The word ‘Capital’ refers to equipment, machinery, vehicles etc. that a business uses to make its product or service. Capital intensive processes are those that require a relatively high level of capital investment compared to the labor cost. These processes are more likely to be highly automated and to be used to produce on a large scale.
Capital-intensive production is more likely to be associated with flow production but any kind of production might require expensive equipment and materials. Capital is a long-term investment for most businesses, and the costs of financing, maintaining, and depreciating this equipment represents a substantial overhead. In a capital-intensive process, it can be costly and time-consuming to increase or decrease the scale of production.
Referring to labor-intensive, the word ‘Labor’ defines the people required to carry out a process in a business. Labor-intensive processes are those that require a relatively high level of labor compared to capital investment. This type of intensive is just as oppose to capital-intensive in which it uses the power from its workers or employees.
These processes are more likely to be used to produce individual or personalized products, or to produce on a small scale. Labor-intensive processes therefore are more likely to be seen in job production and in smaller-scale enterprises. The speed of production is much slower than it is in capital-intensive which the machines are automated and able to work for 24-hours. Unlike workers, they are human being whom need enough rest and food supply to continue working day after day.
Labor is sufficiently available and cheaper in most economies. Labor-intensive method, it is argued therefore could lead to reduced cost of production. Capital, however, is scarce and expensive and in the case of less developed economies, has to be imported with scarce foreign exchange. If so, this would increase expenditure on imports and could affect the balance of payment of the economies involved. For this and other reasons labor-intensive method is favored.
It is also believed that if labor-intensive methods are employed, the abundant unemployed labor in most economies today will be employed, thus solving the unemployment problems. If the marginal propensity to consume is high, more goods and services would be demanded which will result in economies of scale.
Some has the argument that capital-intensive method leads to dualism in the economy, so that most of the capital equipment and capital-intensive methods of production are in the urban areas, creating an urban capital center and the labor rural center where jobs and social amenities are inadequately provided. This situation leads to rural-urban migration.
Labor-intensive methods are often argued that they do not readily adopt to change. Capital-intensive method can however, easily be adjusted to suit modern trends in production due to their flexibility. Capital-intensive methods are therefore clearly associated with high levels of output.
In spite of the reasons advanced in favor of the two methods of production between capital-intensive and labor-intensive, and against the other, it is important that the two techniques of production be married in order for any economy to achieve sustainable economic development.
Capitals are equipment used for production. Labor refers to the people supporting production in the job. Increasing amount of capital or labor is included as factors of increasing production. Increasing capital is also called capital intensive. Increasing labor is also called labor intensive. Some might say that capital intensive is better than labor intensive.
Capital-intensive processes are those that require a relatively high level of capital investment compared to the labor cost. These processes are more likely to be highly automated, at a higher speed, and to be used to produce on a large scale. They are able to produce at a large scale because rest isn’t needed for capital unlike labor. So, capitals can work for hours or non-stop. This makes capital have high productivity. It is argued that labor-intensive methods do not readily adopt to change. Capital has no problems with labor shortages / planning labor. Capital-intensive method can however, easily be adjusted to suit modern trends in production due to their flexibility.
Unlike labor, labor-intensive processes are those that require a relatively high level of labor compared to capital investment. These processes are more likely to be used to produce individual or personalized products, or to produce on a small scale. They produce on a smaller scale compared to capital because they can’t work non-stop, unlike capital. It is also believed that if labor-intensive methods are employed, the abundant unemployed labor in most economies today will be employed, thus solving the unemployment problems. If the marginal propensity to consume (MPC) were high, more goods and services would be demanded which will result in economies of scale. But, labor’s production quality is more likely to be better than capital. An example is cars. Cars are better build by people/made by hand rather than using machines, ex: Rolls Royce. Labor can provide a ‘personal touch’ and be more in-tune with customer needs and wants. Labor can also provide tailor made products / services for different customer needs and wants. Machinery is not flexible enough to provide custom made products / services for individual customers.
Capital’s costs are most likely to be higher than labor. Capitals are more accurate and reduce errors, unlike labor; they can make errors when producing. Big machines are expensive. Capitals also require electricity. Not all good machines are available everywhere. Countries like in Singapore use capital that are imported, examples from Japan, America, etc. To put capital to its highest quality, they need expensive upgrades.
The costs of labor are wages and other benefits, recruitment, training, etc. Labors are more available anywhere than capital. Low skilled labor can be used everywhere especially in primary sectors. So labor costs are cheaper than capital. Unlike capital, bad machines can cost a lot of problems once they’re used. To maximize quality of labor, all it takes is training. But labor can relatively be expensive in a long term.
In conclusion, I’d say that it is better to be a capital-intensive business than labor intensive because it has more advantages and less error than labor.
Capital intensive refer to equipment, machinery, vehicles, and other things that used by business to make its product or services. It processes requires a relatively high level of capital investment rather than the labour cost. He processesare likely to be highly automated and used to produce a large scale. The production is likely to be associated with flow production that require expensive equipment. Capital is a long term investment for many bsuinesses and the cost of financing, maintaining, and depreciating the equipment represents a substantial overhead. And to maximise efficiency, firm want their capital investment to be fully utilised. In capital intensive process, it can be costly and time consuming to increase or decrease the scale of prodcution. Labour intensive refer to the people required to carry out processes in a business. Labour intensive process are those that require a relatively high level of lbour rather than capital investment. The processes are likely to be used to produce individual or personalised products or to produce a small scale. The cost of labour are wages, and other benefits such as training, recruitment, etc. The flexibility in capacitymay be available by use of overtime and temporary staff or by laying off workers. The long term growth may depends on being able to recruit sufficient suitable staff. The labour intensive processes are likely to be seem in job production and in smaller scale enterprises. To increase productivity, it is better to sue capital intensives rather than labour intensives. In capital intensives, business use machinery to increase or decrease the productivity while in labour intensive business use the labour to increase or decrease the productivity. Machinery can be controlled by the owner, it can be turned off and on, owner can control the machine whether it needs to increase the productivity or decrease the productivity, for thw usage cost also will cost ess than labour because if owner didn’t use themachine they can turned it off and the electricity also will stop running and will have no cost especially during holiday while labour are payed monthly so owner need to pay labour every month at the same maount whether at that month the labour have holiday or not. Using a mc=achinery may also lower thecost for the business itself. Because there are some machines taht can do more than 1 activities. For example a labour only can do 1 thing at the same time for example in petroleum. Labour only can serve 1 person while the one in the cashier is another labour while machine is the one who served such as give the introduction to theconsumers but the machine also the one who will be the cashoer so the person can directly pay to the machine. Using a labour may require the cost of wages and training so themore labour a business have the more cost will the business need to while if the business uses machine, business only need to pay for the electricity power charge and and the cost of repairing the machine if it is broken which maybe only once or twice a year. In conclusion, capital intensives are better than labour intensives to increase the business productivity. Even though at the first time when business starts the company requires more amount of capitel rather than labour intensives to buy the expensive machine but if the business have run it will cost moe for the labour intensives than capital intensives. Capital investment also can be controlles so business can control the productivity, while labour can’t be forced for example the average production are same each day : 100 goods but maybe because of the goods are best seller the owner want to increase the productivity, the owner that uese amchine can speed up themachine to produce 200 goods at the same day with the same amount of cost while owner that uses labour intensives can’t increase their production unless the business have more labour but more labour will require more amount of cost.
