TOPIC: THE FACTORS OF PRODUCTION

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TOPIC THE FACTORS OF PRODUCTION

• LEARNING OBJECTIVES At the end of this topic,
  you should be able to
• Define the term factors of production.
• Briefly describe the production process.
• Identify the four factors of production.
• State the characteristics of land.
• Briefly explain what is meant by the law of
  diminishing returns.

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FACTORS OF PRODUCTION DEFINED

• Factors of production are the resources used to
  produce goods and services.
• Question
• Identify the resources used to make a cake.

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PRODUCTION PROCESS

• The production process involves the manufacturing
  and distribution of goods produced and the
  provision of services.
• Question
• Where is manufacturing done?
• How is distribution carried out?
• What type of services are provided to (1) satisfy
  peoples wants and (2) aid production?

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FACTORS OF PRODUCTION

• There are basically four factors of production
  which are required for the production process to
  take place. They are
• Land
• Labour
• Capital
• Enterprise or entrepreneurship

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The nature of Land

• Land refers to all natural resources found in the
  sea and on land. The range of natural resources
  has some influence on the capability of the
  economy to produce different goods and services.

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Land includes

• Raw materials e.g. copper, timber and rubber
• Landscape e.g. mountains, valleys and hills
• Ports e.g. natural harbours
• Climatic conditions e.g. the seasons
• Geographical location e.g. continents or islands

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CHARACTERISTICS OF LAND

1. Mostly immobile Some land such as climatic
   conditions and landscape are immobile as they
   cannot be transferred from one place to another.
2. Limited in supply Although land is limited in
   supply, some can be increased by man-made
   efforts. For example, land area can be increased
   by reclaiming land from the sea. Some examples of
   countries that reclaimed land from the sea
   include Singapore and the United Arab Emirates.

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Characteristics of Land

• Gift of nature Climatic conditions, geographic
  locations, natural deep harbours and mineral
  deposits are all gifts of nature.
• Land is subjected to the law of diminishing
  returns. This hypothesis states that if one
  factor of production is fixed in supply (i.e.
  land and / capital in the short run) and extra
  units of another factor (i.e. labour ) are added
  to it, then the extra output or returns gained
  from the employment of each extra unit of this
  factor must, after a time, go down or diminish

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The law of diminishing returns

• This hypothesis states that if one factor of
  production is fixed in supply (i.e. land and /
  capital in the short run) and extra units of
  another factor (i.e. labour ) are added to it,
  then the extra output or returns gained from the
  employment of each extra unit of this factor
  must, after a time, go down or diminish

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Lesson 2 The nature of Labour

• LEARNING OBJECTIVES
• At the end of this topic, you should be able to
• Define the term labour
• State the characteristics of labour.
• Describe the classification of labour
• Define the term labour force
• Identify and describe those factors which affect
  the supply of labour
• Identify and describe those factors which affect
  the productivity of labour

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Labour

• According to the British economist, Alfred
  Marshall (1842-1924), labour can be defined as
  any exertion that the mind or body has undergone,
  either partly or totally, with the view of
  earning some other good other than the pleasure
  derived from the work itself.
• Thus labour involves the physical and mental
  efforts of individuals as they convert the
  resources of nature into goods and services. It
  therefore would include all forms of work needed
  to transform natural resources into a form useful
  to man.

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CHARACTERISTICS OF LABOUR

• A labourer sells his services only.
• Labour services cannot be separated from the
  worker.
• Labour services cannot be kept or stored like
  goods.
• Labour is provided by human beings. They are not
  machines and must be treated with dignity and
  respect.
• Labour has greater mobility than land as it is
  easy to import labour from another country.
• Labour is not a homogeneous product as each
  person is unique and different people have
  different skills and attitudes.

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QUESTION

• Identify some skills required to cook a family
  meal, for example, the Sunday lunch.
• Is this labour as Alfred Marshall defined it?

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CLASSIFICATION OF LABOUR

• Unskilled - there is no special ability required
  to perform tasks, for example, men who carry
  buckets of cement on a construction site.
• Semi-skilled -- the ability to do a particular
  task is
• only partially developed. These workers need to
  get further training to be able to perform the
  task really well. An example would be practical
  nurses or nurses aides in a hospital. They have
  basic training but need further training to
  develop nursing skills.
• Skilled - there is a special ability to do a
  particular job. These skills required may have
  been developed through specialised training
  following prescribed courses or developed on the
  job during employment.

