Good morning everyone. Today, we’re going to talk about two important production methods that businesses use — capital intensive and labour intensive operations. These two mainly differ in how much they rely on machines versus people. Understanding them helps us see how businesses choose the best way to make their products or deliver services.
Let’s start with capital intensive operations. These rely mostly on machinery, equipment, and technology rather than human labour. You’ll usually see them in industries like car manufacturing, oil refining, or chemical production, where machines do most of the work.
The big advantages are that they’re highly efficient — machines can work faster than people, they don’t get tired, and they can run 24 hours a day. For example, Toyota uses robots to assemble cars quickly and accurately. They also provide consistent quality, because machines make fewer mistakes. Even though the setup costs are high, businesses save money in the long run with lower labour costs. And because they produce on a large scale, they enjoy economies of scale, meaning the cost per unit goes down as production increases.
But there are also some drawbacks. The initial investment is very high. Machines can also be inflexible — it’s hard to change designs or processes quickly. Heavy automation can lead to job losses, and machines need regular maintenance, which can cause delays if they break down. A good example of this is a modern bottling plant, where robotic arms and conveyor belts handle most of the work.
Now let’s move to labour intensive operations. These rely more on people than machines. You’ll find them in hospitality, education, customer service, or handmade crafts.
The benefits are that people bring flexibility — they can adapt easily to changes. For example, a tailor can adjust a suit for each customer’s needs. Labour intensive production also requires less start-up capital, creates jobs, and provides a personal touch, which is especially important in services like hotels or healthcare.
However, there are downsides too. Labour costs are higher over time, people can make mistakes, and they need breaks, so productivity is limited. There can also be strikes or disputes that disrupt operations.
Choosing between the two depends on things like the type of product, cost and availability of labour, demand, technology, and need for customisation. For example, a smartphone factory is mostly capital intensive, while a local bakery or tailor shop is more labour intensive. Most businesses use a mix — machines handle routine work while people focus on creativity and customer service.
To sum up, capital intensive operations rely on machines for speed, consistency, and efficiency, while labour intensive operations depend on people for flexibility, creativity, and personal service.
By the end of this lesson, you should be able to explain both methods, give examples, and discuss which approach might suit different types of businesses.
