Specialisation and the division of labour

Firms
Specialisation provides the following benefits to firms.

Benefits
Firms can:
1. Focus on their core markets.
2. Gain from more efficient uses of scarce resources.
3. Improve the quality of their products.
4. Cut down on waste.
5. Speed up production.
6. Become more competitive.
However, specialisation also has some disadvantages.

Costs

Firms may suffer from:

1.  Over-specialisation, when a change of tastes or preferences results in a fall in demand

2.  If a manufacturing process relies on many complex machines all specialising in a small aspect of production, any breakdown in machinery would cause the whole production line to stop.

Workers

Similarly, specialisation also creates some costs and benefits to workers, including:

Benefits

 1.  Development of more skills which deepen the value of human capital.

 2.  Labour can become more productive.

 3.  Workers can be more effectively rewarded.

 4.  Skills can be transferred from job to job.

However,

 1.  Workers can experience boredom from monotonous and repetitive work.

 2.  Productivity can fall as a result.

 3.  Workers risk unemployment if demand for their skills falls.