Chapter Introduction

Strategic business analysis involves the thorough evaluation of all facets of enterprise operations that starts with a good
foothold in the knowledge and application of basic principles of economics, human resource management, production
and operations management, marketing management, as well as financial management to aid in decision-making.

Economic analysis allows business managers to compare the different types of needs, goods, resources, and the
outcomes from combining those resources in the larger view of local and global economic activities.

Human resource management underscores the process of developing a job analysis as a requisite for the creation of a
human resource management plan.

Meanwhile, knowledge of production and operations management will clarify the processes involved in answering the
questions of what, how, and for whom to produce. The production and operations management areas of planning and
control, materials management, inventory management, and project and supply chain management are important to
appreciate to ably apply them when one conducts strategic business analysis.

Economic activities are further fueled by marketing initiatives. Marketing management allows for the movement of
goods from production to consumption side, and creates other economic activities in between. Finally, financial
management puts the valuation of economic activities in place This is the area where costs are accounted for, and
where receipts are reconciled with expenses to determine the financial viability and sustainability of a business
enterprise. This chapter explains the important ideas, theories, and concepts in business management to aid any
business manager to craft a strategic business plan

Lesson 1

Economic Principles

Lesson Outcomes

 Identify various concepts in economics as they are used in business planning.

 Describe how economic trade-offs and social values impact business policies.
 Discuss economic concepts, in an articulate manner, inside the classroom.

Lesson Introduction

Economics is the study of how to manage money and the financial status of an Individual, an enterprise, an organization,
or a country. Managing a household or an organization requires different skills that will come handy in regular day-to-
day transactions one may have. At the core of economics studies are concepts such as scarcity, unlimited needs and
wants, alternatives, choice, and foregone benefits. In a more business-like scenario, is the economic aspect of budgeting
and financial management Learning how to invest, how to spend, and how to save money are other critical aspects of
economic understanding.

Classified into two branches,

microeconomics
and macroeconomics,

the principles and concepts apply similarly but different in scope. The former only deals with individuals, households,
and specific companies. The latter deals with the society as whole and its dynamic relationship with the rest of the world.
This lesson will provide the perspective of integrating economic knowhow in business analysis approach and in the
strategy development of a business organization.

Lesson Objectives
 After this lesson, students are expected to:
 differentiate between needs and wants in an economic process;
 express the intricacies of economic activities and how they relate to individual and business wants:
 determine the resources that become part of either consumption, production, or distribution process:
  evaluate the various types of resources, and, labor, capital and entrepreneurship, and how those resources
eventually classify as to scarce from abundant, renewable from nonrenewable, natural from man-made, and
free from economic; and
 assess how everyday human activities are intertwined with economic concepts and principles.

Lesson Presentation

Economic issues permeate society in various ways. Economic principles and concepts can be found in everyday dynamics,
from large scale activities such as movements in the stock market, government directives on poverty and health care,
and multi-nation involvement in trade, to as simple as fluctuations in the market price of basic commodities, Critical and
complex economic issues impact the lives of ordinary people in the same way that they affect businesses. To better
understand the interplay of economic factors in both household and business situations, it is best to first appreciate
some basic economic ideas.

Economics seeks to answer the question of what, how, and for whom a good or service is produced. Economic realities
and situations are in fact closer to us than we imagine them to be. Economic activities begin with an individual,
progressing to the small unit of society, which is the household, on to the larger entities such as companies, and the
international communities. At the core of any economic concern is an individual's wants and needs. Understanding
economics is a futile exercise if scarcity is not discussed and if people need not choose among existing alternatives and
practice trade-offs. If existing resources can address every individual's needs and wants, there is no need to study
economics. However, just as these needs and wants are infinite, most resources are finite and scarce. Scarcity of
resources leads one to explore the economics of things. Scarcity should not be confused with shortage. It refers to the
existence of limited resources that are not enough to address unlimited human needs or demands. On the other hand,
shortage refers to a market occurrence whereby the demand is more than the supply available at a given time.
Therefore, properly allocating these resources according to a larger vision and direction of individuals, households,
companies, and international communes becomes more critical. Satisfying the needs and wants of various entities are
the driving force of all economic activities and eventually defines the prospective prosperity of individuals, companies,
and communities.

If the cause of understanding economics is the persistence of resource scarcity. the lessons of economics allow one to
optimize the utilization of these scarce and limited resources.

Rationalization allows one to evaluate the value of the goods being obtained based on the cost that must be expended
for its exchange. When an individual finally makes a purchase, it comes because of carefully evaluating the Intrinsic and
extrinsic value of the good in question, and only pays for it if it is worth its price. Scarcity of resources evolves into the
identification of alternatives and a decision for trade-off.

The rational mind allows one to end up with a right decision after a review of all available possibilities. When money is
spent on a particular product over other possible and equally valuable alternatives, a choice is made. The loss from
setting aside the value of pursuing other alternatives with the same amount is referred to as the opportunity cost. It is
normal for individuals to compare varying alternatives, looking at their quantifiable and nonquantifiable values,
assessing possible losses and gains, and evaluating available options before a choice is made. As there are no perfect
choices, just as information is not one hundred percent obtained, every choice has positive and negative consequences.

