UNIVERSITY OF LA SALETTE,INC

COLLEGE OF ENGINEERING AND ARCHITECTURE

SANTIAGO CITY, PHILIPPINES

Module 6: Managing the Marketing Function

Introduction
Engineer managers are engaged in the production of tangible or intangible goods. Some of
these engineer managers are directly responsible for marketing the company's products or services. If
he is promoted as general manager, both the production and marketing functions become his overall
concern.
At whatever management level the engineer manager works, he must be concerned with
convincing others to patronize his outputs. If he is the general manager of a construction firm, he must
convince people with construction needs to avail of the services of the company. If he is the staff
officer of a top executive, he must convince his boss to continuously rely on him regarding the staff
services he provides.
If the foregoing statements are true, the engineer manager has a marketing problem. He needs
to understand certain concepts related to the marketing discipline.

Learning Outcomes
At the end of this module, you are expected to
a. elaborate marketing concept;
b. discuss the four P`s of marketing;
c. define finance function and identify funds requirements; and
d. apply factors in risk management and insurance.
Preassessment:
Instruction: Answer the following questionnaire based on your personal and honest views as there are no
wrong answers.
1. Who are qualified to become operations managers?

2. What is the finance function?

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

Lecture
Topic 1: Marketing Concept
WHAT IS THE MARKETING CONCEPT?
Marketing is a group of activities designed to facilitate and expedite the selling of goods and
services. The marketing concept states that the engineer must try to satisfy the needs of his clients by
means of a set of coordinated activities. When clients are satisfied with what the company offers, they
continually provide business.
THE ENGINEER AND THE FOUR P'S OF MARKETING
The engineering organization will be able to meet the requirements of its clients (or customers)
depending on how it uses the four P's of marketing which are as follows:

1. the product (or service)

2. the price
3. the place, and
4. the promotion
The Product
In the marketing sense, the term "product" includes the tangible (or intangible) item and its
capacity to satisfy a specific need.' When a customer buys a car, he is actually buying the comfortable
ride he anticipates to derive from the car. This is not to mention the psychological benefits attached to the
ownership of a car.
The services provided by the engineer manager will be evaluated by the client on the basis of
whether or not his or her exact needs are met. When a competitor comes into the picture and sells the
same type of service, the pressure to improve the quality of services sold will be felt. When improvement
is not possible, "extras" or "bonuses" are given to clients. An example is the construction company that
provides "free estimates" on whatever inquiries on construction are received.

The Price

Price refers to the money or other considerations exchanged for the purchase or use of the
product, idea, or service. Some companies use price as a competitive tool or as a means to convince the
customer to buy.
When products are similar in quality and other characteristics, price will be a strong factor on
whether or not a sale will be made. This does not hold true, how- ever, in the selling of services and
ideas. This is because of the uniqueness of every service rendered or every idea generated.
When a type of service becomes standardized, price can be a strong competitive tool. When a
construction firm, for instance, charges a flat 10 percent service fee for all of its construction services, a
competitor may charge a lower rate. Such action, however, will be subject to whether or not the
industry will allow such practice.

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

Figure 6.1 The Engineer Manager and the Four P's of Marketing

The Place

If every factor is equal, customers would prefer to buy from firms easily accessible to them. If
time is of the essence, the nearest firm will be patronized.
It is very important for companies to locate in places where they can be easily reached by their
customers. Not every place is the right location for any company.
When a company cannot be near the customers, it uses other means to eliminate or minimize
the effects of the problem. Some of these means are:

1. hiring sales agents to cover specific areas;

2. selling to dealers in particular areas;
3. establishing branches where customers are located;
4. establishing franchises in selected areas.

Manufacturing companies can choose or adapt all of the above-mentioned options. Service
companies like construction firms adapt the modified versions. An example is the engineer manager of
a construction firm who gives commissions to whoever could negotiate a construction contract for the
firm.

