A production firm is a firm whose primary activity is the conversion of raw materials, parts and sub-assemblies into finished products for use by a customer. The manufacturing transformation requires equipment and personnel. It may be either capital or labor intensive. Firms that make automobiles, toys, and computers are examples.

The distinction between a manufactured product and a service product is not always obvious. However, the distinction between a manufacturer and a service firm is more apparent. Most manufactured products ultimately provide a service, and some services involve a product.