This PowerPoint slides explains the whole chapter of Production. Syllabus for High School level Business Studies.

1. 2.1 Concept of Production
2.2 Methods of Production
2.3 Types of Production
2.4 Factors of Production
2.5 Specialization

2. 
 Closely linked to marketing (the action of selling & promoting
products or services)
 The process of using resources to add value to a product or
service, so as to meet the needs of the customer.
 Methods used to transform tangible inputs (raw materials,
semi – finished goods, sub – assemblies) and intangible inputs
(ideas, information, knowledge) into goods or services.
 It creates an OUTPUT which has an EXCHANGE VALUE.
What is PRODUCTION?

3. Water must be sourced,
treated & purified
Plastic bottle needs to
be produced
Bottle needs filling with
water
Plastic cap must be produced,
placed on bottles and sealed
Label must be designed,
printed and stuck on the
bottle
The product can be
transported to retailer
In order to get something as simple as a bottle of water on a supermarket
shelf the following things must be done :-

4. 
 Definition : An economic term referring to the total
satisfaction received from consuming a good or
service
 For a product to be something we can use and get
some usefulness out of it
 An activity is productive if it involves the creation of
utility.
 There are 5 Types of Utility
UTILITY

5. 
 Utility of Form
 When someone makes something, they assemble a
product from parts & you can use it
 Exp : the form when applied to a clothing item, it can
be the shape and size of the garment and the selection
of fabric
 Utility of Task
 When someone does something for you. These are
services which are intangible and cannot be replicated
 Exp : Doctor, hairdresser, mechanic
Types of Utility

6. 
 Utility of Time
 Making sure that the product is available when people
need it.
 Exp : McDonald’s drive through – can’t make
customers wait for fries while their burger is done.
 Utility of Place
 Making sure the product is accessible, bring it to the
customer, or have it in a convenient place
 PC Expo, Harvey Norman
Types of Utility

7. 
 Utility of Possession
 Letting the customer have the product, usually after
they pay, they can “possess” it and hold it and etc.
 Transfer of ownership
Types of Utility

8. 
 Job Production
 Involves the production of single, individual items.
 Exp : Hairstylist – hairdo, boat-builder – a yacht
 Batch Production
 The production of batches of similar products
 Exp : a baker produces batches of jam doughnuts, cream
buns, cakes and bread.
 Flow Production
 Involves passing sub – assemblies / parts from one stage of
production to another in a regular flow. Each stage adds to
the product
 Exp : bottling of water, an automobile company; Toyota
Methods of Production

9. 
(1) PRIMARY INDUSTRY
 Industry that extracts raw materials from the earth, such as coal, fish and
wheat. Raw materials are mined, collected, grown or cut down.
 Examples coal mining, agriculture, oil extraction
(2) SECONDARY INDUSTRY
 Industry that processes primary products into manufactured goods.
 Examples car production, making tables
(3) TERTIARY INDUSTRY
 Businesses that provide a service, either to individuals or to other
businesses
 Examples hairdressing, banking or solicitors
Types of Production

11. 
Types of Production
Extractive Industry
 Concerned with
primary industries
which extracts wealth
from nature like
fishing, mining,
hunting.
 Supply raw materials
for the manufacturing
industry
Manufacturing &
Construction
 Convert raw materials
and intermediate goods
into finished goods.
 Also includes those
firms involved in
building of all types of
structures like houses,
offices etc.

12. 
Types of Production
Commercial Services
 Help distribute goods
from the producer to
the consumer
 Trading, banking,
insurance,
warehousing,
advertising, transport &
communications
Direct Personal services
 The provision of
personal services
 The more advanced &
sophisticated a society
is, the greater will be
the number of firms
catering to it

13. 
Production Operations
Model
Factors of
ProductionsInput Transformation
ProcessingProcess
•Product
•Services
Output
Feedback

14. 
 Any production process involves the use of all
factors of production.
 Land
 Natural resources including water and the proportion of
the planet. (Exp : Land, water, minerals, tress, etc.)
 Labour
 Refers to all human resources that could be used in the
production of goods and services. (Exp : workers)
 Workers are paid in the form of wages
Factors of Production

15. 
 Capital
 The money invested in business including equipment
purchases
 Interest is the return to the capital
 Entrepreneur
 The process of bringing the above factors together to
make a profit.
 The Entrepreneur is the person who takes the risk of
organizing the other factors of production to produce
goods & services
Factors of Production

16. 
 Definition : the division of productive activities
among persons/regions/countries
 No individual or area of country is totally self –
sufficient a.k.a. “Division of Labour”.
 The social phenomenon of individual human beings
or organizations each concentrating their productive
efforts on a rather limited range of tasks.
Specialization

17. 
 Specialization entails focusing on a narrow area of
knowledge or skill or activity.
 It involves a person's or an organization's adapting
for the unusually effective or efficient performance
of some particular function, often at the expense of
the individual's or organization's ability to perform
most other functions for themselves, which are then
necessarily left to others with more appropriate skills
or talents or abilities.
Specialization

18. 
Advantages & Disadvantages of
Specialization
Advantages
 Practice makes perfect: Worker
specializes in a particular task and
gives in the best, thus producing
goods faster and less wastage of
material. (FASTER)
 Use of machinery: Specialized
machinery can be used which is
further increase the productivity.
 Increased Output: with improvement
in efficiency and use of machinery
output is increased.
 Saves time: There is no time wasted in
switching of jobs and thus the
momentum of production can be
maintained which leads to less
wastage of time.
Disadvantages
 Boredom: Performing the same task over
and over again may lead to boredom for
the workers.
 Lack of variety: Though the number of
goods produced increases but they are
identical or standardized.
 Low motivation for worker: Repeatedly
performing the same task may lead to
low motivation level for the worker. The
worker might not have the sense of
fulfilling a complete task as he is
performing only a part of the job.
 Lack of mobility: Due to specialization
workers might find it difficult to switch
between occupations

19. 
 Individual Specialization
 Company Specialization
 A business or area focuses on the production of a limited scope of products or
services in order to gain greater degrees of productive efficiency within the
entire system of businesses or areas.
 For example when in a factory an assembly line is organized in a specialized
manner rather than producing the entire product at one production station.
 Regional Specialization
 Certain areas have specialized in certain industrial production e.g. coal mining
in Yorkshire, pottery in Stoke
 Country or National Specialization
 Certain countries have advantages in producing certain goods. They may have
natural resources or they may be able to produce goods cheaper.
 e.g. Sri Lanka Tea, Japan electronics. They then trade these goods for those
produced in other countries.
Types of Specialization