The Promotion

When engineer managers have products or services to sell, they will have to convince buyers to
buy from them. Before the buyer makes the purchasing decision, however, he must first be informed,
persuaded, and influenced. The activity referred to in this case, is called promotion.
McCarthy and Perreault define promotion as "communicating information between seller and
potential buyer to influence attitudes and behavior."
There are promotional tools available and the engineer manager must be familiar with them if he
wants to use them effectively. These tools are as follows:

1. advertising
2. publicity
3. personal selling
4. sales promotion

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

Advertising. Nylen defines advertising as "a paid message that appears in the mass media for the
purpose of informing or persuading people about particular products, services, beliefs, or action." The
mass media referred to include television, radio, magazines, and newspapers. If the engineering
manager wants to reach a large number of people, he may use any of the mass media depending on his
specific needs and his budget. Each of the public advertising carriers, i.e., radio, television, magazines,
and newspapers, has their own specific audiences and careful analysis must be made if the engineering
manager wants to pick the right one.

Publicity. The promotional tool that publishes news or information about a product, service, or idea on
behalf of a sponsor but is not paid for by the sponsor is called publicity. The mass media is also the
means used for publicity. If the engineer manager knows how to use it, publicity is a very useful
promotional tool. His message may be presented as a news item, helpful information, or an
announcement.

Personal Selling. A more aggressive means of promoting the sales of a product or service is called
personal selling. It refers to the "oral presentation in a conversation with one or more prospective
purchasers for the purpose of making a sale."
Personal selling may be useful to the marketing efforts of the engineer manager. If, for instance,
he is the general manager of a firm manufacturing spare parts, he may assign some employees to
personally seek out spare parts dealers and big trucking companies to carry their product lines.

Sales Promotion. Any paid attempt to communicate with the customers other than advertising,
publicity, and personal selling, may be considered sales promotion. This includes displays, contests,
sweepstakes, coupons, trading stamps, prizes, samples, demonstrations, referral gifts, etc.
Contests and sweepstakes are very popular sales promotion tools.

Topic 2: Strategic Marketing for Engineers

Companies, including those managed by engineer managers, must serve markets that are best
fitted to their capabilities. To achieve this end, a very important activity called strategic marketing is
undertaken.

Under this set-up, the following steps are made:

1. selecting a target market

2. developing a marketing mix

Selecting a Target Market

A market consists of individuals or organizations, or both, with the desire and ability to buy a
specific product or service. To maximize sales and profits, a company has the option of serving
entirely or just a portion of its chosen market. Within markets are segments with common needs and
which will respond similarly to a marketing action. Figure 6.2 shows an example of the various
segments of a given market.
An analysis of the various segments of the chosen market will help the company make a decision
on whether to serve all or some of the segments. The segment or segments chosen become the target
market.

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

In selecting a target market, the following steps are necessary:

1. Divide the total market into groups of people who have relatively similar product or service needs.
2. Determine the profit potentials of each segment.
3. Make a decision on which segment or segments will be served by the company.

As shown in Figure 6.2, a company may choose any or all of the residential, industrial, and
government segments. This decision will depend, however, on the profit potentials of each segment
and the capability of the firm.
A smaller company may find it most profitable to supply only the construction material needs of
the residential segment. A bigger company, however, may find it more profitable to perform actual
construction in addition to selling construction materials.

Figure 6.2 The Construction Market and its Segments

Factors Used in Selecting a Target Market. A

target market must have the ability to satisfy the
profit objectives of the company. In selecting a
target market, the following factors must be taken
into consideration:

1. the size of the market, and

2. the number of competitors serving the market.

The total demand for the product or service in a

given area must be determined first if the
company wants to serve that particular market. If
there are existing businesses serving the market,
the net demand must be considered.

Developing a Marketing Mix

After the target market has been identified, a

marketing mix must be created and maintained.
The marketing mix consists of four variables: the
product, the price, the promotion, and the place
(or distribution).
Given a marketing environment, the engineer
manager can manipulate any or all variables to
achieve the company's goals. As such, the quality
of the product may be enhanced, or the selling
price made a little lower, or the promotion activity
made a little more aggressive, or a wider distribution area may be covered. Any or all of the foregoing
may be undertaken as conditions warrant.
As shown in Figure 6.3, all marketing activities are focused on the target market.

