PRODUCTION COMPLETE NOTES

Def.: is the distribution of goods and services to satisfy human needs and wants
Commerce can also be defined as trade and aids to trade, where trade is defined as the
exchange o gods and services with or without the use of money. E.g. goods for goods or
services for goods or services for services.
Aids to trade these are indirect services that assist trade and are also called commercial
services.

Production is defined as the provision of goods and services to satisfy human needs and
wants, production comprises of the following:
 Stages of production
 Factors of production

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  Forms of production
 Value addition and beneficiation
 Mass production
 Specialisation, simplification and standardisation
Goods and services
Goods are tangible items that satisfy human needs and wants e.g. cakes, bread, clothes
furniture, cars etc. and are divided into two categories namely:
 Consumer goods
 Capital goods
Consumer goods are tangible goods that satisfy human needs and wants and are divided into
two categories namely, consumer durable and consumer non- durable goods
Consumer durable goods are goods that satisfy human needs and wants and have a long life
span e.g. furniture, wardrobes, chair, and motor vehicles.
Consumer non-durable goods these are finished goods that are ready to be consumed and
have a short life span e.g. bread, cakes, shoes, milk, meat and clothes etc.
Capital goods these are goods that have a long life span and are used to produce other goods
such tractor, sewing machine, grinding mill, a hoe etc.
Services these are intangible [cannot be seen or touched] items that satisfy human needs and
wants e.g. entertainment, tourism, and insurance. Services can be divided into categories
namely: direct and indirect services [commercial services]

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Human needs these are items [goods and services] that humans cannot survive without, these
items improve the standards of living of humans and are regarded as necessities such as food,
shelter, water, clothes, education and medical care
Human wants these are items [goods and services] that humans can survive without, these
items improve the standard of living of humans and are regarded as luxuries e.g. motor
vehicles, television set, cell phone, etc.
Stages of production
As discussed above production is responsible for provision of goods and services and has
stage namely:
 Primary stage
 Secondary stage
 Tertiary stage
Stages are discussed using the following headings:
 Level of the stage
 What the stage does or is involved in
 Examples of each stage
Primary stage
 It is the 1st stage of production
 This stage of production is involved in extraction of raw materials from the earth’s
crust
 The raw materials are extracted from the earth’s crust in their natural or raw state
 The raw materials extracted from this stage [outputs]are treated as inputs in the next
stage of production
 Examples include farming, fishing, hunting, quarrying, forestry and mining
Secondary stage
 It is the 2nd stage of production
 It is involved in the following:
 Manufacturing
 Processing
 Assembling
 Construction
 Manufacturing is the conversion of raw materials into finished and semi-finished
goods e.g. turning wheat to flour [semi-finished product] or turning flour into bread or
cakes [finished goods]
 Processing is the removal of impurities from minerals and goods to give them a better
value e.g. diamond cutting and polishing, copper ore processing, gold processing i.e.
Making rings and necklaces or removal of intestines of fish, Mopani worms etc.
 Assembling this involves the assembling of components to make a finished product
such G-tel phones or Mazda Willovale car plant or Foton car plant in Willovale.
 Construction is the building of large structures such as sky scrapers, roads and
bridges

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Tertiary stage
 It is the 3rd stage of production
 It’s involved in distribution of goods and services
 The services involved include are direct and indirect services
 It also includes trade and aids to trade
Factors of production
 These are the means of production that are monitored by enterprise, these comprise
of the following:
 Land
 Labour
 Capital
 Enterprise/ Entrepreneurship/ Organisation
Land
 This refers to the site on which the production process takes place
 It comprises of the original or natural resources that are renewable and non-
renewable such as seas, minerals deposits etc.
 Usually they fixed and immobile factors
 They don’t have a cost of production coz they occur naturally
 This factor varies in quality and value e.g. the productive the land is the more
expensive it will be.
 The reward for the factor is rent
Labour
 This refers to the effort needed in the production process to make goods and services
 Physical effort this requires the manual labour that is needed in the production
process such as shop floor workers
 Mental effort this is the labour that thinks and manages and supervises the
other manual or physical effort.
 Labour is divided into skilled, semi-skilled and unskilled labour
 The supply of labour depends on the following, age, school leaving age,
number of people seeking employment and this is a flexible factor of
production
 Its reward is wages and salaries
Capital
 Is the money invested to run a business
 It can also be assets introduced in the business to start the business such as machinery,
equipment, motor vehicles
 It is wealth set aside for the production of further wealth
 The reward for capital is interest
Enterprise/ Entrepreneurship/ Organisation
 This refers to the ability to run a business

