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What are Physical Resources in Business?

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  • 0:00 Features of Physical Resources
  • 1:02 Materials
  • 1:37 Buildings And Facilities
  • 2:16 Machinery And Supplies
  • 3:40 Energy
  • 4:03 Lesson Summary
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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.

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