Meaning of Division of labour

Division of labour can simply be defined as a system of breaking down production processes into different stages so that each stage can be handled or undertaken by an individual. This division of production processes depends on the type, size of the industry and goods produced. Example of division of labour takes place in a bakery whereby production processes is broken down into distinct stages such as mixing of flour, grinding of flour, moulding and cutting into various sizes, loading into the oven, removal from the oven, removal from the pan, and finally selling of the bread. An another great example is in the textile industry which is subdivided into spinning, weaving and dyeing, warping, beaming, drafting, and denting.

The origin of division of labour

It was one of the founding fathers of Economics called Adams Smith who enunciated the theory of division of labour in 1776 in his book titled “The Wealth Of Nations”. Adams Smith visited an industry where pins were produced and found out that pin making involed eighteen (18) different processes at that time. He also got to discover that all the eighteen (18) processes were being hanled by only one man and as a result, only twenty (20) pins were produced in a day.

Adams Smith then came to the conclusion that if these eighteen different processes of pin making were handled by different individuals instead of just one man, then more pins will be produced. When the idea of division of labour thought out by Adams Smithwas applied, the number of pins produced in a day by one man appreciated from Twenty (20) pins to 48,000 pins in a day. This is how the application of modern day division of labour came into being.

Specialization

Specialization can be defined as the act of an individual or firm or country concentrating its resources and efforts in the production of relatively few commodities in which it has the greatest advantage over others.

Specialization on the other hand also refers to the practice of an individual or business focusing their productive capacity (skills, resources, etc.) on a limited set of goods and services. Specialization is important because it greatly improves productivity – the ratio of inputs to outputs. The typical example is the assembly line. Producing goods on an assembly line increases productivity because multiple tasks can happen simultaneously and just when they are needed.

How is Specialization related to division of labour?

Specialization is related to the concept of division of labor – where workers with different skills and tools contribute different parts to a final product. Specialization can be seen in nearly every modern industry. Fast food chains, law firms, education, video-game development and programming, medicine and manufacturing all use specialization in one form or another. Specialization can also refer to a business like a hardware store or barbershop. Both businesses can operate more effectively because they offer a narrow set of goods and services, and they develop expertise in these areas.

Types of specialization

1. Specialization by products: 

This wher a firm, individual or government concentrates in the production of a particular commodity. For instance, a government concentrating in the production of paper materials. An individual or farmer concentrating in the production of palm oil, Cassava flour, Yams, Maize, Rice etc.

2. Specialisation by process:

This is the concentration of a firm or individual or government on a particular stage of a production process. For instance, Mr. A, concentratin in the spinning aspect in the textile industry, Mr. B, concentrating in the weaving and dyeing aspect, Mr. C.  concentrating in the warping aspect, Mr. D. concentrating in the beaming aspect, Mr. E. concentrating in the drafting, and denting aspect etc.

3. Territorial or geographical Specialisation:

This is the concentration of a geographical area or territorial area on the production of a product or commodity. It is determined by the natural resources or natural endowments available in that geographical area. For instance, Oil companies concentrate on the production of petroleum products in areas were crude oil is available, While people in riverine areas concentrate on fishing etc. 

4. Specialisation by s*x:

This also referred to as custom or race or traditional specialization. In this kind of specialization, a kind of production is being carried out by a particular gender, for instance in some parts of Nigeria, driving of trailers and heavy duty trucks is belived to be the occupation of men while the women are meant to do less stressful jobs, in some parts also, it is believed that it’s the duty of the man to put food on the table and carter for the financial needs of the entire family while that of the wives or women is to do the cooking and house chores etc.

