Theme 1: Commercial Operations
1.1.4 Division of labor
Specialization
Specialization implies the production of a limited range of goods
by individuals, firms, regions, or countries
Specialization by individuals
Individuals become economically specialized when he/she
focuses on a narrow range of tasks
Example:
• Teachers who are specialized in teaching one subject
Specialization by firms
With this, firms get specialized for a narrow range of products
and they become experts in their field that may increase the
efficiency of the firms and they may also employ specialized
workers which may increase their profit.
▪ Emirates- Air travel
▪ Starbucks- Coffee and Beverages
▪ KFC- fried chicken and chicken hamburgers.
▪ Walmart- Supermarket chain
▪ Coca cola-soft drinks
Specialization by region
Certain geographical regions in some countries are
specialized in producing certain products
, ▪ Wine Production: Bordeaux, France
▪ Technology and Innovation: Silicon Valley, California,
USA
▪ Textile Production: Manchester, England
▪ Agriculture: Central Valley, California, USA
▪ Automobiles: Detroit, Michigan, USA:
Specialization by country
Some countries are specialized in producing certain goods and
services which they trade with other countries leading to increase
the world’s output.
➢ Switzerland: Financial Services
➢ Japan: Automobiles
➢ Saudi Arabia: Oil Production
➢ Germany: Industrial Machinery
➢ China: Manufactured goods
Division of labor
This is the process of separating the production process into a
number of tasks and allocating labor for each task
impact of the division of labor on firms and workers
Advantages of division of labor to workers:
➢ Skills of the workers will improve
➢ More motivation from job satisfaction
➢ Specialized workers tend to get higher pay
➢ Increased Efficiency
➢ Reduction in Work Fatigue
Disadvantages of division of labor to workers
1.1.4 Division of labor
Specialization
Specialization implies the production of a limited range of goods
by individuals, firms, regions, or countries
Specialization by individuals
Individuals become economically specialized when he/she
focuses on a narrow range of tasks
Example:
• Teachers who are specialized in teaching one subject
Specialization by firms
With this, firms get specialized for a narrow range of products
and they become experts in their field that may increase the
efficiency of the firms and they may also employ specialized
workers which may increase their profit.
▪ Emirates- Air travel
▪ Starbucks- Coffee and Beverages
▪ KFC- fried chicken and chicken hamburgers.
▪ Walmart- Supermarket chain
▪ Coca cola-soft drinks
Specialization by region
Certain geographical regions in some countries are
specialized in producing certain products
, ▪ Wine Production: Bordeaux, France
▪ Technology and Innovation: Silicon Valley, California,
USA
▪ Textile Production: Manchester, England
▪ Agriculture: Central Valley, California, USA
▪ Automobiles: Detroit, Michigan, USA:
Specialization by country
Some countries are specialized in producing certain goods and
services which they trade with other countries leading to increase
the world’s output.
➢ Switzerland: Financial Services
➢ Japan: Automobiles
➢ Saudi Arabia: Oil Production
➢ Germany: Industrial Machinery
➢ China: Manufactured goods
Division of labor
This is the process of separating the production process into a
number of tasks and allocating labor for each task
impact of the division of labor on firms and workers
Advantages of division of labor to workers:
➢ Skills of the workers will improve
➢ More motivation from job satisfaction
➢ Specialized workers tend to get higher pay
➢ Increased Efficiency
➢ Reduction in Work Fatigue
Disadvantages of division of labor to workers
