Business Analysis& Decision Making Essay

According to Haslam, Neale and Johal (2000), the total factor productivity us in general defined in two main types the Level of delve and capital and their efficiency of production and the productivity of the firm. The productivity of capital and labour is calculated as total outputs divided by inputs of labour and capital. repel cost in a company makes a major part of the production cost and should be therefore most cost efficient. The total date divided to the total physical output equals the total labour productivity.EXAMPLE If a company produces more the one product or provides service alternatively the fabricate it can be difficult to recognise the physical output. Therefore, financial proxies such as prize added or net output of employment atomic number 18 used. In order to compare the figures fair with each other, financial indexes can be produced. This is possible by dividing the total number of labour hours into the measure out added, (Haslam, Neale and Johal, 2000) .The run of this calculation is the value added generated by labour hour. This index can be compare not just with the past years of production of a firm, in addition it is possible to compare with other companies to obtain a broad prospective about labour productivity and how efficient labour is used. Furthermore, over the years inflation changes the purchasing power of money and capital productivity varies. Assts may change value due to depreciation or capital consumption. Therefore, companies analyse the value added per of fixed assets. Capital productivity is calculated as capital stock (before depreciation or capital consumption) divided into the net output or value added figure, (Haslam, Neale and Johal, 2000).The relationship between a growing product market and productivity is that in a growing market the demand of a manufactured good increase. The result is an increase in volumes produced and sold. However, productivity is the output less the cost of production. Therefore , a growing market is not the only factor in order to achieve greater productivity. Like it was briefly pointed out in the paragraph above, labour cost is expensive and therefore should be used efficiently.A boost in productivity may occur whilst improving the productive flow. Due to the introduction of new techniques, working methods such as cell or mass production and technical inventions such as conveyors labour costs can be cut and productivity increased. Another factor for increasing productivity may be employees satisfaction. In addition, in a growing market it comes to fragmentation and segmentation and the market matures. In order to stay competitive some firms lower their prices, which results less revenue generated.Employee satisfactionLabour time most efficient usedlabour efficiency, product quality, brand recognition and the economyHaslam, Neale and Johal, political economy in a Business context 3rd edition, Thomson Learning 2000, London