Presentation

RAJA AHSAN 046

SUBMITTED TO:
SIR USMAN
Factors of Production:
 Production:
Transformation of inputs into output is called Production.
 Factors of Production is an economic terminology.
 Factors of Production are the resources required to develop product, good
and services.
 Four Factors of Production:
• Land
• Labor
• Capital
• Organization/Entrepreneurship

LAND+LABOR+CAPITAL=ORGANIZATION
1-Land:
 Upper Surface of Earth which is God gifted.
(Plains,Mountains,Desert etc.)
 Land include:
• Agricultural Land
• Natural Resources
• Land for Real Estate
• Land for Industries
 Requirement of Land depends on nature/size of business of an organization.
 Example:
Real Estate business require more Land than an IT Company operating online.
Features of Land:
 Limited Supply:
Supply of Land is limited. Supply of Land Cannot increases.
 Optimal Level of Production:
Up to a specific level of production from land is increases but after that
Level of production cannot be increase.
 Lack of Geographical Mobility:
Land cannot be moved from one place to another but we can develop it only.
 Durable in Nature:
Land has a long productive ability as compares to other factors.
 Difference in Location:
• Land closer to cities has more worth.
• Distance between production and consumption will be favorable if cost
of carrying raw material will be high.
Factors Affecting the Productivity of Land:
 Natural Climate:
Floods, Disasters, Insects.
 Location:
Availability of raw material depend on location.
 Source of Capital:
Out from agriculture and Industries level depend upon level of capital.
Example: Money, Machinery, Equipment's etc.
 Ownership of Land:
Sense of ownership will definitely will increase the productive capacity as compare to
the situation given on tenured system.
 Quality of Inputs:
Good quantity of inputs will increase the production capacity of agriculture sector.
Example: Latest Technology, Good seeds, Fertilizers, Pesticides etc.
2-Labour:
 TheHuman Resource or Individuals involved in
developing the products is called Labour.
Example: Construction worker ,Data analyst,
Project Manager etc.
 Reward of Labour is Wages.
 Workers are paid as per their knowledge,
skills, expertise, education etc.
Features of Labour:
 Labour is original and indispensable factor of production:
Labour is original and indispensable factor of production without it the work of
production is not possible.
 Labour is an active factor of production:
Land and capital are considered as the passive factor of production, because they alone
cannot start the production process.
 Labour is perishable than any other commodity:
Labour cannot be stored.
 Labour cannot be separated from the labourer:
Land and capital can be separated from their owner, but Labour cannot be separated
from a labourer.
 Labour supply is inelastic:
 It means that their supply can neither be increased nor decreased if the need demands
so.There is positive relation between price and supply but reward of labour
(wage)has negative relation.
Factors Affecting the Productivity Labour:
 Physical Health:
Poor health of workers.
 Ethical Element:
The perception of ethical behavior can increase employee performance, job
satisfaction, organizational commitment, trust and organizational citizenship
behaviors.
 Atmosphere Work:
Positive atmosphere of work will definitely leads to more production.
 Rate of Wages:
Higher rate of wages lead to better performance of labourer.
 Performance of Labourer:
Its depends upon types of technology available to Labourer.
 Political Instability:
Stable Political condition leads to more employment which will increase
the productive capacity of labourer.
Opportunities for Promotion:
Productivity of labourer will be more
applicable in case of performance
based promotion.
Relationship Between Worker
and Owner:
Owner should develop a policies in
favour of worker like Salary and
House.
3-Capital:
 Capital is referred to Money.
A portion of money which is uses to make more
money.
 Itis not Direct factor of Production. It is
indirect factor of production because its is
used to purchase Land, raw material,
Equipment and to pay Salaries etc.
Features of Capital:
  Capital is a Passive Factor:
Capital is a passive factor of production. This is so because capital is ineffective
without the cooperation of labor.
 Capital is Man-Made:
Capital is a man-made thing. Its production and supply is controlled by the efforts of
man.
  Capital has high Mobility:
The land is immobile and labor has the least mobility, while capital has both ‘place
mobility’ and ‘occupational mobility’.
 Capital Depreciates:
Capital depreciates over time. For example, if a machine is used again and again its
efficiency goes down and it may not be suitable for further use due to depreciation.
 Capital is Temporary in Nature:
It can not last forever. Therefore, Capital needs to be reproduced and replenished
from time to time. This makes capital a short-term asset.
 Development of Trade:
Higher amount of Capital leads to high amount of
Exports.
 Modern means of Transportation:
It increase the volume of sale and reduce the days of
delivery.
 Capital is recalled as Past Savings:
Capital goods become savings when production exceeds
consumption. 
For example, when a farmer does not consume or sell
a part of his crop production, it can be used as seeds
in the future.
Factors Affecting Capital:
 Labor Force:
The skills and knowledge of the labor force can impact the use and productivity of
capital goods.
 Investment:
The level of investment in capital goods can impact the overall amount and quality of
capital in an economy.
 Economic Policies:
Government policies such as tax incentives, subsidies, and regulations can impact the
level and composition of capital in an economy.
 Technology:
Advances in technology can impact the composition and quality of capital goods.
 Infra-Structure:
The quality and availability of infrastructure such as transportation, communication,
and energy systems can impact the use and productivity of capital goods.
4-Organization:
A factor that produce goods or provide good with the
combination of labour,
Land and capital in order to earn profit.
 It is involved in creative idea to develop new products.

 Entrepreneur:
 A person who create business idea.
 It take Risks to launch new products or goods.
 Investment of Resources.(current assets and fixed assets).
 Implement the Project.
Features of Organization:
  Achievement of Common Objectives:
 The organizational structure should build around common and clear cut objectives. This
will help in the proper accomplishment of objectives.
 Division of Work:
Organization helps in dividing the work into related activities so that they are assigned to
different individuals.
 Coordination:
Coordination of various activities is as essential as their division. It helps in integrating
and harmonizing various activities.
 Co-operative Relationship:
An organization creates co-operative relationship among various members of the
group. The structure should be designed that it motivates people to perform their part of
work together.
 Performance:
The organization’s main aim is to achieve the goals and objectives through
effective performance which is possible with
human resource development. 
 Thank you!

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