• There are generally two approaches to production:
    • Capital intensive and
    • Labour intensive production

Capital Intensive Production

  • Capital-intensive production refers to the production process that requires high levels of investment in machinery, technology, and equipment.

Features of capital intensive produciton:

  • High use of capital to finance the production process
  • The majority of work is done using machinery and technology
  • Low use of labour
  • Large-scale production
  • High level of automation

Ideal situations for capital intensive production:

  • Production processes that are highly repetitive
  • Production processes that require consistent quality
  • Production processes that involve a high level of precision
  • Products with high demand that justify the investment in capital equipment

Advantages of capital intensive production:

  • High level of efficiency due to automation
  • High level of productivity
  • Consistent quality of products
  • Cost-effective in the long run

Disadvantages of capital intensive production:

  • High initial capital investment
  • High operating costs due to maintenance and repairs
  • Limited flexibility in the production process
  • Difficulty in adapting to changing customer demands

Example:

  • Automobile manufacturing plants are capital-intensive because they require large investments in machinery, technology, and equipment.

Labour Intensive Production:

  • Labour-intensive production refers to the production process that requires a high level of labour input and a low level of capital investment.

Features of Labour intensive Production:

  • High use of labour to perform tasks
  • Minimal use of machinery and technology
  • Low production volume
  • Small-scale production
  • Low level of automation

Ideal situations for labour intensive production:

  • Production processes that are not highly repetitive
  • Production processes that require customization
  • Products with low demand that don’t justify high capital investments
  • Production processes that involve a high level of skill or craftsmanship

Advantages of labour intensive production:

  • Flexibility in the production process
  • Low initial capital investment
  • Lower operating costs due to minimal use of technology
  • Greater customization options

Disadvantages of labour intensive production:

  • Low level of efficiency due to manual labour
  • Limited scalability due to reliance on labour
  • Difficulty in achieving consistent quality
  • Higher labour costs

Example:

  • Handmade jewellery is a labour-intensive production process that requires a high level of skill and craftsmanship, and minimal use of machinery and technology

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