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

Figure 6.3 The Marketing Mix and the Target Market

Topic 3: Finance Function
WHAT THE FINANCE FUNCTION?

The finance function is an

important management responsibility that
deals with the "procurement and
administration of funds with the view of
achieving the objectives of business." If
the engineer manager is running the firm
as a whole, he must be concerned with the
determination of the amount of funds
required, when they are needed, how to
procure them, and how to effectively and
efficiently use them.
In the performance of his duties,
the engineer manager, at whatever
management level he is, must do his share
in the achievement of the financial
objectives of the company.
The finance is one of the three
basic management functions. The other
two are production and marketing.

THE DETERMINATION OF FUND REQUIREMENTS

Any organization, including the engineering firm, will need funds for the following specific
requirements:

1. to finance daily operations

2. to finance the firm's credit services
3. to finance the purchase of inventory
4. to finance the purchase of major assets

Financing Daily Operations

The day-to-day operations of the engineering firm will require funds to take care of expenses as
they come Money must be made available for the payment of the following:
1. wages and salaries
2. rent
3. taxes
4. power and light
5. marketing expenses like those for advertising, entertainment, travel expenses, telephone and
telegraph, stationery and printing, postage, etc.
6. administrative expenses like those for auditing, legal, services, etc.

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

Any delay in the settlement of the foregoing expenses may disrupt the effective flow of work in
the company. It may also erode the public's confidence in the ability of the company to operate on a
long-term basis. Creditors, for instance, may withhold the extension of credit to the company.

Figure 6.4 The Finance Function: A Process Flow

THE DETERMINATION OF FUND
REQUIREMENTS

Any organization, including the

engineering firm, will need funds for the
following specific requirements:

1. to finance daily operations

2. to finance the firm's credit services
3. to finance the purchase of inventory
4. to finance the purchase of major assets

Financing Daily Operations

The day-to-day operations of the

engineering firm will require funds to take care
of expenses as they come Money must be made
available for the payment of the following:

1. wages and salaries

2. rent
3. taxes
4. power and light
5. marketing expenses like those for advertising,
entertainment, travel expenses, telephone and
telegraph, stationery and printing, postage, etc.
6. administrative expenses like those for
auditing, legal, services, etc.

Any delay in the settlement of the

foregoing expenses may disrupt the effective
flow of work in the company. It may also erode
the public's confidence in the ability of the company to operate on a long-term basis. Creditors, for
instance, may withhold the extension of credit to the company.

Financing the Firm's Credit Services

It is oftentimes unavoidable for firms to extend credit to customers. If the engineering firm
manufactures products, sales terms vary from cash to 90-day credit extensions to customers. Construction
firms will have to finance the construction of government projects that will
be paid many months later.

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

When a new chemical manufacturing firm finds difficulty in convincing distributors to carry their
products, a credit extension may solve the problem. A new problem, however, will be created, i.e., how
the credit arrangement will be financed.

Financing the Purchase of Inventory

The maintenance of adequate inventory is crucial to many firms. Raw materials, supplies, and
parts are needed to be kept in storage so they will be available when needed. Many firms cannot cope
with delays in the availability of the required material inputs in the production process, so these must be
kept ready whenever required.
The purchase of adequate inventory, however, will require sufficient funding and this must be
secured. Sometimes, inventories unnecessarily tie-up large amount of funds. The engineer manager must
devise some means to make sure this situation does not happen.

Financing the Purchase of Major Asset

Companies, at times, need to purchase major assets. When top management decides on
expansion, there will be a need to make investments in capital assets like land, plant, and equipment.
It is obvious that the financing of the purchase of major assets must come from long-term
sources.

