Production Flashcards
Productivity
Is how well the business is using all its resources.
Production
Is the process is taking raw materials (inputs) and adding value to them through a process, producing a final product (output)
Land
Reward= RENT
Refers to the earth and to all natural resources which come from above and below the earth and in the air eg: beaches, seas, rivers, sunshine, Oil, trees
Capital
Reward= INTEREST
Refers to the money invested to produce a product
Fixed capital
Assets which have a long productive life in the business and can be used multiple times. Eg: machines, vehicle, buildings.
Working capital
Assets which are needed for the day -to - day running of the business but usually do not have multiple use. They are depleted sometime after one use
Renewable
Can be reproduced themselves or can be produced by man eg: bamboo trees
Non- renewable
Are limited in supply and cannot reproduce themselves or be reproduced by man eg: oil
Labour
Reward = WAGE/SALARIES
Refers to all the people or human resources taking part in the production process
Factors influencing productivity
Layout of the factory Quality of raw materials / input Job fit and workers motivation Management skills Location
Importance of productivity
More productive the resources of the business, the more profits it will earn.
By measuring productivity the business can measure its own progress.
Comparing productivity with other similar business tells the firm how competitive it is.
Levels of production
Subsistence
Domestic/ self sufficient
Surplus
Export
Subsistence sector
At this level the country is barely able to produce enough to meet the needs of its citizens.
Domestic/ self sufficient
At this level the country produces enough goods and services to meet the needs of its citizens. uses local resources like land and labour
Surplus sector/ production
At this level country produces more than enough goods and services to meet its documents needs. Extra surplus is exported to tithe countries
Export sector/ production
Produces goods solely for the export market. Goods are not use locally
Primary sector
Involved in using natural resources from the earth. Natural= raw materials. Eg: fishing, mining, farming
Secondary sector
Raw materials go through the manufacturing process where value is added and it is transformed into a new product.
Tertiary sector
Giving services to the community. Is heavily dependent on human input and includes many other things banking, communications, insurance
Small business
are an integral part of Caribbean economies. Serves an important role in providing products that may be suitable for large scale production.
> can have between 7-25 people
usually has its own location separate from home
Cottage industry
Is one where the production of goods takes place in the home or within a specific community
Characteristics of cottage industry
Labour used tends to be family members
Work may done in the community centers or in church halls
Wide range of products produced in this industry
Advantages of cottage industry
Uses locally available inputs
Labour cost are low since family members are employed
Creates employment for persons with specialized skills
Disadvantage of cottage industry
Marketing skills of the producers tend to be lacking
Quantity produced tend to be small therefore small profits
Government support is needed to grow the industry and improve quality
Linkage / spin-off industry
Is a firm or business that is connected to another industry. The output or finished product of one business is the input or raw material in the making of products in another
Backward linkage
Occurs when the industry forms a linkage with another usually one of its industry suppliers.
Forward linkage
Occurs when the output of one industry becomes the input for a another industry
Benefits of linkages
There is a reduced risk of disruption of the supply of inputs due to theses linkage
Contacts for supply of inputs can improve quality of inputs
Linkage can encourage large scale production
Disadvantage of linkage
Formation of these linkages may be capital intensive
Finding investment needed may be difficult
Benefits of small business
Responsive to changes in the market place
Innovative-tend to think outside the box and are able to find innovative solutions to problems
Grow into lager businesses
Internal growth
Lager growth ( lager employment)
Increasing capital>more money, asset including: fixed and working capital
Opening other outlets
External growth
Mergers- when 2 or more business willing to come together to form one new company
Takeover- a type of business which may be friendly or hostile
Acuvtion -where a large or more powerful company aquires or obsorb small company under friendly terms
Marketing
Is what distinguishes your business from other options and makes it unique.
Marketing mix
A marketing strategy that incorporates the core marketing activities
Target market
Is the group of consumers at which a business marketing effort are aimed
Product life cycle
Stage 1 Introduction phase
> business may launch one new product. Little to no profits being made
Growth phase
Sales increase rapidly as more consumers become aware of the product and decides to try it. Business may offer different sizes. Starts to make a profit
Mature stage
Sales continue to increase but at a slower rate. Sales may peak and level off in this stage. Many competitors on the market at this point