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THE SUPPLY OF LABOUR OR LABOUR FORCE

• The supply of labour in a country or the
  country's labour force refers to all those people
  who are either employed or seeking employment.

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Factors which affect the supply of labour

• The labour force of a country is affected by a
  number of factors, which may either cause the
  supply to increase or decrease. Among these
  factors are
• The size of the population Populations that are
  large tend to have a greater supply of labour
  than populations that are small. The birth rate
  does affect the size of the population and hence
  the labour force.
• The age distribution of the population This can
  affect the labour force in that if the population
  is old, (the majority of the citizens are retired
  or near retirement) or if the majority of the
  population is young (that is of school age) then
  the labour force may be small.

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Factors which affect the supply of labour

• The compulsory school leaving age and retirement
  age If young people leave school early for the
  working world this means that more labour is
  available to, the country. Also if retired
  persons are allowed to work this again
  contributes to an increase in the labour force.
• Social habits In some countries married women
  may not be allowed to work and this would reduce
  the supply of labour.

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THE PRODUCTIVITY OF LABOUR

• The productivity of labour is affected by its
  efficiency. There are a number of factors that
  may affect the productivity of labour.

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The productivity of labour

1. The level of education of the worker This factor
   affects whether the worker can be trained further
   in a particular area or in a new area.
   'On-the-job' training may assist in advancing the
   productivity of the worker.
2. The standard of health of the worker Healthy
   individuals are far more efficient than sick
   ones. The adequacy and efficiency of the health
   services will also determine the extent to which
   sick persons are restored to health and assume
   their productive roles.

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The productivity of labour

• The attitude of people towards work If persons
  are responsible and apply themselves to the task
  that they are engaged in then this would affect
  their productivity in a positive way.
• Wages Workers are motivated to perform by
  income, thus allowing them to improve their
  standard of living and their health. A system of
  paying workers called 'piece rate' is known to
  increase productivity.

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Productivity of labour

1. The transportation system available to assist
   workers in getting to and from work If the
   transportation system is efficient it means their
   workers will be able to get to work on time, less
   fatigued and result in an increase in their
   productivity.
2. The mobility of labour If persons are willing
   move to new areas to find work or move into new
   occupations, then it is likely that their
   productive ability will be utilised.

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Productivity of labour

1. The organisation of the workplace Good
   organisation means that raw materials will
   available and machines will be in proper working
   order. This means also that careful instructions
   will be given so that there is no loss of time
   and waste of resources in the productive process.
2. Working conditions The layout of the factory,
   the lighting and ventilation of offices are areas
   to examine. If workers have to leave the plant
   purchase lunches because there is no canteen
   facilities available this may prevent them
   returning to work on time or be stressed out on
   the job, hence reducing their efficiency.

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Productivity of labour

1. Offering promotion opportunities to workers
   This acts as a challenge to workers. Workers will
   be motivated to perform at their jobs.
2. Providing sufficient education and proper
   training opportunities Provide opportunities
   for workers to upgrade themselves by attending
   courses either locally or overseas. On-the-Job
   training programmes can also enhance the
   productivity of workers.

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Productivity of labour

1. Injecting new blood into the organisation Young
   people are more receptive to new ideas and bring
   with them new thoughts and ideas that might
   benefit the organisation.
2. Ensuring good management The good management of
   human resource development is vital in any
   organisation. For example, in Japan, the emphasis
   of workers' welfare has resulted in happier and
   more dedicated staff. This has helped increase,
   productivity.

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Productivity of labour

1. Provision of social services by the government
   Provision of social services such as medical,
   housing, transportation and educational
   facilities by the government will ensure that
   most people will be able to afford them. As the
   well-being of the labour force improves,
   productivity will increase.

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QUESTIONS

• Can your productivity be increased?
• Suggest some ways that this may be done.

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Lesson 3Mobilisation of Labour (Migration and
the Labour Force)

1. Define the term migration
2. Identify and describe the types of migration
3. Identify the reasons for migration
4. Describe the effects of migration
5. State the obstacles to mobility of labour.
6. State the advantages and disadvantages of
   division of labour.

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Migration defined

• MIGRATION is the permanent movement of people
  from one area to another or from one country to
  another. A person leaving one country to reside
  permanently in another is called an emigrant and
  when he arrives in that country he is termed an
  immigrant. Today the term migrant is used to
  represent both.

