Production Flashcards
(29 cards)
What is Production?
Production is the process of using materials (inputs) and transforming them to produce goods and services (outputs) that satisfy wants and needs
The term ‘factors of production’ refers to…
the resources that are combined in the production process to make goods
Land includes…
All renewable and non-renewable resources
What is Labor?
Any human effort – mental or physical that is used in the creation of goods and services.
List the types of Labor
- unskilled
- semi-skilled
- skilled
- professional
Define the term ‘Capital’
any man-made resources or goods used by a business used in the production of goods and services.
Fixed capital is…
any man-made resources that does not get consumed for production
Working capital is…
any asset or man-made resources that is consumed during the production process
Venture capital is…
A form of financing that provides funds to early stage, emerging companies with high growth potential, in exchange for equity.
Who is the entrepreneur?
The owner and risk taker in a business venture who is responsible for organizing all the other factors of production to produce a product that will allow the business to make a profit.
List the functions of a small business
- Create employment opportunities in local communities
- Making profits to make it worthwhile for the entrepreneur to continue their business
- Supplying goods and services that satisfy demand
- Supply small niche markets where the customers demand more personalized items
List 3 advantages of small businesses
- Easy to set up
- Responds quickly to changes in market and economic conditions
- Introduces new products and ideas
- Increases competition for larger businesses
- Increases consumer choice
List 3 disadvantages of small businesses
- Often lacks skills
- Difficult to raise capital
- Lacks resources to offer a wide range of services
- Unable to compete on costs with larger businesses
Three characteristics of a small business:
- Owns premises separate from the owner’s home
- Tends to have paid employees
- Have more formalized production methods and employ more machinery and other capital equipment
Define the term ‘Internal Growth’.
Internal Growth is when a business uses its own resources to increase its scale of production
List 5 benefits of business growth
- Expand its sales and increases market sales
- Has the ability to invest in more more productive factor inputs
- Benefits from price discounts for purchasing in bulk
- Increases Job security for employees
- Reduce profits and still earn more profits
Define the term ‘External Growth’
This occurs when one or more businesses combine to form a larger one, also known as integration
What is a Joint Venture?
A contractual agreement between two or more organisations to share their expertise, management and risks of running a new business project.
What is a Merger?
A merger is created when one or more businesses agree to combine their capital and operations to form a new larger enterprise
How is an Acquisition created?
One company buys enough shares in the ownership of another so that it can take overall control. This can happen with or without the agreement of the owners of the other company
Horizontal Integration is when…
One or more businesses in the same industry combine their operations.
Vertical Integration is when…
A business combines with others at different types of production
Lateral Integration is…
A merger between two or more companies unrelated business activities which allows the company to diversify its product range
