Lesson Worksheet - Capacity Utilisation
This lesson / revision workshop provides a range of questions that cover the topic of production capacity and capacity utilisation:
Saab struggles to break even
Saab only just survived sliding into insolvency in early 2010. But its worries aren’t over. Recently the firm has had to stop its assembly line because unpaid suppliers had halted shipments of parts and materials.
read more...»Life in the chocolate factory - automation, productivity, motivation and culture
I spotted this article buried away in the Independent’s Food & Drink section and I think it works really well for business students - particularly those researching the change management and cultural implications of a major takeover…
read more...»Capacity cuts at Toyota UK as production still hit after Japanese earthquake
Great short video here from the BBC which explains how Toyota is extending its capacity cuts to the Burneston factory in the UK following problems with the supply of components for car manufacture. The Derby factory will be closed for two days each week during May 2011. A good example of how a business can reduce production capacity in the short-term, and also of the potential problems which can arise with lean production (i.e. Toyota and other car makers not maintaining high buffer stocks of components).
JIT - How lean production suffers from a terrible shock
A third blog hat tip in one evening - this time we are indebted to Peter Hill at Blessed Hugh Faringdon School. He spotted a typically topical and accessible feature on the BBC which describes the production problems experienced by Japanese motor manufacturers in the awful aftermath of the recent Tsunami. As Peter points out, the article is not only highly relevant in terms of lean production, but also covers broader topics such as contingency planning and responding to external influences.
CSR - Responsible Jeans? Its a Blast…
Many thanks to Ian Pryer and Mike Slark for spotting this excellent, topical case study of CSR in action. The Telegraph article describes how retailers and clothing brands such as Asda, Diesel, Matalan and Primark are among those being criticised for selling jeans made using sandblasting, which can cause illness or even death.
As Ian pointed out to me during the BUSS4 revision workshop in Fulham on Monday, many students arrived at lessons during Comic Relief week in ‘worn-look’ jeans. Had they stopped to consider how the manufacturing process may effect the health of those involved in their production? Are their own jeans from a business like New Look or M&S who say they have already outlawed sandblasted jeans from their supply chain? Or are they from one of the firms being targeted by ‘Labour Behind the Label’? Lots of good CSR material to discuss here.
Which is bigger – McDonalds or Subway?
The answer to that question depends on how you measure size.
read more...»CSR - Green Growth Case Studies from UK Businesses
Students researching the benefits and costs of firms which are undertaking corporate social responsibility activities will be on the look out for tangible, credible evidence of results. This series of brief case studies from the Carbon Trust is a veritable gold mine for effective research and should enable students to include evidence which examiners find credible and relevant…
read more...»CSR - The Mega Dairy, Economies of Scale and Cornflakes
This is a terrific, topical case study that you can use with students to examine a range of important business studies topics - not the least economies of scale, CSR and market structure.
read more...»Niche segmentation - Britain’s Last Teddy Bear Maker
Here’s a cuddly story stuffed full with topical business studies teaching material. Of all the 30 or so teddy factories that once existed in Britain, only one still remains. Nestled in the Shropshire countryside, Merrythought Ltd has been making teddy bears since 1930. This short video takes us behind the scenes to watch the production process at Merrythought. It is almost like taking our students on a visit to a factory museum! Inside, a dozen or so ladies hand-stitch each teddy in much the same way as was done 100 years ago. The only real sign of the use of technology in the production process is a mechanised stuffing machine!
Oliver Holmes, the managing director of Merrythought, acknowledges in the video that his bears are far more expensive than others on the market. The average price of a soft toy in the UK is £7.81 and the smallest Merrythought bear retails at well over £50. Merrythought’s unit costs are over 50 times higher than their competitors in the Far East. So a key question for students is - how does Merrythough compete? And can they survive?
read more...»Unit 3 Micro: Economies of Scale - the Mega Container Ship
There are currently around 9,000 container ships cruising the world’s shipping lanes, transporting goods around the globe. But the competitive structure of the shipping industry looks set to be shaken up by the arrival of 10 new mega container ships. These provide a great example of how economies of scale can lead to lower unit costs.
read more...»Will a new manufacturing technology change the world?
