(a) Highlight the factors which encourage entrepreneurs to adopt division of labour in production. (b) What factors are capable of limiting the practice of ...

Answer Details

Division of labour means splitting a production process into separate tasks, with each worker specialising in one task rather than doing the whole job. Entrepreneurs adopt it because it raises output and lowers cost, but its use is limited by several practical factors.

(a) Factors that encourage entrepreneurs to adopt division of labour:

• Large market and high demand: when a firm can sell large quantities, it pays to break work into specialised tasks to raise output.
• Large scale of production: big firms have enough work to keep specialised workers and machines fully employed.
• Availability of capital and machinery: specialisation goes hand in hand with the use of machines, so access to capital encourages it.
• Availability of skilled and adequate labour: enough workers must be available to be assigned to separate tasks.
• Nature of the product: goods that can be broken into distinct stages (for example assembling manufactured goods) lend themselves to division of labour.
• Desire to increase efficiency and reduce cost: specialisation raises each worker's speed and skill, lowers unit cost and increases profit.
• Good transport and communication: these allow parts and finished goods to move easily between specialised stages and to a wide market.

(b) Factors capable of limiting the practice of division of labour:

• Size of the market: a small market cannot absorb the large output that specialisation creates, so specialisation is not worthwhile.
• Small scale of production: where output is low, there is not enough work to justify splitting tasks among many workers.
• Nature of the work: some jobs, such as personal or artistic services, cannot be divided into stages.
• Shortage of capital: without money for machines and premises, specialisation is difficult.
• Shortage of skilled labour: too few workers means one person must handle several tasks.
• Risk of monotony and reduced worker morale: repeating one task can bore workers, lower quality and raise labour turnover.
• Interdependence and risk of disruption: if one stage stops (through a fault or strike), the whole chain halts.
• Poor transport and communication: these restrict the market and the movement of parts, limiting specialisation.