Labour and capital

All production operations combine the two factors of labour and capital. The importance of labour and capital to a specific business are described in terms of their intensity.

Labour intensive

Labour intensive is when products are mainly produced by human workers. Machines and special tools may be used too, but overall it requires human creativity and effort to produce the product.

Advantages	Disadvantages
Customised products are easier to make	Quality of products can vary due to expertise of the worker
Less expensive machinery costs	Skilled workers take time to train
Humans can use their own initiative and problem solve	Skilled workers will be paid more than unskilled workers

Advantages	Customised products are easier to make
Disadvantages	Quality of products can vary due to expertise of the worker

Advantages	Less expensive machinery costs
Disadvantages	Skilled workers take time to train

Advantages	Humans can use their own initiative and problem solve
Disadvantages	Skilled workers will be paid more than unskilled workers

Capital intensive

Capital intensive is when products are mainly produced by machines and robots, meaning the initial outlay and maintenance, will be very high.

Advantages	Disadvantages
Less employee wages and costs	More difficult to customise orders
Quality can be standardised, the same every time	Breakdowns in production can be costly
Machines can work continuously, 24/7	Initial set up costs of machinery are high

Advantages	Less employee wages and costs
Disadvantages	More difficult to customise orders

Advantages	Quality can be standardised, the same every time
Disadvantages	Breakdowns in production can be costly

Advantages	Machines can work continuously, 24/7
Disadvantages	Initial set up costs of machinery are high

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Methods of productionLabour and capital