Capital basically means technology equipments or in other words, machinery. While labour means human workers. Some business owners prefer having capital intensive in the company rather than labour intensive for several reasons. One of them includes increasing firm’s productivity. Having capital intensive will produce products faster and accurately. Not to mention that technology has advanced these days. Also, they process quickly. They work longer and automatically better than labour. Capital intensive doesn’t have to be paid wages; they don’t need fringe benefits and etc. however, in some countries, they are expensive and some companies could not afford having many capital intensive in their company. On the other hand, labour intensive doesn’t necessarily produce greater, faster goods. Most labour would prefer to work in companies who have a better environment and provide good fringe benefits or rewards that would give them motivation to work harder. Even though capital is faster and better in producing goods and so on, labour productivity is the most important factor in determining the productivity of a company. Comparing labour and capital: labour could not work 24 hours every day because it is a violation to force workers to work 24 hours without changing shifts. Therefore, companies that have labour intensive rather than capital intensive tend to have many workers. This is because they have to shift times of when they are working whether they are at day or at night. Also, capital can do multitasking since they are machines. They can do two or more things at the same time, which in result will produce more goods. If you were asked for both, a machine and a human, to compete with each other to produce 100 products within a day, I guarantee that the machine will win. This is why most business owners that own companies such as, Indomilk, Indomie and so on, have capital intensive rather than labour because they produce faster and more accurate. Labour may not be fast to produce certain of goods in certain of days, and they may also do some inaccurate mistakes. When they do make mistakes, they will have to do that again which would create a longer time. Moreover, if the company has to import goods and they have labour intensive and accidentally made a huge mistake and have to re-do all over again. It would create a delay for the goods to be imported and the consumers demand may fall. However, labour creates an opportunity for LEDC’s to have more job opportunities, especially for people who have just lost their jobs. It will increase their specialization, skills and experience. Overall, labour intensive had been defeated by capital intensive. To increase your firm’s productivity, it is a better choice to have capital intensive. However, labour is also good for other reasons besides increasing the firm’s productivity. Other reasons include increasing a country’s percentage of people having work, the society’s specialization and skills, experience and so on. Most companies doesn’t necessarily have capital intensive because they are quite expensive. Therefore they have labour intensive instead. Having capital intensive may also be as perfect as you think it will even though it is accurate, fast and can increase your firm’s productivity. As you know machines will somehow experience the time where they are broken, damaged or physical deterioration. Two options will include whether to fix, if possible, or to buy a new one. But of course, both options will reduce your money as they are quite expensive.
Capital Intensive not always better than labour intensive. It depends on what kind of sector and what things do they do. there are 3 types of sector, primary, secondary, and tertiary. things do they do could be on goods or services.
The first sector or primary sector is the sector that involves extracting natural resources, so the primary sector is a labour intensive, because they need workers that work on the field, for example: farming, they will need people to feed the animals, guard them, and check their healthness, all of that cannot done by only one or two people, they will need more than twenty for the big farm. There are some possible reason why they dont use machine, first if like in the farm, they will need long time to only knowing do this animal is sick or not, we know that if use machine theprocess are automatic, so they dont need to be afraid that they will forget. Secong the robots are really expensive, the cost for 1 robot equals to 5 cows or 1000 chickens or 10 goats. They will rather buy more animal rather than buy one robot.
The second sector or the secondary sector is the sector that manufacture the raw material into goods that have more utility or morw useful that before. Most of the secondary sector company , they are capital intensive, because they need more machines than labour, the machines are used in all process. The labour or worker are only used on checking rather the machines are already on or not, and the people or labour or worker only like the one who repair the machines, the one who control or make the software by using computer. For example secondarysector that is capital intensive: coca cola, the coca cola company used all computer or machines. Start from cleaning the bottle, filling the bottle, caping the bottle, until packing the bottle all of that is done by machine. For example of secondary sector that is labour intensive is: lamborghini factory, the process is done by labour or worker. They use a system that all of the cars are moving on a trail, and there are posts, in every post there are people that will be the one who puttinf sparepart, like: construct the machine, putting the doors, and etc. Even the test drive is done by worker. Although the people use machine also to make it faster, like : the screwdriver, the trail that move the car , the lifter that help lift up the heavy things, etc. The factory like this want to run with labour intensive because they want it to be really specific or perfectionist.
The third sector or the tertiary sector is the sector that involves with distribution or services. The distribution sector is labour intensive because they need people that wash the car in the washing car shop or people that serve the customer in the department store or in the restaurant. In a big department store they need more than one hundred people to work there, so it is not possible if they hire hundreds of robots, there are some possible reason that they will not hire the robots, first is really expensive, for example: one robot = 50 million rupiah, so 100 robots= 5 billion rupiah or five hundred thousand dollars, even the profit of the business for thirty years cannot reach that much. Second is robot cannot answer the question of t customer as quick as people, they will need to change the sound to computerly, and then they have to search for theanswer from the system and then speak it again to the customer, all of that process need more than 5 minutes, if people, only less than ten second they can know the answer already.
So the conclusion is that labour intensive is not always better than capital intensive.
