Module3 group3.valenzuela.taba.mercurio.parchamento

1. PRODUCT PROCESS
Foundations of Entrepreneurship:
Module 3

2. Production Processing
 Production is a process of combining various material inputs
and immaterial inputs (plans, know-how) in order to make
something for consumption (output). It is the act of creating
an output, a good or service which has value and contributes
to the utility of individuals.
 The definition of factors of production in economic systems
presumes that ownership lies with households, who lend or
lease them to entrepreneurs and organizations. But that is a
theoretical construct and is rarely the case in practice. With
the exception of labor, ownership for factors of production
varies based on industry and economic system.

3. Types of Production Process
Project-based production
 One-of-a-kind production in which only one unit is
manufactured at a time. This type of production is often
used for very large projects or for individual customers.
Because the customer’s needs and preferences play such a
decisive role in the final output, it’s essential for the
operations manager to maintain open and frequent
communication with that customer. The workers involved in
this type of production are highly skilled or specialists in their
field.
 Examples:
 custom home construction
 Haircuts
 yachts

4. Batch Production
Batch production is a method used to produce similar items in
groups, stage by stage. In batch production, the product goes
through each stage of the process together before moving on
to the next stage. The degree to which workers are involved in
this type of production depends on the type of product. It is
common for machinery to be used for the actual production
and workers participate only at the beginning and end of the
process.
EXAMPLES:
Bakeries
Textiles
furniture

5. MASS PRODUCTION
 Mass production is used by companies that need to create
standardized products in large quantities as economically as
possible. Products are mass produced in order to generate
the inventory needed to meet high market demand. This
type of production usually requires heavy investment in
machinery and equipment; workers are generally needed to
assemble component parts to make the finished good
 EXAMPLES:
 toilet paper
 cell phones
 Automobiles

6. FLOW PRODUCTION
 Flow production, also known as continuous production,
occurs when a process runs twenty-four hours a day.
Companies whose products are homogeneous use this
production approach to reduce cost and increase efficiency.
These systems are highly automated, and workers act as
monitors rather than as active participants.
 EXAMPLES:
 gas and oil
 Steel
 chemicals

7. The Basics of Factors of Production
 The modern definition of factors of production is primarily
derived from a neoclassical view of economics. It
amalgamates past approaches to economic theory, such as
the concept of labor as a factor of production from socialism,
into a single definition.

8. Land as a Factor
 Land has a broad definition as a factor of production and
can take on various forms, from agricultural land to
commercial real estate to the resources available from a
particular piece of land. Natural resources, such as oil and
gold, can be extracted and refined for human consumption
from the land. Cultivation of crops on land by farmers
increases its value and utility. For a group of early French
economists called the physiocrats who pre-dated the
classical political economists, the land was responsible for
generating economic value.While the land is an essential
component of most ventures, its importance can diminish or
increase based on industry. For example, a technology
company can easily begin operations with zero investment in
land.

9. Labor as a Factor
 Labor refers to the work done by project managers and
developers in building the final product. Even an artist
involved in making art, whether it is a painting or a
symphony, is considered labor. Labor also labor refers to the
work done by project managers and developers in building
the final product. Even an artist involved in making art,
whether it is a painting or a symphony, is considered labor.

10. Capital as a Factor
 In economics, capital typically refers to money. But money is
not a factor of production because it is not directly involved
in producing a good or service. Instead, it facilitates the
processes used in production by enabling entrepreneurs and
company owners to purchase capital goods or land or pay
wages. For modern mainstream (neoclassical) economists,
capital is the primary driver of value. Capital also refers to
the purchase of goods made with money in production.

11. Entrepreneurship as a Factor
 Entrepreneurship is the secret sauce that combines all the
other factors of production into a product or service for the
consumer market. An example of entrepreneurship is the
evolution of social media behemoth Facebook Inc. (FB). After
Facebook became popular and spread across campuses,
Zuckerberg realized that he needed help to build the
product and, along with co-founder Eduardo Saverin,
recruited additional employees. While large companies make
for excellent examples, a majority of companies within the
United States are small businesses started by entrepreneurs.
Because entrepreneurs are vital for economic growth,
countries are creating the necessary framework and policies
in order to make it easier for them to start companies.

12. References:
https://courses.lumenlearning.com/wmopen-
introbusiness/chapter/production-processes/
https://www.investopedia.com/terms/f/factors-
production.asp

13. Group 3:
Taba, Clarissie Joyce
Mercurio, Wea Mae
Parchamento, Camille
Valenzuela, Patricia Maeh
II-BTLE/HE-A