PRODUCTION

5th FORM
PRINCIPLES OF BUSINESS
Specific Objectives
At the end of the lesson students should be
able to:
⦿ Identify factors in the production of goods and
services
⦿ Identify industries developed from the natural
resources of Caribbean territories
⦿ Differentiate between production and productivity
⦿ Explain the importance of productivity
⦿ Explain the role of capital in production
⦿ Differentiate amongst types of capital
⦿ Classify the different types and levels of production
Motivational Quote for students
LET US EXPLORE THE TOPIC
PRODUCTION
What do you know about the term
Production??
WHAT IS PRODUCTION
⦿ This is the process of using materials (inputs)
and transforming them in some way to
produce goods and services or it is the act of
creating or manufacturing.
PRODUCTION PROCESS
Do you know any resources that
are needed in order to produce a
product?
FACTORS OF PRODUCTION
The resources needed by businesses to produce goods
and services. These are:

Land or natural resources - refers to all gifts of nature

Labour - refers to all physical and mental contributions

of an employee

Capital - refers to all man-made items such as money,

machinery, building etc.

Enterprise/Entrepreneurial skill - refers to bringing all

the other factors together to produce goods in order to
make a profit while taking risks
DIFFERENCE BETWEEN
PRODUCTION AND PRODUCTIVITY
⦿ The value or volume of goods
produced, production can be
increased by using more
factors of production such as
employing more labour
Production
⦿ Productivity measures
efficiency, it is the amount
produced per worker
⦿ Productivity = Output/Input
⦿ Output(goods and services
produced
⦿ Input (Workers, money
machinery, raw material
Productivity
⦿ Businesses are forced to be productive for a
number of reasons. Do you know why this is
so??
IMPORTANCE OF PRODUCTIVITY
⦿ Reduces the cost of each unit
⦿ Lead to an increase in sales and profits
⦿ Leads to an expansion of the business
⦿ Allows the business products to compete
more effectively in the foreign market –
which will increase the country’s export
FACTORS AFFECTING
PRODUCTIVITY
◼ Training /skills
◼ Workers health
◼ Working condition
◼ Workers motivation
ROLE OF CAPITAL IN PRODUCTION
● Capital is used to buy land to build a factory, repair a building as well as
expand a business used in production
● A business that operates with little capital and uses more labour and
low-cost tools is an example of labour intensive production
● Capital intensive production – is a business that uses less people, but
more expensive equipment, results in an increase in productivity.

TYPES OF CAPITAL

● Fixed capital- assets such as buildings, machinery which will be kept for
a long time and used many times in the production process

● Working capital -includes stocks of goods and cash needed for day to
day running of the business

● Venture Capital- finance provided to new or small business with the

potential for growth by wealthy investors
Do you know the different types of
production?
TYPES OF PRODUCTIONS
⦿ Extractive (agriculture, mining, fishing
⦿ Construction (building)
⦿ Manufacturing (assembling, refining)
⦿ Service (transport, communication, tourism)
PRODUCTION LEVEL

⦿ Subsistence -
⦿ Domestic
⦿ Surplus
⦿ Export
COTTAGE INDUSTRIES
⦿ An industry where the creation of products
and services is home based rather than
factory based. This industry:
⦿ Does not rely on expensive machinery
⦿ Offers employment to family members with
manual skills
⦿ Use local material like wood, clay to reduce
waste
⦿ Products made includes:
⦿ 1. leather craft
COTTAGE INDUSTRIES CONT’D
⦿ 2.Embroidery
⦿ 3. floral arrangements
⦿ 4. making dolls, basketry, pastries
⦿ 5. Tailoring, hairdressing etc.
SMALL FIRMS
⦿ A small business owned by private individual
and has a relatively low number of
employees and sales
⦿ FEATURES OF SMALL FIRMS
⦿ Small capital (usually less than $250,000)
⦿ One to twenty employees
⦿ Uses simple technology usually manually
⦿ Small land space
⦿ Small sales tunover
ADVANTAGES AND DISADVANTAGES
OF SMALL FIRMS
⦿ ADVANTAGES
⦿ Increases competition for
large firms
⦿ Provides goods and
services that large firms
may not provide
⦿ Reduces unemployment
⦿ Provides income for owner
and employees
⦿ Innovative – develop new
ideas
⦿ DISADVANTAGES
⦿ The business lack
expertise in certain areas
⦿ Difficult to source capital
⦿ Limited ability to service
customers due to
unavailability of resources
⦿ No benefit from cost
advantages
⦿ No access to research and
development facilities
GROWTH OF A BUSINESS
⦿ Internal ⦿ External
⦿ Opening other outlets ⦿ Start a joint venture with
⦿ Employing more workers local contacts
⦿ Increasing capital ⦿ Merger
⦿ Takeover