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Internal migration vs External migration

• When an individual leaves the rural areas to
  settle permanently in the city this is called
  in-migration or internal migration. If an
  individual leaves one country to reside in
  another country this is called out-migration or
  external migration.

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EFFECT OF MIGRATION ON THE LABOUR FORCE

• Migration affects the labour force in that it is
  one of those factors affecting population growth
  or decline in some countries. It is used to
  preserve the balance between the birth rate and
  the number of inhabitants that a country can
  support. If more persons leave a country than
  those coming in or being born, this will prevent
  this country from achieving maximum economic
  growth. Too few workers will halt development and
  industrial production.

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Effects of migration

• On the other hand if a country has more
  inhabitants than it can support this will cause
  average output and standard of living to be low
  and there will be great demand for social
  amenities. Governments find themselves spending a
  great deal on public relief payments or food
  imports instead of harnessing this expenditure
  for industrial development.

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Migration and the Caribbean

• Many Caribbean countries face the problems
  mentioned above. However, when many educated
  persons such as our professionals, lawyers,
  doctors, managers, teachers, nurses and other
  skilled persons leave, this results in the pace
  of industrialization and development in Caribbean
  countries slowing down. Many of these
  individuals have been trained in the Caribbean
  from meagre scarce resources. This "brain drain"
  as it is called, has a negative impact on the
  Caribbean.

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REASONS FOR MIGRATION

1. To increase material wealth e.g. better homes
   and cars
2. To increase living space
3. To find better jobs and higher living standards
4. To make use of better educational opportunities
5. Health reasons
6. To escape political and economic pressure.

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EFFECTS OF MIGRATION

• There are negative as well as positive affects of
  migration - both on the country from which
  persons leave and on the one where they settle.

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Effects of migration

1. If the persons are skilled professionals then
   they will add to the quality of the human
   resources of the country where they settle. On
   the other hand, they reduce 'the quality of the
   human resources of the country they leave.
2. If the population of the country where they leave
   is small this further adds to the reduction in
   labour necessary for development. On the other
   hand, if the population is large, then the
   government may find that less is spent on social
   programmes and the money saved in this way can be
   used towards development.
3. If the country where the migrant settles is
   over-populated, then there is going to be more
   spending on social welfare programmes and less
   spent on development.

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Effects of migration

• The migrant may also find difficulty in getting
  work in his new country because
• There may be sex, class or race discrimination
• His/her educational qualifications may not be
  recognized, hence further studies will have to be
  undertaken
• There are language difficulties to contend with
  or
• He/she suffers from lack of knowledge of the
  different systems in the new country.

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MOBILITY OF LABOUR DEFINED

• Mobility of labour refers to the movements of
  labour.
• Question
• Can you identify any person or persons who have
  moved from their home country to another for the
  purpose of employment?

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Types of Mobility of labour

• There are two types of mobility of labour
  occupational mobility and geographical mobility,
• Occupational mobility of labour This refers to
  the transfer of labour resource from one
  occupation to another, either horizontally or
  vertically.
• Horizontal mobility would involve a change of job
  involving a change of duties.
• Vertical mobility would involve a change of job
  involving a change in the level of responsibility.

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Geographical mobility of labour

• This refers to movements of labour from one place
  to another, either locally, regionally, or
  crossing national boundaries.

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OBSTACLES TO OCCUPATIONAL MOBILITY OF LABOUR

1. Lack of necessary skills and qualifications For
   example, to become a doctor, one needs to be
   professionally trained as one.
2. The age factor Older workers are generally less
   mobile than younger workers.
3. Sentimental reasons Having close ties with
   colleagues and supervisors might be a factor
   causing one to stay on in a job.
4. Insufficient information about job availability
   Due to lack of information, availability of jobs
   in other fields is not known to job-seekers.

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OBSTACLES OF OCCUPATIONAL MOBILITY

1. Unwillingness to take risks by changing job or
   environment The worker may be very familiar with
   his present job and does not want to move out of
   his comfort zone as he does not know what to
   expect in the new Job.
2. Entry requirements and restrictions for certain
   occupations To be qualified for certain jobs,
   one would need to fulfil certain criteria. For
   example, to be a pilot, one needs to be of a
   minimum height and have good eyesight.
3. Contractual obligations Being under a contract
   or bond would make changing Jobs difficult.

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Obstacles to geographical mobility

1. Financial constraints the cost of moving is a
   major factor which restricts geographical
   mobility.
2. Political instability war, riots, or political
   upheavals in a country would discourage people
   from moving into a country.
3. Sense of belonging to ones country family and
   friends and a sense of belonging to ones country
   (patriotism) would make people think twice about
   uprooting themselves.