THE SOURCES OF FUNDS

To finance its various activities, the engineering firm will have to make use of its cash inflows
coming from various sources, namely:

1. Cash sales. Cash is derived when the firm sells its products or services.
2. Collection of Accounts Receivables. Some engineering firms extend credit to customers. When these
are settled, cash is made available.
3. Loans and Credits. When other sources of financing are not enough, the firm will have to resort
to borrowing.
4. Sale of assets. Cash is sometimes obtained from the sale of the company's assets.
5. Ownership contribution. When cash is not enough, the firm may tap its owners to provide more money.
6. Advances from customers. Sometimes, customers are required to pay cash advances on orders made.
This helps the firm in financing its production activities.

Short-Term Sources of Funds

Loans and credits may be classified as short-term, medium-term, or long-term. Short-term

sources of funds are those with repayment schedules of less than one year. Collaterals are sometimes
required by short-term creditors.
Advantages of Short-Term Credits. When the engineering firm avails of short-term credits, the
following advantages may be derived:
1. They are easier to obtain. Creditors maintain the view that the risk involved in short-term
lending is also short-term. Thus, short-term credits are made easily available to qualified borrowers.
2. Short-term financing is often less costly. Since short-term financing is favored by creditors, they
make it available at less cost.
3. Short-term financing offers flexibility to the borrower. After the borrower has settled his short-term

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debt, he may consider other means of financing, if he still requires it. Long-term financing, in contrast,
eliminates this option. He is stuck with the long-term funds even if he no longer requires it.

Disadvantages of Short-Term Credits. Short-term financing has also some disadvantages. They
are as follows:

1. Short-term credits mature more frequently. This may place the engineering firm in a tight
position more often than necessary. When the frequency of the firm's cash inflows are more than twelve
months apart, the firm could be in serious trouble meeting its short-term obligations.
2. Short-term debts may, at times, be more costly than long-term debts. When short-term debts
are used to finance long-term expenditures, the frequent renewals, adjustment of terms, and shopping
for new sources may prove to be more costly.

Supplies of Short-Term Funds. Short-term financing is provided by the following:

1. trade creditors
2. commercial banks
3. commercial paper houses
4. finance companies
5. factors, and
6. insurance companies.
Trade creditors refer to suppliers extending credit to a buyer for use in manufacturing, processing, or
reselling goods for profit. The instruments used in trade credit consist of the following: (1) open-book
credit, (2) trade acceptance, and (3) promissory notes.
The open-book credit is unsecured and permits the customer to pay for goods delivered to him
in a specified number of days. For financially weak engineering firms, the open-book credit is a very
useful source of financing.
The trade acceptance is a time draft drawn by a seller upon a purchase payable to the seller as
payee, and accepted by the purchaser as evidence that the goods shipped are satisfactory and that the
price is due and payable. Under the terms granted in the trade acceptance, the seller allows the buyer to
pay within a certain number of days. The arrangement provides the buyer some relief in financing his
short-term requirements.
A promissory note is an unconditional promise in writing made by one person to another,
signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a certain
sum of money to, or to the order of, a specified person or to bearer.
Commercial banks are institutions which individuals or firms may tapas source of short-term financing.
Commercial banks grant two types of short-term loans: (1) those which require collateral, and (2) those
which do not require collateral. Examples of commercial banks granting short-term loans are City
Trust, Premier Bank, and Land Bank.
Commercial paper houses are those that help business firms in borrowing funds from the money market.
Under this scheme, the business firm in need of funds issues a commercial paper, which is a short-term

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

promissory note, generally unsecured, and issued by large, established firms. The commercial paper is
sold to investors through the commercial paper house.

Business finance companies are financial institutions that finance inventory and equipment of almost all
types and sizes of business firms. Examples of finance companies in the Philippines are Philacor Credit
Corporation and Consolidated Orix Leasing and Finance Corporation

Factors are institutions that buy the accounts receivables of firms, assuming complete accounting and
collection responsibilities.' Engineering firms which maintain sizable amounts of accounts receivable may
avail of the services of factors when they are in dire need of cash.

