POB SECTION 5
MANUFACTURING
Making or finishing a raw material into a finished good
NATURAL RESOURCES
Materials that occur naturally in the earth or its atmosphere (water, air, minerals, fish stocks, timber)
SECTORS THAT BENEFIT FROM CARIB. NATURAL RESOURCES:
Producers of metal goods
Restaurants and food shops
Food processing
Drinks manufacturing
Metal refining & smithing
Production
The process of using raw materials (input) and transforming them in some way to produce goods or services(output)
Simply put, it means making goods or services out of resources.
Productivity
A measure of how much output can be produced from a given input level.
HOW TO CALCULATE - Quantity of output/quantity of input
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
The technology applied to producing goods without human input
COMPUTERIZATION
To use a computer to do tasks that were previously carried out by people.
THE RESOURCES NEEDED BY BUSINESSES TO PRODUCE GOODS AND SERVICES
Land
This refers to all natural resources on the earth, such as the land businesses are built on
Labour
Refers to all physical and mental contributions of an employee
Can be divided into :
skilled (engineers etc)
semi skilled (driver etc)
unskilled (vendor etc.)
Capital
Refers to all the man made items that go into producing other things, such as manufacturing machines, tools and buildings
Enterprise
Refers to bringing together all other factors tgether to produce goods to make a profit while taking risks.
1) IMPROVING THE LABOUR SUPPLY
Labour supply refers to the number of hours that the labour force is prepared to work at given wage rates. This involves several strategies and considerations:
Wage incentives: Higher wages can motivate people to work longer hours to benefit from higher incomesW
Labour Productivity: Its not only about the number of hours worked but also the intensity and efficiency of how they work
WAYS TO INCREASE PRODUCTION AND PRODUCTIVITY
Effect on production
Effect on productivity
Employees work longer
Level rises
May have no impact
Employees work harder
Level rises
Will be some increase
Employees work smarter
Level rises
Level rises
2) HUMAN RESOURCE DEVELOPMENT
Involves enhancing the effectiveness and motivation of employees, to improve employee contribution. This includes creating systems like appraisals & appraisal interviews to identify and support personal development and provide learning and development opportunities.
APPRAISAL
A formal evaluation of an employee’s performance over a particular period.
APPRAISAL INTERVIEW
In a performance review meeting, an employee meets with their manager 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.
METHODS OF ACHIEVING IMPROVED TARGETS AT A NATION-BUILDING LEVEL (COUNTRY-WIDE):
An improved education system
Improving the health system
Improving working conditions
WAYS FIRMS CAN IMPROVE HUMAN RESOURCES QUALITY:
Training and education courses for employees
Health initiatives like insurance
Improved working conditions
3) IMPORTANCE OF POSITIVE WORK ETHIC
A WORK ETHIC is a belief in the importance of work and that hard work is fulfilling
4) USE OF CAPITAL TO INCREASE PRODUCTIVITY
5) LAND USE AND DECLINING PRODUCTIVITY IN THE REGION
Capital provides the necessary resources to facilitate the transformation of inputs into outputs.
It typically refers to the machinery, tools and buildings that a business uses to produce other goods.
It enhances efficiency increases output per worker and drives economic growth by enabling businesses to produce goods and services more effectively and competitively.
TYPES OF CAPITAL
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.
JOB PRODUCTION
Involves a one-off job, these are more expensive to plan prepare and implement than mass production methods. They are longer than most other forms of production
Typically, they will involve one or just a few customers, and one or just a few manufacturers.
BATCH PRODUCTION
Batch production involves work being passed from one stage to another, and each production stage is highly planned.
Manufacturing industries such as food processing, pharmaceuticals, automotive, and electronics commonly use batch production methods.
FLOW PRODUCTION
It involves products or services moving through a line of production, where they repeatedly undergo the same sequence of operations.
Bottling operations, soap manufactures, and airports use flow production.
