Choosing methods of production for business

Methods of Production for Business

When a company decides which method of production to use, it involves several considerations and factors. These factors can influence whether the company opts for a labour-intensive or capital-intensive approach. Here are some key reasons for production choices

Finance Available

The amount of capital and financial resources a company has at its disposal is a critical factor. Capital-intensive production often requires a substantial initial investment in machinery and automation. Companies with limited financial resources may opt for a labour-intensive approach if they cannot afford the upfront costs of automation.

Quantity of Production

The desired quantity and scale of production play a significant role in the choice of production methods. If a company needs to produce large quantities of identical goods efficiently and consistently, capital-intensive methods may be preferred. Conversely, if the product is customised, unique, or produced in lower quantities, a labour-intensive approach may be more suitable.

Technology Availability

The availability of technology and machinery necessary for a specific production method can influence the choice. If advanced technology is not readily accessible, a company may have no option but to rely on labour-intensive methods.

Examples

Finance Available:

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Choosing methods of production for business

Business Management

Quantity of Production:

An automobile manufacturer producing thousands of vehicles of the same model may heavily invest in robotics and automation (capital-intensive) to ensure efficiency and consistency. In contrast, a boutique chocolate maker producing artisanal chocolates may rely on skilled chocolatiers (labour-intensive) to create unique and limited-edition products.

Technology Availability:

In a developing country with limited access to advanced manufacturing technology, a local textile business may use labour-intensive methods for weaving and sewing textiles, as the necessary machinery is not readily available.