Insurance companies are also possible sources of short-term funds. Industry reports indicate that
insurance companies in the Philippines regularly make investments in short-term commercial papers and
promissory notes.

Long-Term Sources of Funds

There are instances when the engineering firm will have to tap the long-term sources of funds. An
example is when expenditures for capital assets become necessary. After the amount required is
determined, a decision has to be made on the type of source to be used.

Long-term sources of funds are classified as follows:

1. long term debts

2. common stocks, and
3. retained earnings.

Long-term debts are sub-classified into term loans and bonds.

Term Loans. A term loan is a "commercial or industrial loan from a commercial bank, commonly
used for plant and equipment, working capital, or debt repayment." Term loans have maturities of 2 to 30
years.

The advantages of term loans as a long-term source of funds are as follows:

1. Funds can be generated more quickly than other long-term sources.

2. They are flexible, i.e., they can be easily tailored to the needs of the borrower.
3. The cost of issuance is low compared to other long- term sources.

Bonds. A bond is a certificate of indebtedness issued by a corporation to a lender. It is a marketable

security that the firm sells to raise funds. Since the ownership of bonds can be transferred to another
person, investors are attracted to buy them.

Common Stocks. The third source of long-term funds consists of the issuance of common stocks.
Since common stocks represent ownership of corporations, many investors are placing their money in
them.

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When properly utilized, common stocks can be cheaper and more stable sources of long-term
funds. Unlike bonds and term loans which must be repaid at a certain date, common stocks do not have
maturity and repayment dates.

Retained Earnings. Retained earnings refer to "corporate earnings not paid out as dividends."
This simply means that whatever earnings that are due to the stock-holders of a corporation are
reinvested. Because these retained earnings can be used by the firm indefinitely, they become an
important source of long-term financing.
In like manner, the sole owner of an engineering firm may decide to reinvest whatever profits
he derives from his business. The same decision may be adapted by the owners of a partnership.

THE BEST SOURCE OF FINANCING

As there are various fund sources, the engineer manager, or whoever is in charge, must
determine which source is the best available for the firm.
To determine the best source, Schall and Haley recommends that the following factors must be
considered:

1. flexibility
2. risk
3. income
4. control
5. timing
6. other factors like collateral values, flotation costs, speed, and exposure

Flexibility

Some fund sources impose certain restrictions on the activities of the borrowers. An example of
a restriction is the prohibition on the issuance of additional debt instruments by the borrower.
As some fund sources are less restrictive, the flexibility factor must be considered. In general,
however, short-term fund sources offer more flexibility than long-term sources. This is so because after
settling the debt, short-term borrowers may shift to other types of financing. Long-term borrowers are
given this opportunity only after a longer period of waiting.

Risk

When applied to the determination of fund sources, risk refers to the chance that the company
will be affected adversely when a particular source of financing is chosen.
Generally, short-term debt “subjects the borrowing firm to more risk than does financing with
long-term debt. This happens because of two reasons:

1. short-term debts may not be renewed with the same terms as the previous one, if they can be
renewed at all.
2. since repayments are done more often, the risk of defaulting is greater

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Income

The various sources of funds, when availed of, will have their own individual effects in the net
income of the engineering firm. When the firm borrows, it must generate enough income to cover the
cost of borrowing and still be left with sufficient returns for the owners.
It is possible that the owners were enjoying higher rates of return on their investments before
borrowing was made. The reverse may happen, however, at other times. Nevertheless, the effects on
income must be considered in determining the source of funding to be used.

Control

When new owners are taken in because of the need for additional capital, the current group of
owners may lose control of the firm. If the current owners do not want this to happen, they must
consider other means of financing.

Timing

The financial market has its ups and downs. This means that there are times when certain
means of financing provide better benefits than at other times. The engineer manager must, therefore,
choose the best time for borrowing or selling equity.

Other Factors

There are other factors considered in determining the best source of funds. They are as follows:

1. Collateral values: Are there assets available as collateral?

2. Flotation cost: How much will it cost to issue bonds or stocks?
3. Speed: How fast can the funds required be raised?
4. Exposure: To what extent will the firm' be exposed to other parties?

