3.1 What are Inputs and Outputs and their Role in Transformation?

Inputs are all the resources which a business requires in order to make its product or service (essentially the raw materials). These resources are either:

• Tangible - Those that can be physically held. Examples include wood, brick, crude oil etc.
• Intangible - Those which are abstract and not physically measurable. Examples include the skills and expertise of the workforce. 

The three sectors have respective types of inputs. In the primary sector, inputs could be categorized as the animal feed for the farm animals. Secondary sector inputs include the skills of the work force in an automotive manufacturing plant. The tertiary sector such as service companies like call centres. 

Transformation of raw materials to product

With the inputs and raw materials available to make ideas into products, a process must take place known as the transformation process. Outputs can only be made after the process of transformation occurs. 

The transformation process differs from sector to sector. In the primary and secondary sectors, processes tend to require the physical goods and raw materials to undergo mostly mechanical transformation in order for the output to be obtained. Let us make some examples for each sector:

• Wood
• Cars
• A bank account

Wood is an output from the primary sector which is used in various forms to make other products produced by the secondary sector. It is derived from the raw material input (trees) which is processed and used to make wood in its various manufactured forms. 

Cars are made in the automotive sector in a manufacturing plant using very many component parts. Human expertise and specialisation is also required to assemble the parts together with machinery. 

The tertiary sector, often referred to as the service sector, will include things like the provision of banking and bank accounts. We are all very significant users of the tertiary sector, often without realising it. 

It's important to note that intangible inputs are utilised in order to provide the services in this sector. In other words, the support skills, knowledge and technical expertise which will be used to provide the repair services for the notebook are not physically visible. 

The transformation from input to output is not exclusive to one location. Depending on the sector and what is to be produced, the location tends to vary. 

A primary sector example is the cutting of log woods by the farmer in the field, which has multiple uses on the farm including building sheds, producing wood shavings for the farm animals and as fuel. 

The secondary sector uses metal and steel in construction of bed frames in the factory. In this case, metal is the input which is transformed in the factory to the bed frames (output).

Tertiary sector example includes provision of account handling services to clients in a financial services company. This takes place in an office. Outputs can be physical or intangible products and it can also be services. Regardless of the sector, outputs must always be greater in value than the combination of inputs. 

Any business enterprise whose costs of inputs outweigh the value of the outputs is doomed to failure. Therefore, it is imperative that the output must be of high value and cover the cost of the input - in any of the sectors.


Activity 11 - Give 5 examples of products from each sector.