Production - what is its definition?

What is production? It is a process spread over time, which consists of manufacturing a good, its preparation, and processing. The process begins with the delivery of intermediate products or raw materials to create something new and more complex. The manufacturing process does not end when the item is released from the factory. Sales service is also included in the production process. In literature, we can still meet with the term manufacturing process, which means the same thing. This aspect is understood only from the technical point of view. It describes the successive stages of using raw materials and semi-finished products, i.e. production factors, which together produce a completely new item for sale. If we want to analyze the production process, it is also worth taking into account the concepts related to the economy of the enterprise. Production is a very complex phenomenon, which consists of more than one stage, and the result is a product ready for immediate sale. 

Production and factors of production - what are they?

Production and factors of production - what is the relationship? It is worth saying at the outset that each material, semi-finished product, and service is a good used to create a completely new product. In the classical view, such factors of production are listed as:

• labor,
• capital,
• land.

Depending on the economic phenomenon we want to describe, this list can be even longer. Sometimes the literature also mentions a fourth factor, organization. Modern economics narrows down to two factors: labor and capital. In current economic theories, the land is included in the capital part. The genesis of the term factor of production was born in 1776 in Adam Smith's work The Wealth of Nations.

Production and factors of production - what else is worth knowing? The level of use of factors of production and their proportion can change very quickly - especially against the backdrop of today's globalized economy. This phenomenon can be explained by the demand curve for a firm's products and the marginal utility curve. Then there is the factor income summation method, which involves adding up all of the firm's income. It is also worth remembering that capital is not only fixed assets and monetary assets in various forms but also human capital. Human capital translates into the knowledge and skills of the staff working for the business entity.

Production - what does this process look like?

Production - how can the whole process be described simply? It is a complex and multi-stage process occurring in a production plant. By modifying and combining materials or semi-finished products something completely new and more complex is created. The elements of the production process are: technological processes, quality control, storage, internal transport, research, development, and development of further production channels. Not only raw materials but also so-called semi-finished products are used to transform and create new goods.

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