LEAN PRODUCTION
A systematic approach that aims to minimize waste while maximizing efficiency productivity and quality.
Toyota manufacturing
EXTRACTIVE
Any form of industry that removes resources supplied naturally.
Involves extracting, harvesting, or gathering natural resources for processing, refinement and use in various industries.
CONSTRUCTION
Refers to the process of creating physical structures such as houses, office blocks, factories, etc.
MANUFACTURING
Concerned with making finished products from raw materials and semi-manufactured goods
SERVICE
Provides direct services to people, for example, taxi services. '
A commercial service provides a service to a business organization rather than an individual, for example, business insurance.
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.
Economics of scale are the 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.
KEY ASPECT: it enables a business to produce a larger output at a lower unit cost
ADVANTAGES OF A LARGE FIRM
TECHNICAL
Effective techniques are used to produce goods such as the use of automated machinery for mass production purposes imated
COMMERCIAL
Refer to the advantages in the buying and selling of goods, raw materials parts and other purchases.
FINANCIAL
Large firms are able to raise finance more cheaply than smaller firms
MARKETING
Marketing cost are more lower when you produce on a large scale.
INFORMATION TECHNOLOGY
Large firms are able to use information technology at a lower unit cost of sale than in small firm.
MANAGEMENT
A larger firm is able to employ a greater number of specialist managers.
RISK-SPREADING
Whereas a small firm will produce or sell in narrow range of products, a large firm is likely to produce and sell a far wider range.
Diseconomies of scale result in increasing output or sales but only at the expense of higher unit costs.
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 that arise from these economies of scale include ineffective communication, staff inertia, losing touch with customers, etc.
An industry that takes place in people's homes. The key distinguishing features of this type of industry include the following:
HOME-BASED
People can work from home rather than in a factory
MAINLY MANUAL
Typical people will work with their hands
SMALL-SCALE
The scale of production will be small in contrast the factory production
USES LOCAL RAW MATERIALS
materials will often be sore to locally so that they can be transported easily to family homes
Small businesses play an important role in nation-building and serving the needs of people in Caribbean countries, as well as the needs of people across the globe.
MSME
A micro enterprise has between one and five employees
A small enterprise has between 6 and 15 employees
Enterprise has between 16 and 50 employees
FUNCTIONS OF SMALL BUSINESSES
CREATING EMPLOYMENT
MSME provide employment for a large number of people in urban and rural areas. Small firms provide work in many industry, example: retailing, the hotel and catering industry.
PROVIDING SERVICES
MSMEs provide services for larger firms as well as providing services that large firms do not want to provide themselves.
CATERING FOR NICHE MARKETS
Demand may be relatively small and specialized in a niche market, therefore a large firm may find that demand and potential sales are too low for it to target the market.
ADVANTAGES
GENERATE EMPLOYMENT AND INCOMES
small businesses offer individuals the chance to earn income to support themselves and their family.
Necessity entrepreneur: people who become entrepreneurs because they need a national income to get by.
INCREASE COMPETITION FOR LARGER FIRMS
Small businesses provide essential components and supplies for larger businesses The existence of Msme sector means that customers have alternatives to large enterprises where prices may be higher.
Small businesses can supply a local market
Small businesses provide essential components and supplies for a larger businesses
INTRODUCE NEW PRODUCTS AND IDEAS
Being entrepreneurial often involves coming up with new ideas
DISADVANTAGES
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
Internal- by investing in new products or selling more of the customer’s existing
External- Involves the takeover of another business, a merger with another business or the creation of a joint venture
TYPES OF INTERNAL GROWTH
OPENING OTHER OUTLETS
Most well known restaurants and hotel chains start from a single premises.
The idea is then introduced to multiple outlets under a single ownership
EMPLOYING MORE WORKERS
If a company wants to grow, it will often take on more staff to deal withh the increased level of business.
