MEANING OF PRODUCTION
Production may be defined
as
the numerous economic activities aimed at the creation of goods and
services and their distribution for the satisfaction of human wants.
It can also be described as the transformation of resources into
physical goods. This definition is all embracing; it includes both the
manufacturing of tangible goods such as motor cars, shirts and shoes as
well as the services of professionals such as barbers, lawyers, teachers
and musicians among others.
Production
is incomplete if the goods and services produced do not reach those who desire for them, that is, the final consumer.
Thus, the work of distribution either wholesale or retail, or
transportation is a very vital productive process that cannot be ignored
when one is talking about production. It is necessary to mention here
that the cardinal objective of production is to create utility in order
to increase the material well-being of the people.
Types of Production
Two types of Production can readily be identified. These are
i. direct production and
ii. indirect production.
Direct Production
Direct Production refers to subsistence type of production embarked upon on a small scale by peasant household for the
Production of goods and services to satisfy the needs of their family. These products or services are not intended for sale it is meant for personal consumption.
Indirect Production
Indirect Production means
large scale production of goods and services
which involves the use of modern technologies with considerable
potentials to realize a good level of surplus that the producer would
exchange to get money in order to satisfy his other boundless need. It
is not possible in today’s world for an individual to satisfy all his
needs directly with his own goods and services without depending on
others for exchange.
Indirect Production is divided into three categories, namely;
1. Primary Production
2. Secondary Production
3. Tertiary Production
Primary Production
Primary Production is the
process of extracting raw materials from the land, sea and air. In other words, it includes
all productive activities that involve the tapping of natural resources for human use.
Primary Production forms the bedrock of subsequent Production because
all the goods and services produced at this level are regarded as raw
materials. For example, production in mining, quarrying, fishing and
farming fall under primary Production.
Secondary production
Secondary Production involves the
conversion
of raw materials extracted at the primary stage of production into
finished goods that are readily acceptable to the final consumers.
All activities at this level are known as manufacturing of craft.
Secondary Production includes the construction and manufacturing
industries with products such as processed food, clothes, automobiles,
roads, bridges etc.
Tertiary Production
Tertiary Production is the third stage of Production where
the distribution of goods and services produced at the secondary level
is actually taking place. Tertiary Production involves a lot of
activities which covers a wide range of commercial and professional
services such as transportation, wholesales, retails as well as the
services rendered by doctors, lawyers, teachers, hairdressers, bankers
and advertisers.
Types of goods
There are two types of goods, namely;
1. Consumer goods
2. Capital goods
Consumer Goods
Consumer goods are goods meant
for consumers’ immediate needs. It is the final good that does not require to be processed further. There are two types of consumer goods:
i.
Perishable Goods: Perishable goods include products such as Garri, Yam, Bread and Butter.
ii.
Durable Goods: durable goods are goods which last longer, e.g. cars, refrigerators, TV and radio sets etc
Capital Goods
The Production of other goods and services depends on capital goods.
Capital goods do not actually satisfy human wants, they are generally
regarded as producer goods since
they are used to make other goods. Examples of capital goods are buildings, machines, factories and raw materials.
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Factors of production;
i. Land
ii. Labour
iii. Capital
iv. Entrepreneur
