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balance between the costs of automation

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Businesses often decide between using automation and labor in production. An automotive environment may have high fixed costs and low variable costs, and an industry that utilizes manual labor for production will have low fixed costs and high variable costs. How would you describe the balance between the costs of automation, or fixed costs, and the costs of labor, or variable costs? How has technology changed the balance between automation and labor? What type of industry benefits the most from technological innovation?

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Businesses often decide between using automation and labor in production. An automotive environment may have high fixed costs and low variable costs, and an industry that utilizes manual labor for production will have low fixed costs and high variable costs. How would you describe the balance between the costs of automation, or fixed costs, and the costs of labor, or variable costs? How has technology changed the balance between automation and labor? What type of industry benefits the most from technological innovation?

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The balance between the costs of automation or fixed versus variable or costs of labor is a choice that is based on a host of factors, such as availability of capital or finance, nature of operations, business and product that favors a particular approach more than the other. For example, a large firm with access to financial resources and infrastructure would opt for an automated setup, if the industry is such that automation would result in more profitability for the firm whereas a smaller firm with limited resources and access to cheap ...

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Sheetal Jain, PGDM
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  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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