Subjects

Business

Explore Business
Search

The production operations of any business combine two factor inputs:

  • Labour – i.e. management, employees (full-time, part-time, temporary etc)
  • Capital – i.e. plant & machinery, IT systems, buildings, vehicles, offices

The relatively importance of labour and capital to a specific business can be described broadly in terms of their "intensity" (or to put it another way, significance).

  • Labour-intensive production relies mainly on labour
  • Capital-intensive production relies mainly on capital

Sounds simple! Some examples will help reinforce the point:

Labour intensive

  • Food processing (e.g. ready meals)
  • Hotels & restaurants
  • Fruit farming / picking
  • Hairdressing & other personal services
  • Coal mining

Capital intensive

  • Oil extraction & refining
  • Car manufacturing
  • Web hosting
  • Intensive arable farming
  • Transport (airports, railways etc)

The main features of each category can also be summarised as follows:

Labour intensive operations

  • Labour costs higher than capital costs
  • Costs are mainly variable in nature = lower breakeven output
  • Firms benefit from access to sources of low-cost labour

Capital intensive operations

  • Capital costs higher than labour costs
  • Costs are mainly fixed in nature = higher breakeven output
  • Firms benefit from access to low-cost, long-term financing
Featured
CPD courses

Teaching the New Edexcel A Level Business

Join the tutor2u Business team for a resource-packed day designed to fast-track your lesson planning and preparation for the new Edexcel A Level Business specification. We'll look at the key changes in teaching content, explore the new challenges of teaching this linear specification and dive into some brand new teaching resources designed specifically for the new Edexcel A Level Business course from September 2015.

Learn more ›

You might also like

Reference material

Teaching & learning products

Edexcel A Level Business Year 1 (AS) Teacher PowerPoint Presentations

This resource comprises a complete collection of editable PowerPoint presentations that are ideal for teaching individual topics for the whole Year 1 (AS) teaching content. Each presentation has a consistent, clear and professional format and maps precisely to the specification teaching content.

£75.00

AQA BUSS2 Revision Guide

The essential 20 page quick revision guide for AQA AS Business Studies BUSS2. All the key topics covered to enable you to focus your exam preparation on crucial BUSS2 exam technique.

£4.00

Close

Business