As one studies economics, it is important to point out that there are terminologies that are commonly encountered that
may have a different meaning from its usual purpose. For instance, free resources are not actually resources that can be
obtained and used without costs. On the other hand, costs in economics can be either intrinsic or extrinsic, that is, a cost
with no actual cash outlay or a cost with identified cash effect. Oftentimes, there is a need to identify assumptions in
order to simplify the complexity of economic issues. However, details and big pictures will continue to re-emerge all
throughout one's study of economic issues and activities and it is important to critically appreciate them as they affect
models and assumptions differently.

Human needs and wants, when not satisfied, results to a feeling of inadequacy or distress. Generally, human needs and
wants involve other noneconomic factors such as political, emotional, social, technological, emotional, and even legal.
Consider how each person needs both food and shelter, although both are essential, the first one is a requirement to
survive while the other is something necessary for protection against unpredictable natural elements. Using this
example, it is also safe to say that human beings have needs and wants that are either primary or secondary.
Primary needs are those that are essential for one's survival, these are resources that an individual cannot live without
Meanwhile, secondary needs are those that are directly associated with one's happiness, or a person's elevated status in
society. These secondary needs are what we refer to me wants. Food is clearly an example of a need, just as shelter that
is at the barest of minimum is. However, under normal circumstances, condominium living in a posh development area
is already considered as a want.

Goods and services are created with fixed and variable inputs. Fixed Inputs are present in short-run production.
However, all inputs can be made variable In a long-run production period. Utility is the degree of satisfaction derived
from the consumption of a good or service. When satisfaction is gained from any of the economic activities, other
principles come into play. The principle of reduced usefulness or diminishing marginal utility in economics comes from
the continued use of the same amount of product over a period of time. It is no longer rational to continue the use and
spending for a product when its degree of usefulness or utility has been maximized, or saturation point has been
reached.

On the economic activity of production, a fixed input can only be useful until its maximum output. Hence
prresultoducers should be aware of the principle of diminishing marginal returns. When the consumption of a product is
lower than the amount of energy spent on it, diminishing returns happen. In the same way, while buying something, you
evaluate the utility derived from it with each unit and the cost you are paying for it. In the beginning, the benefits are
higher than the value, but gradually, they decrease with continuous consumption. This law is very useful in our daily life.

Economic activities refer to production, distribution, and consumption of goods and services. The goods that go around
these economic activities are classified as to either tangible or intangible. The former are goods with physical identity,
while the latter refers to services. Using this definition, economic activity would refer to the movement of both goods
and services in a production, consumption, and distribution process to satisfy human needs and wants. The magnitude,
type, and extent of resource involvement differ in every economic activity.

All economic activities are motivated by either directly or indirectly satisfying human needs and motivations. This is the
reason why human needs and wants are Identified as the fundamental cause of any economic activity. However, the
way an economic activity is chosen to satisfy the same type of need or want differs from one individual to another.
Varying individual resources, priorities, situations, motivations, preferences, and level of satisfaction dictate the multiple
ways by which needs and wants are met.

An economic resource is a means by which an individual's needs and wants may be directly or indirectly satisfied. For
example, a cup of rice is an economic resource as it provides the food requirement of an individual, just as a rice
plantation is an economic resource because it provides the rice requirement of a community or a company A teacher is
an economic resource for those with teaching and learning needs, just as a lawyer is an economic resource for those
requiring legal services. There are many different examples of economic resources that can be found in everyday
settings, and these resources differ in category depending on the nature or level of scarcity, form, or renewability

Various types of goods become the object of multiple economic activities that aim to satisfy different needs and wants.
The question is whether these goods satisfy needs and wants in a direct or indirect manner. Goods that directly satisfy
human needs and wants are classified as consumption goods. Example would be a cup of rice in a restaurant menu.
Meanwhile, capital goods are those goods that indirectly satisfy human needs and wants. Example would be gasoline,
which is needed to fuel a car to be able to provide a means of transport. Depending on how it was used, the same
resource can be classified both as consumption and capital goods. The distinction lies on how the good was used and
not on its inherent character. A cup of rice can be categorized as consumption good when it is purchased and consumed
as it is. It becomes a capital good when it is used as an ingredient to create another food product or obtained for a
different purpose such as producing a rice wine.

Based on nature or level of scarcity, economic resources are either scarce or free. Further note that scarcity is relative to
areas or situations such that a resource is only considered scarce if the need for it exceeds the available quantity.
Whereas, free resources happen when the available resources exceed that current need for it. As to renewability,
resources are either renewable or nonrenewable. Renewable resources such as watersheds and forests are regenerative
and sustainable although this can usually happen only over a long period of time. On the other hand, nonrenewable
economic resources such as coal, minerals, and gas are exhaustive and only exist in limited quantities. Meanwhile,
consumption of these resources grows exponentially leading to more insufficiency of its quantity to satisfy the long-
term requirements of the society Resources can also be classified according to their physical form, and are either natural,
man-made capital or human. What exists in nature such as land and bodies of water are natural resources Man-made or
capital resources are those goods that were produced by men from combining natural resources and were created for
an identified purpose Human resources come in the form of labor services such as a doctor, a writer, or a fisherman

From the simplest way of performing household budgeting to altering a nation's trade direction, knowledge of
economics provides a huge leverage for an individual, or for a company that he wishes to manage After becoming
familiar with the concepts of scarcity, choices among alternatives and of trade-off distinguishing between the
classifications of economics resources, and contrasting the various types of goods, connecting these concepts to day-to-
day activities will become easier to appreciate. In particular, one's daily activities involve the use of the major economic
concepts and theories, and become valuable in making certain decisions in life.

