• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Penpoin.

Better Knowledge. Your Insight Is Sharper

  • Business
    • Business and Strategy
    • Marketing
    • Operation
    • Human Resources
  • Finance
    • Financial Analysis
    • Investment
  • Economics
    • Introduction to Economics
    • Microeconomics
    • Macroeconomics
  • Online Learning
    • Coursera
    • Udacity
    • Udemy
    • Skillshare
    • Magoosh
  • Reading List
    • Self-Help
    • Business and Money
You are here: Home / Business and Strategy / What Are Business Resources Examples

What Are Business Resources Examples

Updated on August 11, 2023 by Ahmad Nasrudin

What Are Business Resources Examples

In producing goods or providing services, businesses need resources. We also call it input. Economists call them factors of production. They consist of four components:

  • Land
  • Labor
  • Capital
  • Entrepreneurship

Land

Businesses can use the land to produce various agricultural commodities such as soybeans and corn. They can also use it as a location for factories, shops, or office buildings.

However, land does not only refer to land for business locations. It also includes various natural resources and everything on earth, such as:

  • Crude oil
  • Natural gas
  • Coal
  • Copper
  • Iron ore
  • Bauxite
  • Water
  • Wood

In classification, they usually fall into renewable natural resources such as soil and non-renewable natural resources such as metallic minerals.

Land provides raw materials for the various goods we produce, such as components, machinery, clothing, furniture, food, and beverages. For example, manufacturers need aluminum and iron to make cars, which are produced by processing bauxite. And miners extract bauxite from nature.

Likewise, businesses obtain wood from the forest to be used as input to make furniture. Then, tire manufacturers buy rubber latex from rubber plantations to produce their products.

Labor

Labor refers to the physical and mental effort of those who work in the company. It involves not only physical activity during the production process but also their skills and knowledge. Sometimes we call it human resources or human capital.

Workers may operate machinery and equipment in a factory. Others may be involved in administrative activities in the office or in retail outlets selling products. Others may be driving vehicles to deliver products to a warehouse.

Businesses can increase output by hiring more workers and by improving the existing workers’ quality. For the latter, it involves education, training, and development. Experience also contributes to quality.

Investing in the workforce is vital to business. Improved quality makes workers more productive. They produce more output for a fixed input. It leads to higher business profits as it bears a fixed salary/wages but can generate more output.

Such investments are increasingly important in the service business. The staff is directly involved in delivering the service. Thus, their quality determines the quality of service delivered.

Capital

From an economist’s perspective, capital refers to physical capital such as machinery, equipment, buildings, and vehicles. It is a man-made tool to help businesses to process inputs into outputs.

Capital goods examples are:

  • Production machine
  • Hand tools
  • Wind turbine
  • Conveyor belt
  • Forklift
  • Computer
  • Logistics truck

They can vary greatly between businesses. For example, for a content writer business, computers, tables, chairs, and other office equipment are capital goods.

Then, economists exclude financial capital because it does not contribute directly to production. Instead, we use them indirectly, namely to buy capital goods.

But, for businesses, financial capital is as important as capital goods. They need it to finance operations and grow the business. In general, financial capital is divided into two categories:

  • Equity capital represents the ownership interest in the company. It can be from the initial investment by the founder and from selling the company’s shares to the public on the stock exchange. Compensation for them is dividends and capital gains (for public companies).
  • Debt capital represents liabilities, where the company has to pay interest and pay off debt as it matures. Examples are bank loans or bond issuance. Interest is compensation for creditors.

Entrepreneurship

Entrepreneurship is the activity and willingness of individuals to manage the other three resources to produce goods and services. We name these individuals as entrepreneurs willing to take risks, make decisions, and manage resources to run the business. Entrepreneurship is an input because, without it, there is no business and production.

Entrepreneurs realize their commercial ideas by setting up businesses. Then, they map out what raw materials and labor they need to produce the goods and services they plan. Finally, to put it all together, they need capital, which can come from personal pockets or external parties such as bank loans.

Furthermore, entrepreneurs also have to organize the business. They determine what business structure is appropriate, whether a sole proprietorship, partnership, or limited company. Another task is to structure and divide the activities required to operate into various business functions.

  • Introduction to Business and Management: Roles and Functions of Business
  • Business Process: Definition, Importance, and Management
  • How Does a Business Work?
  • The Role of Business in Society and the Economy
  • Business: Definition, How it Works, Compete

Topic: Business and Its Role Category: Business and Strategy

AFFILIATE

If you click on this link, thank you for contributing to us. We may earn a commission when you buy through our links. Learn more ›

5 NEW ARTICLES

How to Handle and Resolve Stakeholder Conflicts

How to Handle and Resolve Stakeholder Conflicts

Stakeholders have different interests and goals, which are often contradictory. Stakeholder

What are the Benefits of International Trade

What are the Benefits of International Trade?

Increased access to cheaper and more varied goods and services is key benefits of international

Where Do Comparative Advantages Come From

Where Do Comparative Advantages Come From?

The comparative advantage stems from the ability to produce goods and services at low opportunity

What is the Capital Budgeting Process

What is the Capital Budgeting Process?

In simple terms, the capital budgeting process involves generating ideas, making proposals about

Autarky Examples, Pros, and Cons

Autarky: Examples, Pros, and Cons

What's it: Autarky is a system or philosophy in which an economy seeks to

Primary Sidebar

  • "Becoming Supernatural" by Joe Dispenza
    "Becoming Supernatural" by Joe Dispenza
  • "Thinking, Fast and Slow" by Daniel Kahneman
    "Thinking, Fast and Slow" by Daniel Kahneman
  • "All About Love" by Bell Hooks
    "All About Love" by Bell Hooks

Footer

5 TRENDING ARTICLES

  • Business Size: Definition, Measurement, Classification
  • Socio-cultural Factors: Examples and How They Impact Business
  • The Role of Business in Society and the Economy
  • Trade Restriction: Reasons, Types, and Impacts
  • List of Examples of Social Enterprises You May Be Familiar

EXPLORE MORE

CATEGORIES

Accounting and Finance Books Business and Strategy Financial Analysis Human Resources Investment Macroeconomics Marketing Microeconomics Operation

TOPICS

Aggregate Demand Business Management Demand Financial Analysis Financial Ratio Government Budget International Trade Leadership Macroeconomic Equilibrium Marketing Marketing Management Organizational Structure Profitability Ratio

Copyright © 2023 · About Us  · Privacy Policy and Disclaimer  ·  Affiliate Disclaimer  ·  Terms of Use  ·  Comment Policy  ·  Contact Us