PHILOSOPHY OF BUSINESS

CHAPTER 8: PRODUCTION
JOAN P. LACSAMANA
MBA STUDENT
 PRODUCTION
 the term production comes from a Latin
producere which means to bring forth, or to bring
into existence (literally, to produce).
 An economic activity which creates good and
services intended for exchange.
 The process of fabrication of physical objects
through the use of men, materials and
equipment.
 The process by which goods and services are
created.
 The creation of utility – goods and services-as a
result of labor and effort.
PRODUCTION CONCEPT
The philosophy that consumers will favor
products that are available and highly
affordable and that management should
therefore focus on improving production and
distribution efficiency.
 3 ELEMENTS OF PRODUCTION
1. As an economic activity – the concept of
economic activity is a generic one in the whole
concept of business, which means that all
activities involved in business are subsumed
under the generic concept of economic activity.
2. As the creation of goods and services – it defines
the particular role of production in the business
process, and qualifies just what specific
economic activity production is performing.
3. As intended for exchange – it invests in the
product the attribute and imperative of availability,
without which the production output would not be
a commodity or economic good.
TYPES OF PRODUCTION PROCESS
1. The Extractive Process – draws the products in
their raw from direct from their resources – from
air, from water and from the earth.
2. The bio-extractive process – it derives its
products from sources which are sustained by life,
the flora and fauna, that is, plant life and animal
life.
3. The Manipulative Process – this is more
popular known as the manufacturing process,
and sometimes also called the factory process
or the transformative process.
The term manufacture originally referred to
the crude manual process of making things
manu –meaning hand and facere meaning to
make.
Change is the essence of the manipulative
process.
1. Physical Change – is the process where the
change in the product material is extrinsic to
the material itself. These are found in three
levels of manipulative principles:
a. Monolithic – a process produces one product
out of one material.
b. Synthetic – a process produces one product
out of a number of materials.
c. Analytic – a process which produces a
number of products out of one material; that
is, from one source material, many products
are derived.
2. SUBSTANTIAL CHANGE – is where the
substance or essence of one thing is lost, that
is, it is changed to another substance.
CREATIVE PROCESS
> It is the peak of man’s achievement in the
synthesizing process of his intellect is his
ability to create, whether in the field of arts or
in the realm of sciences.
 THE PRODUCTION FUNCTION
 The basic function of production is product
development. It involves product planning and
production process.
1. PRODUCT PLANNING – is concern with product
design and the material used for the product. It
also involves aesthetic and material used.
 Planning the materials used in the product is
intended (a.) to provide the product’s physical
framework (b.) to enrich the aesthetic
architecture of the product design.
 PRODUCTION PROCESS
The philosophy behind the production process is
that quality product can come only from
quality process. That is, if the production
process is of quality process, then the product
will be of quality.
PRODUCTION RESOURCES
1. LAND – is a source of production materials and a
venue for the production process.
2. CAPITAL – this represents invested goods and consist
of all man-made aids to production, namely,
equipment or machinery, tools, buildings
improvements on land utilized in the production of
goods and services.
3. LABOR – is one of two human resources of economics
and refers to all the physical and mental talent used
or useable in production.
4. ENTREPRENEURSHIP – the entrepreneurial ability is
the economic human resource that provides the
managerial functions in utilizing land, labor and
capital to produce goods and services.
THE PRODUCTION OBJECTIVE
1. Production as a component of the business
process.
-production has the immediate objective of a
finished product and the ultimate objective of
product availability.
2. Production as an economic activity
- The immediate objective of production is the
product, and the ultimate objective is
satisfaction of human needs, which are the
immediate and ultimate objectives of the
business process.