Tel:
86-27-83372627
86-27-83372628
86-27-83372629
Fax:
86-27-83372625
E-mail:
info@sinicline.net
How to Distinguish Capital-Intensive and Labor-Intensive products? |
|
| Release time:2013-05-07 Source:admin Reads: | |
| Capital-intensive ‘Capital’ refers to the equipment, machinery, vehicles and so on that a business uses to make its product or service. Capital-intensive processes are those that require a relatively high level of capital investment and advanced technology compared to the labor cost, which are mainly made in developed areas such as the USA, UK, Germany, Japan, etc. But labor-intensive products like hangtags are usually made in Asian nations for affluent raw materials and cheap labor cost that are in shortage of developed countries. 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, maintaining and depreciating this equipment represents a substantial overhead. But labor is easily accumulated in developing countries that create a great many less technological products like hangtags or handicrafts. In order to maximise efficiency, firms want their capital investment to be fully utilised (see notes on capacity utilisation). In a capital-intensive process, it can be costly and time-consuming to increase or decrease the scale of production. Labor-intensive ‘Labor’ refers to the people required to carry out a process in a business. Labor-intensive processes are those that require a relatively high level of labor such as hangtags 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 The costs of labor are: wages and other benefits, recruitment, training and so on.Some flexibility in capacity may be available by use of overtime and temporary staff, or by laying-off workers.Long-term growth depends on being able to recruit sufficient suitable staff.Labor intensive processes are more likely to be seen in Job production and in smaller-scale enterprises. |
