Rationalization (economics)

Rationalization is often understood in the economy in two ways, firstly in terms of optimization of operation, eg by prescribing time-saving movements of assembly line workers ( Taylorism ), the other as a replacement of human labor by machines (rationalization investment ), if the cost lower for machines than wage costs, or vice versa, if the capital costs exceed the wages. The aim is the rational, functional design of the operational conditions under changing conditions in order to increase productivity.

A common concern is the increased efficiency through better use of existing facilities: A same effect can with less resources, or a greater effect with the same resources can be achieved.

Since then, the business economics has emerged as a distinct scientific discipline, the examination of the phenomenon of rationalization has a special significance, as these are but the most basic measures to profitability preservation and / or enhancement of a company and thus ultimately serves the stock fuse. Economy was understood as "economic interpretation " of the general rational principle. For purposes of economy increase the fledgling business administration sought therefore according to general principles that should serve the company in the implementation of rationalization potentials. Attention is in particular the pioneering work of Hermann, Taylor, Gottl - Ottlilienfelds. Due to the wide variety of possible rationalization activities in a company quickly developed a vast variety of different approaches rationalization. The respective priorities of rationalization activities were associated with the current technological, market and societal developments and are therefore subject to constant change. The increasing intensity of competition caused by stagnant market growth and globalization has, however, clearly

• That the development of rationalization potentials must be an ongoing process and
• That the exclusive focus on streamlining activities then can have fatal consequences for the development of the company, if necessary innovations are thus neglected.

Rationalization is often mistakenly reduced to measures to reduce labor costs. A company needs to create a long-term cost position that allows him to be able to act on the international market competitive. These rationalization measures at all design factors of a site, a department, a region or the whole company must start: structure and process organization, process technologies ( flexibility and automation ), staff (skills, flexibility, working time model, motivation). Also, the enormous economies of scale through design suitable for production, standardization, Typung, variant management, platform concepts have to be used, which are hidden in the areas of development, design and product design. Therefore, a broad understanding in the sense of system rationalization is recommended (see also: Industrial Engineering ).

Rationalization as a system rationalization

The importance of this global rationalization understanding is mainly in three aspects founded:

• In contrast to traditional, often on the (production ) sector focused rationalization theory, the entity recognizes as a whole with all its areas and design factors in the input, output, personnel, technology and organization.
• Accordingly, the underlying economics understanding also needs to be far more comprehensive than is usually the case. To this end, the system uses rationalization on the complementary concept of system efficiency back ( Pfeiffer / White / Strubl / Küßner (1999)).
• System rationalization and innovation processes are in a complementary relationship and must always be the same and equal managed by the corporate management. If this is not the case, running the company risk " to rationalize to death ." This means that dominates in the enterprise to improve its competitive position, the cost perspective, followed by a rationalization project to recognize the other, without the phenomenon of " diminishing rationalization effect". In contrast, new rationalization market position could through innovations in product and process on one hand be in principle improved and at the same time entirely to be tapped.

System rationalization activities should not be ad hoc carried out, but in the context of a corporate strategy systematically prepared. For this purpose, a fundamental vulnerability analysis of the determinants of system efficiency contribute. Are domestic vulnerabilities identified individual rationalization measures have to be developed. To solve the problem, numerous rationalization and design principles are available.

Often affects the following forms: downsizing and / or outsourcing. The competition makes it imperative for all businesses to make their businesses more efficient and more adaptable. Rationalization is the main reason for economic growth because it increases the production potential. You do not normally leads a macroeconomic rising unemployment, even if the keyword rationalization is so often associated.

Rationalization and economy

In a hypothetical economy, all businesses reduce their costs through rationalization by five percent in either the prices may fall by 5% or increase dividend payouts to shareholders and wages by 5% or a similar value. Both falling prices and rising wages and profit distributions have a corresponding demand- enhancing effect. A company that increases its productivity by 5% annually, requires a rising by 5% demand just as many employees as before. In some sectors of the economy can productivity faster than demand to rise ( it comes to layoffs ), in other productivity growth is lower than the increase in demand ( it comes to new hires ).

To the question of why it still comes to long-term unemployment, there are two different explanations: the neoclassical and Keynesian unemployment unemployment.

Problem of rationalization in IT companies

Especially in large companies, there is the problem of efficient performance review of the employees, as project managers and employees form a complex network of information. Saving measures come in many businesses from higher hierarchical levels, which can extend the functionality and efficiency of the team is difficult to assess. Thus there is a risk not to dismiss obvious know- how carriers, which can delay operations in conjunction with a double burden of other team members.