Imagine going to school and learning the same subject every single day. Would you get bored? Do you think you would become an expert on the subject? This article is all about specialisation and division of labour. These concepts are similar to doing a repetitive task in the work environment. Read on to learn about these concepts in more detail and why firms may opt for specialisation and the division of labour. Show
Meaning of specialisation and division of labourSpecialisation and division of labour have two different meanings. They are closely related but they are not interchangeable words. Let’s see their differences. Specialisation happens when a worker only performs one task or a narrow range of tasks. In the case of firms, specialisation refers to different firms specialising in producing different goods or services. Division of labour refers to different workers performing different tasks in the course of producing a good or service. Advantages and disadvantages of specialisation and division of labourSpecialisation and division of labour play a really important role in the economy and their benefits represent also one of the most fundamental of all economic principles. AdvantagesSome advantages of specialisation and the division of labour are:
DisadvantagesSome disadvantages of specialisation and the division of labour are:
Country A may sell vegetables to the surrounding countries as they are the best in that region. However, a draught has hit Country A and has impacted its ability to produce vegetables. This will not only impact the surrounding nations but also greatly impact Country A as it is reliant on the revenue generated from the supply of vegetables.
The importance of trade and exchange when working on the specialisation and division of labourFor specialisation to be economically worthwhile for those taking part in the division of labour, a system of trade and exchange is necessary. This is because workers who completely specialise can’t enjoy a reasonable standard of living if forced to consume only what they produce. The obvious solution is to produce more than what the worker actually needs, and then to trade the surplus. Trade refers to the buying and selling of goods and/or services. Some reasons in favour of trade in terms of specialisation are:
Medium of exchangeThe trade and exchange of goods and services also highlight the importance of the use of money. Money has four functions:
These four functions are discussed in detail in the Money Market explanation. In this explanation, we will look at how money serves as a medium of exchange in relation to specialisation. Buying items without money would be very difficult. That is why it provides a medium of exchange. A medium of exchange is an intermediate instrument/system used to assist the transaction of a sale, purchase, or trade. Without money, trading specialised goods and services would be very difficult. Consumers and producers wouldn't get what they really need or want, as goods and services wouldn’t be exchanged for the right value. However, money eliminates this problem completely. Examples of specialisation and division of labourNow that you understand what specialisation and the division of labour mean, let's take a look at a few real-life examples. Adam Smith first popularized the concept of the division of labour in his famous example of the pin factory. He explained that the production of pins would become more efficient when workers were split up and had different roles in making a pin. From his example, many others implemented the division of labour in their own companies.
Specialisation and division of labour - Key takeaways
Frequently Asked Questions about Specialisation and Division of LabourSpecialisation refers to a worker only performing one task or a narrow range of tasks. In case of firms, specialisation refers to different firms specialising in producing different goods or services. Division of labour refers to different workers performing different tasks in the course of producing a good or service. The main difference is that the division of labour occurs when labour becomes specialised in a particular part of the production process. A country that specialises in a particular good or service would find it difficult to trade without money. Consumers and producers wouldn't get what they really need or want, as goods and services wouldn’t be exchanged for the right value. However, money eliminates this problem completely as it provides a medium of exchange. Someone who studied computer science and has ten years of experience in the industry can create more and more sophisticated software than someone who recently graduated or someone who has no idea about computer programming. Final Specialisation and Division of Labour Quiz
Answer Specialisation refers to a worker only performing one task or a narrow range of tasks. In case of firms, specialisation refers to different firms specialising in producing different goods or services. Show question
Question Define division of labour. Show answer Answer Division of labour refers to different workers performing different tasks in the course of producing a good or service. Show question
Question Explain the difference between specialisation and division of labour. Show answer Answer Division of labour is a type of specialisation. Show question
Question What are some advantages of specialisation and the division of labour? Show answer Answer Some advantages of specialisation and the division of labour are: - Increased output. - Less wastage. - Lower unit costs. Show question
Question What are some disadvantages of specialisation and division of labour? Show answer Answer Some disadvantages of specialisation and the division of labour are: - Over reliance. - Changing tastes/fashions. - depletion of finite resources. Show question
Answer Trade refers to the buying and selling of goods and/or services. Show question
Question Give some reasons in favour for trading goods and services in terms of specialisation. Show answer Answer - Greater variety. - Economic growth. Show question
Question How many functions does money have? Show answer
Question What are the four functions of money? Show answer Answer - Medium of exchange - Measure of value - Store of value - Method of deferred payment Show question
Question Explain how money provides a medium of exchange. Show answer Answer Without money, trading specialised goods and services would be very difficult. Consumers and producers wouldn't get what they really need or want, as goods and services wouldn’t be exchanged for the right value. However, money eliminates this problem completely. Show question
Question Explain how specialisation and the division of labour reduce wastage. Show answer Answer Specialisation allows for workers to become more skilled at a particular task, so they make fewer mistakes and can produce more goods in the same amount of time or less. Therefore efficiency is increased and wastage is reduced. Show question
Question Explain how a change in tastes and fashions is a disadvantage of specialisation and the division of labour. Show answer Answer It is a disadvantage because many firms may find it difficult to adapt to the changes if they’re over-specialised. Show question
Question Explain how specialisation and the division of labour allow for an increase in output. Show answer Answer The repetitive nature of specialisation means that workers develop greater skills in performing their particular tasks. As a result of this, workers can produce more goods in the same amount of time when specialisation and the division of labour take place. Show question
Question Who popularised the idea of the division of labour? Show answer
Question Give two examples of the division of labour in real life. Show answer Answer 1. Ford Motor factories 2. Apple's assembly and production lines Show question When the tasks and authority associated with various positions in the organization are clearly specified it creates a scenario where?When the tasks and authority associated with various positions in the organization are clearly specified, it creates a scenario where: employees are held strictly accountable for their actions.
Which of the following fayol's principles focuses on where the concentration of authority be in the managerial hierarchy multiple choice question?Centralization means concentration of authority at the top level. In other words, centralization is a situation in which top management retains most of the decision making authority.
Which of the following gives managers the right to direct and to control their subordinates in order to attempt to accomplish organizational goals?The correct option is Authority:
Managers must be able to give orders and authority gives them this right. Formal authority gives them the right to command, so that they can get things done.
What is the study of how managers should behave for motivating employees encouraging them to perform at high levels and committing to achieving organizational goals?Behavioral management is the study of how managers should personally behave: (Choose all that apply.) to encourage employees to perform at high levels, to motivate employees to be committed to organizational goals.
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