Specialization

Needs: Are the necessities that are required in all circumstances for humans to survive, namely water, food, clothing, shelter and air. These are required by all individuals, regardless of their class, age gender.

Wants: Are all the desires other than the necessities. The individuals desire these but not for the sake of survival. Wants unlike needs vary from person to person. A want for a certain individual may not be a want for another. Wants are unlimited. Production of goods and services is for the sake of fulfillment of wants and needs. Example of wants: car, furniture, television and so on.

What is production and what are the types of production?

Production is any activity that helps to satisfy human wants and needs whether directly or indirectly. The production process does not always yield something material such as a commodity but may also yield abstract things such as services.

Production can be divided into 4 categories that are discussed below:

Extractive Production: It simply involves the extraction of natural resources. For example mining, fishing drilling for oil and so on. This is also known as primary production.

Secondary Production: This involves the conversion of raw materials or natural resources into semi or finished products. For example, producing cloth from silk. In other words secondary production includes all those activities involved in changing the form or character of the products of the extractive industry so that they can be used for indirect {semi finished goods} or direct consumption {finished goods}.

Tertiary Production: As mentioned before production also includes the provision of services. This third type of production is core commerce as it includes trade and aids to trade. Trade helps in transferring goods from the producer to the ultimate consumer where as "aids to trade" smoothens the trade process. Examples of such services are transport, communication, advertising and so on.

Direct personal services: This includes the services of doctors, engineers, solicitors etceteras to their customers. There is no material production but just the provision of skill.

Production is also categorized as direct or indirect. Direct production is for the producers own sake where as indirect production revolves around the concept of specialization and is not meant for the producer himself.

Interdependence

The world has come a long way since the early stage of subsistence. Today we are interdependent on each other for our needs and wants. Individuals are specialized in a certain field and produce the commodities in which they are adept. One individual cannot produce all the things but just a few to the maximum. On the other hand the needs and wants of individuals are voluminous and diversified. Thus in a bid to fulfil all the needs and wants there is the need for interdependence on others. For example a doctor can treat patients but he has to rely on farmers for food, on a milkman for milk and so on.

Specialization

It is the division of work among labor. The work is separated into stages and a certain workforce specialized in a particular stage is assigned that part of the production process.

Merits of Specialization:

The work is completed quickly as all the workers are proficient in their respective field.
The production yield and quantity is better due to the efficiency of labor.
No time is wasted in moving from one work to another as each group of workers is assigned a specified task.
No or little time is required initially for the labor to learn their work.
Machinery is more efficiently utilized.
The work force required is comparatively less.
There is little or no wastage of inputs.
The cost incurred on production is likely to be less.
Mass production.
Scope for trade and earning of revenues.

Demerits of Specialization:

Interdependence on each other for fulfillment of wants and needs.
Machines take over human skills.
Less jobs.
Specialization in one field means that with changing market demands the individual would not able to change jobs.
Influence of other countries on foreign matters (in case of foreign trade with world powers).

Types of specialization:

Specialization at the individual level

This is the minutest level. Each individual specializes in a certain field. For example in the production of shoes a person specializes in the production of the sole while another specializes in stitching.

Specialization at the regional level

In such a case a certain region of a country specializes in a certain stage of production or in the production of a certain commodity. This is that stage or commodity in which it excels. For example Sialkot specializes in the production of sports goods.

Specialization at the national level

This is the most extensive type of specialization. Each country specializes in the production of a certain commodity and trades it with another country that specializes in the production of another commodity. For example Pakistan specializes in the production of cotton and its products and trades it with other countries such as Kuwait and Iran that specialize in the production of oil.

Factors affecting the location of production units

In case of an agricultural unit of production the climate and fertility of the area is the foremost important criteria. The nature of soil, relief and rainfall must be considered. Where as in case of manufacturing units it is important to be near the sources of supply. There is the need for the cheap availability of power resources. This is also valid for the agricultural unit.

Presence of cheap skilled and unskilled labor is also important. In case of an agricultural unit there is basically the need of cheap unskilled labor where as for the manufacturing unit both forms of labor are required in considerable quantities.

Transport facility is also vital. Transport helps in transferring raw materials from the sources of supply to the production unit and later in transferring the finished goods to the consumption point. It is important for both forms of production units to be located in a place where transport is readily available. Similarly easy access to markets is important, as high transport costs would cut down profits.

Similarly the government policy concerning the production unit must also be considered. In various cases governments have awarded relaxation to both agricultural and manufacturing units. Thus these opportunities must availed properly.