MACHINES VERSUS PEOPLE

 Organisations need to make decisions on whether to be capital or labour intensive and it depends upon:
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Amount to be produced
The product – is it a standardised product or unique
Who you are selling to – luxury item or not
 Whether the product/service requires the
“personal touch”

Advantages of Labour Intensive production
 Workers can learn new skills
 People can think for themselves
 Labour can be used to do many different tasks
 Personal touch – people can interact better with customers – a lot of services cannot be provided by machinery eg hairdressing

Disadvantages of Labour intensive production
 Wage costs are high
 Can only work for so long
 Workers can take ill, need holidays etc

Advantages of Capital Intensive
Production
 Can work 24/7
 Quality of work is consistent
 Work is accurate and precise
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Can do work which is too dangerous and unpleasant for people
More productive than labour – a machine can produce more output per hour than labour
Machines don’t need breaks or holidays etc

Disadvantages of Capital Intensive
Production
 Initial cost is high – have to spend a lot of money to buy machinery at first
 They need to maintained
 They can break down – if they do it can halt production
 Can only be used for the tasks they were designed to do
 Can cause unemployment

 Business will use a combination of people and machines
 Important factors which will decide what combination of labour and machinery used is – how a business’s profits will be affected and if it can afford to buy the machinery

 Mechanisation is labour being substituted by machinery, but labour still operates the machines
 Automation means labour is replaced by machines and machines work automatically and are computer controlled. Workers supervise.
 Reasons for Automation and Mechanisation are
– to reduce costs and increase productivity.

 2 car manufacturers – Vauxhall in
Ellesmere Port – look at the production methods used – and labour and capital intensive etc – prices of cars – the product
– standardisation
 Rolls Royce – look at above – make a comparison – why do you think there is such a comparison