ECOS3003 Lecture Notes - Lecture 5: Management Consulting, Comparative Advantage, Opportunity Cost
30 Jul 2018
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Document Summary
Second aspect of a job is variety of tasks: managers face economic trade-offs when they bundle tasks. Two primary activities (functions): selling software; after-sales service. Each task takes 4 hours, so need two employees to work per day. Structuring the jobs: could specialise in functions (specialised task assignment), could specialise in customer type (provide sales and service to individuals or business) (broad task assignment). Exploiting comparative advantage: match people with jobs based on skills, training; employees concentrate on specialty. Principle of comparative advantage suggests specialisation often will produce higher output than employees producing a broad set of tasks due to economies of scale. Sometimes, performing one task can lower cost of same person doing another. Train employees to complete basic functions; more broad tasks = more training. Level of education may need to be higher across employees (higher wages). Coordination costs: activities of specialised employees have to be coordinated, i. e. sales order to service department.
