Entrepreneurship

Factors of Production
Week 4,5,6

EMS
Grade 8

Term 2
 Factors of Production
• Factors of production = inputs used in
the production process to make new
products or inputs used to deliver a
service
• The amounts from the various inputs
used, determine the quantity of
output according to a relationship
called the production function
• Factors involving production: land,
labour, capital, entrepreneurship
 Capital – Borrowed and
Owned
• Capital = money, buildings, machines,
furniture, vehicles or equipment to
start a business
• Borrowed capital - capital which the
business borrows from institutions to
expand the business
• Own capital – money that an owner of
a business invests in the business to
make a profit
 Skilled Labour
• Labour is the most important factor and also earns the
biggest portion of total spending
• Skilled labour = workers who have a learned skill set or
specialised training to perform their work
• Have varied levels of training or some form of higher
education
• White collar worker = a person who is in a managerial
position or office environment
• Examples of skilled labour occupations are: teachers,
doctors, electricians, computer operators, financial
technicians, and administrative assistants
 Semi-skilled labour
• Semi-skilled labourers have some form of training in a particular
area
• They do not require highly specialised skills
• These jobs require some skill because they are more complex than
those that can be performed by a non-skilled labourer
• Examples of semi-skilled labour: brick layers, artisans, typists and
customer service representatives.
 Unskilled Labour
• Unskilled labour means workers do not have much training or skills
• Mainly perform physical labour duties
• Blue collar worker = a person who performs physical labour
• Examples of unskilled labour: farm labourers, grocery clerks, general
cleaners and sweepers
 Basic Conditions of
Employment
• Maximum hours of work per week = 45 hours
• 9 hours a day= less than 5 days a week
• 8 hours a day = for more than 5 days a week
• Compulsory lunch and rest breaks
• Overtime paid for working on Saturdays, Sundays and
public holidays
• Maternity leave, annual leave and sick leave allowed
according to the national labour law
• Click here to view the basic conditions of employment
act:
http://www.labour.gov.za/DOL/downloads/legislation
/acts/basic-conditions-of-employment/Act%20-
%20Basic%20Conditions%20of%20Employment.pdf
 Role of Workers in the
Business
• Employees play an important role in the
workplace
• Employees in their different roles are
responsible for success or failure in a
business
• Employees have the responsibility to
manage roles they are assigned
• Employees have the responsibility of
growing the business in terms of
profitability
• When employees neglect their roles and
responsibility, then the profitability of a
business is threatened
 Fair Employment
Practices
• Labour Rights in the Constitution
• The Constitution contains a Bill of Rights, Chapter Two,
which enshrines the rights of all South Africans. The
following labour rights are enshrined in the
Constitution:
• Section 18: Freedom of Association
• Section 23: Labour Relations
• Everyone has the right to fair labour practices;
• Every worker has the right to form and join a trade
union and to participate in the union’s activities;
• Every worker has the right to strike
• Every employer has the right to form and join an
employers’ organization and to participate in the
activities of the organization; and
• Every trade union, employers’ organization and
employer has the right to engage in collective
bargaining.
• http://www.labour.gov.za/DOL/downloads/legislation/acts/basic-conditions-
of-employment/Amended%20Act%20-
%20Basic%20Conditions%20of%20Employment.pdf
 Natural Resources
• Natural resources are things
provided by nature – they are
not manmade
• They are divided into
renewable and non-renewable
resources
• Renewable resources can be
reused. Examples are land,
water, air, fauna and flora
• Non-renewable resources are
the sources that cannot be
remade like gold, platinum,
diamonds and coal
• Natural resources can be
depleted if not looked after
 Entrepreneurship

• Entrepreneurs think of ideas and take

risks to start a new business
• Entrepreneurs combine the other
three factors of production in a
process to produce a new product or
service
• Characteristics of an Entrepreneur:
leadership, risk taker, dedicated, hard
worker, creative, enthusiastic
Remuneration of the
Factors of Production

• Remuneration of the factors of

production = money paid to
owners of the factors of
production. Capital reward =
interest
• Labourers are paid a wage or
salary to produce goods and
services. Labour reward = wage
or salary
• Rent is paid for land usage
belonging to some-one else.
Natural resources reward = rent
• An entrepreneur’s reward is
profit generated from the
business. Entrepreneur reward
= profit