FACTORS OF PRODUCTION-GRADE 8

CAPITAL

- This refers to money, building, machinery and vehicles that are invested in the business to
produce goods and services.
- Capital in the form of money is called monetary capital /working capital and capital in the
form of goods is called fixed capital/ real capital

Kinds of capital
- Borrowed capital
This is capital provided by the owner but borrowed from financial institutions like banks.
- Own capital
This is capital provided by the owner from own personal savings.

LABOUR
- This refers to all physical or mental efforts used in the business for the production of goods
and services.
- Examples of physical efforts in the business include drivers, factory workers, construction
workers, etc.
- Examples of mental efforts in the business include managers, supervisors, accountants,
etc.

Classification of labour
- Unskilled labour
This is labour that is mainly manual (physical) and does not require any form of skill,
education or training in order to be performed. Example is labour provided by farm workers,
garbage collectors, domestic workers, etc.
- Semi-skilled labour
This is labour that is manual and requires some form of training but less education in order
to be performed. Example is labour provided by cashiers, trucks drivers, miners, etc.
- Skilled labour
This is labour that is manual and mental and requires a specific form of training, education
and skill in order to be performed. Example is labour provided by motor mechanics,
electricians, artisans, plumbers, office clerks, etc.
- Highly skilled labour
This is labour that is mainly mental and requires a high form of training, education and
skill in order to be performed. Example is labour provided by engineers, accountants,
teachers, etc.

Role of workers in the business

- Produce goods and services from raw materials.
- Work towards increasing quantities of goods and services during a specific period.
- Contribute to the total production in the whole country.
- Perform duties as per contract agreement
- Pay income tax to the authorities to provide for public services.
- Adhere to labour laws which govern the workplace.
Fair employment practices
All businesses are expected by law, to apply these fair labour practices in their workplaces.
• Basic Conditions of Employment Act (BCEA)
- This Act aims at improving working conditions in a workplace.
- It is used to protect all parties involved in a workplace, i.e. employers, employees, unions,
government and all relevant parties.
- It sets conditions with regard to leaves, working hours, overtimes, weekends and holidays,
employment contract, minimum wage and service termination.
• Employment Equity Act (EEA)
- This Act aims at preventing unfair labour discrimination in a workplace.
- It is used the process of employing of workers by the employers.
- It also promote affirmation action (corrective) measures for the previously disadvantaged
sections of the population.
- It ensures that no one is unfairly discriminated on the basis of gender, religion, race,
colour, political affiliation, social background, etc.
• Labour Relations Act (LRA)
- This Act aims at regulating the relationships between employers and employees in a
workplace.
- It provides rights and responsibilities of employers, employees and unions.
- These rights include right of an employee to join trade union and the right of an employer
to lock employees out of the business premises during strikes and the right of the trade
union to enter workplace premises during working hours.

NATURAL RESOURCES
- This refers to all gifts of nature that used in the production of goods and services.
- Others can be consumed in their natural condition but others need to be processed.
- Others can be renewable (trees) and others are non-renewable (gold).
- Examples are land, fish, water, forestry, minerals and farming products.

. ENTREPRENEURSHIP
- This refers to that special human effort which combines the other three factors to produce
goods and services.
- An entrepreneur takes a risk of starting, running and managing the business.
- Entrepreneurship can take the form one person, two partners or a group of people.

REMUNERATION OF THE FACTORS OF PRODUCTION

• Remuneration for the use of natural resources is called rent.
• Remuneration for the use of labour is called wages and/or salaries.
• Remuneration for the use of capital is called interest.
 FORMS OF OWNERSHIP

FORM OF OWNERSHIP CHARACTERISTICS

OWNERSHIP
SOLE TRADER One person -Owner provides capital alone.
-Owner takes all profits alone, suffers losses
alone.
-The owner has unlimited liability.
-Has a limited continuity.
-Owner must pay income tax on business
profit
PARTNERSHIP Two to twenty partners Each partner contributes something.
- partners share profits and losses as per
contributions.
- Partners have unlimited liability.
- Continuity of the business is limited.
- Partners pay tax on their share of profits.
COMPANIES PRIVATE: -Proprietary Limited (PTY) Ltd at the end of
One or more business name.
shareholders to - Appoint a minimum of two directors .
maximum of fifty. - Specific shareholders buy shares to
contribute to capital.
- Shares are not freely transferable.
- Profits are shared amongst shareholder as
dividends.
PUBLIC: - Limited (Ltd) at the end of business name.
Minimum of seven - Appoint a minimum of seven directors.
shareholders. - The public buy shares to contribute to
capital.
-Shares are freely transferable.
- Shareholders have limited liability.
- Profits are shared amongst shareholder as
dividends.
 BUSINESS FUNCTIONS (FUNCTIONS OF A BUSINESS)- GRADE 9