Merits or advantages of division of labour and Specialisation:

1. Time saving: The time and energy that would have been dissipated in moving from one production stage to another is saved.
2. Increase in production: This is made possible because more hand are involved in the production processes of a particular commodity.
3. They increase the skill of workers: Practice the say makes perfect i.e. continuous handling of a single aspect of a production process increase a persons skills and competence.
4. It leads to specialization: Division of labour makes one to be a specialist in the production of a particular job.
5. Cration of employment opportunities: Division of labour brings in the employment of the specialists because an expert would be required to handle each stage of production process.
6. They make the use of machines in production possible:  The division of production processes into different stages brought about the idea of the use of machines in each of the stages. But this does not mean without the use of machines, division of labour cannot be applied in some production processes. For instance the production of fermented cassava used in producing “Akpu” in Nigeria can be done without the application of sophisticated machines.
7. Improvement in the quality of goods: Increased productivity allows the total cost to be spread over a larger output and this will go a long way to consequently reduce the unit cost of an output. The positive effect of this would be increase in the profit of a firm or business entity.
8. Economy of Using tools: The use of different machines in different stages of production processes by the specialists makes it possible for the full and efficient use of machinery and tools.

Demerits or disadvantages of division of labour and Specialisation:

1. They make work monotonous: The performance of one type of operation or work on a daily basis and  everytime makes the operation to become uninteresting, dull and unexciting.
2. They bring about decline in craftmanship: The use of machines renders human beings mere attendants of machines whereby, the turn to robots instead of making use of the skills in the production of commodities.
3. The use of machines, reduces higher chances of employment opportunities: This is so because machines carryout more task than human beings. Take for instance, in a road construction firm were gutters and culvets are required to be dug to pave way for proper drainage systems during rainy seasons, such a great task would require great number of humans of approximately 300 men or more to do the digging for a 1,000 kilometer road which will take a longer period but in order that the firm may save cost of paying over 300 men to do the job, it might opt in to use just two (2) or five heavy duty machines that would be controlled by just two (2) men or five (5) men respectively, which will go a long way to even hasten the job and save cost. Consequently when this is done, the over 300 men that would have been gainfully employed would not have the opportunity to gainful employent that would have putten foods on their tables.
4. They bring about immobility of labour: Continuous and active stay in particular job makes it difficult for a worker to change to another type of work if the need arises.
5. Increase in interdependence among individuals and industries: The repercussion of this is that the absence of one worker or the folding up or winding up of an industry may result in the halt in production processes in othe stages or industries. For instance, any negativity that occurs in the agricultural sector were raw materials such as cocoa, palm oil, rice, maize and many more will affect the production of beverages such as Bournvita, Ovaltine, Chocolates, powdered milk, beer drinks, soaps, body creams such as cocoa butter and many more.

Limitations or factors that encourage or discourage division of labour:

1. The size of the market: Market here refers to the extent goods and services are demanded, if it is high, there will be the necessity to apply division of labour in other to boost production and if it is low, there would be little or no need to adopt division of labour.
2. The availability of labour: The number of workers available would determine the number of stages into which production processes will be split.
3. The nature of the products: The production of some gods and services requires division of labour while others do no. Take for instance services like barbing, driving, etc do not require splitting.
4. Availability of capital: The stages into which production processes can be divided must be handled by different individuals who must be remunerated.
5. Technical difficulties or possibilities: The existence and availability of machines determines to a large extent the operation of division of labour because the type of machines available and the methods of production used, dictates the operation of division of labour.
6. Government policy: The economic policy of the government of a country determines whether division of labour will operate or not, i.e. when the government policy favours the production of a particular commodity, more of the goods will be produced and division of labour will be carried out in a full scale, but the reverse will be the case if otherwise. 

Division of labour necessitates exchange:

Division of labour necessitating exchange simply means that as a result of the fact that people handle one aspect of production process or specialize in one occupation, they depend on others in other to get the goods and services that they cannot produces or render. That is to say division of labour leads to interdependence which on the other hand gives rise to exchange. In modern times, almost every economic activity has be monetized. Therfore, peoplenow specialize in one profession and the money generated from their economic activity is used to buy goods and services produced by others.

Division of labour limited by market:

Division of labour being limited by market means that the extent goods and services produced are demanded will determine whether or not division of labour will be applied.

Economies of scale of production:

By economies of sales, it simply means the growth of a firm or an industry resulting from the expansion of the volume of productive capacity which leads to increase in output and decrease in its cost of production per unit of output.

 There are two types of economies of scale:

1. Internal economies and internal diseconomies.
2. External economies and external diseconomies.

Internal economies:

Internal economies of scale also known as the economies of large scale production are the advantages a firm derives from the expansion of its scale of production as a result of its own personal efforts. In this case, as a size of a firm increases, there will be greater efficiency resulting in the fall in the cost per unit of output. 

