DEMO

PRODUCTION

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Definitions Of Commerce And Production.

Commerce: Is the distribution of goods and services from the producer to the consumer in order to satisfy human needs and wants.  It may also be defined as trade and aids to trade.
Production: It is the provision of goods and services in order to satisfy human needs and wants.

Key terms of the definitions.

Distribution: Refers  to the movement of goods and services from their point of production.
Goods: This refers to tangible or touchable items for example ballpoints, desks, books, bread, sadza and many more.

Classes Of Goods

  • Durable goods:these last for a long time, for example equipment, cars, bicycles and many more.
  • Non –durable goods: these have a short life span, for example clothes, food and perishables goods.
  • Consumer goods: these are goods ready for use  by  the  consumer and they  get used  or finished during the process of  use, for example ball point pen, bread, clothes  and a rubber.
  • Capital goods: these are goods which are used during the production of other goods for example tractors, sewing machine, ploughs and scotch carts. Capital goods are also known as producer goods.

Services

These are intangible or untouchable items for instance health services, teaching, entertainment, hairdressing, insurance, tourism and many more.


HUMAN NEEDS:

Foods, Shelter, Health, Aesthetic & Spiritual Well being
GOODS: Fertiliser,Foods, Medicines, Energy, Fiber, Forage, Construction & Craft Material

SERVICES: Recreation & Tourism, Erosion Control, Wildlife Habitat, Cultural & Religious Sites, Climate Regulation, Water & Nutrient Cycling


Needs 
  • These are basic necessities for human survival and human beings cannot live without them for example food, clothes, shelter, water, education and health services.
 Wants
  • These are items for luxury and human beings can live without them for example Television  sets, Radios, Cars and Bicycles.
 Producers
  • These are providers or suppliers of goods and services; they are manufacturers who use raw materials to make products.
Consumer
  • These are end users of products.


Producer Consumer
 A producer is a person or business that makes goods or provides services  A consumer is a person or business that buys or uses goods or services


Branches Of Commerce

BUSINESS
COMMERCE INDUSTRY DIRECT SERVICE
TRADE AUXILLIARY ACT 1. Construction 1.doctor
Home trade Foreign trade 1. Transport 2. Manufacturing 2. Engineer
1. Wholesale 1. Import 2. Banking 3. Extraction 3.consultant
2. Retail 2. Export 3.Insurance 4. Genetic 4. Lawyer
  3. Re-export 4. Warehousing   5. Teacher

Trade

  • Is the buying and selling of  products
  • It is divided into home trade and foreign trade
  • Home trade is also known as  internal trade, domestic  trade or local trade and  occurs  between citizens  of the same country
  • Domestic trade is further divided  into  wholesale trade and  retail trade
  • Foreign trade is also known as international trade, external trade, global trade or overseas trade and it occurs between  citizens of two or more countries
  • International trade is further divided into  export trade, import trade and entrepot trade

Aids To Trade

  • These are  commercial activities or auxiliary  services  that facilitate trade or help trade to take place smoothly
  • Six examples of aids to trade are as follows: communication, transport, warehousing, advertising, insurance and banking.
Aids To Trade
 1. Banking
2. Insurance  
 3. Mercantile agents
 4. Transport
5. Communication  
6. Advertising and publicity  
7. Warehousing  
8. Trade promotion  
9. Global organisation

Production

  • It is the processes and methods used to transform tangible inputs (raw materials and semi-finished goods) and intangible inputs (ideas, information and knowledge) into goods and services.

Stages of production

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There are three stages of production:

1st Stage

Primary stage.
  • Is the first stage of production
  • It involves the extraction of raw materials from the environment
  • Examples of primary stage activities include farming, fishing, forestry, mining and quarrying.
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2nd Stage

Secondary stage.
  • Is the second stage of  production
  • It  involves  the  processing, manufacturing  or changing of raw materials into  semi-finished or finished  goods  and  assembling of components  into fully –built  goods.
  • Examples of  secondary stage  activities  are  baking, shoe making, sewing, pottery, construction of buildings, bridges, dams and roads.                                  
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3rd Stage

Tertiary stage.
  • Is the third stage of production
  • It is concerned with commerce, that is, aids to trade, distribution of products and direct services made available to end –users like teaching, hair dressing and accounting.
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There is great interdependence amongst these stages of production.
  • Primary stage supplies raw materials to secondary stage.
  • The secondary stage acts as the market for primary stage products.
  •  The secondary stage depends on primary stage for its raw materials.
  • The tertiary stage provides services to both primary and secondary stages of production.
  • Tertiary stage distributes products from both primary and secondary stages.

Forms of production.

There are two forms or types of production, that is direct production and indirect production.