When we say ‘intensive’ , it refers to an increase in something. Capital intensive is an increase in the amount of capital invested and labour intensive is an increase in number of people working. Capital refers to machinery, equipment, and other things with fixed cost. Capital-intensive processes are those that require a relatively high level of capital investment compared to the labour cost. Some people do think that having an increase in capital would help to increase productivity. As the more money invested, the more raw materials can be used to produce more. Yet, some think that having an increase in labour would increase productivity as more people are used to produce. Different business have different objectives. Therefore, it depends. Banks or investment companies are considered as ‘capital intensive’ as they invest more capital and produce more services. While a construction and landscaping company are considered as ‘labour intensive’ because they employ more people for the same gains. In capital intensive, it can be time-consuming to increase and decrease in the scale of production. Which means the number of output produce wont be changing that much over periods of time. While in labour intensive, this process is more likely to produce an individual products, or to produce on a small scale. But, there are some costs in labour intensive such as wages, training , etc. So capital intensive usually occurs in countries with high industrial base because industrial companies are investing more capital rather than hiring more labour. They can still produce goods and services with that amount, they don’t need that many workers. while labour intensive usually occurs in places like Asia, where the labour costs are lower and relatively modern productive plants. Some people can also think to do both intensive as by having more capital, more labour can be hired. If there is an increase in capital and labour, there will be more possibility of an increase in productivity.
When we say ‘intensive’ , it refers to an increase in something. Capital intensive is an increase in the amount of capital invested and labour intensive is an increase in number of people working. Capital refers to machinery, equipment, and other things with fixed cost. Capital-intensive processes are those that require a relatively high level of capital investment compared to the labour cost. Some people do think that having an increase in capital would help to increase productivity. As the more money invested, the more raw materials can be used to produce more. Yet, some think that having an increase in labour would increase productivity as more people are used to produce. Different business have different objectives. Therefore, it depends. Banks or investment companies are considered as ‘capital intensive’ as they invest more capital and produce more services. While a construction and landscaping company are considered as ‘labour intensive’ because they employ more people for the same gains. In capital intensive, it can be time-consuming to increase and decrease in the scale of production. Which means the number of output produce wont be changing that much over periods of time. While in labour intensive, this process is more likely to produce an individual products, or to produce on a small scale. But, there are some costs in labour intensive such as wages, training , etc. So capital intensive usually occurs in countries with high industrial base because industrial companies are investing more capital rather than hiring more labour. They can still produce goods and services with that amount, they don’t need that many workers. while labour intensive usually occurs in places like Asia, where the labour costs are lower and relatively modern productive plants. Some people can also think to do both intensive as by having more capital, more labour can be hired. If there is an increase in capital and labour, there will be more possibility of an increase in productivity.
There are two methods of production in industries - capital and labour intensive. A capital intensive requires the production of goods on services relying heavily on capitals, therefore they have less number of labour. On the contrary, labour intensive involves more labour than capital.
Capital intensive is a widely used method in manufacturing, some examples are the production of airplanes, cars, and mobile phones. The machinery and tools used by a capital intensive cause labor to be more effective, because it causes capital deepening or promises increase in the productivity of labor. These societies have greater chances of reaching high standard of living along in the market.
With the help of equipment, productions became more effective and fast. Errors made by workers can be decreased by the proximity of capitals. Another advantage of capital intensive firms is that it doesn't require as much workers, therefore they do not need to cut costs on their wages. By producing more output than labour intensive, they tend to receive more profit.
Capital intensives, however, requires huge sums of investment on the purchase of capitals, maintenance large sums of investment in purchase, maintenance, and needs of capital equipment. Capital intensive industries require high standards of production and profit rates, to be able to receive sustaintial amount of investment. They need a lot of money to keep the business going.
Capital intensive industries also needs to prepare for high levels of fixed cost and risks. If the volume of sales decline, profits earned by the industry suffers a decrease as fixed costs could not be removed/reduced.
On the other hand, labour intensive companies doesn't need to pay huge amounts of costs on machine purchases like capital intensives and investments.They also provide jobs to the local economy, in turn increases the skills of workers to develop.
Labour intensive industries include restaurant, hotels, some agriculture businesses, etc. Since labour costs are considered variable, they can take advantage in controlling expenses during market downturns by controlling size of employee base.There disadvantages are limited scale of economy, less output, less advanced technology and human errors made with slow rate of production.
To round it off, capital intensive industries may take the lead as a better method of production - with more profit and fast production, less errors, and advancement of technology. However, a labour intensive company may produce goods and services that is impossible for capitals to fulfill (hand made goods, services) and doesn't require additional fixed costs.
Capital-intensive processes are those that require a relatively high level of capital investment compared to the labor cost. These processes are more likely to be highly automated and to be used to produce on a large scale. Capital-intensive production is more likely to be associated with flow production but any kind of production might require expensive equipment. Capital is a long-term investment for most businesses, and the costs of financing, and maintaining equipment represents a substantial overhead. In order to maximize efficiency, firms want their capital investment to be fully utilized. In a capital-intensive process, it can be costly and time-consuming to increase or decrease the scale of production. But, is a capital intensive business is better than a labor intensive business? Let’s find out. Capital’s costs are most likely to be higher than labor. As machines are more accurate and more productive, unlike labor; they can make errors when producing. Big machines are expensive. Machines also require electricity. To put capital to its highest quality, they need expensive upgrades, and regular repair and treatment. Capital and Machines are usually employed at car factory, and manufacturing plants. Labor on the other hand, are smarter than machines. They can think with their brains. They can tackle more complex jobs, which machines can’t do. But hiring a good and skilled labor is expensive. Workers like manager, CEO, and those who have exceptional skills must be fed regularly with high paying salary, or they will get out of the business. Labors are usually employed at restaurants, schools, and small firms. But, whatever you choose to set up your business, every choice has its advantages and disadvantages.
Many firms tends to change the Labor Intensive into Capital intensive especially on secondary sector , this is because firms wanted to produce more , by buying new machines with capitals . By that firms can produce goods faster and better then using human energy , because machine is having unlimited energy and also human can make mistakes , but robot can't . But for garment firms , They use human or Labor Intensive because a clothing need a special touching by human that will make it specialty . That is why Robot is differ than Human . But there are some disadvantage using them . For example , we could buy some machines with a cost of $500000 and could pay wages monthly without machines is $100000 .Plus , there is some strict rules and regulations from the government . But Machines also have some expenses such as electricity , and tax that could total by $500 . So I would suggest that all firms used machines , but for garments , art products , and others could just used garments . So what I say is that Labor Intensive is important , and Capital Intensive is also important . Where there are firms , they should make about this decision carefully . Because both of them is important on production and is very expensive to pay
Capital Intensive sometimes doesn't benefit a certain party or company but sometime it does for a car manufacturing company such as,Toyota,Nissan,etc its very important to deploy more capital than to employ more workers but capital such as machinery is more efficient in companies like that or for a company that owns any large scale production because its more efficient than hiring more workers they can do the job more quickly, produce more goods and save production time and don't ask for a raise
But however these so called machinery can broke down and machinery like that is expansive to fix so sometimes its a bit more like a liability than a machine that makes profit for your company but sometimes employing more workers than buying machines sometimes gives your company such as advantages such as hiring them is less expensive than buying new machine one machine for example can worth up to a payment for 100 workers because machinery is more expensive but of course human is not perfect like machines it can make some errors such as a decrease in making the product unlike machine who can keep maintaining the producing of goods in the same level of quality but machines have a thing that human has and machine doesn't have which is a brain people can think to find new ways to produce goods in a more efficient way unlike machine that needs programing to produce goods and cant find new ways to produce goods unless if they are programmed specifically so the main point of my discussion is that labour and capital have its advantages and disadvantage but most of the time having more capital or being capital intensive benefits more than employing more workers or be labour intensive but of course every company have its own need whether if their company need more capital or labour
Capital intensive means that you will focus on capital as their producer. Labour intensive means that they will try to employ labour as their main producers. Capital intensive tend to be more effective and this is why.