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  It can be the skill required to mobilise, coordinate, control and combine the
contributions of the other means of production to produce goods and services
 This comprises of individuals who are willing to take risks through investing money,
time and effort by utilising the means of production
 These are Entrepreneurs who are the owners and managers of the businesses and set
objectives and ensure that they are achieved efficiently and earn returns.
 The reward for enterprise is profit or loss

Ownership of the means of production

 This is best described as the ownership of the non-human factors that are used in the
production of goods and services in the production process
 This can also be known as financial and capital such as property, tools, infrastructure
and natural resources
Means of production as our Heritage
 Heritage is something that can be passed on from one generation to the other, this also
known as a legacy and this is our birth right.
 If it’s to be our heritage in simple terms means all the means of production must be
owned by the indigenous people.
 Capitalism is when the means of production is owned and controlled by
individuals such as land, capital and industries with minimum or no government
control
 Communism is an economic system where the means of production is
controlled by the state or the government. The government has total control over
goods and services produced through legislation e.g. price controls act
 Socialism is an economic system in which the whole community owns and
controls the means of production. All members of the community equally own
the means of production and should equally work.

Indigenisation
 This is a policy introduced by the Zimbabwean government in which the local people
are encouraged to take part in the ownership of companies and industries [means of
production]
 This was evidenced by government support in the provision of capital and support to
small to medium enterprises owned by indigenous people
 There are two legislations in line with indigenisation namely:

 Land reform Act this was in line with the government’s land policy and aimed
at giving the indigenous people land to practise entrepreneurship skills. The
comprised of the A1[fast track] and A2 [slow] models which redistributed land
which was repossessed from the few white farmers

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  Indigenisation and Economic Empowerment Act [2002] this give the right
to the indigenous people to take over and control foreign owned companies in
Zimbabwe encouraging the participation and empowerment of the indigenous
people. This means the local people will have to buy shares of foreign
companies

Relationship between commerce and production

 Commerce is responsible for the distribution of good and services produced by
producers.
 enables the production to be complete when goods and services reach the consumer a
final user of the product
 the raw materials needed in the production process are distributed by commerce
 commerce enables producers to make transactions, all the money received from debtors
and paid to creditors to reach their final destination through banking
 Commerce also enables to inform consumers of producers new goods and remind the
consumers of the existence of goods through Advertising
 Commerce enables producers to produce goods ahead of demand since it provides
warehouses to store goods on behalf of the producers
 Commerce also enables the transportation of producers goods from the place of
manufacture to the customers and consumers through Transport
 Commerce also enables the manufacturers to have confidence, if risks occur and they
are indemnified through insurance
 Commerce also enables the manufacturers to make contact, contracts and communicate,
address complaints of the customers and consumers through communication

Forms of production
Satisfaction of human needs and wants is done by provision of goods and services which is
done through direct and indirect production
NB// direct and indirect production should not be confused with direct and indirect services
Direct production
 This is the provision of goods and services for own consumption and they will be to
one’s own taste
 This involves farming to produce gods that will be for own consumption with little or
no surplus for sale
 An example of direct production is subsistence farming
Characteristics
 There is use of family labour in the production process and have independence in
production
 Fewer goods are produced since they only produce to satisfy themselves and not for
sale
 They usually produce poor quality goods since they are produced to one’s taste