As one moves up to decision-making levels, such as when making investments, returns and profitability are major
considerations. Knowledge of economics allows one to evaluate available options and the risks that are associated with e
possible alternative. Huge losses can be minimized, and the possibility of gains can be maximized. This knowledge to
evaluate alternatives in order to arrive at an informed choice is a result of a good knowledge of economics. One must be
able to determine the different choices whether one wants to invest in a fixed deposit, lend someone at an interest, or
purchase properties while simultaneously being aware of the risks involved in such alternatives and choices. And while it
is true that the exact future cannot be predicted, anticipating and preparing for possibilities are possible through the
knowledge of economics. For instance, economists can speculate the future value of goods traded in the stock, currency
and futures market predict inflation rates based on historical figures, or determine budgetary shortfall according to
current economic figures.

Finally, a valuable concept that economics allows one to know is the socio- economic issues that happen on a regular
basis. Economics explains the causes and effects of poverty, unemployment, income inequality, gross domestic
production and gross national product inflation and deflation, peso exchange rates, low economic growth, or trade
deficits and the ways by which they can be addressed. From the individual perspectives of satisfying needs and wants, to
company-affecting decisions that are being made and to national and international society-altering directions,
economics presents alternatives and choices for better decisions.

Lesson Exercise
Multiple Choice: Choose the correct answer.

1. Which of the following is not true of human needs and wants?

A. Satisfying human needs and wants diminishes the feeling of distress.

B. Human needs and wants vary depending on individuals.
C. When an individual's needs and wants are already satisfied, the individual will no longer encounter the same needs
and wants in the future.
D. The quantity of a person's needs and wants increases over time.

2. Which of the following is not an example of basic human needs and wants?

A food
B. clothing
C. shelter
D. gold and silver
E. water

3. Which of the following is not an example of nonrenewable resources?

A. power from the sun

B. coal
C. liquefied natural gas
D. petroleum
E. silver and gold

4. Which of the following correctly describes the relationship between human needs or wants, and economic activities?

A. Every economic activity directly satisfies a human need.

B. Every human need or want motivates an economic activity.
C. The end goal of any economic activity is to satisfy a human need or want
D. An economic activity produces a human need and want.

5. Which of the following is not a type of scarce resources?

A renewable resources
B natural resources
C manufactured resources
D. human resources

6. Which of the following is not an example of scarce resources?

A wood
B. gold
C. waler
D. petroleum

7. Which of the following is an example of capital resources?

A watershed
B. lawyer
C. petroleum
D. computer

8. Every choice results in a foregone alternative, which economists refer to as

A. accounting cost
B. changing cost
C. opportunity cost
D. alternative cost

9. Why do people need to make choices in the use of resources?

A Scarcity of resources exists.

B. Greed is evident among owners of resources.
C irrationality exemplifies resource owners
D. Choices are available.

10. What is the fundamental problem of economics as a discipline?

A The allocation of resources amongst the competing needs and wants because there are unlimited wants while there
are limited resources
B. How to ensure continuous economic growth in the face of uncertainty
C How to maximize profits for companies and consumer value for citizens
D How ls balance the needs of the economy with society and the environment

Lesson Review

When an individual goes to a physical market, makes a purchase, and obtains a product, economics is exercised. Imagine
the number of times this process is performed by an individual on a day-to-day basis. However, obtaining the product
after making a payment is not the only economic activity that happens during a single transaction. In fact, a chain of
operations exists before a customer is able to obtain a product and the seller is able to produce a good.

Economics involves the presence of decision-making among various alternatives in the process of consumption,
production, and distribution. Answering the questions of what, how, and for whom to produce is basic in the study of
economics. Studying economics allows individuals and entitles to make informed decisions to efficiently use scarce
resources while satisfying unlimited needs and wants. In a micro perspective, companies can develop systems for human
resource management, production and operations management, marketing management, and financial management.
Taking it to the macro perspective, knowledge of economics allows nations and states to realize the existence of
problems such as poverty, inflation, high interest rates, high currency exchange rates, deficits in budget, and deficits in
trade, and be able to address them using economic tools and related legislations.

Studying economics allows a student to see things that are not ordinarily recognized such as debit and credit situations,
how loans can be efficiently used, or how interest is predicted. It also meant having the ability to understand and
analyze consumption, production and distribution processes, and the way that money is made. This knowledge of
economics can be valuable whether one is inclined to start a company or manage an existing business, or even in one's
daily activity. Economics is not at all a bundle of principles, and theories. It is all about implementing practical concepts
in the real world.

Lesson 2

Human Resource Management Basics

Lesson Outcomes

 Demonstrate an understanding of key terms, theories, and concepts in the area of human resource
management (HRM).
 Demonstrate competence in the use of HRM practices in business analysis.
 Provide innovative business strategies to problems in the fields of HRM.