When you use capital, they are more efficient. They can get more work done and produce more output for you. They are machines and machine tend to have better processing and produce the task more efficiently
Another reason why capitals are better is they won't make as many mistakes. Labour are just humans and they don't have a perfect record and skills so they will make mistake. Capital will minimize this as they are programed to do a specific task perfectly or as close to perfect as you can get.
Another reason why capital is better is that they don't need to have a salary. You just need to pay certain amount at the start and they will work forever. With labour you will have to make sure you give a good wage and keep it up.
Another possible outcome is that there may be conflict between them. The workers may gang up and face the firms to demand for higher wages while machine don't have the ability to do so.
What makes us employ labour is that they can do certain task that capitals can't do like control or start the machines. Governments employ labour to reduce the unemployment in the country and make it a better place.
Capital-intensive refers to the higher ratio of machinery used than labor. Overall, when a firm is capital intensive, it will increase its firm’s productivity through three factors. The use of machinery allows the firm to produce goods faster, has more precision and it doesn't it need any rest time.
Machinery is able to produce goods quicker and more efficiently as they combine the production process systematically with an allotted amount of time. Compared to labor-intensive firms, more labor is needed to increase the firm’s productivity with help of division of labor. This might affect the amount of capital a firm must give out to reach this action.
Some works to produce such goods require precision. Such things aren’t able to be perfected by a worker itself, only machineries are able to do this task flawlessly by just a button to adjust to what they want. Most car factories would be capital intensive, as the details of the car are accustomed to the consumer’s liking with the help of machinery. The work needed to be done for this type of firm could be spray painting, or a perfect lining on a part of the car.
Machineries don't need break or any sort of rest time. This advantage will allow firms to produce faster, in contrast to labor-intensive firms. As workers would need time to take a rest, eat, go to the restroom and many more.
Even though capital-intensive firms will generally help increase its productivity level, there are some drawbacks that they would have to face. Machinery needs to be maintained and repaired.
Firms need to put in capital to maintain and stabilized the condition of the machinery as they keep on using it. Some firms might not want to increase their cost because of this matter. Thus, some firms would rather choose to be labor-intensive.
Inclusively, capital-intensive firms are able to increase its productivity level than labor-intensive firms with several factors to benefit from. But, capital-intensive firms might reconsider the volume of machines used when they would face its drawbacks to it.
Capital intensive is when the company or firm employs more machinery to work for them to replace the labors while labor intensive is when the firm or company employs more people to work for them rather than the machines. Now i will discuss whether capital intensive is better than labor intensive to increase their productivity.
For me, capital intensive is better for most companies to increase productivity because machines can produce goods faster, they are more accurate, and they also doesn't need any rest times like people do. They can produce very much faster than human can do. If a company will have more labors than machines, the companies will need more money to pay the wages for the workers and with machines it will be more efficient in producing the goods. Another thing that we must consider in choosing the capital intensive is about the accuracy. Machines will be much more accurate to be used rather than the people. Accuracy can reduce the cost of production because it can reduce the amount of goods that is wrong so the goods will not be thrown away. Machines also don't need any rest time like people do, because if people will don't have any rest, they will be sick or even death but with machines, they will not need any rest time because they are machines not people like us. Because machine don't need any rest time, so the company or firm which employ them will produce faster but the company must also think if the machines will work for a long time without rest, the machines will be broken. Even though capital intensive have many advantages but companies will also have disadvantages if they employ more machines. Some disadvantages are that the machines must be repaired and maintained. But not every company will choose capital intensive because of the disadvantages that capital intensive have so they will choose the labor intensive.
So the conclusion is that for me, i will choose capital intensive for my company in order for me to increase the productivity of my company but not all company will think the same as me, some company will also choose labor intensive because they will think that labor will be simpler to use or maybe more productive.
There are 2 types of ways of production – capital intensive and labor intensive.
Capital intensive is the technology like equipment and machines that business needs to produce their outputs of goods and services. A capital intensive business needs a lot of money to buy machines and the business needs more capital investment than labors. It is used to produce on a large scale. For example, manufacturing.
Some businesses those are likely to choose to be a capital-intensive business is businesses that mainly produce goods. The advantages of being a capital-intensive business is that there is less errors that the machines could make. As the result, production of goods and services are more accurate.
As capital-intensive businesses use machines to produce outputs, machines could produce goods and services in greater speed and greater efficiency. Machines are also producing in uniform output. And machines could work 24-hours unlike employees. Capital investments don’t have problems with labor shortage or planning labor. A labor shortage is the insufficiency of qualified employees for employment, which could help in producing outputs.
However, the investment of capital requires a lot of money and also possible training costs. To be able to produce the goods with machines, the machines need to be set up, and it could be time consuming. Machines do not adapt easily to changes in consumers’ demand. Machines are only possible to produce standard products.
Labor intensive is the type of producing goods and services using the process of people working in a business. A Labor-intensive business needs a high amount of people working rather than capital investments. For example, a restaurant.
Labor-intensive production provides a lot of jobs for employees. It creates a lot of income and opportunities for employees and companies to develop further. Employing labor is much more cheaper than employing machines. Labor are more flexible in changes of consumers’ demand.
Labor-intensive production is slower than capital-intensive production. There are also possible mistakes that more likely to be created by human compare to capital. The absence of the employees also affects the production. If the employees are not present, there could be delay of production.
It’s better to be a capital-intensive if a business wants to increase the productivity, as they could produce more goods than employees with better quality and faster speed, and there are fewer errors that could be done by machines even though it requires a lot of money.
The word ‘Capital’ refers to equipment, machinery, vehicles etc. that a business uses to make its product or service. Capital intensive processes are those that require a relatively high level of capital investment compared to the labor cost. These processes are more likely to be highly automated and to be used to produce on a large scale.
