production

Processes and methods employed in transformation of tangible inputs (raw materials, semi-finished goods, or subassemblies) and intangible inputs (ideas, information, know how) into goods or services.

Technological advances often hurt rather than help the companies that buy them. These companies have to spend to upgrade or risk falling behind their competitors. But nearly all the value gets passed on to the customers: lower costs of production almost always leads to lower prices to end users. Businesses almost always forget this second step (having to reduce prices) when evaluating the financial impact of proposed equipment upgrades. The exception to this rule is the rare situation in which a company has pricing power. In such cases, continual technological progress makes monopolies and "moats" more valuable.