Labour-Intensive Production

Meaning

Labour-intensive production uses more human labour than machinery or equipment.

The cost of workers is higher than the cost of capital.

Examples

• Teaching

• Sports coaching

• Physiotherapy

• Management consultancy

• Tailoring

• Architectural firms

• Custom-made products

Features

• Relies heavily on skilled workers

• Produces personalised or customised products

• Flexible to changing demand

• High-quality craftsmanship and service

Advantages

• Better personalised service

• Suitable for customised goods

• High product quality from skilled workers

• Workers can adapt easily to changes

Disadvantages

• Labour costs are high

• Production can be slower

• Products are often expensive

• Human error may occur

Capital-Intensive Production

Meaning

Capital-intensive production uses more machinery, technology, and equipment than labour.

Businesses spend more on capital resources than on workers.

Examples

• Car manufacturing

• Aircraft production

• Soft drink factories

• Oil extraction

• Electronics manufacturing

Features

• Uses automation and machinery

• Mass production of goods

• Large setup costs

• High productivity

Advantages

• Produces goods quickly

• Lower unit costs

• Reduces human error

• Efficient for mass markets

Disadvantages

• Very expensive machinery

• High maintenance and repair costs

• Breakdowns can stop production

• Difficult for small firms to enter the industry