1 Factors of Production Production - when an individual, business, or organization makes a product, provides a service, or generates an idea or concept Six Factors of Production 1.Natural resources 2.Raw materials 3.Labour 4.Capital 5.Information 6.Management

2 Natural Resources Six types of natural resources: 1. agriculture 2.fishing and trapping 3.mining 4.water 5.fuel and energy 6.logging and forestry Extractive industries - primary industries that take something out of the earth or sea

3 Raw Materials Raw materials - any goods used in the manufacturing of other goods. Two Main Types 1. Ingredients ― raw materials that are combined or converted and become a part of the finished product 2. Supplies ― raw materials that do not become a part of the finished product, but are used in the creation process

4 Two Main Raw Materials Pants Fabric Rivets Zipper Thread Air filters for ventilation systems Sewing machine oil Paper for invoices Ingredients Supplies

5 Labour Labour - all of the physical and mental work needed to produce goods and services. Ways to save on Labour Costs: 1.Automation - many tasks are performed by more then one person using machines 2.Consolidation - when small manufacturing sites close down and are centralized into one large site 3.Outsourcing - hiring of another company to perform tasks for your company

6 Capital - the money invested in the business Liquid capital - can be transformed into other items to run the business ie. a new truck Non-liquid capital - part of the business operations, and cannot be converted into liquid capital easily ie. buildings or equipment -these items are also called capital goods Intellectual property - the ideas or the talent of a business’ workforce Capital

7 Information To produce goods and services in a competitive global market, businesses require more information about new technology customers Competition political conditions sources of supply Accurate and usable information reduces a business’ risk and can enhance its profitability.

8 Management -the people who run the business and control or direct the factors of production - also allocate company resources and makes decisions that affect the day-to-day and long-term operations of the business

9 Purchasing Purchasing of the raw materials to produce the product or service may be the responsibility of a purchasing department, purchasing agent, buyer, or owner. Some considerations when making purchasing decisions include the quality the price any additional costs Four Stages of the Production Process

10 Processing conversion processing - convert one item into another through processing Examples of raw materials that are refined to produce semi-finished or finished products include bauxite  aluminum sugar cane  sugar wheat  flour timber or logs  paper

11 Quality control -standards that ensure all produced products conform to prescribed levels of excellence. These standards are set by the company, the government, or another organization such as the International Organization for Standards (ISO).

12 Grading -the act of checking products for size and quality against fixed standards for the product or product category. -grading allows consumers to make informed purchasing decisions “seconds” - products do not meet manufacturer's standards and are often sold as is, containing slight defects, such as towels or sheets

13 Improving Productivity Increased productivity consists of the following: maintaining quality while increasing speed increasing quality while maintaining speed increasing both quality and speed at the same time Improving and maintaining productivity is often dependent on training capital investment investment in technology new inventory systems

14 Training Four Major Types of Training 1.Initial training 2.Ongoing training 3.Retraining 4.Specialized training Capital Investment Investment of capital into items, such as new computers, machinery, buildings, and facilities, contribute to increased productivity.

15 Investment in Technology Utilizing up-to-date technology enables companies to maintain and improve their competitive edge. Ie. Robotics for automation New Inventory Systems Just-in-time (JIT) inventory systems allow businesses to coordinate suppliers, monitor warehouse storage, and keep track of factory production to deliver goods on time. -Saves time, money, space and reduces waste -having the right material, at the right time, at the right place, and in the right amount.