I was astonished to recently read about a technological development that I initially dismissed as an early April fool joke – the concept of 3D printing. It’s a compelling story, packed full of relevance, particularly for A2 students looking at Production, or Operations Management.
read more...»CSR - Apple audits the supply chain
The headline in the Telegraph today doesn’t read well for Apple, but I wonder whether the underlying story is actually good news for the firm and enhances its reputation for CSR?
read more...»CSR - Avoiding the child labour hotspots
Several prominent businesses have been caught out when investigations have highlighted the exploitation of child labour in their supply chains. Primark and Apple are great examples that are likely to popular research examples for students preparing for AQA BUSS4 in June 2011. So the latest Child Labour Index will probably be required reading for businesses keen to avoid the reputational damage that can arise from being seen to profit from extremely low pay. As this Guardian article explains, the worst-offending countries include many of the emerging markets which have provided the source of low-cost supply for many multinational brands. India performs particularly badly. A good quote in the article from risk management specialists Maplecroft who produce the index makes an important point: [my emphases in bold]
“These large emerging economies are essential to the strategic interests of multinational business. Not only is child labour wrong but the existence of child labour within a company’s value chain can have significant impacts on reputation and profits and it is critical that companies undertake stringent monitoring of all suppliers.”
Cutting costs - with a lick of paint?
A half-term hat tip to Ian Pryer for spotting this neat story about low-cost airline about Easyjet. Easyjet’s use of a new hi-tech paint, which is claimed to reduce flight drag and therefore reduce fuel consumption is an excellent one for both AQA BUSS2 and BUSS4 students.
For BUSS2 students, an interesting example of the lengths low cost airlines will go to to reduce costs in order to make more profit or be more price competitive. This is a topic that they will no doubt have been recently looking at.
For BUSS4 students, there is a clear CSR angle here with Easyjet’s belief that this may lead to lower carbon emissions. Or are they simply reducing costs? Perhaps it’s an example of how firms can actually do both. One for students to discuss.
Here’s an article describes the innovation and here’s the Easyjet press release which gives the news a clear corporate spin!
Technology in business - RFID takes on the counterfeiters
Another gem of a video from the BBC Business team. This is a great example of how technology can be harnessed to improve profitability by protecting the intellectual property or brand reputation. RFID tags (radio frequency) have been around quite a while but their unt cost made them uneconomical for use in protecting high volume manufacture - until now. The rapid growth of counterfeit products, particularly from emerging markets like China, creates problems for firms that have invested heavily in product innovation or branding.
CSR - keeping a CCTV eye on suppliers
Another good resource for CSR here, but one which some students may not want to watch due to the gruesome nature of the topic.
The Guardian reports that leading supermarket chains are demanding that CCTV systems be fitted in the stunning and killing areas of all abattoirs that supply them with meat, as they move to reassure consumers that animals are not being cruelly treated. Morrisons, M&S, Waitrose, Co-op and Sainsbury’s have also promised that CCTV images will be independently monitored - as called for by the charity Animal Aid, which ran a campaign last year involving undercover filming of alleged brutality.
Its a good example of how retailers need to take great care with all aspects of their supply chain, and how pressure groups are becoming increasingly influential stakeholders in key retail sectors.
Business Strategy: next steps for the budget airline industry
It’s amazing to think how over just 15 years, Europe’s budget airlines have soared to account for a third of all air travel in the region. But their growth is slowing. Here are a few ideas and a link to an article which outlines some of the approaches the industry might take in the years ahead.
read more...»More UK product recalls: why?
The number of products recalled in the UK because of faults or health risks reached a new high of 229 product recalls in the 12 months to November 2010. Recalls are made after a health and safety risk or a major design or production flaw has been discovered in a product.
This is clearly bad news for customers, but what does it tell us about the production processes behind the recalled products?
read more...»Can a specialist sports retailer survive?
I fear for JJB Sports plc. In the run-up to Christmas I’ve had cause to get involved in a lot of sports-related shopping, both online and on the high street! I’m not convinced that there is still a viable business model for a national chain of sports sports which genuinely specialise in sporting goods (equipment and clothing).
read more...»Tough lessons in running a business from the entrepreneurial coalface
Students rarely get the inside track on the hurdles and challenges faced by entrepreneurs day-to-day. They can be forgiven for thinking that setting up and managing a business is, in the textbook world, pretty straightforward. Get the marketing mix right, raise the finance, motivate the staff & the jobs a good’un. Yeh, right. Sure
So this excellent article in the Telegraph might help provide a reality check. It is certainly packed full of useful discussion points. Just look at some of the problems encountered by a nice mix of businesses and entrepreneurs:
- A stonemason for whom demand literally freezes when the weather turns wintery
- Declining net profit margins as competitors fight for market share in an industry with much spare capacity
- A major customer going into liquidation leaving a firm with a substantial bad debt
- Rapid growth in revenue highlighting deficiencies in stock management and customer service
- Tricky decisions about whether to delay investment in research & development as a result of weakening demand from the public sector
- A franchisor that is struggling to open new locations
Some amazing images to help teach economies of scale
A huge hat tip to Innes Robinson over on the superb GCSE Economics blog for spotting this absolutely priceless collection of images of Sainsbury’s main distribution centre - the ideal visual stimulus for illustrating, explaining and discussion economies of scale. The sheer scale of the distribution operation is breathtaking, as is the extent of automation in the stockholding and handing processes.
