THE PRODUCTION

PROCESS
 PRODUCTION

• Production - when businesses use raw materials in a process to

produce goods that the market needs.
• They transform and change materials into goods and services people
can buy and use.
• Important part of a country's economy.

Example:
• Production of wooden tables:
- Wood is the raw material that has been changed or manufactured into
an item for people to buy and use.
- It has gone through the production process.
 INPUT AND OUTPUT

Input
• Things or materials the
business uses or puts
into the production Output
process to make the • Things or items you
goods and services. get out of the
production process.
• Inputs are needed to
make the goods and • Outputs are your final
services and are item that is sold to
usually your raw customers.
materials.
Example:
Example: • Chair
• Wood
PRODUCTION PROCESS OF A WOODEN CHAIR

Input
• Wood is the raw
material that comes
from trees.

Process
• Wood is
manufactured
and changed.
• Added parts.

Output
• The finished chair,
ready to sell.
INPUT IN THE PRODUCTION PROCESS

Input We remember
the Acronym
CELL

Capital Entrepreneurship Land Labor

 Capital Entrepneurship

• Money the production process uses • The idea and entrepreneurial thinking
to run the business. that brings all the other inputs
• This can be as well as machineray together.
and equipment. • Organizes the inputs into a
successful production process.

Examples: Example:
• Trucks for transporting goods or raw • The owner who started up the
materials. business brings all the other inputs
• Saws ( equipment ) for making or together in order to make goods an
profit.
producing the goods.
• Computers for running the business.
 Land Labor
• Natural resources the production • Labor is the work that employees do to
process uses. produce goods.
• Workers work in using the other inputs
to produce the goods.

Examples: Examples:
• Land the factory is built on. • Workers who control the machinery.
• Land the raw materials are grown • Workers who drive the trucks to
from. transport goods.
• Energy through electricity that • Workers who use the equipment to
powers the production process. make the goods.
 PRODUCTION PROCESS INPUTS IN ACTION

Entrepreneurship

Capital Labor

Land
 INDUSTRY SECTORS

• Sectors are a way of grouping business activities.

• Inputs and outputs are different from industry to industry such as a bakery is
different to a furniture shop.
• Industries work in different sectors and all need each other to survive.

There are 3 Sectors :

Tertiary
1. Primary Sector
2. Secondary Sector Secondary Sector
3. Tertiary Sector

Primary Sector
 1 - PRIMARY SECTOR

• This is the economic sector in which the business uses land and natural
resources as raw materials.
• These business are found in rural areas, farm lands and agricultural areas.
• These businesses are the first layer of the economy.
• People use mainly the land in this sector.
• They need raw materials to survive as they make money off selling the raw
materials.

Activities in the primary sector:

- Fishing
- Farming
- Mining
- Hunting and gathering
- Forestry
 2- SECONDARY SECTOR

• Secondary sectors are located just outside towns.

• This is the second layer of the economy.
• Businesses use the raw materials from the Primary sector to process it into
things people can use.

Activities in the Secondary Sector:

- Food and drink factories
- Car factories
- Ship-building yards
- Anything with building and engineering
- Working with metals
 3- TERTIARY SECTOR

Tertiary sectors are located in the towns.

This is the third layer of the economy.
Businesses offer the finished goods and services to the public.

Finished goods are sold by retailers such as:

• Supermarkets
• Clothing outlets

Services to the public include:

• School for education services
• Hospitals for healthcare services
• Restaurants for food and drink services
 MORE INFO ON SECTORS

• In poorer countries, most of the money comes from the primary sector as most
people work close to the land.
• In richer countries, most of the money comes from the tertiary sector as most
people provide services to others.
• All the sectors are linked together and if one sector breaks down, the other two
sectors cannot work properly.

How each sector is linked together:

• The Primary sector produces raw materials that is needed or used by the
secondary sector.
• The secondary sector uses the materials from the primary sector and makes the
finished goods for other businesses to sell.
• The tertiary sector is made of businesses that people can use. Information
makes the tertiary sector successful.
• The tertiary sector uses what the secondary sector manufactures.
 SUSTAINABLE USE OF RESOURCES
• Different economic sectors use resources as inputs to produce outputs.
• Some of these resources are non – renewable and others are renewable that
are scarce.
• The earth has a limited amount of resources for businesses to use.
• Businesses have to use resources sustainably if they want to keep operating.

