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5 Production Factors That Influence Business Development

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5 Production Factors That Influence Business Development

All of the things that organizations utilize to generate or create products and services are referred to as production elements. Natural resources, labor, capital, entrepreneurship, and information are all examples of factors of production.

Natural resources, labor, capital, and entrepreneurship are coupled with other production elements to create a desired service or product.

Types of Production Factors

Factors of production are several types of specific inputs that enable the economic system to function properly. Profits are generated through natural resources, human resources, capital, entrepreneurship, and information.

Resources of Natural Origin

Natural resources are everything that can be found in the environment or natural surroundings that can be used by humans to create commodities and services. Plants, water, wind, mining, soil, and other natural resources are examples.

Renting out land or rice fields for a year to make money is an example of a production activity based on natural resources.



Another input factor in production is labor, sometimes known as human resources. It refers to any mental or physical effort made by humans to generate goods and services.

People who work as writers or programmers are examples of human resource production activities. Their work pays them a salary or earnings.


Capital is a production factor that encompasses all man-made assets used to produce additional services or goods. Capital is divided into two categories: capital goods and capital money. 

Capital goods, for example, include computer equipment, factory machines, printers, buildings, transportation, and raw materials used in the manufacturing process.

Capital money, on the other hand, refers to any cash or non-cash available as an investment in a business. Bonds, stocks, debt securities, bank loans, and other financial instruments are examples. 

A reward in the form of bank interest rates is an example of a production activity in the form of capital.


Entrepreneurship can also refer to a business. Because without entrepreneurship or businesses, human resources or labor cannot contribute.

Entrepreneurs are in need of work, and entrepreneurs are the ones who offer it. All factors of production have little economic value without entrepreneurs. Entrepreneurs seek for business prospects, manage other production aspects, and take on financial risks.

Batik enterprises, banana chip firms, coffee shops, chicken geprek kiosks, and other entrepreneurial aspects are examples of production activity.

Information and Knowledge

Finally, information or knowledge is one of the variables of production. To evaluate and combine new information, information is a combination of experience, contextual information, and expert knowledge.

Manufacturing knowledge and information as production factors are key drivers of productivity and economic progress. It has distinct traits that set it apart from other physical manufacturing operations.

Production activities from information resources, such as being an engineer or a doctor, for example, can lead to increased experience and knowledge. The higher a person's insight or knowledge, the higher his or her wages or salaries.

Examples of Production Activities

Farmers own land and work on it to earn a living. Seeds are planted in the ground (natural resources). Prepare, plant, and harvest crops (labor), and use tractors or machines (capital) to speed up the task of cultivating the land.

As an entrepreneur, here an example of a farmer's production activity is to combine other production factors to bring their products to the market (entrepreneurship).

Examples of other production activities, say sugar or flour, all of the ingredients come from plants (natural resources). In fact, eggs are also produced from chickens that eat corn grains grown in the soil (natural resources).

Meanwhile, making cake dough from eggs, sugar, and flour takes time and effort (labor). With recipe and innovation, you are trying to mix all the factors of production to create a cake that can be sold and generate profit (entrepreneurship).

The Role of Technology in Business Development

Technology plays an important role in placing optimal production factors. No exception, in terms of any business development. 

To manage various factors of production such as human resources or labor, you need the support of online accounting software to manage inventory.

Repetitive administrative tasks, such as recording transactions, need to be carried out accurately, systematically and neatly. Thus, human resources or labor will be more productive and satisfied working in your company.

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