of products to fill an order, generally received on a regular basis. The process involves a team of workers assembling or producing the product. The whole process is done in the one location and is carried out by the one person or team. The batch process means that the worker is involved with the project for more of the production time and manages a range of processes. MULTIMEDIA EXAMPLE: The production of a Movie Trailer, animated TV show or graphic design marketing team. |
Continuous Production
This process occurs when the customer requires a steady supply of the product. This type of production is often associated with competent manufacture where demand is relatively constant. MULTIMEDIA EXAMPLE: production of a News based TV show, e.g. channel 9 News, and channel 7 Sunrise. There will always be news to cover on a local, national and international level and it regularly receives high ratings, which allows these shows to continue. |
Production Quality Control
Quality control is a system of maintaining standards in manufactured products by testing a sample of the output against the specification.
Continuing sales and the company’s reputation depend on the reliable quality of its product. Customers will quickly return items and change brands if a product does not perform effectively. Quality control can take many forms form highly sophisticated scientific testing to simple visual inspection. Testing and inspection may be carried out on every item that is produced in the case of non-destructive tests or only randomly on items to destruction. Products that do not match the accepted standard are then rejected and altered or destroyed, or an entire production run may need to be redesigned. Production EfficiencyEfficiency refers to achieving maximum productivity with minimum wasted effort or expense. Improving efficiency ensures costs are kept to a minimum. Improvements in efficiency are measured by comparing costs of production with profits.
Ways that companies can improve efficiency are: · Replace human labour with automatic machines · Computerising some aspects of the business, such as administration · Ensuring workers are properly trained · Specialise in one product · Multi-skilling workers so that they can perform more than one operation and fill in for absent workers, · Bulk buy raw materials (cost savings) · Locate near resources or market (lower costs of transport, time savings, etc) Production Staff |
- Includes supervisors/managers, skilled, semi-skilled and unskilled labour.
- They ensure adequate levels of raw materials are readily available for sustained production levels.
- Carry out quality control at appropriate points
Factors That Can Affect Quality Control
· Restructuring:
o Can involve personnel, systems, processes and physical environment
o Effects can be positive and negative.
o Can cause stress/anxiety on workers, causing a lowering of the quality of the product/services.
o Workers moved may initially lack the skills to perform new tasks, retraining must be under taken to provide knowledge to overcome lack of experience. This can lead to a short drop in quality of the product/services for a short while, until they are experienced enough.
o Restructuring personnel into specific teams with designated roles can help to improve product quality through skill specialisation
· New workers can provide a fresh attitude and show less complacency, possibly improving the quality of product/services.
· The introduction of new machinery can improve the quality of products through increased accuracy, precision and output. However, workers may have to be trained in the use of the new technology (this can be costly and time consuming).
o Can involve personnel, systems, processes and physical environment
o Effects can be positive and negative.
o Can cause stress/anxiety on workers, causing a lowering of the quality of the product/services.
o Workers moved may initially lack the skills to perform new tasks, retraining must be under taken to provide knowledge to overcome lack of experience. This can lead to a short drop in quality of the product/services for a short while, until they are experienced enough.
o Restructuring personnel into specific teams with designated roles can help to improve product quality through skill specialisation
· New workers can provide a fresh attitude and show less complacency, possibly improving the quality of product/services.
· The introduction of new machinery can improve the quality of products through increased accuracy, precision and output. However, workers may have to be trained in the use of the new technology (this can be costly and time consuming).
Factors That Can Affect Production Efficiency
Improving efficiency may mean that a company may decide to:
· Upgrading technology, to improve production time, save long term costs (eg. Staff) and to improve quality. However, staff would need to be retrained which is costly and time consuming.
· Outsourcing various processes to other companies or overseas saving initial capital expenditure, training costs and so on. Outsourcing many processes can decrease production time by large amounts of production to be worked on at the same time.
· Subcontract workers, saving costs of holiday pay and so on. This increases overall profits.
· Retrain and moving workers to other areas in the company.
· Retrench redundant staff to reduce overall costs and increase profits. This can have negative effects on the workers who lose their jobs, including severe loss of income until new job found, as well as depression and anxiety when workers realise finding a job in a specialist industry isn’t easy. Their families may also be impacted, as house mortgages and debts may not be able to be paid (could lose house).
· Amalgamate with other companies to increase products produced and potential increase in client base.
· Upgrading technology, to improve production time, save long term costs (eg. Staff) and to improve quality. However, staff would need to be retrained which is costly and time consuming.
· Outsourcing various processes to other companies or overseas saving initial capital expenditure, training costs and so on. Outsourcing many processes can decrease production time by large amounts of production to be worked on at the same time.
· Subcontract workers, saving costs of holiday pay and so on. This increases overall profits.
· Retrain and moving workers to other areas in the company.
· Retrench redundant staff to reduce overall costs and increase profits. This can have negative effects on the workers who lose their jobs, including severe loss of income until new job found, as well as depression and anxiety when workers realise finding a job in a specialist industry isn’t easy. Their families may also be impacted, as house mortgages and debts may not be able to be paid (could lose house).
· Amalgamate with other companies to increase products produced and potential increase in client base.