Lesson Introduction

Human resources management involves the monitoring of the culture of the organization, and is responsible for the
recruitment of appropriate workforce, in the recommendation of market-based compensation and benefits that are in
accordance with the company's current and potential resources and in the crafting of an overall strategic employee
development plan. It is also the management function that conducts research and makes policies and recommendations,
which are implemented to benefit, attract, and retain the best employees. HRM covers five functional areas:
organizational design; staffing, rewards, benefits, and compensation system; training and development; and
performance management and appraisal system.

Organizational design is about ensuring that there is an employee-job fit for all the positions in an organization to fulfill
its mission. This is done through the corollary functions of planning and job analysis. Staffing deals with the recruitment
of individuals whose skills, abilities, knowledge, and experiences are deemed appropriate for the jobs in the organization
that needs to be filled. Corollary functions to staffing are recruitment and selection

Then there is the design of rewards, benefits, and compensation system that includes compliance, rewards based on job
evaluation, and direct and indirect employee benefits and compensation. Its compliance component includes the legal
aspects of human resource management. Employee and organizational training and development seek to ensure that
employees have the necessary knowledge and skills that will allow them to satisfactorily perform their jobs and steer the
company toward its advancement in its sector Performance management and appraisal uses performance evaluation
tools developed or adopted by the organization to help identity interventions to enhance work efficiency. This lesson will
help students

better understand the role of human resources and their vital functions in business operations.

Lesson Objectives.

 After this lesson, students are expected to:

 present the value that human resource management play in the
 general business analysis and strategy formulation: demonstrate an understanding of the traditional functions
of human
 resource management;
 integrate the major activities associated with human resource management:
 review the proper steps for strategic planning in human resources; and
 reflect in their thinking process on business analysis the valuable areas of visioning and valuing, environmental
analysis, internal analysis strategy formulation, strategy implementation, and evaluation and assessment.
Lesson Presentation

The dynamic demands and expectations of consumers in both public and private entities, profit, and not-for-profit
organizations across the globe necessitate the finding of more value in creating strategically designed human resource
units. A critical and careful assessment of how a company operates to best align with its overall mission and goals results
in more positive outcomes for people, systems. as well as technologin the context of human resource management. At
the core of human resource management is the attraction, placing, rewarding, training. and retention of the right people
according to the objectives of the organization.

A job analysis outlines the human resource management plan. Job analysis is the process of collecting and studying
various factors that are related to the operation and responsibilities of a specific job. Its immediate products are job
description and job specification

Job description contains the job title, location, summary of duties, machines, tools, equipment needed to perform the
job, and materials and forms that will be used to perform the job, including the supervision that is expected to be given
or received, as well as working conditions and possible risks. Job specification, on the other hand, contains the
statement of manpower qualification for a specific job. This Includes the required minimum education, experience,
training, judgment, Initiative, physical effort, skills, responsibilities, communication level, and emotional and social
characteristics. Job analysis is required in human resource planning, recruitment and selection, training and
development, job evaluation and performance appraisal the creation of a compensation and rewards system, and the
establishment of health and safety policies.

Designing organizational structures also considers efficient work process and dynamics. This being said, due
consideration is given not only to the daily processes but more so to the organization's priority areas that are more often
accomplished over a longer period. Understanding the efficiency of all systems and programs marks the beginning of the
analysis on how to better improve results and outcomes. Additionally, human resource management emphasizes
accountability in the design of structures and systems that involves people and resources. As such, a level of
independence and clear standards must be established at the onset, to ensure that processes will run smoothly and with
the least disturbance or delays.

Ensuring the efficient managerial function of planning, organizing, directing, and controlling are within the context of
designing organizational structures. Planning pertains to formulating strategies of personnel programs ahead of use and
will contribute to overall organizational goals. On the other hand, organizing is an essential process of allocation of tasks
amongst members of a specific structure, with identified relationships, responsibilities, and accountabilities within an
integrated activity toward the achievement of a common goal. Meanwhile, directing is a function that allows for the
activation of people at various levels of skills and tasks, and ensures that each one is able to maximize his or her
contribution to organizational goals. Given appropriate motivation and reward, directing employees at different levels
becomes possible even with the slightest exercise of authority. Controlling comes after planning, organizing, and
directing, and necessitates the review of the employees actual performance. It also includes verifying deviations and
comparing results from identified plans, and offering corrective actions for improvement

Business experts suggest that to be able to predict organizational success is to ensure that the right people are placed in
the right position in the company's functional process The continuous development and evaluation of existing
organizational structure pay a key role in the initial design, and subsequent re-design of company structures and
groupings. This process of structural assessment and re-design ves the referencing of existing employees and carefully
examining they form roles that are based on their ability and expertise.

Every employee has the strength and skill set that can be useful for leading a company or organization to a level of
success. Most often, these strengths, when left unrecognized, may cause disillusionment and in some cases shifting
roles. It may also lead to re-formatting in the reporting structure of an organization, as every Individual is evaluated for
strengths and weaknesses that would maximize potentials and would fit in the organization's current goals and larger
direction.

