Production - Types of Production

len Alfred Ajibola - Thu, 02nd January, 2020 @ 20:58: PM

Topics in Commerce

Principle of Marketing: Positioning as a Marketing Mix Principle of Marketing: Packaging as a Marketing Mix Elements of Promotion in Marketing Mix Principle of Marketing: Promotion as a Marketing Mix Principle of Marketing: Place as a Marketing Mix Principle of Marketing: Price as a Marketing Mix Principles of Marketing: The 7 Ps of Marketing Mix Factors necessary for Division of Labour Disadvantages of Division of Labour Advantages of Division of Labour Outbound Marketing explained Inbound Marketing explained Production - Types of Production Commerce: Definitions and Scopes of Commerce Differences between Balance of Trade and Balance of Payments Balance of Payment Deficit and Balance of Payment Surplus Disadvantages of Foreign Trade Divisions of Foreign Trade Advantages of Foreign Trade What is Foreign Trade? Types of Foreign Trade

Academic Questions in Commerce

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

The followings are principles of marketing mix except _____.

  • A. People

  • B. Positioning

  • C. Pressure group

  • D. Packaging

  • E. Promotion

  • F. Product

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

What does a bearer cheque mean?

What is an order cheque?



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Types of Production:

We have three types of production in commerce; they are:

1. Primary Production

The focus of primary production are on raw materials.

Any activity that involves the acquisition of material(s) from the surface of the earth with the intention of satisfying human needs or want is referred to as primary production.

Please read on an Introduction to Production, its Definitions and Examples here.

As an instance, primary production is said to occur when a farmer prepares a land for crop production, plants on the farmland and eventually harvests the agricultural produce.

You can read on the Differences between Plants and Crops here.

Another example of primary production is seen in a miner who goes down the earth in search of gold, diamond , iron or any other natural resources.

Also, a fisherman doing his job of catching fishes on the sea or ocean is considered to be involved in primary production.

Please read on "How to start a home based Fish Farming" here.

The point is:

In primary production, the produce or products are derived in their raw form. As a result, the materials or products derived from primary production can be further processed during secondary production.

Please read on the Functions and Characteristics of Commerce here.


2. Secondary Production

Any activity that turns raw materials or intermediate material or materials from primary production into a finished product is referred to as secondary production.

You can read on the Concept Division of Labour here.

As an instance, secondary production involves the conversion of iron ore (raw material) obtained from mining into a finished product like steel.

Another instance is seen when cassava (a raw material from agricultural produce) is processed into garri. (Garri is a local food in Nigeria; and it's the finished product in this instance).

In short, secondary production involves the assembly and manufacturing processes.

Please read on the Advantages of Foreign Trade here.

Note: Production industries will always obtain their raw materials from primary production in order to manufacture a variety of products. For instance, the plastic industry may obtain its raw materials from oil, natural gas and coal (which are products derived from the fractional distillation of petroleum or crude oil).

Please read on Fractional Distillation of Crude oil or Petroleum here.


3. Tertiary Production

Any activity that puts finished goods or services into the hands of the final consumer is termed tertiary production.

Please read on Supply, Law of Supply and Supply Curve here.

You can read on Consumer Right and Protection here.

Tertiary production include the commercial services that support the distribution processes of production.

Please read on the 4 P's of Marketing here.

Examples of tertiary production are activities carried out by the distributive sales person or marketer, advertising company, bank, transporter, teacher in a classroom and so on.

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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


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 crucial (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.

Please read on the functions and characteristics of commerce here

A public company is not owned by an individual; rather it's usually owned by groups or a 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 Limited Liability Company, Its Advantages and Disadvantages here

There are seven elements of the marketing mix. 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.
  5. Packaging
  6. Positioning
  7. People

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

Please read on the Principles of Marketing Mix here