INCREASING CAPITAL
A key aspect of growth will be the aquisition of more financial capital in order to invest in better resources and equipment
ESTABLISHING E-COMMERCE
Creating an online trading platform such as a website enables small businnesses to expand organically to a potentional worldwide market without having to open up outlets around the globe
FRANCHISING AND OUTSOURCING
Outsourcing is when a business contracts out some of its work to an outside supplier, who will then make goods or provide a service on behalf of the business.
This makes it possible for a business to grow quickly at a low cost because managing tasks are done by people external to the business.
Franchising allows others to use its business idea, format, logo and products for a share of the profits.
TYPES OF EXTERNAL GROWTH
JOINT VENTURES
A joint business is set up between the two companies .
A business arrangement in which 2 or more priorities agree to pull their resources to accomplish a specific task or a goal.
MERGERS
Went to businesses combined to form a single company.
The shareholders of both businesses retain a shared interest in the new businesses.
TAKEOVERS/AQUISITIONS
An accusation occurs when one business gains control of part of another business. Our business may be prepared to sell off one of its divisions that it no longer wishes to keep nearly
To take over another company, one business will buy up a majority or all the shares in the business it wants to take over. It may offer the shareholders in the company being acquired shares in the new business.
EFFECTS OF GROWTH
when our business grows these will inevitably impact many different parts of the business the main effects are:
LABOUR
More workers will be employed due to more activities and responsibilities
For Micro and small businesses, including those in Cottage Industries, it will be possible to switch from the employment of part-time or casual labor to employing people full-time.
CAPITAL
More fixed and working capital will be acquired and the business may have to seek other sources of financing.
USE OF TECHNOLOGY
More technology will be required to speed up production and lower total costs.
POTENTIAL FOR EXPORT
As sales increased the business can change from the domestic level of production to surplus and export .
Industries in an economy are very important in determining how effective that economy is. Some sectors of the economy provide more opportunities to create linkage industries than others.
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.
an industry will have backward links to other industries as well as forward links.
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.
the term key sectors of the economy refers to industries that have both strung forward and backward linkages.
MANUFACTURING
Making or finishing a raw material into a finished good
NATURAL RESOURCES
Materials that occur naturally in the earth or its atmosphere (water, air, minerals, fish stocks, timber)
SECTORS THAT BENEFIT FROM CARIB. NATURAL RESOURCES:
Producers of metal goods
Restaurants and food shops
Food processing
Drinks manufacturing
Metal refining & smithing
Production
The process of using raw materials (input) and transforming them in some way to produce goods or services(output)
Simply put, it means making goods or services out of resources.
Productivity
A measure of how much output can be produced from a given input level.
HOW TO CALCULATE - Quantity of output/quantity of input
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
The technology applied to producing goods without human input
COMPUTERIZATION
To use a computer to do tasks that were previously carried out by people.
THE RESOURCES NEEDED BY BUSINESSES TO PRODUCE GOODS AND SERVICES
Land
This refers to all natural resources on the earth, such as the land businesses are built on
Labour
Refers to all physical and mental contributions of an employee
Can be divided into :
skilled (engineers etc)
semi skilled (driver etc)
unskilled (vendor etc.)
Capital
Refers to all the man made items that go into producing other things, such as manufacturing machines, tools and buildings
Enterprise
Refers to bringing together all other factors tgether to produce goods to make a profit while taking risks.
1) IMPROVING THE LABOUR SUPPLY
Labour supply refers to the number of hours that the labour force is prepared to work at given wage rates. This involves several strategies and considerations:
Wage incentives: Higher wages can motivate people to work longer hours to benefit from higher incomesW
Labour Productivity: Its not only about the number of hours worked but also the intensity and efficiency of how they work
WAYS TO INCREASE PRODUCTION AND PRODUCTIVITY
Effect on production
Effect on productivity
Employees work longer
Level rises
May have no impact
Employees work harder
Level rises
Will be some increase
Employees work smarter
Level rises
Level rises
2) HUMAN RESOURCE DEVELOPMENT
Involves enhancing the effectiveness and motivation of employees, to improve employee contribution. This includes creating systems like appraisals & appraisal interviews to identify and support personal development and provide learning and development opportunities.