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  There are poor standards of living in direct production and there is a lack of variety
which in turn satisfies fewer needs and wants
 There is use of simple tools in the production process such as hand hoes and axes
which slows down the production process
Advantages
 Simple tools are used
 Goods are produced to one’s taste
 Family labour is used hence low operating costs
 Full utilisation of available resources
 Saves on labour since there is use of family labour
 Saves on tool since there is use of simple tools
 Leads to self-satisfaction
Disadvantages
 Poor quality goods are produced
 Lack of other related skills
 Does not satisfy some of the basic needs
 Lack of variety
 It takes long to produce goods
 High cost of production
 There is low productivity rate
 There is no specialisation
 Poor standards of living

Indirect labour
 It is the production of goods and services with a large surplus to sell
 This involves mass production of the goods and services
 There is also use of modern technology to increase t e output
 This is also known as commercial farming and there is specialisation e.g. cattle
ranching, crop production, dairy farming, ornamental horticulture etc.
Characteristics
 There is specialisation through provision of the same product line enabling them to be
experts
 There is provision of surplus goods and services due to mass production
 There is provision of quality goods and services since they want to lure customers to
buy their products
 There is variety and enables satisfaction of more needs and wants of the consumers
 There is use of sophisticated technology hence making the production n process fast
and efficient.
 There is interdependence of the workforce hence making division of labour easy and
increasing productivity
 Mass production enables organisations to enjoy low cost of production.

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Advantages
 Leads to trade
 There is a variety of goods produced
 More goods are produced [mass production]
 More human needs and wants are satisfied
 Low cost of production
 There is specialisation which leads to interdependence of workforce
 High quality goods and services are produced
 The use of machinery enables production to be fast
 Leads to employment creation
 Raises standards of living

Disadvantages
 High operation costs
 Produces standardised products
 Mechanisation leads to unemployment
 There is no full utilisation of resources
 Does not save on labour since there is need to employ a large labour force
 Does not save on tools since there is use of sophisticated tech
 There is no self-satisfaction
Mass production is defined as the provision of goods and services on large scale or quantities,
these goods are usually standardised [identical]. Mass production uses more efficient methods
of production and is based on division of labour, specialisation and continuous production
process.
Factors to consider when choosing a production method
 Quantities of goods to be produced
 The type of product the company is willing to make
 The cost of producing the commodity
 The variety of goods to expected by consumers
 The amount of capital required
 Assets required such as machinery, motor vehicles
Advantages
 There is division of labour
 Specialisation improves efficiency in the production process
 There is consistency in the quality of products
 There is a lower cost of production due to mechanisation and high productivity
 High quality products due to specialisation
 Enjoys economies of scale due to bulk buying
 Reduced wastages thru the use of sophisticated technology
 Labour costs are usually low due to use of sophisticated technology
 The production process is fast this gives the business competitive advantage
 Continuous production enables the business to meet unexpected changes in demand

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  These of skilled labour mean there minimum supervision needed in the production
process
 It leads to trade
 Specialist labour enables them to share ideas and improve the quality of goods and
production process
 Mass production can result to low prices of goods
Disadvantages
 Continuous processes can lead to disruption of the whole production process if one
station beaks downs
 Machinery required for mass production is expensive
 Leads to standardisation of products hence compromising quality
 Mechanisation leads to unemployment
 There is interdependence of workers [if one worker is absent the whole process halts]
 There is high costs incurred by the business e.g. insurance and warehouse costs
 Speedy production can result in errors which are costly to the organisation

Division of labour and specialisation

Division of labour occurs when work or trade activities are divided into simpler tasks that are
carried out by various individuals
Specialisation occurs when a person specifically trained performs tasks that he or she is best at
or talented at e.g. teacher, carpenter, and doctor
Forms of specialisation
Specialisation by country this occurs when country produces a particular product to which
the country is best suited or has comparative advantage e.g. Zimbabwe produces tobacco,
Zambia produces copper, Congo produces diamonds.
Specialisation by region this occurs when region produces a particular product to which the
country is best suited or has comparative advantage e.g., Matebeleland is known for ranching,
eastern highlands is known for producing tea etc.
Specialisation by town this occurs when a town produces a particular product to which the
country is best suited or has comparative advantage e.g. Victoria Falls is known due to tourism,
kwekwe is known due to iron and steel production
Specialisation by firm this occurs when a firm produces a particular product to which the
country is best suited or has comparative advantage e.g. Gtel produces phones, Mazda produces
cars and old mutual provides insurance policies
Specialisation by individual this occurs when an individual produces a particular product to
which the country is best suited or has comparative advantage e.g. commerce teacher, dentist,
carpenter etc.
Advantages of division of labour and specialisation
 There is division of labour

