Production: Creating goods and services to satisfy human wants.

48

First Term

Week 4

Subject: Commerce

Class: SS1

Topic: Production

Instructional Materials: Illustrate with a diagram

Content:

Meaning of Production

Production refers to the process of generating value, usefulness, or demand for goods and services. It involves transforming raw materials or resources into finished products that are more desirable or valuable than in their original state.

Essentially, production increases the worth of a commodity, making it more beneficial and appealing to consumers.

Stages of Production

Taking the book industry as a case study, the stages are:

• Manufacturing paper from wood pulp in the industry.
• Writing and preparing the manuscript by authors.
• Printing and publishing processes.
• Distributing the books to bookstores, where they are available for purchase. 

Types of Industry

Industry refers to obtaining raw materials or transforming them into more valuable forms. For example, in furniture-making, industry includes cutting down trees, processing them into planks, and shaping the planks into furniture like chairs and tables.

Industries are divided into three main types:

Primary Industry (Extraction Activities)
This involves obtaining raw materials directly from nature. Examples include:

• Agriculture (crop production, fishing, animal husbandry, and forestry)
• Mining (extraction of petroleum, gas, and solid minerals like gold and iron)
• Forestry (growing and cutting trees for timber)

Secondary Industry (Manufacturing and Construction Activities)
This involves transforming raw materials from the primary industry into finished or semi-finished products. It includes:

• Manufacturing – Processing raw materials into consumer or industrial goods. Example: Sawmilling turns timber into planks, and carpentry makes planks into furniture. Other examples in Nigeria include producing cement, textiles, footwear, and beverages.
• Construction – Building structures like houses, roads, bridges, and airports. This sector creates goods that cannot be moved from one place to another.

Commerce: Aid to Trade

Commerce is a branch of production that involves activities that help producers obtain raw materials and distribute finished products to consumers. It adds value to goods by ensuring they are available in the right locations and suitable quantities for further production or consumption. Unlike primary and secondary production, commerce does not change the physical state of goods; instead, it provides essential services that facilitate trade and distribution.

1. Transport

Transport ensures the movement of goods and raw materials from one place to another. For example, in furniture production, equipment must be delivered to sawmills, timber transported to carpentry workshops, and finished furniture distributed to consumers. Transport methods include roads (vehicles, bicycles), railways (trains), waterways (ships, canoes), and air (airplanes).

• Communication

This enables producers, suppliers, and consumers to exchange information without physical contact. Communication methods include postal and courier services, telephones, radio, television, and the Internet.

• Trade

Trade involves buying and selling goods. It is divided into:

1. Internal Trade – Buying and selling within a country.
2. External Trade – Exporting or importing goods across countries.
3. Entrepôt Trade – Importing goods and re-exporting them without further processing.
4. Warehousing

This involves storing raw materials, semi-processed goods, and finished products until they are needed. Warehouses help regulate supply, ensuring goods are available when required for production or sale.

• Banking

Banks provide financial services such as loans and credit to businesses, helping producers finance their operations. They also facilitate payments and secure transactions.

• Advertising

Advertising informs potential buyers about products and their benefits. For instance, furniture sellers display chairs and tables in showrooms or use media like newspapers, television, and social media to promote their products.

• Insurance

Insurance protects businesses from financial losses due to risks such as accidents, theft, or fire. In return for a fee (premium), insurance companies compensate businesses for losses, ensuring stability in commerce.

Direct and Indirect Services

Services play a crucial role in production and can be classified into direct and indirect services based on their purpose and beneficiaries.

Direct Services

Direct services, also known as personal services, are rendered directly to consumers to meet their needs.

These services do not involve the production of physical goods but rather focus on satisfying individuals. Examples include:

·         Teachers – Educate students.

·         Lawyers – Provide legal assistance.

·         Doctors – Offer medical care.

·         Entertainers – Provide amusement and relaxation.

·         Soldiers and Police Officers – Ensure security and law enforcement.

·         Artisans (e.g., hairdressers, barbers, tailors, photographers, and caterers) – Offer skilled services to individuals.

Indirect Services

Indirect services support businesses and industries by facilitating production, trade, and distribution. Unlike direct services, these are not provided to final consumers but help in economic activities. Examples include:

·         Banking – Provides financial support and credit to businesses.

·         Transport – Moves raw materials and goods from one place to another.

·         Insurance – Protects businesses from financial risks.

·         Warehousing – Stores goods until they are needed.

·         Communication – Enables business transactions and coordination.

Read also: Characteristics of commerce