ReplyDeleteCapital-intensive production is more likely to be associated with flow production but any kind of production might require expensive equipment and materials. Capital is a long-term investment for most businesses, and the costs of financing, maintaining, and depreciating this equipment represents a substantial overhead. In a capital-intensive process, it can be costly and time-consuming to increase or decrease the scale of production.
Referring to labor-intensive, the word ‘Labor’ defines the people required to carry out a process in a business. Labor-intensive processes are those that require a relatively high level of labor compared to capital investment. This type of intensive is just as oppose to capital-intensive in which it uses the power from its workers or employees.
These processes are more likely to be used to produce individual or personalized products, or to produce on a small scale. Labor-intensive processes therefore are more likely to be seen in job production and in smaller-scale enterprises. The speed of production is much slower than it is in capital-intensive which the machines are automated and able to work for 24-hours. Unlike workers, they are human being whom need enough rest and food supply to continue working day after day.
Labor is sufficiently available and cheaper in most economies. Labor-intensive method, it is argued therefore could lead to reduced cost of production. Capital, however, is scarce and expensive and in the case of less developed economies, has to be imported with scarce foreign exchange. If so, this would increase expenditure on imports and could affect the balance of payment of the economies involved. For this and other reasons labor-intensive method is favored.
It is also believed that if labor-intensive methods are employed, the abundant unemployed labor in most economies today will be employed, thus solving the unemployment problems. If the marginal propensity to consume is high, more goods and services would be demanded which will result in economies of scale.
Some has the argument that capital-intensive method leads to dualism in the economy, so that most of the capital equipment and capital-intensive methods of production are in the urban areas, creating an urban capital center and the labor rural center where jobs and social amenities are inadequately provided. This situation leads to rural-urban migration.
Labor-intensive methods are often argued that they do not readily adopt to change. Capital-intensive method can however, easily be adjusted to suit modern trends in production due to their flexibility. Capital-intensive methods are therefore clearly associated with high levels of output.
In spite of the reasons advanced in favor of the two methods of production between capital-intensive and labor-intensive, and against the other, it is important that the two techniques of production be married in order for any economy to achieve sustainable economic development.
Capitals are equipment used for production. Labor refers to the people supporting production in the job. Increasing amount of capital or labor is included as factors of increasing production. Increasing capital is also called capital intensive. Increasing labor is also called labor intensive. Some might say that capital intensive is better than labor intensive.
ReplyDeleteCapital-intensive processes are those that require a relatively high level of capital investment compared to the labor cost. These processes are more likely to be highly automated, at a higher speed, and to be used to produce on a large scale. They are able to produce at a large scale because rest isn’t needed for capital unlike labor. So, capitals can work for hours or non-stop. This makes capital have high productivity. It is argued that labor-intensive methods do not readily adopt to change. Capital has no problems with labor shortages / planning labor. Capital-intensive method can however, easily be adjusted to suit modern trends in production due to their flexibility.
Unlike labor, labor-intensive processes are those that require a relatively high level of labor compared to capital investment. These processes are more likely to be used to produce individual or personalized products, or to produce on a small scale. They produce on a smaller scale compared to capital because they can’t work non-stop, unlike capital. It is also believed that if labor-intensive methods are employed, the abundant unemployed labor in most economies today will be employed, thus solving the unemployment problems. If the marginal propensity to consume (MPC) were high, more goods and services would be demanded which will result in economies of scale. But, labor’s production quality is more likely to be better than capital. An example is cars. Cars are better build by people/made by hand rather than using machines, ex: Rolls Royce. Labor can provide a ‘personal touch’ and be more in-tune with customer needs and wants. Labor can also provide tailor made products / services for different customer needs and wants. Machinery is not flexible enough to provide custom made products / services for individual customers.
Capital’s costs are most likely to be higher than labor. Capitals are more accurate and reduce errors, unlike labor; they can make errors when producing. Big machines are expensive. Capitals also require electricity. Not all good machines are available everywhere. Countries like in Singapore use capital that are imported, examples from Japan, America, etc. To put capital to its highest quality, they need expensive upgrades.
The costs of labor are wages and other benefits, recruitment, training, etc. Labors are more available anywhere than capital. Low skilled labor can be used everywhere especially in primary sectors. So labor costs are cheaper than capital. Unlike capital, bad machines can cost a lot of problems once they’re used. To maximize quality of labor, all it takes is training. But labor can relatively be expensive in a long term.
In conclusion, I’d say that it is better to be a capital-intensive business than labor intensive because it has more advantages and less error than labor.
Kevin 8C
Capital intensive refer to equipment, machinery, vehicles, and other things that used by business to make its product or services. It processes requires a relatively high level of capital investment rather than the labour cost. He processesare likely to be highly automated and used to produce a large scale. The production is likely to be associated with flow production that require expensive equipment. Capital is a long term investment for many bsuinesses and the cost of financing, maintaining, and depreciating the equipment represents a substantial overhead. And to maximise efficiency, firm want their capital investment to be fully utilised. In capital intensive process, it can be costly and time consuming to increase or decrease the scale of prodcution.
ReplyDeleteLabour intensive refer to the people required to carry out processes in a business. Labour intensive process are those that require a relatively high level of lbour rather than capital investment. The processes are likely to be used to produce individual or personalised products or to produce a small scale. The cost of labour are wages, and other benefits such as training, recruitment, etc. The flexibility in capacitymay be available by use of overtime and temporary staff or by laying off workers. The long term growth may depends on being able to recruit sufficient suitable staff. The labour intensive processes are likely to be seem in job production and in smaller scale enterprises.
To increase productivity, it is better to sue capital intensives rather than labour intensives. In capital intensives, business use machinery to increase or decrease the productivity while in labour intensive business use the labour to increase or decrease the productivity. Machinery can be controlled by the owner, it can be turned off and on, owner can control the machine whether it needs to increase the productivity or decrease the productivity, for thw usage cost also will cost ess than labour because if owner didn’t use themachine they can turned it off and the electricity also will stop running and will have no cost especially during holiday while labour are payed monthly so owner need to pay labour every month at the same maount whether at that month the labour have holiday or not.
Using a mc=achinery may also lower thecost for the business itself. Because there are some machines taht can do more than 1 activities. For example a labour only can do 1 thing at the same time for example in petroleum. Labour only can serve 1 person while the one in the cashier is another labour while machine is the one who served such as give the introduction to theconsumers but the machine also the one who will be the cashoer so the person can directly pay to the machine. Using a labour may require the cost of wages and training so themore labour a business have the more cost will the business need to while if the business uses machine, business only need to pay for the electricity power charge and and the cost of repairing the machine if it is broken which maybe only once or twice a year.