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  Specialisation improves efficiency in the production process
 There is consistency in the quality of products
 There is a lower cost of production due to mechanisation and high productivity
 High quality products due to specialisation
 Enjoys economies of scale due to bulk buying
 Reduced wastages thru the use of sophisticated technology
 Labour costs are usually low due to use of sophisticated technology
 The production process is fast this gives the business competitive advantage
 Continuous production enables the business to meet unexpected changes in demand
 These of skilled labour mean there minimum supervision needed in the production
process
 It leads to trade
 Specialist labour enables them to share ideas and improve the quality of goods and
production process
 Mass production can result to low prices of goods
Disadvantages
 Leads to standardisation of products hence compromising quality
 Mechanisation leads to unemployment
 There is interdependence of workers [if one worker is absent the whole process halts]
 There is high costs incurred by the business e.g. insurance and warehouse costs
 Speedy production can result in errors which are costly to the organisation
 Loss of craftsmanship
 Repetition leads to boredom and monotony
 Risk of occupational diseases is increased

Chain of distribution
 Goods after production need to reach the consumer s from the manufacturers and
various channels will be used to make this successful
 There are factors to consider when choosing a distribution channel namely:
 Type r nature of the gods to be distributed e.g. perishability and fragility of the
goods these require short channel s whilst some goods are durable e.g. soap,
clothes require long channels
 Quantity of the goods or order
 Size of the business e.g. large businesses us the direct channels whilst small
businesses use small businesses use the longer channels due to financial
resources
 Urgency of the delivery e.g. goods that need speedy delivery such as drugs when
there is a disease outbreak need short channels
 Cost involved, some channels involve lower costs such as the traditional
channel
 Government policies some goods require the shortest channel such as tobacco
and petroleum and other essential goods
 Distance involved, the shorter the channel the lower the cost such as distribution
costs, storage costs whereas those that import the costs will b higher

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 Manufacture
r
Marketing
1 4 boards 7

Wholesaler
3 Regional
distribution centre Producers retail shop
5
6
2 Retailer

4 Post office

Consumer

Route 1
This is known as the traditional channel and is suitable for durable goods that have a
long life span without decaying e.g. Soap, clothing and wine just to mention a few
 Wholesalers
 Buy goods in bulk form manufacturers
 Break bulk to suit consumers’ needs
 Sore goods in warehouses
 Sell a variety of goods to retailers
 Retailers sell goods in single units to consumer s
Route 2
This chain of distribution is used by cash and carry wholesalers who sell a variety of goods to
consumers using self-service and the goods will be sold on a cash and carry basis
 Wholesalers
 Buy goods in bulk form manufacturers
 Break bulk to suit consumers’ needs
 Operate in warehouses for cheaper rentals
 Sell through catalogues
 Sell case lots directly to consumers
Route 3
Route is ideal for sale of durable product such as furniture, electrical goods and a variety of
house hold goods

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  Large-scale retailers
 Have large capital and buy directly from manufacturers
 Buy in bulk and enjoy economies of scale and break bulk to
consumers
 Have their own transport
 Include supermarkets, hyper markets and department stores
Route 4
Route is ideal for sale of durable product such as furniture, electrical goods and a variety of
house hold goods that can be handled by the post office, this channel can be used by mail-
order firms that employ agents to distribute catalogues
 Consumers order goods through the post office
 The goods are delivered to consumers through the post office
 Consumers can pay for the goods at the post office when the goods are
delivered [Proforma invoice is used]
NB// the costs are high for mail order firms due to packaging, advertising, printing and
posting of catalogues