Key Terms:

• Non-renewable: cannot be renewed, when it is all used up, there can never be
anymore of it made.

• Scarce: in short supply or limited supply.

• Sustainably: long-term and able to last for a long time.

 EXAMPLES OF NON-RENEWABLE AND RENEWABLE
RESOURCES
Non – Renewable Resources:

• Coal and Oil.

• Oil is used to produce petrol and diesel, which is important for industry and the
economy. This resource is going to run out.

Renewable Resources:

• Timber, plants and energy from the sun.

• Metals such as gold and iron are also renewable as we can recycle them, even
though we cannot renew them by making them.
• Even though we can renew resources such as timber by growing forests, we
use Timber more quickly than we can renew them. We do not use these
resources sustainably.
 DEVELOPED AND DEVELOPING COUNTRIES
RESOURCES
The Earths resources belong to everyone, but some countries use more of them
than others.

Developed Countries:
• Developed countries with industrial economies use more resources than
developing countries.
• Developed countries use resources such as Oil unsustainably because they
cant afford to access these resources.

Developing Countries:
• Developing countries are not industrialist.
• Developing countries cannot use these resources unsustainably because they
can not afford to access them.

• Both kinds of countries use resources unsustainably.

• All countries, businesses and individuals are responsible for using the worlds
resources in a sustainable way.
 HOW CAN A BUSINESS USE RESOURCES
SUSTAINABLY
• Think of • Reduce the amount of
alternative resources they use.
resources to use.
• Example:
• Solar energy - Making their production
rather than oil. process more efficient

and saving electricity

Sustainable and water.
ways

• Use recycled resources where

possible.

• Encourage customers to return

resources such as plastic bottles
so they can be reused.
 ECONOMIC GROWTH ?
• Economic growth is an increase in an economy's ability to produce goods and
services over a specific period of time.

Economic growth measured :

• A percentage change in an economy's gross domestic product.

Gross domestic product GDP ? Example:

• The total value of all of the goods • When the value of a
and services that the country country's goods and
produces over a specific period. services goes up , the
country has produced
more goods and services
= economy has grown
 FOR AN ECONOMY TO GROW ?

• Unemployment rates need to be low – people need to have jobs to contribute

to the goods and services that the economy produces.

• Country needs to eradicate poverty so that all of its citizens can contribute to
the economy.

• The population needs to be :

- Educated
- Skilled to work productively

Negative economic growth problems in RSA

• High unemployment
• HIV/ AIDS
• Skills shortage
 PRODUCTIVITY

• Productivity is the measure of how much you get out of the effort you put into
something.
• Productivity is about doing your part for the business you work for and making a
difference in the country's economy.
• Productivity is also how efficiently you use your time to get things done.
Example: Ice – cream truck

• This Ice – cream trucks productivity is

measured by how much it take to make
the inputs ( Ice-Cream ingredients) into
outputs ( Ice – cream ).

• If the ice – cream owner makes a lot of

quality ice – creams in very little time,
he is being productive.

• If he uses a lot of time and they are

poor quality , he is not being
productive.
 THE EFFECT OF PRODUCTIVITY ON ECONOMIC
GROWTH
• The better the country's workforce the better the
economic growth.

• In South Africa unemployment, low skill level and

HIV/AIDS makes the workforce less productive
decreasing the economic growth.

• Unemployed people produce no goods or services at

all.

• Unskilled people are limited with producing goods and

services.

• People who are ill have to spend a lot of time off work.
 TECHNOLOGY IN THE PRODUCTION PROCESS

• Production process have been becoming more technological far as people have
been making things.
Example:
- People used to harvest maize by hand but now there are machines called combine
harvesters to do the job.
• Businesses use technology to make the process quicker and more efficient.
• Technology automates the production process.

Advantages of machines in the production process:

1. Work more quicker than people.

2. Make fewer mistakes than people.
3. Do not get tired or distracted.
4. Do not get sick or take off leave. VS
5. Can work longer hours.
6. Do not need monthly incomes.
7. Do not need to be trained.
 CONTRIBUTION OF TECHNOLOGY TO IMPROVE
PRODUCTIVITY
• Technology makes the production process quicker and more standardized.

• Computers and machines are built to do specific jobs.

• They help businesses to increase their capacity to produce more goods and
services to contribute to the economic growth of the country.
CONTRIBUTION OF TECHNOLOGY TO IMPROVE
PRODUCTIVITY

THANK YOU