Unit 01 Commercial Operations PDF

# UNIT 01 Commercial Operations ## Production & The Factors Of Production - **Production:** is a process that involves converting resources into goods or services. - These goods and services _(products)_ help to satisfy the needs and wants of people. - **Needs:** The basic things humans require fo...

# UNIT 01 Commercial Operations ## Production & The Factors Of Production - **Production:** is a process that involves converting resources into goods or services. - These goods and services _(products)_ help to satisfy the needs and wants of people. - **Needs:** The basic things humans require for their survival such as food, water, shelter, and clothing. - **Wants:** The desires people have such as books, cars, pizza, iPhone, saree, branded watches, luxury houses. - The image shows a slice of pizza, an iPhone and a yellow sports car to illustrate examples of wants. ## The Production Process - The production process is a diagram showing inputs and outputs. - **Inputs:** - Land - Labor - Capital - Entrepreneurship - **Outputs:** - Cars - Houses - Food - Computers - The formula **INPUT + PROCESS = OUTPUT** is also shown below to illustrate the steps involved in the production process. - The image below shows the following inputs: - Mangoes - Milk - Rice - The process includes a blender. - The output is shown as Mango Lassi. ## Needs vs. Wants - The text describes the conceptual difference between Needs and Wants, stating that needs are things that are required for survival, while wants are things that are desired. ## Manufacturing - **Manufacturing:** The process of turning raw materials or parts into finished goods. - The image shows a set of tools and workers assembling a chair. ## Capital Goods and Consumer Goods - **Capital Goods:** Man-made products used by a business to produce consumer goods or other capital goods. - Capital goods include items like buildings, machinery, and tools and equipment. - **Consumer Goods:** Products purchased by consumers to satisfy their needs and wants. - Examples of consumer goods include food, laptop, clothing, and mobile phone. - **Consumer:** A person who buys goods and services for personal use. ## Capital Goods vs. Consumer Goods - Table showing items in the category of Capital Goods: - Crane - Factory - Landscaper's Tools - Restaurant Pizza Oven - Table showing items in the category of Consumer Goods - Smartphone - Pizza - Home Gardener's Tools - Home Kitchen Oven - The image shows a tractor and a set of consumer goods, including clothing, a plate of food and beads to illustrate. ## Intermediate Good - **Intermediate Goods:** The goods produced for businesses, such as components/ingredients/raw materials. - An intermediate good is a product used to produce a final good or finished product. - The image shows a cake with flowers as a finished product, and the ingredients such as flour, sugar and egg which are intermediate goods, that came together to form the cake. ## Production Quantities - **Mass Produced:** Goods that are manufactured in very large quantities - perhaps millions of units. Examples: breakfast cereals, soft drinks, cars - Goods such as suits, jewellery, some furniture and boats may be handmade by skilled workers and produced on a smaller scale. ## Goods and Services - **Goods:** Items you can see and touch. - Examples: Food items, clothing, recreational items, etc. - **Services:** An action that satisfies our wants through the efforts of other people or equipment. - Examples: Hair salons, law offices, restaurants. - The image shows groups of goods, such as drinks in a grocery store, and services, including a worker at a delivery service. ## The Provision and Delivery of Services - In many developed countries, most production involves the provision or delivery of services. - The range of services provided is enormous and they are often divided into 2 categories: 1. **Direct Services (Personal Services):** Those that providers aim directly at consumers. - **Examples:** Financial services, Telecommunications and IT services, Personal services, Care services, Education, Public services. 2. **Commercial Services:** Provided to support businesses with the distribution of products: - This includes the distribution of raw materials, intermediate goods, finished goods and also services. - **Examples:** - **Trade:** the exchange of products between different owners for money. - **Aids to trade** ## Examples of Commercial Services - **Examples:** Export agencies, Import agencies, Retailing. ## Aids to Trade - Aids to trade are services provided by commercial enterprises to support businesses in the trading process. - **Examples:** - Communication Systems - Transport - Advertising - **Some Businesses:** Might be involved in the provision of both commercial services and direct services. - **Examples:** Banks provide financial services for consumers and businesses. ## The Factors Of Production - **The Factors of Production:** The inputs needed for creating a good or service, which include: - Land - Labor - Entrepreneurship - Capital - The image shows illustrations of each input. ## FOUR FACTORS OF PRODUCTION - **Land:** Refers to all natural resources, such as minerals, forests, and water. - **Labor:** Refers to the effort and skills of people who work to produce goods and services. - **Capital:** Refers to the tools, machinery, and other physical assets used to produce goods and services. - **Entrepreneurship:** Entrepreneurs combine the other factors of production, land, labor, and capital to make a profit. They identify opportunities, organize resources and bring new products or services to the market. ## Roles Of An Entrepreneur - Entrepreneurs: - Come up with new business ideas. - Are business owners. - Are risk takers. - Organize Resources.