Route 5
This chain of distribution is where the producer sells directly to the consumer. This route is
used:
 When producers own retail outlets receive goods from the
manufacturers and sell directly to consumers. Bata footwear is an
example
 Used when manufacturers push their own products such as footwear,
assembled cars and radios
 Farmers can have their own retail shops and sell perishables produced
from their farms e.g. potatoes, vegetables and fruits
 Tied shops that sell goods of one manufacturer only

Route 6
This chain is the shortest route where both wholesalers and retailers have been eliminated. It
is ideal for the sale of the following goods directly to the consumers:
 Fragile goods to reduce unnecessary handling such as glass and eggs
 Goods with a slow rate of turnover such as cars, and furniture
 Goods made by order such as cakes , clothing
 Perishable farm products such as milk, meat, vegetables, fruits
 This is the only channel used for provision of direct services such as personal
services given to consumers, there are no middlemen e.g. teachers , lawyers,
ad musicians

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 Route 7
This I the cannel that is responsible for agriculture produce that is sold to marketing boards
by farmers, marketing boards buy primary products and sell to both retailers and wholesalers.
Examples of marketing boards are Grain Marketing Board [GMB], Tobacco International
Marketing Board [TIMB]

Reasons for direct dealing / elimination of the wholesaler.

 Nature of the goods such as fragility and perishability
 Growth of large scale retailers with:
 Large amount of capital
 Have their own transport
 Have their own warehouses
 Manufacturers own retail shops such as Bata
 The use of tied shops such as Total
 Sale of slow moving goods such as aeroplanes
 Sale of expensive products such as sports cars
 Enjoy economies of scale buying from manufacturers [discounts]
 Manufacturers give expert advice on technical goods such as electrical
appliances
 Manufacturers sell branded and packaged goods which are easy to sell to
consumers directly
 The use of authorised dealers who distribute straight to consumers
Value addition and beneficiation
The above terms both involve the changes of the features of a product or service and this will
give value to the product the forces of demand and supply have led to extensive value
addition and benefaction
Value addition
Def.:
 It is the difference between the price of a good or service and the cost of production /
it is found by subtracting the cost of production form the selling price

 It’s the improvement a company gives its product or service before offering it to
consumers

 It is the estimated amount of a product is increased at each stage of manufacture

through storage and distribution

 It is also known as increasing the worth of a product

 It can also be a change of place, time or form of the material

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  It is the increase in the economic value of a product through a number of activities
such as packaging, distribution etc.

Advantages of value addition

 Value addition creates brand loyalty
 Enables the business to charge a premium [higher price]
 Instils a sense of pride to the consumers
 Allows consumers to be willing to pay more for a product
 It increases the life span of a product
 Gives the business competitive advantage over its rivals
 It leads to trade
 Products look attractive
 Increase the economic value of a product
Disadvantages of value addition
 Products become expensive
 Businesses lack adequate tech to add value to products
 Entrepreneurs lack knowledge that is needed to add value to products
 Can be wasteful if consumer do not buy the product

Beneficiation
This is defined as the removal of impurities from mineral ore or raw materials to give them a
high grade product that can fetch a higher price e.g. diamond cutting and removal of intestines
of Mopani worms
The concepts of value addition and beneficiation are inseparable or are interwoven or
intertwined and need caution when dealing with them, the diagrams below will give a clear
understanding of the two concepts:
Concept of value addition and beneficiation
Diamonds
Cutting polishing

Rough stone of Diamonds Diamonds sold

diamonds

Raw materials beneficiation value addition

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 Mopani worms

Harvested from Intestines Boiled, salted,

Mopani worms removed dried, packed,
trees
stored and
distributed

Raw materials Extraction in beneficiation value addition

Primary production

Wheat
Grinding baking

Shelling removes Flour Bread / cakes

Wheat
husks

Raw materials beneficiation value value

addition addition

Natural resources
These are items that are of paramount importance to communities and nations, are used in the
production process and are divided into renewable and non-renewable. Exploitation is needed
but there is need to sustainably exploit the resources so that future generations will benefit
from the resources too.
Advantages of exploiting natural resources
 They are cheap to buy since they are abundant
 Sold to obtain foreign currency
 Leads to trade
 Can be converted to finished goods to satisfy human needs and wants

