Production : factors and forms of Production
Production , factors and forms are very essential to put into consideration before setting up any business empire.
Production is the making of goods and providing of services that satisfy the needs of people.
As an individual we all have needs for food , clothing and other things which enables us to live .
Some of these needs are daily such as food, while others are periodical. These goods are not necessarily provided by us but someone else.
Whoever provides these goods to meet our needs is either in production or offers services.
is not restricted to goods and Services. The machines that are used in the factory to make other goods needed by consumers in the society were produced by other people.
Forms of Production
can be divided into two main branches :
1 production of goods and raw materials
There are three main forms of industry that involve the turning of raw materials into other forms of goods. These are :
*(a) The extractive industry : extraction involves taking raw materials from the ground.
*(b) Manufacturing industry : This industry makes the assembles products . It processes raw material into finished or semi finished products.
*(c) Construction industry : construction concerns the design and manufacturing of capital goods.
2- Production of services
Commerce concerns the Production of services. The extractive , manufacturing , and construction industries mainly produce goods.
They depend on commerce to distribute these goods from where they are made to people who need them to satisfy their needs.
Production of services can be divided into two categories which includes :-
*(a) Commercial services : commerce involves commercial Activities. This involves the distribution and exchange of products, such as raw material which is made available by nature and manufactured goods which are made by man.
*(b) Direct services : direct services are part of Production. Some services are called direct services because the Individual benefits of such services.
Such services may not go through the usual ways of distributing goods and services.
Factors of Production
For the activities of Production to take place , certain factors must be available . These factors are land , labour , capital , and enterpreneur .
These factors supply the money , physical effort, land or place of business and the managerial expertise to enable the making of goods and supplying of services possible.
* Land : land is provided by nature but it is acquired by business for it’s operation. Land has an Economic value .
The Economic value is why most land owners sell or either lease to their land out for business.
* Labour : labour is an important factor of production. It means the physical and mental efforts provided by an individual workers towards Production.
* Capital : Individuals going into business would need land and people or labour to help him perform a lot of duties in the organisation , and without adequate capital such won’t be possible.
* Enterpreneur : the fourth factors of production is the enterpreneur. An enterpreneur is a person or an organisation that decides to go into business .
Enterpreneurs is regarded as :
– The provider of capital ( equipment and money ) and brings together all the four factors of production.
– The risk bearer .
– The decision maker on what shall be produced .
– The person who ensures that the routine responsibilities of the organisation are performed either by himself or by people appointed to act on his behalf .
However before going into any form of Producing commodities, the forms and factors of production are to be looked into as well.