Grade 10 – POB – Factors of Production (Capital, Entrepreneur, Land and Labour – CELL)

These are the factors/elements needed in order for production of goods/services to occur. These factors are:
1. Land/Raw Materials (Natural Resources)
All Natural Resources including: minerals (e.g. bauxite, oil, iron ore, gold and diamonds etc.), sunshine and
rainfall, waters (e.g. rivers, ponds, lakes, seas and oceans), deserts and forests and the various climatic
conditions such as warm or cool weather.

Natural Resources of the Caribbean and the related industries

Natural Resource Countries Related Industries

Bauxite Jamaica, Guyana Bauxite Industry
Oil and Natural Gas Trinidad & Tobago Petroleum Industry
Gold & Diamond Guyana Gold & Diamond Industry
Manganese Guyana Glass and Steele Industries
Forestry Guyana, Belize Furniture and Construction
Limestone (most countries) Cement
Gypsum Jamaica Gypsum Industry

Home Work
List three things produced by any four of the industries mentioned above and discuss one importance of this
industry to each related country.

2. Labour (Human Resources)

This refers to all categories of skills and occupations and is also known as the human resource aspect of the
factors of production. It refers to all staff/persons that make up the workforce.
 Labour force - refers to all persons who have reached the legal age to be working, whether or not they
are employed.
 Labour Supply – the amount of labour available to carry out productive activity. The labour supply can
be affected by factors such as:
 availability of proper transportation
 availability of proper health services
 the education level, skills and competencies of the labour force.
 the birth rate/population size of the country etc.
 The Efficiency of Labour – how well the workers in the labour force perform is determine by the
following:
 level of education of labour force
 the technology available
 procedures and methods put in place to carry out work
 monetary and other benefits provided by organizations
 types of on-the-job training offered by companies to improve employee performance
 opportunities for employee promotion
 the type of management/leadership style used by the organization
 the health and well-being of the workers – physical and mental stress affect staff performance
 lack of proper working conditions etc.

The Effects of Migration on the Labour Force

There can be internal migration (where people move from one part of the country to another part of the same
country) or external migration where people leave one country to live in another country permanently. External
migration can cause a situation known as “brain drain.” This is when professional, technical, skilled and semi-
skilled persons migrate to other countries. The country’s resources have been used to develop these persons
who have now left with their skills to be used to develop another country. Other effects of migration include:
 Production will be negatively affected causing a slow down in economic growth.
 Social and financial problems are created (e.g. children left without parents to provide proper
guidance care and protection, this can then lead to strains on the country’s welfare system or
children become problems in society due to law-breaking etc.).
 Caribbean countries experience inflows of foreign exchange (remittances) from persons who
work overseas and send money back home to support their families. This money is then spent in
the local economy.
 Internal migration causes the loss of qualified persons from one community to another and a
decrease in the labour force in that area. It also causes overpopulation of areas that persons
migrate to and insufficient amenities such as housing, etc. to accommodate these migrants.

3. Capital (Manufactured Resources)

Money and other assets invested in a business, or used to start and run the business. Capital is divided into two
categories (Fixed and Working Capital). (See SBA handout for details)

4. Entrepreneurs
An Entrepreneur is a person who takes on the risks involved in starting and operating a new business. The act
of managing the business enterprise is known as entrepreneurship. The entrepreneur takes on this risk in order
to make a profit but may suffer losses instead if he/she doesn’t have the right personality traits or does not
provide what customers want.

Personal Traits and Leadership Qualities of an Entrepreneur

a) Creative/Innovative – the entrepreneur must come up with new ways of completing old tasks and also
with fresh ideas and techniques. He/she must use his imagination to create products that are
different/original to suit the wants/needs of customers or create products that will persuade people to
want to buy (i.e. create products for markets and markets for products).
b) Flexible – entrepreneurs should be able to change their ways become accepting of new technologies and
new ways of doing things in a changing world to become more acceptable to people. This will help to
ensure the business remains successful.
c) Goal-Oriented – entrepreneurs must set goals and remain focused on the goals to be achieved (making
the business successful.)
d) Persistent/persevering – someone who does not give up easily when trying to achieve goals that have
been set.
e) Used to taking calculated risks – An entrepreneur has to risk their own money to run a business and
must continue to take risks as time goes by to ensure the business continues to be successful. He should
take these risks after studying the situation and determining if the risk is more likely to be successful.

Functions of the Entrepreneur

1. Conceptualizing – the entrepreneur must formulate ideas regarding the type of business and the type of
product that can be put on the market. He must also think of the size/quantity of production in order to
make a profit.

2. Planning – this means the entrepreneur will consider the future and what is to be done in the future
regarding what was conceptualized. The entrepreneur will make short-term as well as long-term plans
and make company rules/policies as well as design organization structure. Planning also includes
outlining the duties of managers and setting targets to be met for example, production and sales targets.
 3. Accessing Funds – the entrepreneur is responsible for raising funds or finances before production
begins and whenever the business needs additional capital for expansion. This capital does not have to
come from the entrepreneurs own pocket can be from various sources.

4. Organizing – this involves bringing together all the factors of production in order to ensure efficiency,
maximum output and maximum profits. (Factors of productions – Land – raw material, Labour -
employees, Entrepreneur and Capital).

5. Operating the Business – once the entrepreneur has chosen the right form of ownership, made short-
term and long-term plans and organized resources, including time and money, he may begin to operate
or run the business. Operating the business will involve the functional areas of production, marketing,
finance and personnel. Operation of the business results in the production and sale of goods and services
with the aim of making a profit.

6. Evaluating the performance of the Business - This is when the entrepreneur carries out checks after
production is complete, to ensure that the process was successful and to make sure that the company’s
goals are being achieved. Problems and failures must be assessed and strategies put in place to ensure
these problems do not occur in the future.

7. Bearing Risks – this is when the entrepreneur takes chances, not knowing what the end result will be.
There are two types of risks:
i) Insurable risks and
ii) Non-Insurable risks
Insurable risks are the risks that can be insured and the entrepreneur must ensure he takes out insurance
policies for these types of risks. (These include theft, fire, flooding etc.)
The entrepreneur has to bear the results of non-insurable risks all by himself. These non-insurable risks
are called uncertainties and include things like the change in the demand of a product etc.

8. Reaping Profits or Bearing Losses – the business will make a profit if the entrepreneur sells his goods at a
higher cost than the cost he had to bear in order to get the goods. If he sells his goods at a price lower than the
cost he had to bear to get the goods, he will be making a loss. If it is a partnership business, the profits or losses
will be shared by the partners.