Manufacturing companies – How they function

What is manufacturing?

It is the production of goods. These goods are made either for use or for sale and are made with the use of labor, machines, chemicals, tools and biological processing, or formulation.


In the early days, manufacturing was carried out by a single skilled artisan and he was helped by his assistants. In the pre-industrial world, the guild system protected the privileges and trade secrets of urban artisans. In the past, much of the manufacturing occurred in rural areas, where household-based manufacturing served as a supplemental subsistence strategy to agriculture.


The term manufacturing can refer to the gamut of activities from high technology material to handicrafts. But more often than not, it is applied to industrial production. It refers to the process in which raw materials are transformed into finished goods. This is done on a large scale. The finished goods that are produced may be used for further manufacturing other, more complex products, such as household appliances, automobiles etc. Alternatively they could be sold to wholesalers. These wholesalers in turn sell them to retailers, who then sell them to end users – the consumers.


Let us see how manufacturing works in a free market economy. In a collectivist economy, manufacturing is directed by the state to supply a centrally planned economy.

In case of a free market economy, manufacturing works at the mass production of goods to be sold to consumers. This sale is done at a profit. And in the case of mixed market economies, government regulations play a big part in the manufacturing process.

The term manufacturing encompasses all intermediate processes required for the production and integration of a product’s components.

The following is a list of the world’s largest manufacturing companies ordered by revenue in millions of U.S. dollars according to the Fortune Global 500. Toyota from Japan, which is part of the automobile industry tops the list. It is followed by Volkswagon from Germany of the automobile industry group and by Samsung Electronics from South Korea from the Electronics industry.

The European union leads the world list of manufacturers, followed by the United States and then China.

There are two schools of thought when it comes to the manufacturing process. Scientific management, also called Taylor ism was a theory of management that analyzed  and synthesized workflows whereas Fordism, named after Henry Ford, is a notion of a modern economic and social system based on an industrialized and standardized form of mass production.

Manufacturing is the wealth-producing sector of an economy. Manufacturing provides important material support for infrastructure. However there are some pitfalls to manufacturing. Manufacturing comes at social as well as environmental costs. Hazardous materials expose workers to health risks and also wreak havoc on the environment, the cleanup of which many outweigh the benefits of the product. However developed countries have labor laws and environmental laws in place, which help regulate the manufacturing activities.


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