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