Staffing comes after job analysis and human resource planning. It includes recruitment, selection, placement, and
orientation. Recruitment is the process of searching for prospective employees and providing an encouraging
environment for them to pursue their job application in the organization. Recruitment may be both internal and external
to the organization. Internal recruitment can be in any of the following forms: promotion, transfer, job posting, or
employee referrals. External recruitment can be in the form of advertisement, through direct recruitment, via
employment exchanges, using employment agencies, networking with professional associations, campus recruitment, or
even word of mouth announcements.

Selection is the process of determining the qualifications, knowledge, skills. attitude, experiences, and values of an
applicant with the purpose of ascertaining job suitability. Selection involves screening of applicants, having applicants
take tests or other methods of screening and shortlisting such as interviews, reference and background verification,
medical job candidates include aptitude test, psychomotor test, job knowledge test, vocational or interest test,
personality test and group discussion participation test. Interview types, on the other hand, can be informal, formal,
planned, patterned, nondirective, in-depth, stress, group, or panel. It is normal that the applicant's fit to the company
culture is considered at this point.

Placement is the process of giving the selected candidate the most suitable job in terms of the organizational
requirement and the prospective employees qualifications after thermalities of screening. This phase of matching then
leads to eventual orientation. Varied techniques are adopted to ensure employee orientation and to introduce a new
hire to his new work environment, introducing him to people, practices, purposes, and policies of the organization A
good orientation program is critical in improving employee morale in reducing employee turnover in curtailing absences
in lessening work accidents, and in avoiding industrial strife

Screening

Job Matching

Orientation

Work Performance

Placement to Work Performance Flow

Human resource management is valuable to the organization as it helps attract and retain the right people. Valuable to
human resource management efficiency is having a good reward, benefits, and compensation system. This process
involves wage and salary administration, providing incentive and fringe benefits schemes, as well as social security
Insurance and creation of retirement funds. While compensation is a direct reward for the work done, benefits emanate
from a defined company incentive program. Benefits are indirect payments for working beyond what a job requires. As
one motivational tool, rewards, benefits, and Incentives may be financial or nonfinancial in nature. Employers are
encouraged to exercise their creativity in developing other types of rewards and benefits, beyond what is government-
mandated. Corporate discounts, office perks, childcare facilities, wellness programs, and education fees reimbursement
were added to the usual disability and health insurance, stock options, profit sharing, paid parental leaves, and
performance bonus.

Training and development are the process of creating avenues for employee improvement, reskilling and up-skilling for
managerial development, career planning. and transfer or promotion. Training is the imparting of technical and
operational skills that are needed for the current job. Meanwhile, development is the process of conducting suitable
programs to improve one's human and managerial capability to handle a more expansive role in the organization.
Provisions for training and development of employees should be embedded in corporate policies as a way of cementing
information on how the company puts a premium on professional development. In a similar note, policies on training
and development provide the needed direction for the creation of employee development plans as well as performance
improvement mechanisms. Training and development differ in periods, focus, orientation, motivation, objectives,
number of beneficiaries, and purpose.

Having the right organizational climate is an emphasis in the task of human resource management, a climate that
celebrates and rewards the advancement of people in their education, exposure, and training because these steps
ultimately contribute to a happier work force and a more efficient organization. Training and development exercises
make for effective human resource management as they solidity teamwork and promote team spirit among
organizational members. In the same way, training and development programs provide excellent growth opportunities
for people who have the big potential to move up in the organizational ladder through diligence and commitment.
Ultimately, having a good training and development program improves organizational productivity, affects society and
economy reduces costs, maximizes scarce resources, and improves profits and overall work conditions of people.
Performance management and appraisal defines the direction and movements of the careers of people in the
organization. This systematic assessment of an individual's job performance and their potential for advancement results
in further training, coaching, or correction as needed. The result of performance appraisal may be promotion, transfer,
or retention. An extreme case would be demotion, or separation, other than retirement or resignation. Performance
management and appraisal include setting performance standards, communicating these standards to the employees,
measuring the performance, and comparing this to what is identified as standard, providing a venue for the discussion of
results as feedback, provision of corrective action when necessary and implementation and regular review. Methods for
performance appraisal vary from the traditional checklist type that is based on job analysis, to conducting confidential
reports, defining critical incidents, ranking paired comparison, narrative, graphic rating, grading, forced distribution,
testing of work sample, nominations, or a combination of types.

Other organizations utilize the service of professional assessment centers that conduct assessment using curated
evaluation models. Examples of curated evaluation models would include Management by Objectives by Drucker, the
Behavioral Anchored Rating Scale or BARS, the trait-based appraisal, human resource audit, and the 360-degree
performance appraisal. Caution must be exercised in the use of performance appraisals that continue to exhibit inherent
limitations of central tendency, halo effect, horn effect, leniency or strictness spillover effect, the fear of losing
subordinates, the fear of losing relationships, a well as the loss of goodwill or the wrong use of the methods.

Human resource management of late has included new ideas such as artificial intelligence, big data, hybrid work models,
healthy organizations instead of mere employee wellbeing, diversity, equity and inclusion, the onboarding of people
with power skills, reskilling as much as up-skilling, gig economy concept, and cyber security. As technology continues in
its essential role in many organizational functions, the capability of a workforce to integrate and incorporate new and
emerging technologies in the performance of work will prove valuable.