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ADVANTAGES OF DIVISION OF LABOUR

1. Increase in output The concept of division of
   labour was first introduced by Adam Smith who
   proved that with division of labour, output will
   increase.
2. Requirement of specialists Because of the
   specific tasks involved, people with the
   necessary skills and knowledge are needed. Thus
   the company has to employ specialists so that
   operations for the production of goods and
   services can be carried out.

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ADV. OF DIVISION OF LABOUR

1. Use of machinery Some tasks can be performed
   more efficiently by machines. The division of
   labour makes possible the use of machinery to
   accelerate the production of goods. This will
   enhance productivity of labour.
2. Increase in productivity Workers performing
   repetitive tasks will soon become experts. They
   know the tasks they perform well and are more
   efficient. Productivity thus increases.

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ADV. OF DIVISION OF LABOUR

1. Saving of time With division of labour, more
   time will be saved as workers do not have to move
   from one place to another to perform different
   operations. The saving of time, in turn, helps
   the company to become more cost-effective.
2. Diversification of employment With
   specialisation, more job opportunities are
   created, each requiring different skills. For
   example, as firms mechanise and computerise,
   workers trained in these areas are required.
   This will create new employment opportunities.

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DISADVANTAGES OF DIVISION OF LABOUR

1. Doing repetitive work might be boring and
   monotonous Due to the repetitive nature of the
   job, workers may find their jobs uninteresting
   and unchallenging. The workers may also feel
   alienated from one another as they work alone
   with minimal interaction with co-workers.
2. Lack of ownership As the workers do not create a
   product from start to finish and only contribute
   a portion towards the production of the product,
   they do not feel a sense of ownership towards the
   product.

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DISADV. OF DIVISION OF LABOUR

1. Retards creativity Because of the repetitive
   nature of the job, there is little room for
   creativity and workers might become bored.
2. Causes immobility of labour The workers, being
   specialists, are easily made immobile if they are
   retrenched or if their jobs are being made
   redundant because of technological advances. They
   will have difficulties in looking for other kinds
   of jobs because their specialised skills might
   not be relevant in other jobs.

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LESSON 4 UNEMPLOYMENT

• LEARNING OBJECTIVES
• Define unemployment
• Identify and describe the types of unemployment
• Describe possibly ways to reduce these types of
  unemployment
• Describe unemployment in the Caribbean
• Define underemployment
• Describe self-help and community work
• Identify some of the agencies that provide
  training for self-help and community work
• Identify the types of training received by these
  agencies.

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UNEMPLOYMENT DEFINED

• Unemployment is a situation where there are more
  people seeking jobs than there are jobs
  available.

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TYPES OF UNEMPLOYMENT

• There are different types of unemployment caused
  by different situations. The following are the
  main types of unemployment
• Cyclical
• Frictional
• Structural
• Technological
• Seasonal
• Casual
• Disguised
• Residual

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CYCLICAL UNEMPLOYMENT

• Cyclical unemployment refers to the booms and
  slumps that occur in the level of industrial
  activity which has occurred over the past
  centuries.
• In boom periods there is a general rise in demand
  for products thus causing industries to expand
  and employ more workers and this may happen over
  an extended period of time - several years.
  However, this general increase in demand does not
  continue forever and is usually followed by a
  general fall in demand for goods and services.
• This period is described as a 'slump'. When this
  occurs, industries react by laying-off workers.
  Note that this type of unemployment is due
  primarily to a general fall in demand for goods
  and services that is, the majority of industries
  experience this fall in demand at the same time.

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REDUCTION IN CYCLICAL UNEMPLOYMENT

• Some economists like Lord Beveridge feel that
  since cyclical unemployment was brought about by
  inadequate demand in the economy on a whole, then
  polices must be put in place to increase overall
  demand for goods and services.
• One suggestion to increase demand is to increase
  spending, both in the public and private sectors.
  The view is that if government spent more on
  social programmes and the like, this would
  provide income for persons who would create
  demand and thus cause more job expansion. The
  same would also be true of the private sector.
• It has been recognized 'that a low level of
  unemployment cannot be achieved simply by demand
  management. This is largely due to the fact that
  inflation follows a high level of demand.
  Therefore more attention must be paid to reducing
  unemployment by creating conditions which
  stimulate existing firms to expand and new firms
  to enter production.

