Dstinguish between 'productivity' and 'production'.

It is a question from the subject"PRINCIPLES OF MANAGEMENT." The answer is required for t.Y.B.A.F level....

UNIVERSITY EXAM..................

The answer should have points(9-10 points), which could be highlighted.

the answer is for7-8 mks....

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Production is “the act of producing, making, or creating something.” Productivity is “the state of being productive.” In other words, production is when you actually make something, and productivity is the state or measurement of how much you are making.

In a business sense, production can be defined by four factors: land, labor, capital, and entrepreneurship.

  • Land - Resources that are available for production—the raw goods necessary to make something.
  • Labor - Human input into the production process—workers who convert the raw goods into products.
  • Capital - Goods used in the supply of products—infrastructure, factories, buildings, machinery, and anything that aids labor.
  • Entrepreneurship - Individuals who bring the finished products to market—entrepreneurs invest their own capital and take the risk that the whole process will be profitable.

All of these are necessary for production to take place. Entrepreneurs must put forth the money, time, effort, and risk to employ labor and capital and enable them to turn land or raw goods into the products or services they wish to sell.

Productivity, as a business term, is the measure of output per unit of input. An input could be any of the four factors of production, while the output could be revenue or inventory. The overall goal of an efficient, productive company is to maximize output per input. Land, labor, and capital can be limited and scarce, so a highly productive company will be able to make the absolute most out of the resources or inputs it has.

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Regardless of what one is producing there are specific resources necessary for production to take place. The four factors of production are land, labor, capital, and entrepreneurship. Productivity measures the efficiency of those factors of production, how much output verses how much input. For example, take the farming industry today one farmer can produce more vegetables than he could have 100 years ago thus feeding more people. Why? productivity in the farming industry has become more efficient due to technological advances, better fertilizers and control over mother nature. All businesses seek to increase their profits and measuring the levels of productivity with regard to costs, revenues, and profits allows businesses to gauge the efficiency of any or all the factors of production. The more efficient and streamlined costs and revenues are monitored the greater the profit margin will be. 

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