Production of Goods Services Resources l l The

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Production of Goods & Services

Production of Goods & Services

Resources l l The elements that go into producing goods and services Also known

Resources l l The elements that go into producing goods and services Also known as ‘inputs’

Factors of Production l Land l l Labour l l Physical & mental effort

Factors of Production l Land l l Labour l l Physical & mental effort Capital l l All natural resources, including mineral resources, livestock & sea resources Goods that are made in order to produce other goods & services Enterprise l Bringing together the other factors of production in order to create goods & services

Improving Efficiency l l More cost-effective = more profitable How? l l l Improving

Improving Efficiency l l More cost-effective = more profitable How? l l l Improving fertility of land Using renewable or recyclable resources Greater education & training of workforce Increasing level of investment in capital equipment Extending overall scale of production Combining factors of production in a balanced way to avoid problems such as diminishing return

Production l The process whereby resources (factors of production) are converted into a form

Production l The process whereby resources (factors of production) are converted into a form that is intended to satisfy the requirements of potential customers

Output l The finished products resulting from the transformation process Inputs Transformation Process Feedback

Output l The finished products resulting from the transformation process Inputs Transformation Process Feedback Outputs

Classifying outputs l Natural resources l l Semi-finished & finished goods l l Primary

Classifying outputs l Natural resources l l Semi-finished & finished goods l l Primary production Secondary production Services l Tertiary production

Definitions l Primary sector l l Secondary sector l l Organisations involved in extracting

Definitions l Primary sector l l Secondary sector l l Organisations involved in extracting raw materials (e. g. farming, fishing, quarrying) Organisations involved in processing or refining the raw materials from the primary sector into finished or semi-finished products (e. g. paper mills, textile manufacturers, oil refineries) Tertiary sector l Organisations involved in providing services to customers and to other businesses, in either the public or the private sector (e. g. education, retailing, hairdressing)

Primary Sector l l l Final output is a natural resource Transformation process is

Primary Sector l l l Final output is a natural resource Transformation process is quite simple Process may be expensive, e. g. oil extraction

Secondary Sector l l Process of converting primary products into finished goods May be

Secondary Sector l l Process of converting primary products into finished goods May be inputs for businesses producing a more complex end product

Tertiary Sector l The provision of services is known as ‘tertiary production’ l l

Tertiary Sector l The provision of services is known as ‘tertiary production’ l l Commercial Personal Both Many transformation processes produce both goods & services (e. g. meal in a restaurant)

Disadvantages of production l Undesirable outputs, e. g. l l Pollution Waste Exploitation of

Disadvantages of production l Undesirable outputs, e. g. l l Pollution Waste Exploitation of child labour Firms held responsible through pressure groups, consumer action or government legislation

Structure of industry in the UK l l Tertiary sector is the largest sector

Structure of industry in the UK l l Tertiary sector is the largest sector in terms of contribution to GDP and employment in the UK As people become more affluent, they demand more manufactured products and, as wealth increases still further, they demand more services

Value added l l Sales revenue - the cost of bought-in materials, components and

Value added l l Sales revenue - the cost of bought-in materials, components and services Adding value is the process of increasing the worth of resources by modifying them

How is value added? l l Production process - components combined into a desirable

How is value added? l l Production process - components combined into a desirable product Distribution & retailing - easier reach of the customer Identifying an attractive mix of design, function, image & service Creating a USP

Unique Selling Point l l USP A feature of a product or service that

Unique Selling Point l l USP A feature of a product or service that allows it to be differentiated from other products, e. g. Brand

Homework Read Chapter 3 & supplement notes if necessary Page 33 - Case Study

Homework Read Chapter 3 & supplement notes if necessary Page 33 - Case Study “Fast food goes posh”

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