Organisations of production

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Organisations of production refer to the different ways economic activities and production processes are structured and coordinated in an economy. Here are the main types:


Primary Organisations (Primary Sector)


Involve extraction of natural resources.


Examples: farming, fishing, mining, and forestry.


Secondary Organisations (Secondary Sector)


Involve manufacturing and industrial production.


Examples: factories, construction companies, and textile industries.


Tertiary Organisations (Tertiary Sector)


Provide services rather than goods.


Examples: transport companies, retailers, banks, and hospitals.


Quaternary Organisations (Quaternary Sector)


Involve knowledge-based services.


Examples: research firms, IT services, education, and consultancy.


Types of Ownership


Private Sector: Owned by individuals or companies (e.g., Apple, Toyota).


Public Sector: Owned by the government (e.g., NHS, public schools).


Cooperatives: Owned and run by members (e.g., farming cooperatives).


Non-profit Organisations: Focus on social goals rather than profits (e.g., charities).


Would you like a diagram or chart to go with this explanation?


1. Forms of Production Organisation

a. Subsistence Production

Producing goods for personal or family use, not for sale.


Common in rural or less industrialised economies.


b. Commercial Production

Goods and services are produced for profit and market exchange.


Common in capitalist economies.


2. Structures of Organisation

a. Unit of Production

Individual/Family-based: Farming, handicrafts.


Small Enterprises: Local shops, artisans.


Large Enterprises: Corporations with complex structures.


b. Sole Proprietorship

Owned and run by one person.


Simple setup, full control, but unlimited liability.


c. Partnership

Two or more people share ownership and profits.


Shared responsibility and decision-making.


d. Corporation (Limited Liability Company)

Separate legal entity.


Owned by shareholders, run by a board of directors.


e. Cooperative

Owned and operated by members.


Profits shared equally, focus on mutual benefit.


f. State-owned Enterprises

Owned and managed by the government.


Operate in sectors like energy, transport, healthcare.


3. Organisation by Method of Production

a. Job Production

Customised, one-off products.


E.g., tailor-made suits, custom furniture.


b. Batch Production

Producing a set quantity of a product in groups.


E.g., bakery items, clothing.


c. Mass Production

Large-scale production of standardized goods.


E.g., automobiles, smartphones.


d. Continuous Production

Non-stop production process, often automated.


E.g., oil refining, chemical plants.


4. Organisation by Economic Sector

(As mentioned earlier: primary, secondary, tertiary, quaternary, and sometimes quinary – high-level decision-making like top executives or government officials.)


5. Modern Trends in Production Organisation

Outsourcing: Hiring third parties to perform tasks.


Automation: Using machines and AI to increase efficiency.


Globalisation: Production spread across countries.


Just-in-Time (JIT): Producing only what is needed, reducing waste.


Lean Production: Maximising efficiency by eliminating waste.


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6. Factors of Production

These are the essential inputs needed for production:


Land – Natural resources used (e.g., minerals, water, land itself).


Labour – Human effort, both physical and mental.


Capital – Man-made tools, machines, and infrastructure.


Entrepreneurship – The person or group that organises resources and takes on risk.


7. Coordination Mechanisms in Production

a. Market Mechanism

Supply and demand determine what is produced.


Used in capitalist economies.


b. Command/Planned Economy

Government decides what and how much to produce.


Common in socialist or centrally planned economies.


c. Mixed Economy

Combination of both market and government control.


Most countries operate with this system.


8. Production Systems by Scale and Technology

a. Cottage Industry

Small-scale, home-based production.


Low investment and traditional tools.


b. Small and Medium Enterprises (SMEs)

Local businesses with moderate investment.


Important for employment and innovation.


c. Large-Scale Industry

Heavy investment, mass production, often multinational.


Examples: steel plants, car manufacturing.


d. High-Tech Industry

Uses advanced technology and R&D.


Examples: electronics, biotechnology, aerospace.


9. Vertical and Horizontal Integration

a. Vertical Integration

A company controls multiple stages of production (e.g., from raw materials to finished product).


b. Horizontal Integration

A company expands at the same stage of production (e.g., one steel company buying another).


10. Informal vs. Formal Sector

Formal Sector: Regulated by the government, includes contracts, taxes, and legal protections.


Informal Sector: Unregulated, often cash-based, lacks job security or benefits (e.g.,

 street vendors).


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