5.
2 Operations methods
IB BUSINESS MANAGEMENT
Knowledge check
• State four operations methods and describe one.
• Job production, batch production, mass/flow production, mass customization.
• Job production, also called customized production, refers to the production of a single, one-
off product.
• Each individual product once started has to be completed before the next product is started.
The product is specially made to a specific order. Production is market-oriented. Products are
often unique. Usually associated with the highest end of the market. The emphasis is on
quality and originality.
• Advantages: The mark-up is likely to be high. Satisfied clients as they get exactly what they
want. It is flexible.
• Disadvantages: It can be expensive (skilled workers). It is likely to be time-consuming. When
is very labour-intensive, the business can become dependant on skilled workers.
Job production - Examples
Job production - Examples
Knowledge check
• Batch production is the production of a limited number of identical products at a time.
• Products are made in separate groups (batches). Each batch goes through the whole production
process together. It usually involves a number of distinct stages where each batch passes through one
stage of production before passing on to the next stage. Usually associated with the middle end of the
market. The emphasis is on quality and affordability. Products are still market-oriented. Customers are
offered customized products, but using a range of standardized options. Some consultation need to be
made with customers, as their needs have to be taken into account, although the exact options may be
limited. Market research can replace that consultation.
• Advantages: Increased output volume. It increases sales revenue. Enables economies of scale. Allows
each batch to be specifically matched to the demand. Some flexibility is retained. The design and
composition of batches can be easily altered. May be useful for trialling products. May help deal with
unexpected orders.
• Disadvantages: Lack of uniqueness. High levels of stocks. Unit costs are likely to remain high. The size
of the batches are dependent on the capacity of the machinery or of labour allocated to them. Business
may lose production time as there is often a need to clean and adjust machinery after each batch has
passed through.The work may be boring and demotivating for the workers.
Batch production - Examples
Knowledge check
• Mass production, also called flow production or continuous production is the production of large
quantities of identical products.
• It suits the production of large numbers of a standardized item that only requires minimal alterations. It
is viable for industries where the demand for a product is high and consistent. Requires careful planning
in order to synchronize all the stages of the production process. Often with minimum labour input.
Labour is usually unskilled. The product is sold at the low end of the market and in large quantities.
• Advantages: Considerable economies of scale. Quality tends to be high and consistent. Once set up, the
system needs little maintenance. Labour costs may be low because much of the process is mechanised.
The jobs required are relatively unskilled and even replaceable. Machines do not need regular breaks
and can be relied to produce at the same standard every time they are set.
• Disadvantages: High initial set-up cost (capital-intensive). Breakdowns are costly. The business is very
dependent on a steady demand from a large segment of the market. The system is inflexible (if there
are sudden changes in demand, the business may be left with large stocks of unwanted products). The
work involved tends to be boring, demotivating, and repetitive.
Mass production - Examples
Workpoint
• Complete the table about the three main methods of production.
Job production Batch production Mass production
Set-up time Long Reasonably fast Long
Cost per unit High Medium Low
Capital (machinery) Flexible Mixture Large number
Labour Highly skilled Semi-skilled Unskilled
Production time Long Can be quick Quick
Low (raw materials) High (raw materials) High (raw materials)
Stock High (work in progress) Medium (work in progress) Low (work in progress)
Low (finished stock) Medium (finished stock) High (finished stock)
Knowledge check
• Distinguish between line production and process production.
• Line production is the set of sequential operations established in a factory where components
are assembled to make a finished product. Examples include cars, laptops, and toys.
• Process production is the production of goods that requires inputs for continuous conversion
into finished products. These inputs include heat, pressure, coating, and chemicals. Examples
are gasoline, paint, and food.
Exam tip
• It is important to outline the advantages and disadvantages of each method if a
question asks to evaluate, discuss, or recommend operations methods.
Knowledge check
• State the main features of mass customization.
• The needs and wants of a large number of consumers are met at a lower cost.
• Products are customized on a large scale.
• It focuses on large markets with fragmented segments where the end-users’ preferences are
not likely to experience changes.
• It requires great level of flexibility and responsiveness.
• It requires a careful configuration of units, people,
processes, and environments.
• More intimate knowledge about end-users and
higher profits creates a feedback loop system,
which can help companies provide even better
and different products.
Mass customization - Examples
Workpoint
IB learner profile - Thinkers
Suggest and justify an appropriate operations method for each of the following
products:
• Children’s clothes
• A piece of top notch pottery
• Paracetamol tablets
• A collective wedding ceremony
• A collector’s bottle of wine
• Lightbulbs
• A Formula 1 racing car
Knowledge check
• State the factors that influence the decision of the appropriate production method
for a particular business.
• The size and characteristics of the target market
• The demand for the product
• The state of existing technology
• The availability of resources
• Government regulations
Knowledge check
• Outline the implications for the business functions of changing the production
method.
Human Resources
• Some workers may have to be redeployed, retrained, or even let go, so human resources would
need to be carefully managed.
• Refining the roles and responsibilities of workers and middle managers would require careful
planning.
Marketing
• Production can reflect the orientation of a business as well as the choice of product available to
the consumer, so the image or perception of the business may be altered.
• Distribution channels may be affected, which may lead to differing response times.
• Changes in costs of production could be passed on to the consumer through changes in price
(which are likely to mean an increase, at least in the short term, to pay for the transition costs).
Knowledge check
Finance
• Changing production method will have an impact on stock control, which affects costs.
• Changes may take time and could interrupt current production, causing delays in the working
capital cycle.
• Any change will need financing, whether it is short or for significant developments that may
require major long-term funding.
5.2 Production methods
By the end of this topic, you should be able to:
• Describe the different operations methods.
• Outline the factors that influence in the choice of the production method.
• Outline the implications of changing the production method in the business
functions.
Sources
• Lominé, L., Muchena, M., and Pierce, R. (2014). Business Management Course
Companion. Oxford University Press
• Lominé, L., Muchena, M., and Pierce, R. (2022). Business Management Course
Companion. Oxford University Press
• Stimpson, P., Malli-Charchalaki, A., Smith, A. (2022). Business Management for the IB
Diploma. Cambridge University Press
• Stimpson, P., Smith, A. (2015). Business Management for the IB Diploma. Cambridge
University Press
• Surridge M., Gillespie, A. (2022). Business Management. Hodder Education