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  Some resources are renewable hence they can be replenished naturally
 Employment creation
 Enables the organisation to acquire sophisticated tech
 Promotes economic development
 Allows a nation to correct its negative balance of payments
 Allows infrastructural development
 Raise revenue for the government through taxes
 Supports indigenisation a government policy

Disadvantages of exploiting natural resources

 Some resources are non-renewable hence depletion
 Depletion of resources creates ghost towns such as Mhangura
 Exploitation leads to desertification
 Exploitation leads to pollution e.g. air, water, land and noise pollution
 Soil erosion can result from exploitation of resources
 Land degradation creates an eyesore environment
 Raw materials are sold for less hence they have little benefits to the nation if not
beneficiated and value added
 Mining can create hazards such as landslides and collapsed mines
 Exploitation requires technology and expertise hence some of the minerals will not be
exploited such as uranium
 Exploitation of minerals can destroy more productive land under agriculture
 Mineral ore existence can lead to forced evacuation e.g. Chiyadzwa
 Illegal gold panning on the river banks can lead to siltation of dams

Business and its environment

The business is mainly concerned with pleasing individuals who have a direct interest in the
business known as stakeholders, these stakeholders are divided into two categories namely:
internal and external stakeholders
Internal stake holders
 Employees
 Job security
 Training and carer development
 Salaries and wages
 Fringe benefits
 Good working conditions

 Managers
 Salaries and wages
 Job security
 Profit maximisation
 Business growth

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  Independence in decision making

 Shareholders / Investors
 Business growth
 Dividends
 Profit maximisation

 Directors / owners concerned with:

 Business growth
 Dividends
 Profit maximisation
External stakeholders
 Customers
 Reliable suppliers
 Timely deliveries
 Safety of goods
 Quality products
 Affordable/ fair prices

 Suppliers
 Credit worthiness of customers
 Prompt payment by debtors
 Goods on demand
 Infor about changes in taste and preferences of the customers

 Competitors
 Quality of other suppliers goods
 Pricing methods and prices of commodities
 Market share
 Market growth

 Community
 Employment creation
 Safe products
 Safe production methods [environmental friendly]

 Banks
 Interest rates
 Lon repayment [credit worthiness]
 Opening Accounts [current and savings accounts]

 Government
 Taxation
 Abide to legislation [Acts]
 Conditions of work for employees

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  Salaries and wages

 Lobbyists / environmentalists
 Clean environment [proper dumping of waste]
 Clean production methods [minimum or no pollution]

The business environment comprise of the elements that influence or affect a business
operations and are divided into two categories namely: internal and external environments
Internal environment
The internal environment is also known as the micro environment and these factors consist of
all the factors that influence business operations and emanate from within the business, these
factors vary as per business and comprise of the following:
 Employees
 Owners /Directors
 Shareholders
 Managers
The above mentioned individuals have different interests and they are influenced in different
ways mainly:
 By the activities they carry out
 The choices they will make
 The behaviour of the individuals
The internal environment if influenced by the following aspects:
 Mission statement
 Corporate objectives
 Leadership style
 Organisational culture
 Organisational structure
 Resources
External environment

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 The internal environment is also known as the micro environment and these factors consist
of all the factors that influence business operations and emanate from outside the business,
these factors are uniform for all businesses and comprise of the following: and are presented
in the form of a statement Susan Left Evans Picking Potatoes in Town [S.L.EP2.T]