Inside Amazon’s Warehouse
Ever wondered what it is like in Amazon’s warehouse? Here is a brief 1 minute guide which illustrates how Amazon’s warehouse in Scotland is organised. In effect it is just like an automated library! An interesting point made about Toy Story 3 and other popular DVDs and books. Amazon’s solution is to spread stocks of those items around the warehouse - otherwise it would have dozens of pickers (including many temporary workers during the seasonal peak in demand) all fighting to get to the same warehouse location!
Snow disruption and distribution channels
The snow has brought great disruption to the lives of millions. But what of the businesses whose job it is to distribute goods around the UK? What happens when a distribution business can’t distribute?
This short video from the BBC highlights the operational headaches being faced by distribution businesses as they get to grips with the winter weather disruption.
Outsourcing and offshoring explained
This four-minute radio interview on BBC R4 provides a terrific explanation of the difference between offshoring and outsourcing - two concepts that students (and some teachers!) sometimes seem confusing. Well worth a listen.
Advent business (1) - shortages
Here we go - the first of December, much of the country under snow and ice, and a critical shortage of Christmas trees is reported in The Independent - take a look at the final section of the report here. It gives a great example of external influences which the suppliers of the trees cannot control - the geographical areas in which the growers are concentrated are covered in snow at the critical felling period and cannot get the trees to market, over the impassable roads. Combine this with another change in the conditions of supply - the EU has withdrawn the subsidies that it used to pay to Christmas tree growers, which means that the supply from countries like Denmark is down as some companies have exited the market.
Meanwhile the conditions of demand have changed as well - British buyers now favour the non-needle-dropping Nordmann Fir which now has a massive 60% share of the market for fresh trees. Fewer than 200,000 of them are expected this year, when there are usually a million available. How could producers plan for this, when there is a 10-year life cycle for the trees from planting to felling, which necessitates very long term planning.
If you were a producer, who would you choose to supply? Who has the greatest power in this market - is it the consumer, the grower or the retailer? And how much will you be prepared to pay to get the Christmas tree that you want, this year?
Productivity calculations in the car industry
Car industry watchers will know that Fiat is one of the few car companies who have enjoyed a relatively successful decade. Fiat cars will be back on sale in America for the first time since 1983. Fiat’s return to America is the first visible result of what is intended to be an ever closer union with Chrysler, agreed on last year when the American giant was in bankruptcy (Fiat managed to grab 35% of the business). There’s an interesting article in The Economist, but if you read on you might like to mainly focus on some industry figures on productivity, which I’ve presented as some simple calculations.
read more...»Dominos Pizza - Growth & Strategy (Part 2) - Innovation, Service and Smart Operations
For a hugely consumer-centric business Dominos must always be keenly aware of consumer needs and wants and stay tuned to when they change. My own experience is probably not atypical. I want hot pizza, competitively priced, produced to a consistently good standard, delivered on time and ordered and paid for over the internet with the minimum of fuss! That gives Dominos five operational and quality hurdles to overcome and doubtless there are many more for different groups of consumers – for example the hundreds of thousands of people who enjoy a pizza but who are glucose intolerant.
read more...»Outsourcing illustrated in 30 seconds - Xerox and Marriot Hotels
Sometmes a short tv ad helps make a point that textbooks never can. Take this lovely example of an ad which promotes the business process outsourcing offered by Xerox. Marriot Hotels have outsourced some of the administation activities to Xerox, so that hotel staff can focus on core activities such as customer service. The ad considers what might happen if those hotel staff might be asked to return to the back office and start raising invoices again. Love it..
Working with Suppliers - Thomas Cook Challenges Hotel Bills
First there was Serco threatening to withdraw their support if suppliers didnt accept a price cut. Now Thomas Cook - one of the duopoly of mass tour operators in the UK - has decided to flex its muscles and demonstrate its bargaining power with a key supplier group - holiday hotels. Is this an abuse of Thomas Cook’s market dominance?
read more...»
