Commerce

Production: Definitions and Examples of Production

len Alfred Ajibola - Tue, 07th May, 2019 @ 19:05: PM

Topics in Commerce

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Academic Questions in Commerce

Please check out our Test Your Knowledge page to see all Questions and Answers

The followings are advantages of division of labour EXCEPT _____.

  • A. It promotes the use of machines in production industries
  • B. There is an increase in profit
  • C. It saves time and expenses of training
  • D. It fosters the spirit of division
  • E. It increases the production of quality goods and services in the market
  • F. It increases a country's economic growth

Which of the following statement is incorrect concerning division of labour?

  • A. It is the specialization of works
  • B. It can become monotonous
  • C. It is the specialization of processes
  • D. The nature of a job is not a condition for division of labour
  • E. A person performs only a part of the job
  • F. Division of labour has some of its drawbacks

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Meaning of Production:

Let’s explain the concept of production using the analogy below:

There is something you probably would like. It could be a phone, car, console game, movie or something else. All of these things would have underwent a series of transformation processes before you could enjoy them. To this end, the goal of production is to indeed satisfy your demand for these transformed things.

According to Parkinson and Bates,

Production is defined as an organized activity of transforming resources into finished products in the form of goods and services.

Please read on the Types of Production here.

From the above definition, the objective of production is therefore to satisfy the demand for goods and services. The transformed resources of production could be a car, phone or something else.

Please read on Demand, Law of Demand and Demand Schedule here.

Note: When a service is rendered, such rendered service is also considered as production because it satisfies the needs or wants of the recipient or consumer.

Therefore, people who provide services like hair dressers, security men and public bus drivers are considered productive; and whatever service had been rendered can appropriately be referred to as production.

It is important to state that consumers will always pay for the end product of production (which are goods and services).

Please read on the Agencies of Consumer Protection here.

Once again, the main purpose of production is to satisfy human needs and wants.

  • Needs may be referred to your required goods and services. Your needs are necessary and you just can't do without them. Examples are food and shelter.
  • Wants are your desired goods and services. They are not necessarily required and you can do without them. Examples of wants are expensive cars and watches.
    Please read more on Scale of Preference and Opportunity Cost here.

The point is: "anything made or created that isn't wanted nor needed is not considered as production".

From what had been written above, we can further defined production thus:

Production is any activity carried out to satisfy the needs and wants of humans; who would make payments or a form of exchange in return.

An exchange is always involved in production; and such exchange will involve a form of monetary exchange with goods or rendered services.

Please read on Methods of Payment (Bank Notes and Coins) and Characteristics of Legal Tender here.

Note: When a person renders a service for free or satisfies human needs/wants for free, such is not considered as production.

Please read on Community and Volunteer Service here.

In conclusion, production is always an economic activity. This means that it involves money earning and money spending.

Please read on Meaning and Scope of Commerce here.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Commerce

Amazon is an e-commerce website launched in 1995. It did not make any profit for its first seven years.
Amazon's first profit was in 2003. Its founder "Jeff Bezos" is the richest man in the world as at 2018/2019


NOTABLE POINTS IN Commerce

Commerce can be defined as the exchange of goods and services, usually for money and on a large scale that will require the transportation of such goods and services.

Commerce is very important to the life of any Nation for the following reasons:

  1. Commerce facilitates the exchange of goods and services which everyone can enjoy, regardless their location or whether the goods is produced within or outside their country.
  2. Commerce creates an awareness of the existence of goods and services through advertising.
  3. Commerce offers employment to a very large number of people in a Nation.
  4. Commerce promotes rapid transfer of both oral and written messages through communication.
  5. Commerce determines the standard of living in a Nation. This is because the extent of commercial activities is crucial to wealth of  a nation.
  6. Commerce makes for the protection against risk in day to day business operations.
  7. Through commerce, there is a steady supply of goods in a Nation. This is because commerce ensures that goods produced are stored until needed.

A public company is not owned by an individual. Usually, it is owned by groups or a very large number of people.

The shares of a public company are traded freely on the stock exchange.

Below are some features of a public company

  1. A public company must receive it’s training certificate to commence business.
  2. The minimum membership is two while the maximum membership is limitless.
  3. A public company has a legal status. It can sue and be sued.
  4. A public company files and publishes its annual reports, including its accounts.
  5. The liability of its members is limited.
  6. The shares are easily transferrable through the stock market.
  7. A public company can issue debentures to be secured as its assets.

Please read on the types of business structure here

The four elements of the marketing mix are usually referred to as the 4 “P”. These are:

  1. Product: Anything thing that satisfies a consumer’s need is referred to as a product. Product may come in the form of manufactured goods, raw materials or services.
  2. Price: Price is defined as the exchange value of goods and services supplied. In simple terms, it serves as a mechanism of exchange.
  3. Promotion: It involves all the processes that concerns with how business organizations should inform their customers about its product. If done properly, the demand of product will be increased. Promotions can take the form of advertising, search engine optimization, social media marketing, trade fairs exhibition and so on.
  4. Place: The place as a marketing mix concerns variables such as location and transport facility where the distribution of goods and services take place.

Think of marketing mix as the set of marketing tools that an industry or company uses to drive or accomplish its marketing objectives in the target market