Technological

Physical Social
Directors,
Managers,
Employees
and
Shareholders
Political Legal

Economic

Social environment
Communities that organisations operate are dynamic hence in order to be successful in the
ever-changing environment businesses need to adopt and respond to changes. The social
environment is influenced by the following factors:
 Customs of the people in the community
 Traditions [culture]
 Values [Ubuntu]
 Beliefs [religion]
 Poverty
 Literacy
 Life expectancy
 The community
 Businesses should make it their priority to make communities they operate from a
better place
 Businesses should ensure they keep the environment clean [pollution free] and
provide clean water

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  Businesses should be involved in corporate social responsibility [CSR], through
employment creation, providing equal opportunities
Legal environment
 The legal environment is mainly concerned with rules, laws and regulations, these can
be within the country or international laws
 The provision of goods and services should be ethical and legal, this will consist of
laws such as price controls, employment laws, tax laws for companies etc.
 Government will be concerned with the following:
 Trading practices
 Impact on the environment
 Compliance with the laws
 Contribution to taxes
Economic environment
The economic environment deals with fiscal and monetary policies
Fiscal policy changes in government spending levels and tax rates
Monetary policy changes in the level of interest rates which make loan capital more or less
expensive
The economic environment is divided in to macro [large] and micro [small] environments
Macro-economic environment
This economic environment influences the country to a larger extent and comprises of the
following:
 Gross domestic product [GDP] is a measure of the goods which are produced
locally
 Employment
 Inflation
 Exchange rates
 Interest rates
 Taxes
Micro-economic environment
This economic environment influences the country to a smaller extent and comprises of the
following:
 Market size
 Demand and supply
 Decision making
NB// Economic factors are divided into two categories namely controllable and
uncontrollable factors
Controllable factors
 Processing methods

‘Together we are stronger’

  Income levels
 Interest rates
Uncontrollable factors
 Consumer wealth
 Distribution of wealth
 Pollution
 Weather conditions
Political environment
This when the government will set rules, laws and regulation that will govern the economic
system of the nation, more so it will implement policies that assist progress and development.
Politics plays a pivotal role in economic development or can disrupt all the progress
depending on the policies implemented by the government, policies that support business
growth have positive contribution towards success of the economy
 Subsidies
 Grants
 Training facilities [training centres]
 Market research through exhibition at Zimbabwe International Trade Fair [ZITF]
 Tax holidays
 Loans through Small Enterprise Development Corporation [SEDCO]
Whilst policies that do not support tend to have detrimental effects on economic development
and chase away investors
 Political instability
 High tax rates
 High interests
 Too high minimum salaries and wages rates
 Bureaucracy
 Stringent employment laws
 Price controls that are not justifiable
Physical environment
This environment is concerned with the following:
 Limited resources from which organisations compete to extract
 Climatic conditions that are suitable for Agriculture
 Pollution and global warming
Technological environment
This environment is mainly concerned with the changes in innovations that are developed by
businesses
 Business and government invest in research and development [production methods]
 Changes in tech provide businesses with opportunities and threats

‘Together we are stronger’

 Technological development has enabled entrepreneurship to be easy through trends in
retailing such as e-commerce, e-marking, e-tailing, e-insurance and e-assurance, e-
banking, ATMs, and the cards system, bar coding, radio frequency identification
[RFID] and point of sale or pay line etc.

PRODUCTION POSSIBLE QUESTIONS

� Outline the need for production
� Categorise goods and services
� identifying production sites in the community
� Discuss production activities in the community
� Describe each stage of production
� Discuss factors of production
� Outline the relationship between commerce and production
� Discuss importance of indigenous people owning means of production
� Debate on why land is our Heritage
� Explain the importance of land reform and indigenous
� Distinguish direct and indirect production
� Discuss specialization
� Identify merits and demerits of mass production
� Demonstrate division of labour and specialization
� identify local production sites
� Draw link diagrams on channels of distribution
� Explain channels of distribution
� Describe factors considered when selecting channels of distribution
� identify suitable products for each channel of distribution
� identify how value addition is done at each stage of production
� Debate on the merits and demerits of exploitation of resources
� Explain business environment
� identify internal and external factors
� Analyse the impact of internal and external factors

‘Together we are stronger’