RESOURCES IN THE CARIBBEAN

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 AND PRODUCTIVITY

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.

FACTORS OF PRODUCTION

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.

IMPORTANCE OF PRODUCTIVITY

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

ROLE OF CAPITAL IN PRODUCTION

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.

METHODS OF PRODUCTION

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

TYPES OF PRODUCTION

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.

LEVELS OF PRODUCTION

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

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

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.

CHARACTERISTICS OF COTTAGE INDUSTRY

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

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

GROWTH

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 .

LINKAGE INDUSTRY

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.