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FRICTIONAL UNEMPLOYMENT

• Frictional unemployment is the time lapse between
  a person losing one job and gaining another.
• Unless the economy is completely static there
  will always be people changing their jobs. Some
  may desire a change of employment or a move to a
  different part of the country. In certain
  occupations, such as unskilled labour in the
  construction industry, workers are not employed
  regularly by any one employer, so when a
  particular contract is completed labour is made
  redundant.

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REDUCTION IN FRICTIONAL UNEMPLOYMENT

• Since frictional unemployment is due to a time
  lapse between losing employment and gaining
  employment as a result of structural or
  technological changes, then a way to reduce this
  type of unemployment would be to create
  opportunities for people to move from one job to
  another.
• Occupational mobility is possible if workers can
  be retrained for jobs, for example, accounting
  clerks can be trained to operate computers.
  On-the-job training can be provided for workers
  prior to new technology being introduced by firms
  to reduce the level of friction.

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STRUCTURAL UNEMPLOYMENT

• Sometimes unemployment is caused by a fall in
  demand for a particular product. This may be due
  to a fall in the price of a substitute for this
  product, or for example, people may demand one
  product over another because it is heavily
  advertised, or because of a change in taste. This
  will lead to a shift in production.

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REDUCTION IN STRUCTURAL EMPLOYMENT

• Structural unemployment may be reduced to some
  extent if there is less localization of
  industries. If a number of different types of
  industries were located within the same general
  area then there would be greater mobility of
  workers reducing the level of structural
  unemployment.
• Additionally there is the question of good
  transportation, and cheaper housing as motivating
  factors for workers to either travel long
  distances to work or settle in new areas where
  jobs are available.

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TECHNOLOGICAL UNEMPLOYMENT

• Technological unemployment may be due to a firm
  using a new technique or the latest technology in
  its operation thus having to lay off workers in
  the process. For example, an accounting firm may
  opt to use computers in its operations and lay
  off a number of accounting clerks.

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SEASONAL UNEMPLOYMENT

• The demand for some goods and services and the
  availability or supply of others are seasonal in
  nature. For example, some agricultural products
  like sugar cane, apples and mangoes are available
  at certain times of the year, thus workers are
  required to harvest these, but during off-season
  periods they are temporarily unemployed.
• In some countries winter or bad weather may
  prevent roadwork and other out-door construction
  from taking place.
• In most Caribbean countries there is the tourist
  season when many are employed in hotels and guest
  houses across the islands as entertainers, cooks,
  housemaids, and so on, but are laid off during
  off-season periods.

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REDUCTION IN SEASONAL UNEMPLOYMENT

• Seasonal unemployment is unavoidable but it can
  be reduced. One major way is by mixing or
  combining jobs, for example, a cane cutter may be
  used in a factory to do other jobs when cane
  cutting is over, or hotel workers may become
  store assistants during off season periods.
• The difficulty, however, is that It is not easy
  to make the switch from one area to another. For
  example, a farm worker cannot become a taxi
  driver if he does not have a certified driver's
  licence.

60
CASUAL UNEMPLOYMENT

• This type of unemployment includes part-time
  workers and those who do not have steady jobs.

61
DISGUISED UNEMPLOYMENT

• This term is used to describe situations of
  reduced output where individuals are being paid
  but are not working. Unemployment is seen here as
  disguised.

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RESIDUAL UNEMPLOYMENT

• If the situation causing unemployment cannot fit
  into any of the categories described above then
  it is considered as residual. This category would
  include individuals who, because of being
  handicapped (mentally of physically), are not
  employable due to their perceived inefficiency.
• Additionally, there are those individuals who
  work only to satisfy a certain need or desire and
  choose not to work after that has been met.

63
UNEMPLOYMENT IN THE CARIBBEAN

• Apart from the types of unemployment mentioned
  above, there are other factors that contribute to
  the high levels of unemployment that exist in
  Caribbean countries.

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Factors affecting unemployment in the Caribbean

1. A large section of the labour force is engaged in
   agriculture. Agriculture is very fragile, thus
   any factor reducing demand or supply of
   agricultural products can affect the level of
   unemployment, for example, drought, crop failures
   or worsening terms of trade.
2. High growth rate of the population leads to a
   large labour force and not enough jobs being
   created in the long run to deal with the demand.

