BUSINESS STUDIES CHAPTER 4 TOPIC: PRODUCTION

 

PRODUCTION

Introduction to production

Production refers to the creation of goods and services or increasing their usefulness to become more satisfying. For example, transforming raw materials into finished goods, storing them until they are needed, and transporting them to where they are required.

Terms the learner should know

Human wants are the desires of an individual.

Satisfaction of human wants is the meeting of individual desires, and the ability of goods and services to satisfy human wants is referred to as utility.

                                    Types of Utilities

There are four different types of utilities:

(i)               Form utility

This is changing the form of a commodity by converting raw materials to finished goods.

For example:

Sugar cane may be converted into sugar through processing.

 

It is created through manufacturing and processing.

(ii)             Time utility

This is created when a good is stored until it is the appropriate time to use it.

For example:

      Storing foodstuff in the school store during the holiday to use when the school opens.

It is created through storage.

(iii)           Place utility

This is created when goods are transported where they are less needed to where they are highly needed.

This is bridging the geographical gap between the producer of a commodity and its consumers through transportation.

For example:

Transporting books from a bookshop to the school.

Transporting petroleum oil from Processing and Refinery company to petrol stations for sale to people of motorbikes and vehicles.

It is created through transportation.

(iv)           Possessive utility

This refers to transfer of ownership of goods and services from one person the another.

For example:

Ownership of bread be transferred from a canteen owner to a consumer when the customer buys it.

Person A may transfer ownership of his/her land to Person B when this Person B buys this land from Person A.

It is created through trade.

Direct and Indirect Production

There are two types of production:

(a) Direct Production/Subsistence Production

This is when the producer is producing goods and services for his/her own personal consumption.

For example:

A person may build his/her own hut, grow his/her own food, make his/her own clothes.

 

            Characteristics of Direct Production

·         Goods and services are of low quality and quantity.

·         Products are not marketed.

·         It encourages individualism.

·         Does not encourage invention and innovation.

·         Leads to a low standard of living.

·         A lot of time is wasted as one moves from one job to another.

(b) Indirect Production

This is the production of goods and services with a view to selling the excess in order to acquire what one does not produce.

A person concentrates on the production of goods and services that he/she can produce best leaving other people to produce the other goods and services; this process is referred to as specialization.

This production is geared towards satisfying the wants of the individual and those of others.

For example:

Planting maize on a large scale for personal and commercial use; selling the excess.

 

            Characteristics of Indirect Production

·         Production with a view of exchange.

·         The producer specializes in one or a few production areas: specialization.

·         It results in the production of goods and services.

·         It encourages innovation and invention.

·         Products may be marketed to reach more sales.

·         It results in high quality and quantity of goods; due to competition from other producers.

·         Individuals, groups of people, and countries become interdependent.

 

Levels of Production and Related Occupations

There are three levels of production; primary, secondary, and tertiary.