APPRAISAL
A formal evaluation of an employee’s performance over a particular period.
APPRAISAL INTERVIEW
In a performance review meeting, an employee meets with their manager 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.
METHODS OF ACHIEVING IMPROVED TARGETS AT A NATION-BUILDING LEVEL (COUNTRY-WIDE):
An improved education system
Improving the health system
Improving working conditions
WAYS FIRMS CAN IMPROVE HUMAN RESOURCES QUALITY:
Training and education courses for employees
Health initiatives like insurance
Improved working conditions
3) IMPORTANCE OF POSITIVE WORK ETHIC
A WORK ETHIC is a belief in the importance of work and that hard work is fulfilling
4) USE OF CAPITAL TO INCREASE PRODUCTIVITY
5) LAND USE AND DECLINING PRODUCTIVITY IN THE REGION
Capital provides the necessary resources to facilitate the transformation of inputs into outputs.
It typically refers to the machinery, tools and buildings that a business uses to produce other goods.
It enhances efficiency increases output per worker and drives economic growth by enabling businesses to produce goods and services more effectively and competitively.
TYPES OF CAPITAL
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.
JOB PRODUCTION
Involves a one-off job, these are more expensive to plan prepare and implement than mass production methods. They are longer than most other forms of production
Typically, they will involve one or just a few customers, and one or just a few manufacturers.
BATCH PRODUCTION
Batch production involves work being passed from one stage to another, and each production stage is highly planned.
Manufacturing industries such as food processing, pharmaceuticals, automotive, and electronics commonly use batch production methods.
FLOW PRODUCTION
It involves products or services moving through a line of production, where they repeatedly undergo the same sequence of operations.
Bottling operations, soap manufactures, and airports use flow production.
LEAN PRODUCTION
A systematic approach that aims to minimize waste while maximizing efficiency productivity and quality.
Toyota manufacturing
EXTRACTIVE
Any form of industry that removes resources supplied naturally.
Involves extracting, harvesting, or gathering natural resources for processing, refinement and use in various industries.
CONSTRUCTION
Refers to the process of creating physical structures such as houses, office blocks, factories, etc.
MANUFACTURING
Concerned with making finished products from raw materials and semi-manufactured goods
SERVICE
Provides direct services to people, for example, taxi services. '
A commercial service provides a service to a business organization rather than an individual, for example, business insurance.
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.
Economics of scale are the 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.
KEY ASPECT: it enables a business to produce a larger output at a lower unit cost
ADVANTAGES OF A LARGE FIRM
TECHNICAL
Effective techniques are used to produce goods such as the use of automated machinery for mass production purposes imated
COMMERCIAL
Refer to the advantages in the buying and selling of goods, raw materials parts and other purchases.
FINANCIAL
Large firms are able to raise finance more cheaply than smaller firms
MARKETING
Marketing cost are more lower when you produce on a large scale.
INFORMATION TECHNOLOGY
Large firms are able to use information technology at a lower unit cost of sale than in small firm.
MANAGEMENT
A larger firm is able to employ a greater number of specialist managers.
RISK-SPREADING
Whereas a small firm will produce or sell in narrow range of products, a large firm is likely to produce and sell a far wider range.
Diseconomies of scale result in increasing output or sales but only at the expense of higher unit costs.
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 that arise from these economies of scale include ineffective communication, staff inertia, losing touch with customers, etc.
An industry that takes place in people's homes. The key distinguishing features of this type of industry include the following:
HOME-BASED
People can work from home rather than in a factory
MAINLY MANUAL
Typical people will work with their hands
SMALL-SCALE
The scale of production will be small in contrast the factory production
USES LOCAL RAW MATERIALS
materials will often be sore to locally so that they can be transported easily to family homes
Small businesses play an important role in nation-building and serving the needs of people in Caribbean countries, as well as the needs of people across the globe.
