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
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
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