In conclusion, capital intensives are better than labour intensives to increase the business productivity. Even though at the first time when business starts the company requires more amount of capitel rather than labour intensives to buy the expensive machine but if the business have run it will cost moe for the labour intensives than capital intensives. Capital investment also can be controlles so business can control the productivity, while labour can’t be forced for example the average production are same each day : 100 goods but maybe because of the goods are best seller the owner want to increase the productivity, the owner that uese amchine can speed up themachine to produce 200 goods at the same day with the same amount of cost while owner that uses labour intensives can’t increase their production unless the business have more labour but more labour will require more amount of cost.
Capital basically means technology equipments or in other words, machinery. While labour means human workers. Some business owners prefer having capital intensive in the company rather than labour intensive for several reasons. One of them includes increasing firm’s productivity.
ReplyDeleteHaving capital intensive will produce products faster and accurately. Not to mention that technology has advanced these days. Also, they process quickly. They work longer and automatically better than labour. Capital intensive doesn’t have to be paid wages; they don’t need fringe benefits and etc. however, in some countries, they are expensive and some companies could not afford having many capital intensive in their company.
On the other hand, labour intensive doesn’t necessarily produce greater, faster goods. Most labour would prefer to work in companies who have a better environment and provide good fringe benefits or rewards that would give them motivation to work harder. Even though capital is faster and better in producing goods and so on, labour productivity is the most important factor in determining the productivity of a company.
Comparing labour and capital: labour could not work 24 hours every day because it is a violation to force workers to work 24 hours without changing shifts. Therefore, companies that have labour intensive rather than capital intensive tend to have many workers. This is because they have to shift times of when they are working whether they are at day or at night. Also, capital can do multitasking since they are machines. They can do two or more things at the same time, which in result will produce more goods. If you were asked for both, a machine and a human, to compete with each other to produce 100 products within a day, I guarantee that the machine will win. This is why most business owners that own companies such as, Indomilk, Indomie and so on, have capital intensive rather than labour because they produce faster and more accurate.
Labour may not be fast to produce certain of goods in certain of days, and they may also do some inaccurate mistakes. When they do make mistakes, they will have to do that again which would create a longer time. Moreover, if the company has to import goods and they have labour intensive and accidentally made a huge mistake and have to re-do all over again. It would create a delay for the goods to be imported and the consumers demand may fall. However, labour creates an opportunity for LEDC’s to have more job opportunities, especially for people who have just lost their jobs. It will increase their specialization, skills and experience.
Overall, labour intensive had been defeated by capital intensive. To increase your firm’s productivity, it is a better choice to have capital intensive. However, labour is also good for other reasons besides increasing the firm’s productivity. Other reasons include increasing a country’s percentage of people having work, the society’s specialization and skills, experience and so on. Most companies doesn’t necessarily have capital intensive because they are quite expensive. Therefore they have labour intensive instead. Having capital intensive may also be as perfect as you think it will even though it is accurate, fast and can increase your firm’s productivity. As you know machines will somehow experience the time where they are broken, damaged or physical deterioration. Two options will include whether to fix, if possible, or to buy a new one. But of course, both options will reduce your money as they are quite expensive.
Capital Intensive not always better than labour intensive. It depends on what kind of sector and what things do they do. there are 3 types of sector, primary, secondary, and tertiary. things do they do could be on goods or services.
ReplyDeleteThe first sector or primary sector is the sector that involves extracting natural resources, so the primary sector is a labour intensive, because they need workers that work on the field, for example: farming, they will need people to feed the animals, guard them, and check their healthness, all of that cannot done by only one or two people, they will need more than twenty for the big farm. There are some possible reason why they dont use machine, first if like in the farm, they will need long time to only knowing do this animal is sick or not, we know that if use machine theprocess are automatic, so they dont need to be afraid that they will forget. Secong the robots are really expensive, the cost for 1 robot equals to 5 cows or 1000 chickens or 10 goats. They will rather buy more animal rather than buy one robot.
The second sector or the secondary sector is the sector that manufacture the raw material into goods that have more utility or morw useful that before. Most of the secondary sector company , they are capital intensive, because they need more machines than labour, the machines are used in all process. The labour or worker are only used on checking rather the machines are already on or not, and the people or labour or worker only like the one who repair the machines, the one who control or make the software by using computer. For example secondarysector that is capital intensive: coca cola, the coca cola company used all computer or machines. Start from cleaning the bottle, filling the bottle, caping the bottle, until packing the bottle all of that is done by machine. For example of secondary sector that is labour intensive is: lamborghini factory, the process is done by labour or worker. They use a system that all of the cars are moving on a trail, and there are posts, in every post there are people that will be the one who puttinf sparepart, like: construct the machine, putting the doors, and etc. Even the test drive is done by worker. Although the people use machine also to make it faster, like : the screwdriver, the trail that move the car , the lifter that help lift up the heavy things, etc. The factory like this want to run with labour intensive because they want it to be really specific or perfectionist.
The third sector or the tertiary sector is the sector that involves with distribution or services. The distribution sector is labour intensive because they need people that wash the car in the washing car shop or people that serve the customer in the department store or in the restaurant. In a big department store they need more than one hundred people to work there, so it is not possible if they hire hundreds of robots, there are some possible reason that they will not hire the robots, first is really expensive, for example: one robot = 50 million rupiah, so 100 robots= 5 billion rupiah or five hundred thousand dollars, even the profit of the business for thirty years cannot reach that much. Second is robot cannot answer the question of t customer as quick as people, they will need to change the sound to computerly, and then they have to search for theanswer from the system and then speak it again to the customer, all of that process need more than 5 minutes, if people, only less than ten second they can know the answer already.
So the conclusion is that labour intensive is not always better than capital intensive.
When we say ‘intensive’ , it refers to an increase in something. Capital intensive is an increase in the amount of capital invested and labour intensive is an increase in number of people working.
ReplyDeleteCapital refers to machinery, equipment, and other things with fixed cost. Capital-intensive processes are those that require a relatively high level of capital investment compared to the labour cost. Some people do think that having an increase in capital would help to increase productivity. As the more money invested, the more raw materials can be used to produce more. Yet, some think that having an increase in labour would increase productivity as more people are used to produce. Different business have different objectives. Therefore, it depends.
Banks or investment companies are considered as ‘capital intensive’ as they invest more capital and produce more services. While a construction and landscaping company are considered as ‘labour intensive’ because they employ more people for the same gains.
