The concept of "production" in everyday life is common enough. In general, many clearly understand this process. In the article we will dwell on this concept in more detail, consider its components.
Production from a human point of view
To begin with, we turn to terminology and define what production is. This process should be understood as the manufacture of all types of goods or the use of equipment (labor) in conjunction with available resources to obtain the necessary services (goods). When releasing a product for consumption, a person influences natural objects, giving them the form necessary to satisfy their needs. What is production in this case? This process provides in general the processing of the starting materials given by nature into the necessary products of consumption. Having been processed, they, in turn, can be used for further production. Also, these resources can be ready for consumption in its original form. This production function is unchanged regardless of the social structure of society. The production output can be a process quite tangible (production of a certain product) or intangible. For example, what is enforcement proceedings? This is not the release of any product or service. This is a certain procedure for the execution of procedural decisions, the implementation mechanism of which is regulated by law. As you can see, this concept has no direct relationship to consumer products.
Essential elements
A prerequisite for starting any production is the availability of source resources. Let us consider in more detail what are factors of production? Modern literature provides a huge amount of explanation for this concept. Economic theory describes the factor of production as an essential element. It has a key impact on the final result achieved in the process of production or the provision of any service. Factors of production are the main components of functional production. The final result of the entire industrial or commercial process depends on their interaction with each other and, therefore, leads to a stable interaction of the organization with the external environment. The total number of all factors with minor corrections is divided into two groups:
1. Basic. These, in particular, should include: labor, entrepreneurial ability, source capital (which includes land, human capital).
2. Providing. These include: information owned by the manufacturer, technological organization of production, environmental factor, design and research achievements and developments.
In the writings of economists there is another classification. According to her, factors of production are divided into four groups. They are: capital, natural (in some works the concept of "land" is found) and human resources (in this sense, "work" is usually assumed), as well as the ability to do business.
Human resources
By this definition is meant any kind of human activity. It can be physical or intellectual. Human activities (within the framework of this concept) are aimed at achieving a certain result. In the process of labor, professional skills, special education and other useful knowledge and skills acquired by people can be used. The time period during which a person works (produces products, services as a result of his activity) is called working time.
Natural resources
Natural resources: water, air, wood and much more that a person uses in the process of production of goods and services - all these are natural, natural materials. An important point in the application of natural resources is that such production depends entirely on the volume of necessary reserves at the disposal of the organization.
Capital
The concept of "capital" in terms of production factors is collective. By it is meant the total combination of all means of labor used in the process of providing services or releasing goods. At the same time, capital is also investments made in the technological cycle. To account for the use of capital, society introduced the special concept of “production costs”. Let us dwell on this concept in more detail. It should be noted that modern economic theory does not give an unambiguous answer to the question of what production costs are. The relevant literature provides a different interpretation of it. In the opinion of one part of specialists, the costs should be understood only as the costs of living or materialized labor received in the process of production and its further sale. From a different perspective they speak of a phenomenon that arises directly in the sphere of circulation. The second position is characteristic of trade organizations and public catering.
Entrepreneurial ability
The most important link in the production process linking its three main factors (capital, human and natural resources) is entrepreneurship. What is meant by this term? Entrepreneurship is a combination of all types of labor efforts aimed at the production of necessary goods and services. This activity can be understood as skills in the field of management, as well as in the organization of the process of manufacturing products or providing services. Therefore, the main task of a person engaged in entrepreneurship is the most efficient combination of the three other factors of production among themselves.
Additional items
Recently, another factor influencing production has become increasingly important - information. Based on high-quality and timely information, more quick and effective decisions are made. They significantly affect the quality of production. Information is closely intertwined with another component - technological advances. These elements are of great importance, because such a production, based on the latest scientific achievements in the aggregate and the information component, is the most effective in the conditions of the modern economy.