THE FIRM'S FINANCIAL HEALTH

In general, the objectives of engineering firms are as follows:

1. to make profits for the owners;

2. to satisfy creditors with the repayment of loans plus interest;
3. to maintain the viability of the firm so that customers will be assured of a continuous supply of
products or services, employees will be assured of employment, suppliers will be assured of a market,
etc.
The foregoing objectives have better chances of achievement if the engineering firm is
financially healthy and has the capacity to be so on a long-term basis.

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INDICATORS OF FINANCIAL HEALTH

The financial health of an engineering firm may be determined with the use of three basic
financial statements. These are as follows:

1. Balance sheet - also called statement of financial position;

2. Income statement - also called statement of operations;
3. Statement of changes in financial position.

To be able to determine the financial health of a firm, the appropriate financial analysis must be
undertaken.

Topic 4: Risk Management and Insurance

The engineer manager, especially those at the top level, is entrusted with the function of
making profits for the company. This will happen if losses brought by improper management of risks
are avoided.
Risk is a very important concept that the engineer manager must be familiar with. Risks
confront people everyday. Companies are exposed to them. Newspapers report on a daily basis the
destruction of life and property. Companies that could not cope with losses are forced to shut down,
according to reports.
Fortunately, the engineer manager is not entirely helpless. He can use sound risk management
practices to avoid the threat of bankruptcy due to losses.

Risk Defined

Risk refers to the uncertainty concerning loss or injury. The engineering firm is faced with a
long list of exposure to risks, some of which are as follows:

1. fire
2. theft
3. floods
4. accidents
5. nonpayment of bills by customers (bad debts)
6. disability and death
7. damage claim from other parties

Types of Risk

Risks may be classified as either pure or speculative. Pure risk is one in which “there is only a
chance of loss." This means that there is no way of making gains with pure risks. An example of pure

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COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

risk is the exposure to lo of the company's motor car due to theft. Pure risks are insurable and may be
covered by insurance.
Speculative risk is one in which there is a chance either loss or gain. This type of risk is not
insurable. An example of a speculative risk is investment in common stocks. If one wants to make
gains in the common stock market, the nuances and intricacies of investments must be learned and
properly applied. Also, operating the engineering firm is a kind of speculative risk. If profit are
expected, then proper management techniques must be used.

What is Risk Management

Risk management is "an organized strategy for protecting and conserving assets and people. "
The purpose of risk management is “to choose intelligently from among all the available methods of
dealing with risk in order to secure the economic survival of the firm".
Risk management is designed to deal with pure risks, while the application of sound
management practices are directed towards speculative risks that are inherent and
cannot be avoided.

Methods of Dealing with Risk

There are various methods of dealing with risks. They are as follows:

1. the risk may be avoided

2. the risk may be retained
3. the hazard may be reduced
4. the losses may be reduced
5. the risk may be shifted

A person who wants to avoid the risk of losing a property like a house can do so by simply
avoiding the ownership of one. There are instances, however, when ownership cannot be avoided like
those for equipment, appliances, and materials used in the production process. In this case, other
methods of handling risk must be considered.

Risk retention is a method of handling risk wherein the management assumes the risk. A
planned risk retention, also called self-insurance, is a conscious and deliberate assumption of a
recognized risk. In this case, management decides to pay losses out of currently available
funds. Unplanned risk retention exists when management does not recognize that a risk exists and
unwisely believes that no loss could occur.
Hazards may be reduced by simply instituting appropriate measures in a variety of business
activities. An example is prohibiting unauthorized persons to enter the cashier's office. This will reduce
the hazard of theft. Another example is prohibiting company drivers from taking alcohol or drugs while
on duty. Newspaper reports on the accidental killing of three persons including Princess Diana is a
well-publicized case of drunken driving.
When losses occur in spite of preventive measures, the severity of loss may be limited by way
of reducing the concentration of exposures. Examples of efforts on loss reduction are as follows:

1. physically separating buildings to minimize losses in case of fire;

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 UNIVERSITY OF LA SALETTE,INC
COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

2. using fireproof materials on interior building construction;

3. storing inventory in several locations to minimize losses in cases of fire and theft;
4. maintaining duplicate records to reduce accounts receivable losses;
5. transporting goods in separate vehicles instead of concentrating high values in single shipments;
6. prohibiting key employees from traveling together; and
7. limiting legal liability by forming several separate corporations.

