Production-The process of using raw materials (input) and transforming them in some way to produce goods or services(output)

Productivity- a measure of how much output can be produced from a given level of input.

HOW TO CALCULATE - Quantity of output/quantity of input

FACTORS OF PRODUCTION

Land

This refers to all natural resources on the earth including those in the sea and atmosphere around us

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

Enterprise

refers to bringing together all other factors tgether to produce goods to make a profit while taking risks.

RESOURCES IN THE CARIBBEAN

IMPORTANCE OF PRODUCTIVITY

IMPROVING THE LABOUR SUPPLY

This invloves several strategies and considerations

Wage incentives: higher wages can motivate people to work longer hours

Labour Productivity: its not only about the number of hours worked but also the intensity and efficiency of warranty higher productivity can result from:

• Working longer: increased production levels but may not impact productivity

• Working harder: raises both production levels and productivity to some extent working smart here

• Working smarter: enhances both significantly by using time and resources more efficiently

HUMAN RESOURCE DEVELOPMENT

Involves enhancing the effectivveness and motivation of employees. This includes creating systems like appraisals to identify and support personal development, and providing learning and development opportunities.

IMPORTANCE OF POSITIVE WORK ETHIC

USE OF CAPITAL TO INCREASE PRODUCTIVITY

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 enhances efficiency increased 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 typically they involve one or just a few customers and 1 or just a few manufacturers one of jobs take longer than most of forms of production example hairdressers.

BATCH PRODUCTION

Several identical or similar items will be produced in asset or badge the items do not need to be for any specific customer but are made at regular intervals in specific quantities.

FLOW PRODUCTION

Involves products or services that are created in a series of stages on an assembly line, example car assembly plant.

LEAN PRODUCTION

A systematic approach that aims to minimize WASTE while maximizing efficiency productivity and quality.

TYPES OF PRODUCTION

EXTRACTIVE

The process of obtaining raw Materials or resources from natural sources such as mines. Involves extracting, harvesting, or gathering natural resources for prossessing, refinement and use in various industries.

CONSTRUCTION

refers to the process of creating physical structures such as houses and roads and bridges.

MANUFACTURING

Refers to the process of creating goods through various physical and chemical transformation methods. It involves converting raw materials components or parts into finished products.

SERVICE

A service industry provides a direct service to people example taxi services. A commercial service provides a service to a business organization rather than an individual example business insurance.

PRIMARY→ Extracts natural resources → extractive industries

SECONDARY → Makes products often used in raw materials from primary industries →manufacturing and construction

TERTIARY → Provides services → Services to business or individuals

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 product start to develop, and some members of society are able to organize production into small factories and plantation agriculture. Entrepreneurs start to look for ways benefiting from the surpluses by extending the scope of the market in which they operate this inevitably leads to the next level: export

EXPORT

With better organization and production and 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 her business to produce a larger output at a lower unit cost

ADVANTAGES

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 results 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

A cottage industry is one 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 macro 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 existing products

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.