hi there thank you for joining me for a brief overview of the factors of production now what we'll be doing here over the course of the next few minutes is I'll explain really what the factors of production what they are uh what their significance is and I'll also review the four elements of the factors of production uh basically being inputs that businesses use to produce something else typically goods and or Services uh so we use these uh resources if you will will uh for the purpose of turning something into a particular product or maybe even a service uh so let's start by going over what the factors of production are uh the factors of production really are four inputs or elements uh that businesses use to accomplish certain objectives or to achieve certain objectives uh so we're taking certain elements and we're turning those elements into a finished product which is hopefully going to provide some type of value for consumers uh we all know that businesses of course exist and operate for the purpose of providing value and those businesses that fail to provide value aren't going to be operating very long uh so let me go ahead and identify what each of the four elements are I'm going to draw draw out here a quick table uh so we can list the four and I can put a couple different characteristics for each of the factors of production okay the first factor of production or element of the factor of production is what we refer to as natural resources and natural resources include uh things that exist in what we refer to as a natural state meaning that they haven't been manipulated or changed in any way shape or form uh they exist in the form to which they were actually created in uh and natural resources provide a number of different benefits of course uh natural resources can include uh everything from let's say water uh to wind uh even land uh and several other things can serve as natural resources and so obviously these things provide businesses with certain opportunities we have certain areas of the world that are blessed with certain types of natural resources that allow them to do certain things and what we'll also find is that countries that have an abundance of a particular factor of production usually produce businesses that specialize in that particular area uh for example in the Middle East they have an abundance of oil and obviously oil companies tend to surface in that particular area because that is the factor of production that they have most predominantly now one of the things I should have mentioned before is that businesses generally Thrive when each of the factors of production is present to varying degrees and so if you have a certain country that possesses all of these like the United States for example that is very conducive to business uh in countries where only one or two exist uh that really is not going to provide a great deal of growth and there's going to be a quite a bit of struggling for businesses to be successful in those types of environments of course now continuing with the factors of production the next one that we have here is what we referred to as capital and capital includes a number of different things uh includes everything from Machinery different types of tools uh can also include things like technology and several other different things here but uh capital in its Essence here allows businesses to be more productive Ive and to be really more efficient with what they're actually doing it allows them to take advantage of technology and take advantage of machinery and all these other different things for the purpose of producing different types of goods and services and so uh these are extremely important one of the things I didn't identify here that's very important also is financial Capital which which I think should be inferred based upon the term Capital uh but obviously having the the resources the financial resources necessary to put forth into the business is extremely important as well and obviously it's going to be very conducive for businesses thriving in that particular environment the third factor of production are what we refer to as human resources and human resources uh very simply are essentially your labor your people and businesses of of course need to have obviously a labor force a Workforce present in order to be successful you need to have somebody to do the kind of the day-to-day work if you will and we not only look at human resources from a a quantity standpoint right having a a large body of of people uh that's that's important having a numerical uh certain amount of people to perform the work obviously need to have a certain uh number of people to perform certain types of uh tasks uh but we also want to look at does the workforce have the uh knowledge skills and abilities to do the job right do we have a a skilled and educated Workforce that can essentially do the work that's a a very important piece here not just having you know bodies to throw at the task but do you have the right people can that can actually do the work here and that's that's a very important piece that often gets overlooked is we we tend to focus more on quantity and we fail to realize well is the person skilled do they have the knowledge necessary do they have the skill set necessary to perform the task now here in the US we obviously benefit from having a very skilled Workforce very educated Workforce and that's why you see a lot of businesses locate in this particular area uh even within the us we have certain Regional hubs so Silicon Valley of course we have a lot of tech startups and Technology companies locate in that area because if you're looking for you know a a particular person to have the right skill set for a technology type company there's an abundance of them in that area you have the computer science program over at Stanford University in Palo Alto not too far from obviously in Silicon Valley and so you know you tend to try and locate where you're going to find your factors of production and for technology type companies that is a very very big Hub because you can find not only the qu quantity but the the quality of worker that you're looking for they have the knowledge and they have the skills and abilities necessary to actually do the work and the last factor of production and probably the most important is entrepreneurship entrepreneurship of course or entrepreneurs more specifically are the individuals that are going to be taking the risk associated with starting a a new business and there's obviously some inherent risk associated with starting a particular company but there also is a great deal of reward in the form of profit uh obviously being able to keep the The Profit that you generate is a very enticing motivation towards many people and why many people choose to start their own companies and start their own Ventures for this uh motivation and this incentive of obtaining those profits uh so entrepreneurship if you really drill down all of the different economies in the countries and why some Thrive and some don't you can usually delineate entrepreneurship or determine that entrepreneurship is the missing piece to why many countries are not successful they may have the natural resources they may have the human resources they may have the capital uh but entrepreneurship is often missing uh and in large part what needs to be present for entrepreneurship to thrive is the incentive of profits without the incentive of profits if they're if I'm going to take on a great deal of risk but I'm not going to be able to incur or reap the benefits of the risk that I incur then I'm not going to be inclined to put myself out there uh that simply is not going to happen you're not going to have a great deal of Entrepreneurship and environments to which you don't reward people for taking risks and that needs to be present profits need to be present and you have to be able to reward people for taking those risks uh for example in a communistic type country which we'll review uh later on the the important part uh in a a communist type culture is that the government decides ultimately you know what what industries are going to be uh present and going to thrive and who's going to work where and all those different types of things and typically rewards people in accordance for what they need not based upon what they actually earn in terms of profit and so you think about it from an entrepreneurial standpoint if you were in that environment would you be encouraged to take risk if you were going to produce something but you were only going to get in return in accordance to what you actually needed not what you actually work for it's not much of an incentive and so that really needs to be present and even China which is the largest kind of communist Society has has been kind of aware of the importance of Entrepreneurship and has begun to test out kind of private uh sector type uh Industries or privatizing certain industries because it realizes just how important entrepreneurship is to the vitality and the future success of a society so that is the factors of production as I mentioned before the importance here is that the presence of all of these will cause uh businesses to flourish and Thrive uh and obviously if you remove certain factors of production that limitate limits a business's ability to operate and be sustainable