1. ADMINISTRATION FUNCTION
1.1 DEFINITION
- This function receives, processes and stores information, mails, emails, messages, reports
and documents which concern the business.
1.2 CHARACTERISTICS
- It is mostly performed at the reception where calls, faxes, emails, message, people from
outside are received/welcomed.
- It sorts or process information of the business and deliver to relevant functions.
- It retrieves business information when needed by other functions.
- Filling of documents is done either numerically, alphabetically or chronologically.
2. PURCHASING FUNCTION
2.1 DEFINITION
- This function buys or pays for everything which other functions need. This includes raw
material, trading stock, expenses and fixed assets for the business.
2.2 CHARACTERISTICS
- It collects orders from other departments after prioritizing their function needs.
- Places orders with suppliers of good quality and reasonable prices.
- Receives, check and store deliveries from suppliers
- Pays for deliveries and document those transactions.
- Distributes orders to relevant functions.
3. MARKETING FUNCTION
3.1 DEFINITION
- This function advertises and promotes both the business and the product which the
business sells to the public.
3.2 CHARACTERISTICS
- Research the needs of the target market (possible customers).
- Use research results to develop a product idea.
- Advertise that new product to the public (target market).
- Conduct sales promotion to create a brand for that new product.

4. FINANCE FUNCTION
4.1 DEFINITION
- This function manages and controls the money and records the financial activities of the
business.
4.2. CHARACTERISTICS
- It records and keeps records of the financial transactions of the business.
- It research for avenue to get or increase capital.
- It does analysis and draft reports on finances of the business
- It manages investments and assets of the business.
- It ensures that business expenses and liabilities are paid.

5. PUBLIC RELATIONS FUNCTION

5.1 DEFINITION
- This function promotes the positive image of the business by creating good link
between the business and the public.
5.2 CHARACTERISTICS
- This function ensures that the public is satisfied with the business products.
- Conduct market research on their target market to know what the public needs.
- It creates good communication links with the public.
- It supports community projects with their products, services or financially.
6. HUMAN RESOURCE FUNCTION
6.1 DEFINITION
- This function run the process of identifying business staff needs, employing staff members,
training them and keeping their morale up.
6.2 CHARACTERISTICS
- This function identifies vacant posts in all other functions.
- It then advertises, shortlists, interviews, and fill those vacant posts.
- It conducts induction process for new employees.
- It organizes in-service training for employees in different functions.
- It evaluates performance of employees and provides incentives.
- It ensures that employees are paid on due dates and arranges fringe benefits.
- Conducts disciplinary hearings and negotiate with trade unions of employees.

7. PRODUCTION FUNCTION
7.1 DEFINITION
- This function deals with inputs (raw materials) to production process, how inputs are
processed (changed) and the output (finished goods) from the production process.
7.2CHARACTERISTICS
- This function ensures that quality products are produced from raw materials.
- It ensures that the level of output matches the level of demand from customers.
- It plans for an environment that is conducive for production process to take place.
- It monitors the quality of both inputs and output.
- It organizes storage for inputs before being processed and finished goods after being
produced.
8. GENERAL MANAGEMENT FUNCTION
8.1 DEFINITION
- This function manages the overall activities of the business and is in charge of all other
functions of the business.
8.2 CHARACTERISTICS
- It guards against competition with other businesses.
- It monitors all business activities in all functions.
- It researches new production techniques for better quality products and time saving.
- It guides and leads all other functions of the business.
9. RISK MANAGEMENT FUNCTION
9.1 DEFINITION
- This function deals with risks which can affect any business function.
9.2 CHARACTERISTICS
- It provide measures that will avoid the risk before taking place, alleviate the risk or get rid
of
the risk after it took place.
- It then assesses the depth of the risk
- This function identifies risks in all business functions.
- It develops strategies that will counter the risk.
- Assess the implementation of the strategy and control the risk