A Successful organizational design is one that maximizes profits, reduces costs, increases employee and consumer
satisfaction, and provides workflow efficiency, After the evaluation, analysis, and development of every area in an
organization. a completed structure should be implemented using the new policies that were identified in the process.
Working through an enterprise's structure usually from the bottom up will result in identifying problem areas that are
ripe for movement make appropriate recommendations, and craft implementation steps with the organizational design.

Lesson Exercise
Sampling an activity on group dynamics will allow the students to simulate a common organization undertaking that
aims to promote creativity, working in teams and objective evaluation. The students will be facilitated to have their team
activity with the following instructions:

1. Divide the students into groups of six.

2. Each team will be given the following materials: construction paper, a pair of scissors, glue, thread, and stapler.
3. Each team will build a tower with the items provided. The tower will be judged based on three criteria: appearance,
stability, and height.
4. The students will be given 15 minutes to complete the task.
5. After the completion of the task, the professor will judge the towers of each team based on the three criteria. 6.
Asking the students how they went about completing their task will serve as the processing of the activity.
7. Each team will be asked to rate themselves on a scale of 1 to 10. The rating will be on the effectiveness of the team as
an organization, with an organizational purpose/mission of "building a tower."

Lesson Review

Human resource management, also referred to as personnel management, is a largely overlooked area in an enterprise,
and which mainly functions as record keeper and repository of personnel policies and directives that affect the
workforce. It consists of all the activities undertaken by an organization that aims to ensure the effective utilization of
employees' skills and talents to attain individual, group, and enterprise goals. In broader terms, all decisions that affect
the workforce of the organization are subsumed under the human resource management function.

Human resource management should increase employees' job satisfaction and meet their ultimate purpose of self-
actualization within a stimulating work environment where they perform their specific roles. Human resource
management should be able to assist the organizational workforce in achieving their personal goals even as they
contribute to the bigger mission of the company where they work. In this function of the organization, employees must
be led to develop and maintain a quality work life, that should redound to a desirable professional and personal situation.
Company performance is only ensured when there is an efficient and quality human resource management system.
Lesson 3

Production and Operations Management Basics

Lesson Outcomes
 Identify the production and operations framework of a business organization.
 Examine the transformation process in a business operation and how they relate to business analysis.
 Understand the role of production and operations managers in formulating business strategies.

Lesson Introduction

A product or service is the primary object of consumer interest in a market. The need-and want-satisfying capacity of an
item determines its value as a product or service. While most products are created for an identified need or want, some
products are developed for a need or want that is yet to exist. The process and systems that convert raw materials to
another product are the core of production and operations management. Production and operations management
involves the major areas of production planning and control, project management, supply chain management, and
inventory management. Production and operations management finds its value in connecting consumer demands and
the capacity of business enterprises to provide such demands through the use and combination of various economic
resources.

Production and operations management identifies the process that transforms raw materials to finished products, and
the series of processes that convert to a service. During production and operation, other types of utilities are formed.
These are place, time, form, service, and knowledge utilities.

Place utility happens when there is a change from the place of availability to the place of use through transportation. For
example, transporting harvested rice to the brewery for rice wine production.

Time utility happens when the input or the output is stored as part of the utilization process of the consumers. An
example would be imported meat products in cold storage.

Form utility happens when inputs change in size, weight, color, shape, or all at the same time as it converts into a
consumer product. An example would be converting the fiber of a pineapple fruit to fabric and then to a ready- to-wear
dress.

Service utility happens when service is rendered to a client either directly or indirectly. An example would be healthcare
professionals to COVID-19 patients, or computer graphic designers to online buyers.

Knowledge utility happens when Information is imparted to customers through presentations in the form of
advertisements. An example would be giving information about a vitamin's ingredients and health benefits through the
product's television advertisement.

Production management encompasses production planning and development, production administration,

implementation function and other allied activities such as standardization, simplification, specialization, quality control,
and research and development. Production system on the other hand deals with the functions of converting inputs to
output using processes, on demand forecasting, and on manufacturing control.

Lesson Objectives
 After this lesson, students are expected to:
 determine what goes in the creation of a product or service;
 Identify the scope of production and operations management; distinguish the types and systems of production;
 explain the benefits of production and operations management; and
 integrate production and operations management in the bigger strategic business analysis.

Lesson Presentation

Production process refers to manufacturing activities that result in either semi- finished product, finished product, or a
by-product. Operations process refers to activities that result in the availability of a complete service or an allied service.
Production and operations management is the application of the management functions of planning, organizing,
directing, and controlling in the process of manufacturing goods or in the provision of a service. Regardless of the type of
product or service, the activities that happen in the creation of goods are in many ways similar. A set of inputs would
undergo a process to create outputs. This process is in the form of manufacturing operation, assembly of parts, finishing
of parts, and inspection of quality and quantity. In between these processes is the movement and storage of raw
materials, unfinished goods, and finished products.

