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IAAP CAP Exam Study Guide - Certified Administrative Professional39 chapters | 314 lessons | 29 flashcard sets
Video: What are Physical Resources in Business?
Every company has the need for some physical resources, some more than others. Depending on the type of business, the requirements for physical resources may be extreme.What are Physical Resources in Business?
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Lesson Transcript
Instructor:
Tara Schofield
Every company has the need for some physical resources, some more than others. Depending on the type of business, the requirements for physical resources may be extreme.
Features of Physical Resources
Every business needs resources, whether it's people, money, suppliers, or time. The physical resources include tangible items that are necessary and available for a business to function. These are items that take space, have a value, and are used in the operation of the company.
Physical resources are necessary for all types of business. Product-based businesses use physical resources for providing the goods for sale and for the operation of the business. Service-based businesses use physical resources to facilitate the delivery of the service, such as having a space to work, tools that are needed for the service, and resources used to support the service.
Let's imagine you own a dry cleaning business. The company offers in-house, same-day service. As a result, you must have washers, dryers, steamers, irons, tables, and racks to hold the clothes. These items represent the physical resources of your business.
Materials
Materials that are resources are raw goods that will be used in the production of other products. For a kitchen supply factory, an example of a material is metal; something to shape and mold into forks, knives, and spoons. The cutlery is then a product that is sold in retail stores. The materials are not used for the operation of the business, but are a good that will be transformed and sold as a new product. For our example of the dry cleaning business, you do not sell products, only your dry cleaning services. Therefore, you have few, if any, materials.
Buildings and Facilities
The physical building you work in is a part of the physical resources of a company. Whether the space is owned or rented, it is used for the purpose of operating your business. By having this space available, you are able to complete your work. There are some occasions when the building and facilities are the revenue generators of the business. For instance, if you own a conference center and rent space for events and meetings, the building and facility is a physical resource that also earns income. Your dry cleaning company includes a parking lot and a building where the equipment is housed for the purpose of cleaning clothes. The building is a resource where the business is operated.
Machinery and Supplies
Machinery can be an extremely costly expense for most companies. Depending on the type of business, machinery can be a sizable resource. A manufacturing or production company will require substantial types of machinery. Have you ever seen the inside of a bread factory or the like? Huge machines, interlinked and taking up an enormous amount of space. On the other hand, an online business that offers education and information does not need much equipment beyond computer hardware and basic office machines, like photo copiers, phones, etc. Your dry cleaning business requires an ample amount of machinery, including washers, dryers, and steamers. Without machinery, your business would be virtually impossible to operate.
Most businesses also require supplies for various aspects of their production. Even if a company provides a service, there are likely some form of supply materials that are needed. For instance, if you own a full-service car wash, your services require soap, clothes, and towels. These materials are needed for the fulfillment of the service but are not sold as a stand-alone product. Returning to the dry cleaning business, you have many supplies available for your work. Not only do you have laundry detergent and starch, you also have hangers and bags to wrap the clothes in. These materials are some of the physical resources you have available for your work.
Energy
Energy is also used as a resource for fueling operations or could be a product that is delivered, such as propane or electricity. It is a necessary resource to conduct all aspects of business. You couldn't run your dry cleaning business without electricity to run the machines, light the building, and power your phones, cash registers, and computers.
Lesson Summary
Let's review. Physical resources are tangible items that are used in the operation of the business. Some of the resources are used to operate the business or provide products and services. Other resources are available to support the actions of the company. Some of the most common physical resources include raw materials, buildings and facilities, machinery, energy, and supplies. As we saw with our dry cleaning business example, each business has different needs for materials, buildings, machinery, and supplies, while all businesses need energy to conduct their operations.
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