Economics of Marks & Spencer
Added on 2020-01-15
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Financial and EconomicLiteracy for Managers
a) Three classifications of production The main types of production includes Job Production, Batch production and Mass orflow production, however, the selection of production system depends on the nature of theproduct and quantity. These production system includes Job production, Batch production andMass production. Under, the job production system, special products are produced in accordance with theorder placed by the customers. In this method, each product requires separate job forproduction. The job production system requires large number of workers to be employed whomust conversant with different jobs. As per illustration, ship building, Construction businessand printing houses operates under job production system (Sloman, Norris and Garrett, 2013). Batch production is a method of production which is used at the sites where repetitiveproduction requires. The products under batch production methods are produced in advance asper the current and expected demand from market. Under this system, the work is divided as perdifferent operations and only a single batch is produced at one time. This production system isfollowed for motor manufacturing, pharmaceutical companies and for manufacturing smallhand tools. The main production method is Mass or flow production which is referred as constantproduction of standardized products in large amount. The method is used for reducing directmanufacturing cost along with this, process layout system is followed to produce various units.Examples: household appliances and automobile parts (Sloman, Norris and Garrett, 2013).
b) Opportunity costs Within the economic field, opportunity cost is termed as a fundamental cost under whichone alternative is lost in search and selection of other alternatives. This cost is bear in the formof non-monetary terms. The opportunity cost of resources refers to value of the next-highest-valued alternative use of such resource. The major use of such cost is in calculating cost benefitanalysis of an investment. This is further denoted as a kind of benefit that is to be raised from analternative use of the same resource. This concept is applied under various areas like consumerchoices, production capabilities (Armendáriz and Morduch, 2010). Cost of capital, timemanagement, career choices etc. The main use of opportunity cost is in optimal use of scareresources. For example: Individual has £20,000, which can be either invested for purchasingstocks whose prices are expected to be increased, on the hand has, other person has opportunityto apply for higher education. The person has chosen the option of stock purchase, however, helost the opportunity to have increased earning for lifetime, if he /she completes highereducation. Thus, one forgone opportunity of lifetime earning is lost for purchasing stocks. c) The purpose and evolution of the UK standard industrial classification (SIC) since 1948 The Standard Industrial Classification (SIC) has been introduced within the UK in 1948with a purpose to classify business institutions in accordance to the economic activities whichthey carry. The government and authorised regulatory bodies make specific classification forcommercial activities of business, while using SIC guidelines. However, it is used foradministrative purpose to categorize commercial activities in a common structure. Many ofchanges have been done in Standard Industrial Classification and SIC 2007 is the main revisionof Standard Industrial Classification system since 1992, nonetheless, a minor revision was donein 2003. On the basis of classification, the non-statistical activities can be classified as per
economic activities and the particular framework is used for collection, tabulation, presentationand analysis of data and to promote uniformity (National Statistics, 2007).Figure 1 UK Standard Industrial Classification of Economic Activities 2007 (SIC 2007)d) The shift in the demand curve and the movement along the demand curve The demand curve is a graphical representation of relationship among demand andprice of the commodity, at a specific time period. Shift in demand curve The demand curve shifts when customers changes their perception in respect with theworth of a product or service. Shift in demand curve occurs due to non-price factors includingincome of customers, price of related goods, advertisement, future price expectations. Thedemand curve shifts towards right direction, if customers is willing to pay higher prices, on theother hand, it shifts towards left direction if they want to purchase less.
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