Organizations are designed mainly to produce products or services. If these organizations must survive and grow, the
operations function must be undertaken in the most economical manner possible. As most companies are expected to
make profits, any activity, including those for operations, must be managed to contribute to the accomplishment of such
objectives.

Production is about the creation of all goods and services, regardless of type or kind. Meanwhile, operations refer to any
process that accepts inputs and uses resources to change those Inputs in useful ways. Both production management and
operations management play an important role in an organization in increasing efficiency and productivity.

While operations management is focused upon administration, planning, and execution of operations involved in
production of goods and services and trying to minimize the resources, at the same time increasing output, operations
management is more concerned with input/output and churning out products in the shape of desired finished product.

Production Management deals with planning, control, and decision making necessary for carrying out the production
process. Defined as the design, operation, and Improvement of the systems that create and deliver the firm's primary
products and services.

Foremost in production and operations management, is the twin issue of effectiveness and efficiency.

Effectiveness refers to goal achievement, whereas efficiency is related to the cost resource utilization involved in the
production and operation activity. System provides an efficient and effective framework of activities necessary to attain
an objective. It is a dynamic arrangement of elements, each designed to interact with the other, and thus it is more than
just a static combination. Element consists of men, materials, machines, process, and information network designed and
located to interact harmoniously.

In production and operations management, emphasis is also given to the attainment of right quality, which is based
upon the customer's needs. The right quality is not necessarily the best quality. It is determined by the cost of the
product and the technical characteristics as suited to the specific requirements. Likewise, having the right quantity is
also important, emphasizing that the manufacturing organization should produce the products in the right number. If
they are produced more than demand, the capital will block up in the form of inventory and if the quantity is produced
in short of demand, leads to shortage of products.

In a similar vein, producing within the right time is also an important parameter to judge the effectiveness of a
production department, which must aim to make the optimal utilization of input resources to achieve its objective.
Finally, the right manufacturing cost must be established before the product is manufactured. Hence, all attempts
should be made to produce the products at pre-established cost, to reduce the variation between actual and the
standard pre-established cost.

It is also in production and operations management that the location of facilities is given important consideration.
Location of facilities for operations is a long-term capacity decision, which involves a long-term commitment about
geographically related factors that affect a business organization. The purpose of the manufacturing location study is to
find the optimal location that will result in the greatest advantage to the organization.

Layout decisions include the capacity of the organization to make substantial investment in money and effort, its
commitment to maintain the facility, and a full evaluation of cost efficiency to the operations. Some of the more
practical reasons behind modifications in an organization's decision for its operations layout are shown in the diagram
below:

Inefficient operations

accidents or safety hazards

changes in the design of products or services

Introduction of new products or services

changes in the volume of output

changes in the methods or equipment

changes in environmental requirement

changes in legal requirement

morale problem

Productivity is the aim in production and operations management. The efficient combination of land, labor, capital, and
management to optimally produce goods and services determines the level of operational productivity Before an
enterprise is organized, product design is decided

Having a single product creates a more focused posture on production and operations management, and the single
product success can be the springboard for developing a whole product line in the future. The design of the product
remains to be a critical decision for a business owner The uniqueness of a product or service determines its market
success. Similarly, product design is dynamic in the context of changes in consumer preferences, economic situation,
sociological and demographic factors, as well as political and legal challenges.

Product design deals with conversion of ideas into reality, and every business organization must design, develop, and
introduce new products as a survival and growth strategy. Developing the new products and launching them in the
market is the biggest challenge faced by the organizations. Process design is a macroscopic decision-making of an overall
process route for converting the raw material Into finished goods. These decisions encompass the selection of a process,
choice of technology, process flow analysis and layout of the facilities. Hence, the important decisions in process design
are to analyze the workflow for converting raw material. into finished product and to select the workstation for each
included in the workflow.

Production processes can be classified in three categories, flow production, batch production, or unit production. Flow
production, which is also referred to as mass production, denotes a production process that runs in sequence. This type
of production process is suitable for high demand goods, where a steady flow of operation is necessary. Quality control
can be ensured in the type of raw materials used in the manufacturing system before the final product is brought out of
the manufacturing facility. Batch production divides production output in component parts. In this category, the whole
production process is divided in parts, with the unfinished product in the form of various finished parts. Batch
production is applicable for a product that uses different machines and tools depending on the parts to create. Quality
can be checked at every batch production, and production parts can be made available at another functional area. Unit
production happens when production is made according to when the customer specifically requires it. Production
processes of this nature follow a standard, quality, and specification in size, weight, form, color, and packaging. This type
of production process is best used for products that do not require repetitive steps, nor has high demand. Its cost
concerns-also limit its use.

Production planning and control is about implementing plans in terms of job schedule, machine appropriation, and
actual workflow. As production requires the successful conversion of raw materials to finished products whether in parts
or as a whole, the role of a production manager becomes critical. The production manager ensures that the process is
rolled out as planned in accordance to earlier decisions on what, how, and when to produce. Similarly, plans are to be
carried out with the optimum cost efficiency and utmost quality standard. The control functionality can be seen in
producing better quality products at the best reasonable price within the most systematic manner. Planning in
production is in foreseeing probable glitches in the production process and finding remedies for their early solution. A
well-oiled production planning and control system ensures that production schedules a met that materials, men, and
machines are efficiently maintained and optimally are functioning, that the production process is well integrated for
efficiency and economy, and that workload is regulated.

