Page 215 - Cambridge IGCSE Business Studies

15: Production of goods and services

For both businesses and consumers the advantages of new technology are usually
greater than the disadvantages. For workers it is less clear. For some workers
the advantages will outweigh the disadvantages. However, for others, especially
those who lose their job as a result of the introduction of new technology, the
disadvantages are clearly greater.

CASE STUDY Brakes on India’s car market

Current car sales in India are in sharp contrast to the 20–30% annual growth rate of recent years. Such growth
encouraged huge investment in India by foreign car manufacturers into building new factories, equipped with the
latest in computer-aided design and manufacturing processes.

The same manufacturers are now seeing the Indian market shrink. Ford reported its February 2013 Indian sales
fell to 4,490 units, while GM’s sales were down to 7,106 units. To reduce inventories, some car manufacturers are
considering adopting lean production techniques such as just-in-time inventory management.
The one bright spot has been sales of sport utility vehicles (SUVs). SUV purchases soared by 35% in February.

French carmaker Renault, has done particularly well with its Duster SUV. Its sales increased signifi cantly to
6,723 units in February from 4,127 the previous month.

TASK
a Calculate how many more cars GM sold in February 2013 than were sold by Ford in the same period.
b Calculate the percentage growth in Renault SUV sales between January 2013 and February 2013.
c What is meant by ‘inventories’?
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d What is meant by ‘computer-aided manufacturing’?
e Identify and explain one advantage and one disadvantage to car manufacturers of computer-aided design.
f Do you think car manufacturers in India should introduce just-in-time inventory management? Justify your answer.

TEST YOURSELF
1 What is meant by ‘computer-aided design’?
2 Identify and explain one advantage and one disadvantage to a business of new
technology.