Meaning and forms of production

Production may be defined as any human activity that involves the making of physical goods and provision of services for the satisfaction of human wants. It is also seen as creation of utilities, utility means the ability of goods and services to satisfy human wants. In a nutshell, Production is any activity which gives services or changes the form, place or time of anything that is used to satisfy human needs.

Forms of Production/Types of Production

There are three forms of production namely: primary production (extractive industry), secondary production (manufacturing and constructive industry) Tertiary production (commercial and direct services).

Primary Production (Extractive Industry)

This type of production involves digging of raw materials or tapping and harnessing of natural resources from the land, sea and atmosphere.  It includes farming, fishing, hunting, mining, quarrying, oil drilling etc.  This form of production is referred to as primary production.

Secondary Production (Manufacturing and Constructive Industry)

Manufacturing: this is the process of converting of raw materials or primary products from the extractive industry into finished or semi-finished goods.  This class of production includes furniture making, road construction, bridges, paper milling, food processing, car production, chemical, textile etc.

Constructive: this form of production is concerned with the design and manufacture of capital goods. Capital goods are equipment or machinery that can be used for a long period of time to make more wealth. it involves contract construction work such a s building roads, bridges, factories, equipment and residential and public building. Examples of companies in the construction industry include Costain, Julius Berger

Tertiary Production (Commercial and Professional Services)

Commercial services make it possible for the goods produced to reach the consumer. Indeed, production cannot be completed until what is produced reaches the final consumer i.e. the person that desires it and would make use of it. Commercial activities include distribution (storage and transportation), exchange of products and aids to trade (banking, advertising, warehousing, insurance, transportation and communication.  The professional services which are equally known as direct or personal services are provided or rendered directly or indirectly by people to give satisfaction to those who want them.  These are services like teaching, catering, tailoring, hair dressing etc.

Services

These are work done in order to give relief or satisfaction to people. As some workers provide utility that satisfies man’s want and needs through their activities of producing goods, some offer satisfaction through provision of services. Services can be divided into direct and indirect services.

Positive Effects of Production on the Environment/Society

Environment is the place where people live and work including all the physical and natural conditions that affect them such as air, water, rivers, oceans and land. The following are the positive effects, namely:

1. Production makes goods and services available for the consumption/satisfaction of human wants.
2. It makes us enjoy better standard of living.
3. It provides employment opportunities.
4. The factories and big offices make our environment look beautiful and admirable.
5. Society is developed.

Negative Effects of Production on the Environment/Society

1. The extraction of mineral resources in a place may destroy the land on which people farm. This may lead to hunger and starvation because they will have no place to farm.
2. Production causes air and water pollution. This because waste materials or gases released into the air and water can pollute them.
3. Some factories produce dangerous chemicals/products, which are injurious to the health of the workers and can cause death of the people in general. Examples are the production of cement, germicides and pesticides.
4. The vehicles cause a lot of accidents which lead to the destruction of life and property.
5. The heavy vehicles destroy our roads earlier than expected.

EVALUATION

1. What is production?
2. State the three forms of production.
3. State four positive effects of production on the environment/society.
4. State four negative effects of production on the environment/society.
5. Meaning of Factors of Production

Meaning of Factors of Production

The term factor of production is defined as all the visible and invisible resources that are combined together for the purpose of production of goods and services. There are four factors of production, namely, land, labour, capital and entrepreneur or organisation.

The Factors of Production

The following are the factors of production without which production will be impossible:

(a) Land: Land refers to gift of nature or all the natural resources available, applied and used for production without the help of a man. It includes the fixed natural land and other natural resources such as water, forest, mineral deposits etc. The reward for land is rent.

(b) Labour: Labour means all human efforts physical or mental, skilled or unskilled directed toward the production of economic goods and services. The reward of labour is wages and salaries.

(c) Capital: These are wealth used for the production of further wealth. Capital consists of machinery and equipment, buildings, motor vehicles, tools, raw materials and money. The reward for capital is interest.

(d) Entrepreneur or Organisation: This is a factor that organizes and coordinates the human and material resources in the production of goods and services. The entrepreneur is the initiator, innovator, risk-bearer, and decision-maker. These functions distinguish entrepreneurship from routine managerial activities. The entrepreneur gets profit as a reward for his services. Entrepreneur can also be called management.