Internal diseconomies On the other hand:

is when the firm’s expansion leads to less efficiency and increase in the cost per unit of output as a result of internal difficulties or organizational constrainst.

Classification of and advantages of internal economies of large scale production or advantages a large scale firm has over a small firm:

1. Technological or technicaleconomies: A large firm can afford to used advanced machines, employ many workers and apply division of labour etc, which increase its output and lower the cost per unit more than small firms.
2. Marketing economies: A large firm can afford to buy its raw materials in bulk which lowers the prices and attracts large discounts, and then sell in bulk and save packing and transport costs. A large firm also has its own means of advertising and advertises on large scale and at a cheaper rate more than smaller firms.
3. Research economies: A large firm as a result of its size and financial position, can afford to have its own research laboratory and employ competent researchers to man it.
4. Financial economies: A large scale business unit can easily obtain loans from banks, issue shares and debentures to members of the public in order to raise more capital than a small scale business unit.
5. Mangerial economies: A large firm with its sound financial standing and large size can employ financial experts in different fields more than a smale scale business unit.
6. Welfare economies: A large firm provides welfare facilities like housing schemes, canteen, medical services, transport scheme, etc to its workers more than a small firm.
7.  Training economies: A large firm is in a better position of having its own training institute, awarding scholarships to its workers, organizing in-service training and workshops, lectures, serminars etc to its workers than a small firm.
8. Risk-bearing economies:  A large firm is in a better position of warding off competitors and bearing business risks than small firms.

Disadvantages of internal economies of large scale production or advantages of small scale production or advantages small scale firm over large scale firm:

1. The relationship between employers and employees of a large scale firm is more impersonal than a small scale firm.
2. It is easier for smale scale firm to adjust to changes than large scale firm.
3. A large scale firm suffers from bureaucracy and red-tapism which slows down its production processes than a small scale firm.
4. There are more delays in policy and decision-making in a large scale firm as a result of complexities in its administration than in small scale firm.
5. Large scale firm spends more money to maintain its complex organisation than a small scale firm.
6. It requires more capital to establish, run and finance a large-scale firm than a small scale firm.
7. A large scale firm has increased business risks more than a small-scale firm.
8. In a time of economic depression, a large-scale firm may retrench more workers than a small-scale firm thereby causing unemployment.
9. Workers in large-scale firm show negative attitudes to work than their counterpartsin small-scale firm.
10. It is more difficult to to control and supervise workers in a large-scale firm than in a small-scale firm because of their numbers.

Limitations to the scale of production or limitations to the growth of firms:

1. The size of the market: This determines the extent of the growth of a firm because if there is demand for a particular product, there will be need to expand the production and vice-versa.
2. The need to satisfy individual tastes: Standardization of products does not satisfy individual taste and in order to meet this requirement, there will be limitation in the scale of production to allow varieties of goods or products to be produced.
3. Complexity and increasing cost of organisation: The growth of a firmis accompanied by the complexity and increase in cost. For instance, many professionals (managers) will be employed, various units will be created, more machines will be required etc. All of the above reduces the growth of a firm at times.
4. Increased risks: There is positive correlation i.e. positive relationship between the risks and the size of the firm. The more a firm expands, the higher the risks and vice-versa. To avoid greater risk being borne by the entrepreneur, the size of the firm will be small.
5. Falling price of the commodity: A falling price of the commodity without corresponding increase in supply which is not always easy definitely lowers the scale of production.

1. Nature of the firm’s products and nature of the business: A firm that produces perishable goods can grow to limited extent while in a personal services firm like legal services, there is no limit to the scale of production.
2. The organisational ability of the managers of the firm: A firm with an ambitious and highly skilled entrepreneur will increase in scale while the reverse is the case when the owner of the business is unable to manage the large firms.  

External economies and External Diseconomies:

External economies: these are the benfits a firmderives from increase in its outputs and decrease in cost due to helps the firms receives from other firms especially in the use of their products. It simply refers to those benefits attributable to a firm as a result of being located close to others.

External economies: On the other hand, are the increased costs a firm will experience as a result of increasing its output resulting from external effects.