Capital & Labour Intensive Production (Edexcel IGCSE Business)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Capital Intensive & Labour Intensive Production
Labour-intensive production predominantly uses physical labour in the production of goods/services
The delivery of services is usually more labour-intensive than manufacturing
In countries where labour costs are low (e.g. Bangladesh) labour-intensive production is common
Small-scale production is likely to be labour-intensive
E.g. UK schools are labour-intensive operations as teachers plan and deliver lessons and provide pastoral support
Capital-intensive production predominately uses machinery and technology in the production of goods/services
Large-scale production of standardised products is likely to be capital-intensive
Manufacturing in developed countries where labour costs are relatively high is likely to be capital intensive
E.g. Automative manufacturers such as Ford use robots and other production technology to manufacture vehicles with supervisors overseeing the quality of output
The Advantages & Disadvantages of Labour Intensive and Capital Intensive Production
Type of Production | Advantages | Disadvantages |
|---|---|---|
Capital Intensive |
|
|
Labour Intensive |
|
|
Examiner Tips and Tricks
Make sure that you can define both of these key terms clearly. 'Define' questions are worth 2 marks so make sure that your definitions have two elements.
Example
Capital-intensive production predominately uses machinery and technology [1] rather than labour [1] in the manufacture of products
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