DEFINITION of 'Specialization'

A method of production where a business or area focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency within the entire system of businesses or areas. Many countries specialize in producing the goods and services that are native to their part of the world. This specialization is the basis of global trade as few countries produce enough goods to be completely self-sufficient.


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BREAKING DOWN 'Specialization'

Specialization also occurs within the United States, for example, as citrus goods naturally occur in the warmer climate of the South and West, many grain products come from the farms of the Midwest and maple syrup comes from the maple trees of Vermont and New Hampshire.

Specialization can also refer to production, for example when in a factory an assembly line is organized in a specialized manner rather than producing the entire product at one production station.

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  1. What is the relationship between specialization of labor and opportunity cost?

    The relationship between specialization of labor and opportunity cost is based on the mutually exclusive outcome inherent ... Read Full Answer >>
  2. What are the economic impacts of specialization?

    Specialization, along with the complementary concept of the division of labor, occurs when the innate inequalities of human ... Read Full Answer >>
  3. What is the difference between comparative advantage and absolute advantage?

    Absolute and comparative advantage are two important concepts in international trade that largely influence how and why nations ... Read Full Answer >>
  4. What role do core competencies play in a balanced scorecard?

    To a business, a core competency is a an area of specialization that helps bring value to customers. The balanced scorecard ... Read Full Answer >>
  5. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  6. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>

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