- OUTPUT- the finished products resulting from the transformation process
- FACTORS OF PRODUCTION- the four inputs of land, labour, capital and enterprise used in the production of goods/services
- CAPITAL- assets used in order to produce other goods and services e.g. buildings and machinery
- PRODUCTION- the process of transforming resources into a form that is intended to satisfy the needs of customers
- PRIMARY SECTOR- firms involved in the extraction of raw materials from the land or sea e.g farming
- SECONDARY SECTOR-firms involved in the transformation of raw goods into semi-finished or final products e.g car plant
- TERTIARY SECTOR- firms providing services to individuals or businesses e.g hairdressing
- ADDING VALUE- the process of increasing the worth of resources by modifying them
- USP- a feature of a good/service that distinguishes it from those of competitors
- GDP- the value of the country's overall output of goods and services at market prices excluding net income from abroad
Four factors of production
- LAND- animals and crops
- LABOUR- plowing fields or making sandwiches
- CAPITAL- tools and equipment
- ENTERPRISE- someone who puts all the factors of production together to make the good/service
ways of improving the efficiency of the four facto
- Training of Staff
- Investing in Better Capital Equipment
- Reducing Waste
- Increasing the Fertility of Land
- Increasing the Scale of Production
The transformation process
The process by which inputs of factors of production are transformed into output is known as production.
Businesses have the role to produce the goods/services as profitably as possible.
They need to acquire inputs, convert them into outputs and find customers for them.
This is the transfomation process.
Production can vary in relation to the levels of labour and capital required.
- Primary Sector- Output= natural resources... examples include coal, fish and oil
- Secondary Sector- Output= semi-finished and finished goods... examples include tyres, paper and petrol
- Tertiary Sector- Output= services... examples include hairdressers and plumbers
- The secondary sector in the UK has been declining for years
- Britain was once the heart land of the world but now we tend to import more of our manufactured goods from overseas
- Countries such as India and China are able to manufacture the foods which we use cheaper than we can in the UK
- This sector of the UK economy has experienced substantial growth in the past 30 years
- The provision of services to the commercial and personal sectors has driven the economy forward with the UK now one of the worlds leading nations for the provision of financial and insurance services
- High levels of customer satisfcation are important to ensure repeat trade
- Adding value enables you to sell goods/services for more than the face value of the component parts
- At every stage of the transformation process value is added to the basic raw materials, enabling a high price to be charged to the customer
- Businesses can also add value by giving their product/service something that makes them unique from competitors