In capital intensive, it can be time-consuming to increase and decrease in the scale of production. Which means the number of output produce wont be changing that much over periods of time. While in labour intensive, this process is more likely to produce an individual products, or to produce on a small scale. But, there are some costs in labour intensive such as wages, training , etc.
So capital intensive usually occurs in countries with high industrial base because industrial companies are investing more capital rather than hiring more labour. They can still produce goods and services with that amount, they don’t need that many workers. while labour intensive usually occurs in places like Asia, where the labour costs are lower and relatively modern productive plants.
Some people can also think to do both intensive as by having more capital, more labour can be hired. If there is an increase in capital and labour, there will be more possibility of an increase in productivity.
When we say ‘intensive’ , it refers to an increase in something. Capital intensive is an increase in the amount of capital invested and labour intensive is an increase in number of people working.
ReplyDeleteCapital refers to machinery, equipment, and other things with fixed cost. Capital-intensive processes are those that require a relatively high level of capital investment compared to the labour cost. Some people do think that having an increase in capital would help to increase productivity. As the more money invested, the more raw materials can be used to produce more. Yet, some think that having an increase in labour would increase productivity as more people are used to produce. Different business have different objectives. Therefore, it depends.
Banks or investment companies are considered as ‘capital intensive’ as they invest more capital and produce more services. While a construction and landscaping company are considered as ‘labour intensive’ because they employ more people for the same gains.
In capital intensive, it can be time-consuming to increase and decrease in the scale of production. Which means the number of output produce wont be changing that much over periods of time. While in labour intensive, this process is more likely to produce an individual products, or to produce on a small scale. But, there are some costs in labour intensive such as wages, training , etc.
So capital intensive usually occurs in countries with high industrial base because industrial companies are investing more capital rather than hiring more labour. They can still produce goods and services with that amount, they don’t need that many workers. while labour intensive usually occurs in places like Asia, where the labour costs are lower and relatively modern productive plants.
Some people can also think to do both intensive as by having more capital, more labour can be hired. If there is an increase in capital and labour, there will be more possibility of an increase in productivity.
There are two methods of production in industries - capital and labour intensive. A capital intensive requires the production of goods on services relying heavily on capitals, therefore they have less number of labour. On the contrary, labour intensive involves more labour than capital.
ReplyDeleteCapital intensive is a widely used method in manufacturing, some examples are the production of airplanes, cars, and mobile phones. The machinery and tools used by a capital intensive cause labor to be more effective, because it causes capital deepening or promises increase in the productivity of labor. These societies have greater chances of reaching high standard of living along in the market.
With the help of equipment, productions became more effective and fast. Errors made by workers can be decreased by the proximity of capitals. Another advantage of capital intensive firms is that it doesn't require as much workers, therefore they do not need to cut costs on their wages.
By producing more output than labour intensive, they tend to receive more profit.
Capital intensives, however, requires huge sums of investment on the purchase of capitals, maintenance large sums of investment in purchase, maintenance, and needs of capital equipment. Capital intensive industries require high standards of production and profit rates, to be able to receive sustaintial amount of investment. They need a lot of money to keep the business going.
Capital intensive industries also needs to prepare for high levels of fixed cost and risks. If the volume of sales decline, profits earned by the industry suffers a decrease as fixed costs could not be removed/reduced.
On the other hand, labour intensive companies doesn't need to pay huge amounts of costs on machine purchases like capital intensives and investments.They also provide jobs to the local economy, in turn increases the skills of workers to develop.
Labour intensive industries include restaurant, hotels, some agriculture businesses, etc. Since labour costs are considered variable, they can take advantage in controlling expenses during market downturns by controlling size of employee base.There disadvantages are limited scale of economy, less output, less advanced technology and human errors made with slow rate of production.
To round it off, capital intensive industries may take the lead as a better method of production - with more profit and fast production, less errors, and advancement of technology. However, a labour intensive company may produce goods and services that is impossible for capitals to fulfill (hand made goods, services) and doesn't require additional fixed costs.
Capital-intensive processes are those that require a relatively high level of capital investment compared to the labor cost. These processes are more likely to be highly automated and to be used to produce on a large scale. Capital-intensive production is more likely to be associated with flow production but any kind of production might require expensive equipment. Capital is a long-term investment for most businesses, and the costs of financing, and maintaining equipment represents a substantial overhead. In order to maximize efficiency, firms want their capital investment to be fully utilized. In a capital-intensive process, it can be costly and time-consuming to increase or decrease the scale of production.
ReplyDeleteBut, is a capital intensive business is better than a labor intensive business? Let’s find out.
Capital’s costs are most likely to be higher than labor. As machines are more accurate and more productive, unlike labor; they can make errors when producing. Big machines are expensive. Machines also require electricity. To put capital to its highest quality, they need expensive upgrades, and regular repair and treatment. Capital and Machines are usually employed at car factory, and manufacturing plants.
Labor on the other hand, are smarter than machines. They can think with their brains. They can tackle more complex jobs, which machines can’t do. But hiring a good and skilled labor is expensive. Workers like manager, CEO, and those who have exceptional skills must be fed regularly with high paying salary, or they will get out of the business. Labors are usually employed at restaurants, schools, and small firms.
But, whatever you choose to set up your business, every choice has its advantages and disadvantages.
Many firms tends to change the Labor Intensive into Capital intensive especially on secondary sector , this is because firms wanted to produce more , by buying new machines with capitals . By that firms can produce goods faster and better then using human energy , because machine is having unlimited energy and also human can make mistakes , but robot can't . But for garment firms , They use human or Labor Intensive because a clothing need a special touching by human that will make it specialty . That is why Robot is differ than Human . But there are some disadvantage using them . For example , we could buy some machines with a cost of $500000 and could pay wages monthly without machines is $100000 .Plus , there is some strict rules and regulations from the government . But Machines also have some expenses such as electricity , and tax that could total by $500 . So I would suggest that all firms used machines , but for garments , art products , and others could just used garments .
