pricing factor of production

8/10/2019 Pricing factor of production

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Economics (522)

Assignment 2

(Pricing Factor of Production)

Name: Asifa Nazir

Roll Number: W-583956

Session: 2!

Submitted to:"r# "# $iddi%ue

Allama Iqbal Open University Islamabad

(&e'artment of usiness Administration)

Pricing Factors of Production

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Acno*+edgment

First of all, I am thankful of Almighty Allah whose grace alone brings success andaccomplishment.

I am very thankful to Miss Asma, head of the department (HM!, "ackages #td and Mr.

Ahsan Fero$, head of %"&. 'he has been very cooperative throughout my assignment.

I am thankful to my tutor Mr. M. 'iddiue and )rig. (! M. *ubair who always

encouraged me and gave me confidence to go and work with responsibility.

Asifa Nazir

oll +o. -/012


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,ntroduction

As pac"ages names indicates t#at it #as pac"aging business$ It is onlyorgani%ation in Pa"istan o #as suc# large scale pac"aging business$

Pac"ages establis#ed in '() as a *oint venture bet&een Ali groups of

Pa"istan and A"erland + Rausing of S&eden to convert paper and

board into pac"ing for consumer industry$

Over t#e year, t#e company continued to en#ance its failure to meet

t#e gro&ing demand of pac"ing products, additional capital raised from

sponsor international -nance corporation and from t#e public in '.($

Pac"ages commissioned its o&n paper mill in './ #aving production

capacity of !0,111 tones of paper and paper board on &aste paper and

agriculture by products i$e$ eat stra& and river grass$ 2it# gro&ing

demand t#e capacity &as increased periodically and ''. reac#ed

.(11 tones per year$

Since '/! pac"ages limited #as venture &it# tetra pac" international$

3etra Pa" limited to manufacture paper of liquid food of pac"ing and to

mar"et 3etra pac"ing equipment$ Pac"ages limited o&n .!4 of t#is

company$ In '''5!111 pac"ages #as successfully completed t#e

e6pansion of t#e 7e6ile pac"aging by installation of ne& roto-avure

printing mac#ine$ Printing and cutting mac#ine are in production since

8ecember '''$

Pac"ages #as no big competitors in mar"et$


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"ission $tatement

3o be lead in mar"et &e serve by providing quality products and

superior services to our customers ile learning from t#eir feedbac"

to set even #ig#er standard for products$

3o be a company t#at continuously en#ances its superior tec#nologies

competeness to provide innovation solutions to customer needs$

3o be a company t#at attracts and retains outstanding people by

creating culture and fastness openers and innovation promotes

individual gro&t#s and re&ard initiative and performance$

3o be a company t#is combines its people and tec#nologymanagement system and mar"et opportunities to ac#ieve portfolio

ile providing fair returns to its investors$

3o be t#at endorses to set t#e #ig#est standard in corporate et#ics in

serving t#e society$


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.P,/

Pricing Factors of

Production

Production 0nit1

Production unit is a unit ere t#e four factors of production i$e$ ;and,

;abor,


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/aracteristics of and1

4# $u''+ is Fied1

;and is limited alt#oug# it #as alternative uses$ It

supply remains t#e same even if t#e price for it in t#e

mar"et rises or fall s#arply$ If, #o&ever, &e are considering

t#e supply of land for some particular use, t#e stic"

