Business is all about manufacturing and selling things in an influential way. Manufacturing means the effective production of goods. You cannot produce synchronized batches of products with just hands. Instead, you need some kind of machinery for ultimate business growth.
What are capital resources?
Capital resources can e defined as all those man-made resources that are a passive or active source of generating money for you.
These company acquisitions such as machinery, equipment, assets, computers, vehicles, etc are known as capital resources. And spending money on such handmade resources is known as capital investment. This capital investment is very important and necessary for business growth. Because we cannot run a business and keep our pace with the fast going world without capital resources. We also need to change and modify our capital resources with changing technology. It not only enhances business growth and work productivity but also the economic growth of the country.
Fundamentals of productivity/business growth
Capital resources are one of the four fundamentals of productivity. The other 3 are land, labor, and entrepreneurship.
Now let us have a look at these.
To start a business, one needs land where he can start manufacturing things. Of course, he cannot establish a business in the air. Then, he cannot start wearing merely on plain land, he needs to construct a building for it. Now, in this era, construction is not possible without machinery and machinery cannot be developed without capital resources. In fact, cement, ceramics, and other construction material need capital resources for their development. It means that land is nothing if you don’t have the capital resources to construct it.
Now, the other step is labor, without which, the production unit of a business firm cannot work. And to appoint the labor, we need a computer to feed data. We need a cell phone to remain in contact. We need machinery and production equipment on which the labor can work to achieve desired goals. Now, you can see that all these things such as cell phones, computers, and equipment are all capital resources. Hence, without capital resources, we cannot apply labor and labor cannot work.
Now, labor cannot work and even reach you if it does not have a platform. And for a platform, we need entrepreneurship. So, without the latest technology and use of capital resources, a business cannot work.
Manufacturing of goods vs money
Continuous modification of capital resources is essential because it improves productivity and hence enhances the economical cal and business growth. It provides us a chance to produce cheaper and more plenteous goods.
Make sure that money is not included among the factors of production. But it’s a key element and we can call it an investment at right time and in need of an hour. Money just assists trade and is an influential parameter of the good’s value. Otherwise, beings cannot wear, eat, or be sheltered by the money itself. The final and ultimate aim of economic activity (money) is to attain goods and all goods are produced from the capital resources.
It is a circle: money in the form of investment in capital resources increases productivity rate and this leads you towards ultimate business growth; this business growth then again brings you money from which you buy luxuries produced from capital resources. This again leads to enhanced business growth of those industries that are producing luxuries for you.
In this way, capital resources are the reason for ultimate economic growth and attaining worldwide business success. It assists you to travel faster and safer, communicate better, eat better foods, and save your time to enjoy leisure.
Many countries have transformed from developing to the developed state by focusing on savings, investments, and acquiring more advanced capital equipment.
Functions of capital resources
The capital resources perform the following functions indirectly because its a passive factor for ultimate business growth.
- Provides subsistence (that is food, cloth, and shelter to all the labor working at a business firm and people associated with them )
- Provides appliances (tools and implements for the use of workers and ultimately for production at a large scale)
- Provides raw material for production purposes.
- Promotes sales and enhances marketing (one needs to transport goods to the market for sale, for this, vehicles (capital resource) are used. Also, advertisements are crucial for the promotion of a product in the market. And all these needs are fulfilled through the capital fund.
- Promotion of country’s economic growth- adequate capital funds are needed for the ultimate development of a country.