Factors of Production Essay Sample

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1.1 Nature of Business Activity

Factors of Production

Land … all the natural resources

Labour … all the human effort (physical and mental)

Capital … the manufactured resource used in the production process

Enterprise … the unique ability certain people have in organising factors of production

Combining the factors
Labour Intensive Capital Intensive

Division of Labour and Job Specialization
Benefits  Increased Production  Lower Costs  Efficiency  Standardization  Employment is increased Disadvantages  Products are similar/standardized  Increased interdependance  Small business cannot compete  Boring repetitive work

Division of Labour and Job Specialization

Business Functions

Functions of Business
Marketing  Finance  Human Resource Management  Operations Management  Relationships between them 

Marketing
Responsible for  Market research and analysis  Pricing  Promotion  How to sell and distribute

Finance
Monitors the flow of finance in and out of the business  Keeps and analyzes financial accounts  Provides financial information to management

Human Resource Management
Identifies the workforce needs of business  Recruits  Selects and trains  Creates motivational systems  Handles employment contracts  Deals with redundancy or redeployment of staff

Operations Management
Responsible for adequate resources being available for production  Maintains production levels  Maintains quality levels  In charge of production efficiency

Business Activity

Business Sectors
3 types of business sectors  Primary  Secondary  Tertiary As economies develop in countries, business sectors tend to gravitate from primary to tertiary changing the economic structures of countries.

Primary … raw materials and natural resources are extracted

Primary Sector

First stage of the production process Extraction of natural resources: •  Mining •  Fishing •  Forestry •  Agricultural

Renewable vs. Nonrenewable

Secondary Sector

Secondary … output from primary is processed into manufactured goods

Secondary

Second stage of production Products from primary stage are processed into manufactured goods •  Consumer goods •  Producer goods

Tertiary Sector

Tertiary … production of service rather than goods

Tertiary
Production/Provision of services rather than goods Provide support to the first 2 stages of production Can provide services to the public or the state

Chains of Production
Interdependence between industry sectors

Relationship to Development

As an economy/country develops, more of the workforce migrates to the higher sector In China there has been a steady migration of workers from agriculture to manufacturing As all the factories moved from Hong Kong to China, there has been a transition to services economy.

Activity

In a groups of 3 Select any product in your household Identify ALL the types of companies involved in chain of production For each company Classify the sector of the company Determine the factors of production and outputs

Changes in Economic Structure
Industrialization The growing importance of the secondary sector on the economy. ? When did this occur in our country ? What was the impact on our society ? What benefits have we enjoyed

Did you say:

Increase standard of living Reduced imports into our country and increased exports to other countries More jobs More profits to companies, so more taxes to governments Raw materials worth more to other countries because they have been processed

What are potential problems?

Did you say:

Creates depopulation in rural areas as people gravitate towards jobs in manufacturing Stresses on farming and agriculture Difficult to find enough qualified workers Imports may increase to satisfy needs of raw materials Pollution

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