Direct production

  • This is when one produces products for personal use without the help of others, for example subsistence farming, sewing own clothes and constructing a house for self.
Advantages
  • Products are produced to  own liking
  • It provides personal satisfaction
  • There is full utilization of resources
  • There is no payment of wages to workers.
Disadvantages
  • Some basic needs are not satisfied
  • There is no wide range of products to choose from
  • Products  produced are of inferior quality
  • It is very slow to finish a task
  • The producer cannot develop other skills.

Indirect Production

  • This is when products are produced for others or for sale and there are extras for sale, for example commercial farming.
Advantages
  • There is mass production of goods.
  • Consumers exercise their right to choose as goods are many and different
  • There is production  of extra goods or surpluses
  • High quality products are made
  • It encourages simplification, standardization and specialization of processes.
Disadvantages
  • Products produced do not meet personal tastes
  • Some people may find themselves out of employment due to  mechanization and automation
Direct production Indirect production
  • Is the production of products for personal use or own use
  • No surpluses are produced
  • For example subsistence farming 
  • Is the production of products for sale or for others
  • Surpluses are produced
  • For example commercial farming 

Advantages of Direct production Disadvantages of Direct production
  •  Products are produced to own taste
  • It provides personal satisfaction
  • There is full use of resources 
  • There is no payment of wages to workers
  •  Some basic needs are not met 
  • No wide range of goods to choose from 
  • Products produced are of inferior quality
  • Very slow to finish a task
  • The producer cannot develop other skills 

Advantages of Indirect production Disadvantages of Indirect production
  • There is mass production of products 
  • Consumers exercise their right to choose
  • There is production of surpluses 
  • High quality products are made
  • It encourages simplification ,standardization and specialization.
  •  Products produced do not meet personal tastes
  • Some people may find themselves out of employment due to mechanization and automation.

Division of labour and specialization

Division of labour:-This is the break-down of work activities into smaller tasks carried out by different individuals.
Specialization: This is whereby workers carry out those activities they are best at or experts in.

Advantages of division of labour.

  • It results  lowers production costs leading to low prices
  • It causes interdependence between workers
  • It encourages trade
  • There is fast production rate due to the use of mechanization and automation
  • The production of many goods enables consumers to have a wide variety of goods for example refrigerators, cars and computers.
  • Leading to improved standards of living.
  • Mass production of products led to employment
  • Goods are produced for different markets.

Disadvantages of division of labour.

  • The use of machines  causes unemployment
  • It causes poor job satisfaction
  • Work activities become repetitive and boring
  • There is production of standardized products ,  leading to no variety
  • Too much interdependence among workers may cause  production disruptions if one is sick
  • It causes too much interdependence among workers.

Advantages of specialization.

  • Extra  products  are  produced for sale
  • No equipment and tools are left idle
  • Employees and  firms become experts in a particular task
  • Employees acquire specific  skills faster
  • Employees  become proficient in their areas  of specialization
  • Companies can employ  specialized  machinery and equipment
  • Employees can  communicate and share ideas for example  doctors
  • Employers are able assign workers to defined jobs

Disadvantages of specialization.

  • It leads to too much interdependence among workers
  • Employees become immobile ,that is they cannot change jobs easily due to specialization
  • Too much specialization causes  loss of craftsmanship
  • Re-training  of  workers is expensive
  • Mechanization  and  automation  causes  unemployment
  • Repeating  the  same  activity  is  boring  and  monotonous
  • Specialized  workers  are  at  liberty  to  share  ideas  and  skills
Division of labour   Specialisation  
  • Division of labour is when workers perform specific tasks 
  •  Specialisation takes place when any of the four factors of production perform specific tasks


Related concepts

Simplification: This is the  process  of  making  processes  and  activities  much  easier  to  carry  out.
Specialization : This is  a  situation  whereby   an  employee  performs  a   task  one  is  talented  at  and  is  an  expert  in.
Standardization: This is the making of uniform or identical products, for example window and door frames.

Mass production:

  • This is the production of goods in bulk and services in mass
  • It encourages trade
  • It  results in automation  or mechanization
  • Products are always  there
  • Living standards are improved 
  • Production costs are low resulting in low prices.

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Factors of production


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  • These are resources used in the production process. They are also known as means or inputs of production.
Factor Description Reward
1.  Land    Refers to all natural resources, on the earth, under the seas and in the atmosphere. It is the site on which production occurs. Examples include farming land , seas ,air , forests , lakes and mineral ores Rent 
2.  Labour    This refers to the human effort put in the production .The effort may be physical [body] or mental [mind] Wages and salaries 
 3. Capital This refers to the money or wealth put aside for the production of more wealth , for example equipment , tools ,plants and machinery and money.  Interest 
4. Entrepreneurship or Organization or enterprise  This refers to the ability to operate or manage a business Profit