What is Production?

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Factors of Production of a T-Shirt

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Factors of Production

Labour

Outsource is another way to save labour costs by hiring other companies to do the work

Most companies will outsource financial services

Results in cheaper labour cost in countries India,mexico or china.

Consolidation is also a way to save money by closing small manufacturing sites and work in one huge area instead

Most manufacturing tasks are now done by machines to save money and time

Very apparent to automobiles industries

Expensive cost of doing business- many are looking for alternative methods to save money on labor costs

Definition: All physical and mental work needed to produce the goods or services

Natural Resources

All natural resources come from 6 types of primary industries

Logging and forestry

Fuel and energy

Water

Mining

Fishing and trapping

Agriculture

Definiton: Natural resources are resources that occur in the environment without actions of mankind

Information

Investigators are needed to research on latest trends etc.

Researchers are needed to investigate and find information

Examples of financial groups

Businesses are able to provide data for free online and charge companies to advertise on their site

A business is able to sell the information found if they wanted to acquire it

Access to information minimizes risk enhancing profitability

Definition: Information such as public opinions, competition, political conditions, trends and sources of supply are looked at before producing goods and services

Management

2 types of Managers

Head

Single Proprietor

Higher-level managers decides how a business's profit will be distributed along with the other duties

Definition: From allocating companies resources to making decisions on whom to hire, what to make, and where to sell, managers control the factors of production

Capital

Subtopic

The capital can be Liquid or Non-Liquid

Non-Liquid capital means that it is harder to exchange things into money

Bakery equipment is harder to exchange into liquid cash

Includes capital goods like buildings and equipment, or intellectual property like skill, ideas or talent .

Liquid capital means that it is easier to purchase things or to exchange for money

Includes cash, stocks, bonds and accounts recieveable

Definition: the money invested into a business

Raw Materials

There are 2 types of raw materials

Supplies: are raw materials that although do not become a part of the product, they are used in running the business of a product eg. oil used to power machinery that processes wheat

Ingredients: are raw materials that go into a product eg. sugar cane that is used to make refined sugar

Definition: Any goods that are used to make other goods eg. wheat used to make bread