The document discusses concepts related to business productivity including effectiveness, efficiency, productivity, factors that influence productivity, causes of low productivity, and ways to raise productivity. It also covers work study techniques like method study and work measurement. Other topics include benchmarking, types of benchmarking, benefits of benchmarking, business process reengineering (BPR), similarities and differences between BPR and total quality management (TQM), advantages and criticism of BPR.

1. Chapter No.38
Introduction to Business Studies
BY:- ISRAR K. RAJA.
Preston University, Islamabad.

2. Effectiveness and Efficiency
 Effectiveness is concerned with the achievement of
objectives. It achieving what is set out to do.
 It is also measured in terms of timeliness or quality.
 It can be measured by using this formula:
 = Actual Output / Expected Output X 100
 Efficiency is concerned with the input of resources and can
be expressed numerically as:
 = resources actually used / Resources planned to be used X
100
 Effectiveness focuses on output and Efficiency
focuses on inputs.

3. Productivity
 Is a measure of the efficiency with which a firm turns
inputs into output.
 It is output per unit of input.
 Producing more with the same quantity of inputs
 Producing the same quantity with fewer inputs
 Output rising faster than input or output falling more
slowly than inputs.
 Output per Employee = total output/total no. employees
 Output per person per hour = total output/total hours
worked

4. Productivity
 If labor employed to produce non-standard products,
then productivity could be expressed in monetary
terms.
 Value of output per person = value of output/total no.
employed
 Value added per employee = value added by the
firm/total number employed

5. Factors influence Productivity
 The education, training and skills of the workforce
 The stock of capital at the disposal of workers
 The efficiency of organization
 The best utilization of human resources
 Working conditions
 Industrial relations
 Employees motivation

6. Factors influence Productivity of
capital
 The technology incorporated in the capital
 The age of capital stock
 The skills of workforce
 Production planning
 Inventory management
 Product diversity
 Process and layout
 Some organizations are capital-intensive while others
are labor-intensive.
 Total factor productivity =total output/inputs of all
factors of production

7. Causes of Low Productivity
 Planning
 Management
 Employee motivation
 Training
 Waste
 Process or systems of work

8. Factors to Raise Productivity
 Work simplification
 Rationalization
 Capital investment
 Material utilization
 Improved planning
 Changes in the human resource mix
 Facilities improvement
 Organizational change
 Simplification and standardization
 Outsourcing

9. Work Study
 Is a generic term for a series of analytic techniques
used to determine the most efficient use of labor in
relation to the other inputs into the productive
process. It aims to;

10. Purpose of Work Study
 Improve the flow of work to avoid bottlenecks in
production processes
 Improve employees performance
 Improve utilization of space, equipment and material
 Increase the efficiency, productivity and ultimately
profitability
 Providing the basis for incentives
 Improve planning by standardization and procedures
 Better distribution among workforce
 Provide a basis for costing of jobs in the future.

11. Work Study
 Work study two aspects
 Method Study
 Work Measurement-Time Study

12. Steps in Method Study
 Select the job to be study
 Observe and record information about the job and
methods used. Process, Flow charts, motion chart, layout
models and templates, string diagrams, film , video
 Examine and analyze the information
 Identify ways of improving the methods by
eliminating/combining operations, devising new process,
altering machines and sequences.
 Develop revised/ improved methods
 Implement the new methods
 Record and evaluate the new methods, making
adjustments where necessary.

13. Work measurement
 Select the work to be measured
 Define the basis fro measurement
 Undertake the measurement
 Obtain details of work
 Rate the performance in relation to average
 Establish standard time and performance
 Standard time;-the total time in which a job should be
completed at standard performance by a trained and
competent individual in normal circumstances
 Standard Performance:-it is the rate of output that
competent workers will naturally achieve.

14. Techniques for Indirect Time Study
 Synthetic Timing:-applies to a job that is only
marginally different from one for which there has been
a direct time study.
 Predetermined motion time study (PMTS):- requires
the identification of basic human motions to which
times are attached to build a composite time.
 Analytical estimating;- it is more subjective, is issued
for one-off jobs and involves an estimate of time based
on experience.

15. Benchmarking
 A benchmarking is a standard or reference point.
 The continuous process of measuring products,
services and practices against the toughest
competitors or those regarded as industry leaders.

16. Types of Benchmarking
 Competitive benchmarking involves comparing the
performance of an organization’s products and
processes with those of a key competitor.
 Internal benchmarking involves comparisons between
one part of the organization with similar practices in
other parts of same organization.
 Functional Benchmarking is the direct comparison of
a function in two or more organizations, which may or
may not be in the same industry.
 Generic benchmarking involves a comparison with the
practices of world-class organizations.

17. Benefits of Benchmarking
 Identify best practice
 Setting performance goals
 Ways to improve performance
 Learning from others
 Look outwards
 Motivate staff
 Warning against competitive disadvantage
 Continuous updating of perforamance

18. Business process re-engineering(BPR)
 It involves the redesigning of core business processes
 Streamlining operations
 Eliminating wasteful non-value added steps
 Rethinking of process from a holistic view taking into
account technologies, strategy, human resource.
 It focuses not on individual function but on process.

19. BPR VS TQM
Similarities Differences
 Requires support of top
management
 Emphasizes the importance
of teams n empowerment
 Seek to reduce costs, improve
quality and change culture
 Seeks radical or dramatic
change
 Take a zero-based approach-
whether or not activity
should be eliminated

20. Advantages of BPR
 Revolves around customers needs
 Appropriate focus to the business
 Reduction in cost
 Increases competitiveness
 Encourages a strategic view of operational process
 Overcome short-sightedness
 Concentration on functional boundaries
 Elimination of unnecessary activities
 Encourages creativity and innovation

21. Criticism of BPR
 Requires considerable commitment
 Not one time cost cutting exercise
 High cost can damage companies already in trouble
 Requires a high level of expertise and good team work.