A production planning and control system is created with the aim of maximizing the use of economic inputs,
determining the requirements of production in men, machines, and materials, and ensuring that production is done at
the right time with the right quantity and quality. The availability of products in accordance with the requirements of the
marketing department of an organization is also ensured in production planning and control, in as much as adequacy of
stocks is monitored for contingencies and information is gathered to guide in policy and future decision- making.

The scope of production planning and control encompasses those that concern production materials, manpower,
methods, machines and equipment, routing of work, establishment and estimation of work standards, leading and
scheduling. dispatching, expediting, Inspection, evaluation, and cost control. Challenges in production planning and
control would be how to combine functions, how to follow- up on production backdogs, and when to proceed with a re-
planning.

Production planning and control varies depending on products, manufacturing facilities and organizational nuances. The
best type of production is one that requires little or no control at all. As a management tool, controls need not be
elaborate and complex but simple enough yet able to create an efficient operation of optimal production at the least
cost.

Project management evolved from Henry Gantt's famous Gantt chart and Henni Fayol's Five Management Functions of
planning, organizing, commanding. coordinating, and controlling. A project is an organized initiative that has a concept
phase, a project initiation phase, planning, execution, monitoring and control, and a project closure. While it may appear
to be overwhelming to an inexperienced individual, project management systems are meant to simplify and break down
milestones for time and resource use efficiency. A good knowledge of project management presupposes an appreciation
of work integration, scope, time, cost, quality, procurement, human resource needs communication and its channels,
risk and stakeholder management

Supply chain management is the management of a network of business actudes and processes that includes
procurement, manufacturing, transportation fristed coorts, warehousing distribution and inventory management. With
a burness scenario, the expanse of supply chain management is magnified and characterized by geographically distinct
markets, by diversely obtained raw materials, by more efficient manufacturing and procurement processes elsewhere,
and by cheaper labor markets abroad.

Supply chain management involves a broad function that sees planning, design, control, and implementation of
processes related to procurement, manufacturing. distribution, and sales functions of an enterprise. The network of
service providers of the supply chain process, called vendors, are efficiently coordinated and integrated by supply chain
managers to ensure that production and distribution and all other activities in between will not be vulnerable to the
risks of distance and time. Not to be confused with simple logistics, supply chain management goes beyond the
management of the flow of goods as it also deals with securing and exchanging information, data, and documents
between transacting parties. Logistics acts as the post-procurement function of delivering raw materials from the source
to the production plant, and the transportation of finished goods from the production to the various points of
distribution.

Warehouse management completes the logistics process in ensuring the security and safety of goods, finished or
unfinished, at any stage of raw materials procurement, production, and distribution. Normally outsourced, or performed
by a third party, the value of warehousing activities and companies would be in the extent of their reach and multi-
location presence, especially when one speaks of global production and distribution.

Production and operations management is continuously influenced by an ever- changing global environment and must
therefore adjust to the challenges, trends, and developments in this area. Adaptation to the global context, in entering
in supply chain partnerships, in just-in-time performance and real-time monitoring, to mass production and
customization, to bespoke trends, and rapid product development and high valued and diverse workforce, production
and operations management will remain a dynamic area that is worthy of focus in doing strategic business analysis.

Lesson Exercise

In groups of five, research and present in class the production and process of a product or service of your choice,
covering the areas of raw material, identification, process determination, distribution chain, and Inventory management.

The following format should be followed:

 Raw materials-simple listing and classification method

 Process determination-use a process flowchart

  Distribution chain-use a distribution chain diagram

 Inventory management - use a simple Microsoft Excel tracking sheet

The facilitator will provide a rubric for evaluation to measure the group's grasp of their chosen organization's production
and operations system.

Lesson Review

In strategic business analysis and planning, the production and operations management aspect would include plans on
schedule, materials requirement purchasing activity and control, capacity management, sales and operations, as well as
plans on manufacturing and enterprise resources. Production and operations management outlines the process of
product creation and service provision that enterprises provide to the market. The process flow of producing goods and
services varies depending on the nature of the product.

Tangible products are created from combining raw materials as inputs put together by labor using human capital.
Services, on the other hand, are provided through the rendering of transactions in service entities such as in banks,
schools, or hospitals. Often, manufactured products are also part of some service delivery. In ensuring that products and
services reach its final user, production and operations management enters the picture in the form of creating a system
for efficiently utilizing inputs of materials, equipment, labor, money, methods, and management to create outputs of
value.

A good production and operations management system allows for the continuous search for new products and services
to offer the public. It also meant practicing creative and sustainable means to improve product designs, packaging, raw
materials requirement, service delivery experience, and similar innovations to please consumers. It is also in production
and operations management where data is obtained to anchor major management decisions such as changing raw
materials, changing final product form, increasing or reducing production quantity, using technology, modifying a
procurement system, to subcontract or augment production capacity, or whether to shift from being labor to capital
intensive in the production process, Ultimately, production and operations management balance the need to provide
consumers with the best product in the most economical way. using an optimal process that maximizes manpower
efficiency.