POB SECTION 5

Manufacturing

Making or finishing a raw material into a finished good

Define Natural Resources

Materials occurring naturally in the earth or atmosphere (water, air, minerals, fish stocks, timber)

3 SECTORS THAT BENEFIT FROM CARIB. NATURAL RESOURCES:

• Producers of metal goods

• Restaurants and food shops

• Food processing

• Drinks manufacturing

• Metal refining & smithing

Production vs Productivity

PRODUCTION is th process of using raw materials to produce goods or services

PRODUCTIVITY is the measure of output produced from a given input level

HOW TO CALCULATE PRODUCTIVITY

Quantity of output/quantity of input

3 WAYS ON HOW TO INCREASE PRODUCTIVITY

• Organising work more efficiently

• Using more productive resources

• Using automation and computerisation

• Using approaches that motivate staff to work harder

Automation

Technology applied to producing goods without human input

Computerization

Using a computer to perform tasks previously done by people

Define factors of Production

Resources needed by businesses to produce goods and services

Land (Factor of Production)

Refers to all natural resources on earth

Labour (Factor of Production)

Physical and mental contributions of employees

Capital (Factor of Production)

Man-made items used in production like machines, tools, and buildings

Enterprise (Factor of Production)

Brings factors together to produce goods for profit while taking risks

3 importances of productivity

1. Improving labour supply

2. Human Resource Development

3. Importance of Positive work ethic

4. Use of capital to increase productivity

5. Land use and declining productivity in the region

Labour supply

The number of hours that the labour force is prepared to work at given wage rates.

2 strategies for improving labour supply

1. Wage incentives

2. Labour productivity

3 Ways to increase production and productivity, and their effects

• Employees work longer - Production rises while productivity may have no impact

• Employees work harder - Production rises while productivity has some increase

• Employees work smarter - Production and Productivity rises

What is Human Resource Development?

Involves enhancing the employee motivation and efficiency, to improve employee contribution.

Appraisal

A formal evaluation of an employee’s performance over a particular period.

Appraisal Interview

Meeting to set improvement goals and assess past achievements

Development

Individual improvement in a work context, involving employees identifying ways they want to learn and develop new skills and capabilities

3 METHODS OF ACHIEVING IMPROVED TARGETS AT A NATION-BUILDING LEVEL (COUNTRY-WIDE)

• An improved education system

• Improving the health system

• Improving working conditions

3 WAYS FIRMS CAN IMPROVE HUMAN RESOURCES QUALITY:

• Training and education courses for employees

• Health initiatives like insurance

• Improved working conditions

Work Ethic

A belief in the importance of work and that hard work is fulfilling

ROLE OF CAPITAL IN PRODUCTION

Capital provides the necessary resources to facilitate the transformation of inputs into outputs.

Capital

It typically refers to the machinery, tools and buildings that a business uses to produce other goods.

3 Types of Capital & their definitions

• FIXED - Refers to durable capital equipment that can be used repeatedly in the production process, example: tractors.

• WORKING - Reference to capital needed to pay for the day-to-day operations of the business, example: inventories.

• VENTURE - Refers to money that is provided by investors to start up businesses.

4 METHODS OF PRODUCTION & their definitions

• JOB - Involves a one-off job, these are more expensive to plan, prepare and implement than mass production methods.

• BATCH - work being passed from one stage to another, and each production stage is highly planned.

• FLOW - Products or services moving through a line of production, where they repeatedly undergo the same sequence of operations.

• LEAN - A systematic approach that aims to minimize waste while maximizing efficiency productivity and quality.

4 TYPES OF PRODUCTION, THEIR GROUP & their meanings

• Extractive (PRIMARY) - Any form of industry that removes resources supplied naturally.

• Construction (SECONDARY) - Refers to the process of creating physical structures

• Manufacturing (SECONDARY) - Concerned with making finished products from raw materials and semi-manufactured goods

• Services (TERTIARY) - Provides direct services to people

4 LEVELS OF PRODUCTION & MEANINGS

SUBSISTENCE

This level is only sufficient to meet the basic needs of the local population

DOMESTIC CONSUMPTION

Provide sufficient goods to meet the needs of people within a given territory or country

SURPLUS

As industries become more efficient, surpluses of products start to develop, and some members of society can organize production into small factories and plantation agriculture.

EXPORT

With better organization and production and a more intensive use of capital, it becomes possible to export goods and services.

ECONOMIES OF SCALE

Advantages that a larger business has over a smaller one in terms of being able to produce a larger output at a lower unit cost.

3 Advantages of a large firm (economies of scale)

Technical, Commercial, Financial, Marketing, IT, Management, Risk-Spreading

DISECONOMIES OF SCALE

Result in increasing output or sales but only at the expense of higher unit costs.

REASONS AND PROBLEMS FOR DISECONOMIES OF SCALE

REASONS FOR DISECONOMIES OF SCALE

• A firm has become too large to manage effectively

• The scale of production is greater than the demand for goods.

PROBLEMS

• ineffective communication, staff inertia, losing touch with customers, etc.

Cottage Industry

Industry taking place in people's homes

4 KEY FEATURES OF A COTTAGE INDUSTRY

Home based, mainly manual, small scale, uses local raw materials

MSME

Micro (1-5 employees), Small (6-15), and Medium Enterprises (16-50)

3 functions of a small business

Creating employment, providing services, catering for niche markets

3 Advantages of a small business

• GENERATE EMPLOYMENT AND INCOMES

• INCREASE COMPETITION FOR LARGER FIRMS

• INTRODUCE NEW PRODUCTS AND IDEAS

3 Disadvantages of a small business

• The business lacks expertise in certain areas

• Owners found it difficult to source finance

• Ability to service customers

• No benefit from cost advantages

• Access to research and development facilities

• Less well known

Types of growth & meanings

Internal- investing in new products or selling more of the customer’s existing products

External- business takeover, merger, or creation of a joint venture

Types of internal growth

• opening other outlets

• employing more workers

• increasing capital

• establishing e-commerce

• franchising and outsourcing

Types of external growth

Joint ventures, mergers, takeovers/acquisitions

Effects of growth

• Increased labour

• Increased capital

• Increased use of tech

• Potential for export

Linkage Industry

A linkage industry is one that is connected to another industry because it provides supplies for it, or is a market for its finished product.

Backward linkage

When an industry depends on the output from an industry which is at an earlier stage of production.

Forward linkage

When one industry or firm supplies another industry or firm further up the supply chain.

Define the term ‘key sectors of the economy’

Refers to industries that have both strong forward and backward linkages.