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Factors affecting unemployment in the Caribbean

1. Unemployment is further worsened by the
   unbalanced wage structure in the Caribbean where
   a few are employed and paid high salaries. Trade
   unions try to bridge this gap by seeking better
   salaries for those at the lower end of the scale.
   Some employers react to this by laying-off
   workers thereby aggravating an already bad
   situation,
2. The nature of our formal and informal education
   is of such, that youngsters feel that only some
   types of jobs are worthwhile. Hence, many prefer
   to remain unemployed than seek jobs that they
   consider below their status.

66
UNDEREMPLOYMENT DEFINED

• Underemployment is a situation where either
  persons are working less than the normal work
  week and are seeking additional employment or are
  doing a job that is below their level of ability.

67
SELF-HELP AND COMMUNITY WORK

• Self-help and community work may be one response
  to reducing unemployment. Additionally, cottage
  and linkage industries could also reduce the
  level of unemployment.
• Self-help and community work are potent forces
  with respect to their economic contribution in
  assisting in reducing the levels of unemployment
  within Caribbean economies. There are many
  private and public agencies that are responsible
  for the training of persons within these
  economies. Later these individuals in turn are
  able to provide employment for themselves as well
  as spearhead employment for others in their
  communities. Some individuals form co-operatives
  or engage in cottage production.

68
AGENCIES THAT PROVIDE TRAINING FOR SELF-HELP AND
COMMUNITY WORK

• Social Development Commission
• Service Clubs
• Church Groups
• Citizens Associations

69
TYPES OF TRAINING PROVIDED IN THE CARIBBEAN
THROUGH SELF-HELP AND COMMUNITY WORK

• Dressmaking and Tailoring
• Catering
• Basketry
• Ceramic and Pottery making
• Floral decoration
• Welding
• Masonry and Block making

70
Lesson 5 Capital as a factor of production

• Learning objectives
• Define the term capital
• Identify and describe the two forms of capital
• Describe the nature and importance of capital
  goods.

71
Capital as a factor of production

• Capital as a factor of production includes money
  used to acquired natural and human resources as
  well as all other assets which are employed in
  the process of production, such as the tools,
  equipment, buildings, and any improvement to
  existing structures or plant and machinery to be
  used to improve production.

72
Forms of capital as a factor

• Capital as a factor of production takes two basic
  forms
• Fixed capital and
• Working capital.

73
Fixed capital

• These include buildings, machinery and other
  equipment that are used repeatedly in the
  production process and the creation of wealth.

74
Working capital

• Working capital includes stocks of raw materials,
  cash, bank balances and other items needed for
  the day to day running of the business and which
  are constantly used up in this process.

75
Capital goods as the basis for production

• Capital goods or producer goods are defined as
  goods that are used to produce other goods.
• They include all machinery and tools which are
  used in the production process in the act of
  creating more goods.

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The importance of capital goods

• Firms need to have appropriate equipment and
  technology to foster efficiency and productivity.
• Firms must keep pace with the changes in
  equipment and machinery and the techniques in
  their different fields of endeavour so as to
  increase productivity.
• Obsolete technology and backward techniques will
  not foster growth and development.

77
LESSON 6 ENTREPRENEURSHIP

• LEARNING OBJECTIVES
• Define the term entrepreneur
• Describe the nature of entrepreneurship
• Describe the role of the entrepreneur.

78
Entrepreneurship defined

• Entrepreneurship or organisation involves the
  co-ordinating of all the other factors of
  production in the quantities desirable in order
  to achieve production.

79
The Entrepreneur as a factor of production

• The entrepreneur is the person who starts the
  business and determines whether its succeeds or
  fails.
• Several institutions have been set up to assist
  with the development of entrepreneurial skills.
• These include UWI (St. Augustine, Mona and Cave
  Hill), Business Development Centre (formerly
  SBDC), etc. These institutions offer training
  courses to assist in acquiring business skills.

80
The nature of entrepreneurship

• Entrepreneurs are the owners of the business and
  their role is to take on the risks of business
  and make decisions so that production can take
  place efficiently ahead of demand.

81
The nature of entrepreneurship

• The entrepreneur is a risk-taker and a
  decision-maker.
• Successful decision-making results in profits but
  losses will accrue if poor decisions are made.

82
The role of the entrepreneur

• Entrepreneurs must be willing to carry out the
  following activities in order to succeed
• To raise capital either from savings or borrowing
  to invest in the business
• To organise the different types of labour
  required
• To make any change that are necessary in order
  for the business to grow and develop
• To identify and clarify decisions related to the
  business.