limitation on supply is not applicable$ 3#e amount of land

used for5gro&ing eat can be increased by gro&ing less

of some ot#er crop$

2# 7ift of Nature

;and is somet#ing t#at is already t#ere$ It can not be

produced nor can it be destroyed$ It #as been available for

t#ousands of centuries and &as lying useless until man

broug#t it into #is use$

3# &ierent /aracteristics

Not all t#e land is suitable for production$ Only t#e

land #aving speci-c c#aracteristics is useful e$g$ t#e

desert is of no use because no production can be done

on it$

# "o:i+it of and is ,m'ossi:+e

;and cannot be moved from one place to anot#er$

Bo&ever, its o&ners#ip can be transferred$


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a:or1

In t#e &ords of Cars#all, ?Any e6ertion of mind or body undergone

partly or olly &it# a vie& to some good ot#er t#an t#e pleasure

derived directly from t#e &or", is called labor$ >asically labor is any

form of mental or p#ysical &or", done for t#e sa"e of re&ards, directed

to&ards t#e production of goods and services$

/aracteristics of a:or1

4# a:or and a:orer are inse'ara:+e from eac

oter1

In order for labor to be done, t#ere must be a laborer

to do it$ ;i"e&ise, t#ere is a laborer en labor is to be

done$

2# 0nidentica+ a:orers1

3#ere are diDerent categories of labor e$g$ teac#ing is

a profession as it is a form of labor and so is factory

&or"ing$ Bo&ever, t#ey are diDerent in t#e sense t#att#ey diDerent "inds of mental or p#ysical &or"$

3# a:or can :e *asted1

A laborer, sitting idle, doing not#ing is &asting time

and is &asting #is o&n resources$ 3#is is &astage of

labor$

# a:or as a *ea :argaining 'osition1

;aborers are controlled by superiors$ 3#ey do not #ave

nay &ord of aut#ority e6cept to *ust follo& orders, unless

trade unions are formed to bargain &it# superiors$


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5# ;a'id cange in su''+ of +a:or is im'ossi:+e1

Supply of labor depends on t#e population$ It cannot

increase nor can it be reduced at once$ It ta"es some time

for a c#ange in t#e supply of labor to occur$

6# ,n


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Sometimes t#ere are certain build in personal

c#aracteristics of individuals ic# aDect t#eir eEciency$

For e6ample, a man #aving a #ig#er I &ill be more eEcient

t#an t#e one &it# lo&er I$ Similarly incase of manual &or"

a &ell5built &or"er &ill be more eEcient t#an a &ea"er one$

3# Education and raining1

General and tec#nical e6posure is essential in

increasing in t#e eEciency of labor$ A laborer &it# sound

tec#nical training &ill be more eDective t#an t#e one ic#

lac"s t#ese qualities$ 3#e modern industry requires #ig#

s"illed laborer$

# Wages and Fringe ene>ts1

Reasonable allo&ances, bonuses, leave, etc$ increase

t#e eEciency of labor$ A laborer &it# sound tec#nical

training &ill be more eDective t#an t#e one ic# lac" t#ese

qualities$ 3#e modern industry requires #ig#ly s"illed

laborers$

5# Woring En


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labor #as to &or" is an important determinant of laborHs

eEciency$

/a'ita+1

8e-nition of capital can be divided into t&o parts, i$e$ capital in t#e real

sense and capital in t#e money sense$ In t#e real sense capital consists

of t#ose gfoods ic# are used to produce more goods, i$e$ mac#inery,

buildings, etc$ ereas in t#e money sense, capital is t#at part of

income ic# is saved and borro&ed for investment, e$g$ loans from

ban"s etc$

?inds of /a'ita+1

4# Fied and /ircu+ating /a'ita+

Fi6ed capital consists of t#e equipment used toincrease production, e$g$ mac#inery$ It is -6ed capital t#at

does not c#ange its form in t#e course of production$


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a s#ampoo industry etc$ Floating capital is t#at capital

