SOCIAL STUDIES 9 LESSON 1.3 PRODUCTION AND BUSINESS ORGANIZATIONS

THE FOUR FACTORS OF PRODUCTION

CAPITAL, ENTREPRENEUR, LAND, LABOR (CELL)

CAPITAL

MATERIALS CREATED BY MAN; TOOLS, MACHINERIES, EQUIPMENT, FACTORIES

FINANCIAL CAPITAL

MONEY SPENT TO BUY CAPITAL

ENTREPRENEUR

; ORGANIZES, MANAGES, CONTROLS FACTORS OF PRODUCTION

LAND

NATURAL RESOURCES USED TO MAKE GOODS

LABOR

MAN'S PHYSICAL OR MENTAL TALENTS, ABILITIES, AND STRENGTH USED IN PRODUCTION

PAYMENT TO CAPITAL

INTEREST

Payment to entrepreneur

PROFIT

PAYMENT TO LAND

RENT

PAYMENT OF LABOR

wages

SOLE PROPRIETORSHIP

OWNED AND MANAGED BY AN INDIVIDUAL; easiest to manage

PARTNERSHIP

-2 OR MORE INDIVIDUALS agree to share in profits or losses of business
-prone to disagreements
-bigger fund for business

TYPES OF PARTNERSHIPS

BUSINESS, LIMITED, GENERAL

BUSINESS PARTNERSHIP

A legal, binding agreement between two or more people who will be responsible for a single business ( classified into limited or general partnership)

LIMITED PARTNERSHIP

-General partners manage, limited partners do not manage
-General partners unlimited liability, limited partners limited liability
-profit is Proportional to investment or agreement
-Written agreement and filing certificate required
-pass through taxation

General Partnership

-two or more partners who share equal responsibility for managing the business and are personally liable for the business's debts and obligations
-personal assets can be used to satisfy business debts
-income is taxed only once (pass-through taxation)

CORPORATION

large enterprise owned by no less than 5 stockholders who share in its profits but are limited in liability

COOPERATIVE

-Owned and democratically controlled by its members within their community
-NOT FOR PROFIT
-decisions made by elected board members
-limited liability

what does it mean when there are more stockholders in a corporation

higher profit

Methods of production

-Mechanization
-Production line
-Division of labor
-Automation
-Robotics

Production

process of making goods and services

MECHANIZATION

earliest form of production process replacing manual labor

• uses machineries that reduce human effort
  -requires human intervention to operate

DIVISION OF LABOR

DIVIDES TASK AMONG MEMBERS OF A GROUP

AUTOMATION

TECHNOLOGY AND MACHINES PERFORM TASK WITH MINIMAL OR NO HUMAN INTERVENTION

PRODUCTION LINE

-MATERIALS PROCESSED IN A SET SEQUENCE OF OPERATIONS
-WORKSTATIONS

ROBOTICS

MOST ADVANCED METHOD OF PRODUCTION, NO HUMAN INTERVENTION AT ALL

TYPES OF INDUSTRIES

MICRO, SMALL, MEDIUM, LARGE

MICRO SCALE INDUSTRIES

-Very small-scale businesses
-Very low investment and capital.
-Few workers, sometimes just family members.
-Production is usually manual or with simple tools.
-Serves local markets only.

SMALL SCALE INDUSTRIES

Limited investment (higher than micro but not huge).
Employs a small workforce (10-50 workers).
Uses simple machinery or semi-automated tools.
Caters to local or regional markets.

MEDIUM SCALE INDUSTRY

Moderate investment and capital.
Employs a larger number of workers (50-250 workers).
Uses modern machinery and technology.
Supplies goods to regional or national markets.

LARGE SCALE INDUSTRY

Very high investment and capital.
Employs hundreds to thousands of workers.
Highly mechanized and technology-driven.
Produces goods for national and international markets

WHAT IS AN ENTREPRENEUR KNOWN AS?

"CAPTAIN OF THE INDUSTRY"

LIABILITY

obligation that a person or company owes to others, typically involving the payment of money or the transfer of economic benefits in the future.

Limited liability

financial responsibility of business owners only for what they invested in a business

Unlimited liability

the responsibility of business owners for all of the debts of the business