MSME
A micro enterprise has between one and five employees
A small enterprise has between 6 and 15 employees
Enterprise has between 16 and 50 employees
FUNCTIONS OF SMALL BUSINESSES
CREATING EMPLOYMENT
MSME provide employment for a large number of people in urban and rural areas. Small firms provide work in many industry, example: retailing, the hotel and catering industry.
PROVIDING SERVICES
MSMEs provide services for larger firms as well as providing services that large firms do not want to provide themselves.
CATERING FOR NICHE MARKETS
Demand may be relatively small and specialized in a niche market, therefore a large firm may find that demand and potential sales are too low for it to target the market.
ADVANTAGES
GENERATE EMPLOYMENT AND INCOMES
small businesses offer individuals the chance to earn income to support themselves and their family.
Necessity entrepreneur: people who become entrepreneurs because they need a national income to get by.
INCREASE COMPETITION FOR LARGER FIRMS
Small businesses provide essential components and supplies for larger businesses The existence of Msme sector means that customers have alternatives to large enterprises where prices may be higher.
Small businesses can supply a local market
Small businesses provide essential components and supplies for a larger businesses
INTRODUCE NEW PRODUCTS AND IDEAS
Being entrepreneurial often involves coming up with new ideas
DISADVANTAGES
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
Internal- by investing in new products or selling more of the customer’s existing
External- Involves the takeover of another business, a merger with another business or the creation of a joint venture
TYPES OF INTERNAL GROWTH
OPENING OTHER OUTLETS
Most well known restaurants and hotel chains start from a single premises.
The idea is then introduced to multiple outlets under a single ownership
EMPLOYING MORE WORKERS
If a company wants to grow, it will often take on more staff to deal withh the increased level of business.
INCREASING CAPITAL
A key aspect of growth will be the aquisition of more financial capital in order to invest in better resources and equipment
ESTABLISHING E-COMMERCE
Creating an online trading platform such as a website enables small businnesses to expand organically to a potentional worldwide market without having to open up outlets around the globe
FRANCHISING AND OUTSOURCING
Outsourcing is when a business contracts out some of its work to an outside supplier, who will then make goods or provide a service on behalf of the business.
This makes it possible for a business to grow quickly at a low cost because managing tasks are done by people external to the business.
Franchising allows others to use its business idea, format, logo and products for a share of the profits.
TYPES OF EXTERNAL GROWTH
JOINT VENTURES
A joint business is set up between the two companies .
A business arrangement in which 2 or more priorities agree to pull their resources to accomplish a specific task or a goal.
MERGERS
Went to businesses combined to form a single company.
The shareholders of both businesses retain a shared interest in the new businesses.
TAKEOVERS/AQUISITIONS
An accusation occurs when one business gains control of part of another business. Our business may be prepared to sell off one of its divisions that it no longer wishes to keep nearly
To take over another company, one business will buy up a majority or all the shares in the business it wants to take over. It may offer the shareholders in the company being acquired shares in the new business.
EFFECTS OF GROWTH
when our business grows these will inevitably impact many different parts of the business the main effects are:
LABOUR
More workers will be employed due to more activities and responsibilities
For Micro and small businesses, including those in Cottage Industries, it will be possible to switch from the employment of part-time or casual labor to employing people full-time.
CAPITAL
More fixed and working capital will be acquired and the business may have to seek other sources of financing.
USE OF TECHNOLOGY
More technology will be required to speed up production and lower total costs.
POTENTIAL FOR EXPORT
As sales increased the business can change from the domestic level of production to surplus and export .
Industries in an economy are very important in determining how effective that economy is. Some sectors of the economy provide more opportunities to create linkage industries than others.
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.
an industry will have backward links to other industries as well as forward links.
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.
the term key sectors of the economy refers to industries that have both strung forward and backward linkages.