ic# goes t#roug# diDerent "inds of processes$ 3#ese are

of many types, e$g$ fuel, ra& material etc$

Entre'reneursi'1

3#is is t#e main factor of production$ 2it#out it &or" cannot be

initiated$ An entrepreneur is t#e one o combines t#e four

factors of production to produce goods and services$

Functions1

$ P+anning of usiness13#e -rst tas" of an entrepreneur is

t#e plan t#e business "eeping in mind t#e availability of

funds and e6istence of t#e mar"et$

!$ $uita:+e /om:ination of te four factors of

Production1 Naturally t#e most desirable combination of

t#e factors of production is t#e least cost of combination of

t#e four factors of t#e production$ If t#e entrepreneurs

detect t#e one factor costs more t#an t#e ot#er, it &ould be

advisable for #im to replace t#e former &it# t#e latter$

9$ ;es'onsi:i+it for sa+es of Production13#is is done by

advertising and copyrig#ts, etc$

0$ Faces 0ncertainties of Future1 arious ris"s #ave to be

faced and ta"en, in order to improve business$


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($ E=cient Administration1 Big#ly quali-ed e6ecutives

s#ould be employed$ People &it# a bac"ground in business

and economics are essential for t#e business$ 3#ey s#ould

be paid #ig#ly so t#at t#ey &oe" &it# #onesty and

eEciency$

.$ &istri:ution of ;e*ards to te four factors13#is is

done en t#e entrepreneurs pays t#e re&ards in t#e form

of rent, interest, &ages and pro-t to t#e various factors of

production including #im$

)$ ;es'onsi:+e For Pro>t and oses13#e pro-ts of t#e

company are equally faced by t#e entrepreneurs$ 3#ey are

t#e only ones responsible for t#e pro-t and loss of t#e

business as t#ey are t#e ones o ta"e decisions$

&ierent Forms of usiness .rganizations1

3#ere are many types of entrepreneurs#ip$ In t#e follo&ing

&e #ave listed -ve most important types of it:

a$ Sole Proprietors#ip

b$ Partners#ip

c$ Joint Stoc"


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ree t'es of Production Prices1

Cost Car6ists missed t#e fact t#at Car6 identi-ed t#oug# notoften and not very clearly= t#ree main types of

production prices:

$ The private or enterprise production price.3#is price equals

t#e cost5price and pro-t applying to t#e ne& output of a speci-c

enterprise en t#is output is sold by t#e enterprise$

!$ The sect oral production price.3#is price equals t#e average

cost5price and average pro-t applying to t#e output of a speci-c

sector or branc# of production at ?producerHs mar"et prices=$

9$ The economic production price.3#is price equals t#e average

cost5price and average pro-t of an output at t#e point of sale to

t#e -nal consumer, including labor5value contributed by all t#e

diDerent enterprises participating in its production factory,

storage, transport, pac"aging etc=$


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&ata /o++ection @ Ana+sis

/P& (/onsumer Product &i


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;abor, in any organi%ation, refers to t#ose individuals

t#at contribute t#eir services eit#er mentally or p#ysically$

Pac"ages ;td$ #as a trained and s"illed staD in all areas of

production, distribution, mar"eting etc$ Also, t#ey give

training to t#eir labors and laborers in order to en#ance t#eirs"ill level$

3# /a'ita+1

Bere, &e &ill discuss t#e Fi6ed capital, t#at consists of t#e

equipment used to increase production, e$g$ mac#inery$

Pac"ages ;td$ #ave up5to5dated mac#ineries to produce

t#eir products in order to compete bot# national and

international mar"ets, imported ma*orly from Itlay$


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$W. Ana+sis of Pacages td#

$trengts1

Pac"ages ;td$ #as strong management$

3#e labor of Pac"ages ;td$ very eEcient and s"illed$

O&n researc#, development and control department$ 3#ey are #aving t#eir o&n generation plant$

According to need purc#ase t#e ne& tec#nology$

3ransportation system for easy #andling of products$

Strong Advertisement of products$

Proper protection and storage of products$

Pac"ages ful-ll t#e demand of customer$

Weaness1

3#ey cannot ta"e small orders$

SuEcient facilities are not being given to labors


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;ate decision ma"ing$

.''ortunities1

Car"et of pac"aging industry is gro&ing day by day$ Strong advertisements attract t#e customers$

8istribution

pricing factor of production

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