ReplyDeleteSo what I say is that Labor Intensive is important , and Capital Intensive is also important . Where there are firms , they should make about this decision carefully . Because both of them is important on production and is very expensive to pay
Capital Intensive sometimes doesn't benefit a certain party or company but sometime it does for a car manufacturing company such as,Toyota,Nissan,etc its very important to deploy more capital than to employ more workers but capital such as machinery is more efficient in companies like that or for a company that owns any large scale production because its more efficient than hiring more workers they can do the job more quickly, produce more goods and save production time and don't ask for a raise
ReplyDeleteBut however these so called machinery can broke down and machinery like that is expansive to fix so sometimes its a bit more like a liability than a machine that makes profit for your company but sometimes employing more workers than buying machines sometimes gives your company such as advantages such as hiring them is less expensive than buying new machine one machine for example can worth up to a payment for 100 workers because machinery is more expensive but of course human is not perfect like machines it can make some errors such as a decrease in making the product unlike machine who can keep maintaining the producing of goods in the same level of quality but machines have a thing that human has and machine doesn't have which is a brain people can think to find new ways to produce goods in a more efficient way unlike machine that needs programing to produce goods and cant find new ways to produce goods unless if they are programmed specifically so the main point of my discussion is that labour and capital have its advantages and disadvantage but most of the time having more capital or being capital intensive benefits more than employing more workers or be labour intensive but of course every company have its own need whether if their company need more capital or labour
Capital intensive means that you will focus on capital as their producer. Labour intensive means that they will try to employ labour as their main producers. Capital intensive tend to be more effective and this is why.
ReplyDeleteWhen you use capital, they are more efficient. They can get more work done and produce more output for you. They are machines and machine tend to have better processing and produce the task more efficiently
Another reason why capitals are better is they won't make as many mistakes. Labour are just humans and they don't have a perfect record and skills so they will make mistake. Capital will minimize this as they are programed to do a specific task perfectly or as close to perfect as you can get.
Another reason why capital is better is that they don't need to have a salary. You just need to pay certain amount at the start and they will work forever. With labour you will have to make sure you give a good wage and keep it up.
Another possible outcome is that there may be conflict between them. The workers may gang up and face the firms to demand for higher wages while machine don't have the ability to do so.
What makes us employ labour is that they can do certain task that capitals can't do like control or start the machines. Governments employ labour to reduce the unemployment in the country and make it a better place.
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ReplyDeleteCapital-intensive refers to the higher ratio of machinery used than labor. Overall, when a firm is capital intensive, it will increase its firm’s productivity through three factors. The use of machinery allows the firm to produce goods faster, has more precision and it doesn't it need any rest time.
ReplyDeleteMachinery is able to produce goods quicker and more efficiently as they combine the production process systematically with an allotted amount of time. Compared to labor-intensive firms, more labor is needed to increase the firm’s productivity with help of division of labor. This might affect the amount of capital a firm must give out to reach this action.
Some works to produce such goods require precision. Such things aren’t able to be perfected by a worker itself, only machineries are able to do this task flawlessly by just a button to adjust to what they want. Most car factories would be capital intensive, as the details of the car are accustomed to the consumer’s liking with the help of machinery. The work needed to be done for this type of firm could be spray painting, or a perfect lining on a part of the car.
Machineries don't need break or any sort of rest time. This advantage will allow firms to produce faster, in contrast to labor-intensive firms. As workers would need time to take a rest, eat, go to the restroom and many more.
Even though capital-intensive firms will generally help increase its productivity level, there are some drawbacks that they would have to face. Machinery needs to be maintained and repaired.
Firms need to put in capital to maintain and stabilized the condition of the machinery as they keep on using it. Some firms might not want to increase their cost because of this matter. Thus, some firms would rather choose to be labor-intensive.
Inclusively, capital-intensive firms are able to increase its productivity level than labor-intensive firms with several factors to benefit from. But, capital-intensive firms might reconsider the volume of machines used when they would face its drawbacks to it.
Monique 8C
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ReplyDeleteCapital intensive is when the company or firm employs more machinery to work for them to replace the labors while labor intensive is when the firm or company employs more people to work for them rather than the machines. Now i will discuss whether capital intensive is better than labor intensive to increase their productivity.
ReplyDeleteFor me, capital intensive is better for most companies to increase productivity because machines can produce goods faster, they are more accurate, and they also doesn't need any rest times like people do. They can produce very much faster than human can do. If a company will have more labors than machines, the companies will need more money to pay the wages for the workers and with machines it will be more efficient in producing the goods. Another thing that we must consider in choosing the capital intensive is about the accuracy. Machines will be much more accurate to be used rather than the people. Accuracy can reduce the cost of production because it can reduce the amount of goods that is wrong so the goods will not be thrown away. Machines also don't need any rest time like people do, because if people will don't have any rest, they will be sick or even death but with machines, they will not need any rest time because they are machines not people like us. Because machine don't need any rest time, so the company or firm which employ them will produce faster but the company must also think if the machines will work for a long time without rest, the machines will be broken. Even though capital intensive have many advantages but companies will also have disadvantages if they employ more machines. Some disadvantages are that the machines must be repaired and maintained. But not every company will choose capital intensive because of the disadvantages that capital intensive have so they will choose the labor intensive.
So the conclusion is that for me, i will choose capital intensive for my company in order for me to increase the productivity of my company but not all company will think the same as me, some company will also choose labor intensive because they will think that labor will be simpler to use or maybe more productive.
Fernando 8C
There are 2 types of ways of production – capital intensive and labor intensive.
ReplyDeleteCapital intensive is the technology like equipment and machines that business needs to produce their outputs of goods and services. A capital intensive business needs a lot of money to buy machines and the business needs more capital investment than labors. It is used to produce on a large scale. For example, manufacturing.
Some businesses those are likely to choose to be a capital-intensive business is businesses that mainly produce goods. The advantages of being a capital-intensive business is that there is less errors that the machines could make. As the result, production of goods and services are more accurate.
As capital-intensive businesses use machines to produce outputs, machines could produce goods and services in greater speed and greater efficiency. Machines are also producing in uniform output. And machines could work 24-hours unlike employees. Capital investments don’t have problems with labor shortage or planning labor. A labor shortage is the insufficiency of qualified employees for employment, which could help in producing outputs.
However, the investment of capital requires a lot of money and also possible training costs. To be able to produce the goods with machines, the machines need to be set up, and it could be time consuming. Machines do not adapt easily to changes in consumers’ demand. Machines are only possible to produce standard products.
Labor intensive is the type of producing goods and services using the process of people working in a business. A Labor-intensive business needs a high amount of people working rather than capital investments. For example, a restaurant.
Labor-intensive production provides a lot of jobs for employees. It creates a lot of income and opportunities for employees and companies to develop further. Employing labor is much more cheaper than employing machines. Labor are more flexible in changes of consumers’ demand.
Labor-intensive production is slower than capital-intensive production. There are also possible mistakes that more likely to be created by human compare to capital. The absence of the employees also affects the production. If the employees are not present, there could be delay of production.
It’s better to be a capital-intensive if a business wants to increase the productivity, as they could produce more goods than employees with better quality and faster speed, and there are fewer errors that could be done by machines even though it requires a lot of money.
Charlotte 8C