Types of Production

Production is grouped into two major categories. These are direct production and indirect production. 

1. Direct Production:

This is the persistent type of production which is for small-scale production (households).

Direct production refers to a worker supplying his or her own needs, that is, self-sufficient, similar to subsistence farming. The goods or services produced are not for sale. It is usually small in size and family labour is usually involved.

2. Indirect Production:

In this type of production, goods and services are produced on a large scale, with the use of modern technologies, in order to satisfy needs. Indirect production refers to people producing goods and services for others.  

Production as a creation of Utilitythe state of being useful, profitable, or beneficial. More is in four major stages. Form Utility, Place Utility, Time Utility, Possession Utility.

Indirect production is subdivided into three major groups. These are primary, secondary, and tertiary production.

a. Primary Production:

Extraction is also called primary production. It is the first stage of production. It is the extraction of raw materials in their natural form from land, sea, and air. It has to do with the tapping of productive natural raw materials, for example, products from mining, fisheries, and agriculture are primary products.

b. Secondary Production:

Secondary production has to do with the conversion/changing of raw materials, at the extracted stage, to their final forms, or to finished or semi-finished goods, in order to satisfy human wants. This stage is called the manufacturing stage. It includes construction and processed goods like automobiles, coffee, and cars.

c. Tertiary Production:

This is the final stage of production, in which all the stages of production are involved. It is the stage of distribution that covers all the economic activities, in order to have an effective result. Industries in the tertiary sector produce all those services, which enable the finished goods to be put in the hands of consumers. In fact, these services are supplied to firms in all types of industries and directly to consumers. Examples of tertiary production include wholesalers, retailers, lawyers, teachers, hairdressers, and fashion designers.