Another method of handling risk is by shifting it to another party. Examples of risk shifting are
hedging, subcontracting, incorporation, and insurance.
Hedging refers to making commitments on both sides of a transaction so the risks offset each
other.
When a contractor is confronted with a contract bigger than his company's capabilities, he may
invite subcontractors in so that some of the risks may be shifted to them.
In a corporation, a stockholder is able to make profits out of his investments but without
individual responsibility for whatever errors in decisions are made by the management. The liability of
the stockholder is limited to his capital contribution.
To shift risk to another party, a company buys insurance. When a loss occurs, the company is
reimbursed by the insurer for the loss incurred subject to the term of the insurance policy.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT
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 UNIVERSITY OF LA SALETTE,INC
COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

INSTRUCTION: Answer the following questions in your own words. Write your
answers in a short bond paper.

Elaborate Activity

1. Why is controlling a very important management function?

2. Compare and contrast the three distinct types of control.
3. When the engineer manager reviews the financial statements of the company under his
supervision, what benefits does he derive?
4. How may one determine the best source of funds?
5. How may the financial health of the company be determined?
6. What is meant by “risk” Why must it be managed properly?
Evaluate Activity

1. List down the control activities that may be useful to any of the following:
a) the construction of a bridge
b) the manufacture of microchips
c) the installation of a power plant
d) the manufacture of tricycles.
2. Identify an engineering firm of your choice. Determine the methods used by the firm in
handling risk. Do you consider these methods adequate? If not, suggest the appropriate method
that must be used.

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT
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 UNIVERSITY OF LA SALETTE,INC
COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

Summary:

To survive, companies must continuously generate income. To be able to do so, they must be
able to sell enough quantity of their products or services. Engineering firms
are no exception.
The proper management of the marketing function helps the engineer manager convince
customers to patronize the firm. Specifically, the engineer manager must know how to use effectively
the four P's of marketing which are the product, the price, the place, and the
promotion.
Financing the engineering firm is a very important management activity. There is a need to
assure everyone concerned that funds are available when they are needed.
The first area of concern is the determination of fund requirements. If the amount needed is
already known, the next step is to determine the appropriate source of financing.

Reference:

C. Merle Crawford, New Products Management, Third Edition (Homewood, Illinois: Richard D. Irwin,
Inc., 1991)
Jay Heizer and Barry Render, Production and Operations Management (Boston: Allyn and Bacon,
1993)
James M. Higgins, The Management Challenge (New York: MacMillan Publishing Co., 1991)

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT
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 UNIVERSITY OF LA SALETTE,INC
COLLEGE OF ENGINEERING AND ARCHITECTURE
SANTIAGO CITY, PHILIPPINES

LEARNING MODULE
PCEA 009 – ENGINEERING MANAGEMENT

MODULE 6: MANAGING THE MARKETING

FUNCTION

Topic 1: Marketing Concept

Topic 2: Strategic Marketing for Engineers
Topic 3: Finance Function
Topic 4: Risk Management and Insurance

ENGR. ERIKA G. LLABRES

THIS MODULE IS FOR THE EXCLUSIVE USE OF THE UNIVERSITY OF LA SALETTE, INC. ANY FORM OF
REPRODUCTION, DISTRIBUTION, UPLOADING, OR POSTING ONLINE IN ANY FORM OR BY ANY MEANS WITHOUT
THE WRITTEN PERMISSION OF THE UNIVERSITY IS STRICTLY PROHIBITED.