![]() ![]() But buying a vehicle for commercial uses considers as capital.ĭuring a financial crisis or when they suffer losses, companies cut back on the capital expenditure to ensure profits. Buying a car for personal use and family transport is not considers capital. It is important to distinguish between private capital and personal capital. Money used as a resource to buy capital goods like machine, equipment, raw materials etc. But money is not a factor of production, because money is not directly involved with the production of product or services. CapitalĬapital generally refers to money. Skilled and trained workers are referred to as human capital and they get paid at higher wages because they bring more than their physical capacity to the workplace. Hire skilled labour for their specific work increase the productivity of a production unit. Labour by an uneducated and untrained worker is generally paid at low wages. The combination of an adequate number of labour with suitable skills and reasonable labour wages can highly benefit the production firm. Another important factor that influences plant location decisions is the availability of labour near the factory. ![]() Skilled labour can make a significant difference in any production. Human effort is a necessary factor for production. For such industries extreme humid or dry conditions are not suitable for production. In the production of leather, textile, etc. Depending upon the nature of the plant water should be available in adequate quantity and proper quality. Water is used for processing, drinking and sanitary purpose within a production site. influence the selection of plant location. Area, the shape of the production site, cost, drainage, and other facilities, the probability of floods, chance of earthquakes, etc. Cultivation of crops on land by farmers increases its value and utility. Natural resources, such as oil and coal, can be extracted from the land and refined for production purpose consumption. Suitable land and the availability of water make production easier. It is impossible to carry out production without land, water, and other resources. Nature is a very important factor for any production. Production can be agricultural, manufacturing, or service. Production can be seen every day in factories, offices, hospitals, etc. Significance of value addition in production can be transform row material into goods, assemble many small parts, or design a service. In other words, Production is a process of combining various inputs (man, machine, material, money) in order to make something for consumption (product or services). ![]() Production is a process of value addition, which is developed to transform a set of input elements like man, raw material, capital, energy, information into finished products and services in proper quality and quantity. Continuous Production or process production ![]()
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