Entrepreneurship Quarter 2 – Module 6 4 M’s of Production

and Business Model

______1. Output represents the final products from the production process and distributed to the customers.

______2. The 4M’s in the production operation are the materials, manpower, machine and money.

______3. Manpower in production operation refers to the workers involved in the production of goods.

______4. Product description is the marketing copy that explains what a product is and its benefits.

______5. Prototype is a replica of a product.

______6. Product to produce is one of the factors to be considered in the production method.

______7. Educational qualifications and experience is one of the criteria in considering manpower.

______8. Skills and expertise is not important in considering manpower.

______9. Benefits are the reasons why customers will decide to buy the products.

______10. Machine refers to the manufacturing equipment.

Lesson 1: 4 M’s of Operations in Relation to the Business Opportunity and Developing a Business Model
An entrepreneurial venture may either be a sole proprietorship, a partnership, or a corporation, engaged in
merchandising, manufacturing, or service. Nevertheless, whatever type and nature of business ventures is opened to exploit
different business opportunities, innovation or creativity defines the distinction between an entrepreneur and an ordinary
business person.

Thus, the concept of innovation or creativity must, in almost all instances, be introduced and practiced. An entrepreneur
finds way to introduce innovation from the production process to the marketing stage, while an ordinary businessperson simply
imitates business practices and procedures.

The concept of innovation or creativity can easily be practiced and highly noticeable in a manufacturing operation since
raw materials are transformed to finished goods through the production process. Innovation can be introduced from the
production phase up to packaging and delivery.

The three important elements in the production system are; the input, the transformation of production process and the
output.

The Production process, also referred to as the transformation or conversion process, is the stage of production where
the materials are transformed into the final product with the aid of manpower and machine.

The output represents the final product from the production process and distributed to the customers.

4 M’s of Production

The most serious issues in the whole production system are the inputs and the transformation process. Their quality
determines the quality of the output. The factors involved in the input and the production process are usually referred to as the
Four M’s of production, namely Manpower, Method, Machine, and Materials.
 Manpower

Manpower talks about human labor force involved in the manufacture of products. It is measured as the most serious
and main factor of production. The entrepreneur must determine, attain and match the most competent and skilled employees
with the jobs at the most appropriate time period. Educational qualifications and experience, status of employment, number of
workers required, skills and expertise required for the job are some of the manpower criteria that must be highly considered by
the entrepreneur.

Materials

It simply refers to the raw materials necessary in the production of a product. Materials mainly form part of the finished
product. Just in case the resources are below standard, the finished product will unsatisfactory as well. The entrepreneur may
consider cost, quality, availability, credibility of suppliers and waste that the raw materials may produce.

Machine

Machine is about manufacturing equipment used in the production of goods or delivery of services. In the process of
selecting the type of equipment to purchase, the entrepreneur may consider types of products to be produced, production
system to be adopted, cost of the equipment, capacity of the equipment, availability of spare parts in the local market, efficiency
of the equipment and the skills required in running the equipment.

Method

Method or production method is the process or way of transforming raw materials to finished products. The resources
undergo some stages before it is finalized and become set for delivery to the target buyers. The selection of the method of
production is dependent on product to produce, mode of production, manufacturing equipment to use and required skills to do
the work.

The product is the physical output of the whole production process. It should be valuable and beneficial to the
consumers and should satisfy their basic needs and wants. A product can be heterogeneous or homogeneous. A heterogeneous
product has dissimilar characteristics, parts, and physical appearance. It can be easily identified from other products.
Entrepreneurial ventures that produce heterogeneous products include makers of furniture, bags, and home decors.

On the other hand, a homogeneous product has a physical appearance, taste, or chemical content that can hardly be
distinguished from that of the other products. Businesses that produce homogeneous products include makers of soft drinks,
and medicines.

After knowing the production process and system, and how the product is being processed, not it is important to know
about product description, wherein product description promotes and explains what a product is and why it’s worth buying. The
purpose of a product description is to provide customers with details around the features and benefits of the product so they’re
obliged to buy.

Know who your target market is, focus on the product benefits, tell the full story, use natural language and tone, use
power words that sell, and use good images. These are guidelines for you to have a good product description; since some
customers are very particular with it since they consider the welfare of their family, if it is safe to use.

Prototype is created before the massive production of such product; an entrepreneur must consider prototyping. One of
the important early steps in the inventing process is making a prototype.

A prototype is a duplication of a product as it will be produced, which may contain such details as color, graphics,
packaging and directions. Benefits are the reasons why customers will decide to buy the products such as affordability, efficiency
or ease of use. The features of the product or service merely provide a descriptive fact about the product or service.

Most importantly, it is better to test your product prototype to meet customers’ needs and expectations; and for your
product to be known and saleable. Pretesting of the product or service is similar to a sample of the product or service given to
the consumer free of cost in order that he/she may try the product before committing to a purchase.

The entrepreneur’s main concern is the satisfaction of a customer, for they are the life blood of the business. Without
them, all the efforts, will be wasted as well as the chance to venture into a new business.
 In a manufacturing venture, the supplier plays a vital role. They are your business partners, without them your business
will not live. You need them as much as you need your customers to be satisfied. But as an entrepreneur you have to choose a
potential supplier who has loyalty and values your partnership: a supplier who would lead you to the fulfillment of your business
objectives, mission and vision. This entity is part of a supply chain of a business, which may offer the main part of the value
contained within its products. Certain suppliers may even involve in drop shipping, where they ship goods directly to the
customers of the buyer.

How do supply chain management systems coordinate planning, production, and logistics with suppliers?

Supply chain management systems automate the flow of information among members of the supply chain so that they
can use it to make better decisions about when and how much to purchase, produce, or ship.

Value chain is a method or activities by which a company adds value to an item, with production, marketing, and the
provision of after-sales service. The main goal and benefit of a value chain, and therefore value chain analysis, is to make or
support a competitive benefit.

A supply chain is a structure of organizations, people, activities, data, and resources involved in moving a product or
service from supplier to customer.

The main objective of supply chain management includes management of a varied range of components and
procedures, for instance, storing of raw materials, handling the inventory, warehousing, and movement of finished product from
the point of processing to the point of consumption.

When value chain management is implemented effectively, the flow of products and materials is improved through the
accurate forecasting of sales and demand as well as improved inventory management. Delays are also minimized and products
are visible and traceable throughout the supply chain.

Supply chain management decreases purchasing cost. Retailors depend on supply chains to quickly distribute costly
products to avoid sitting on expensive inventories. Any delay in production can cost a company tens of thousands of pesos. This
factor makes supply chain management ever more important.

Value chains help increase a business's efficiency so the business can deliver the most value for the least possible cost.
The end goal of a value chain is to create a competitive advantage for a company by increasing productivity while keeping costs
reasonable.

Business model describes the factors of how an organization creates, delivers, and captures value in economic, social,
cultural or other contexts. The development of business model construction and variation is also called business model
innovation and forms part of a business plan.

It is a company's plan on how it will make revenues and make a profit. It describes what products or services the
business plans to manufacture and market, and how it plans to do so, as well as what expenses it will incur.

There are important phases in developing your business model, namely: identifying the specific audience; establishing
business process; recording business resources; developing strong value proposition; determining key business partners; and
creating demand for today’s generation strategy and being open for innovations.

After developing a business model, we will proceed in developing a business plan. To be able to successfully complete
this module, you need to prepare a business plan and operate your plan and finally keep records of your business transactions.

Business Plan

What is a Business Plan For?

Entrepreneurs who plan to enter any business endeavor must have a business plan on hand to guide them throughout
the process. Different business plans are prepared for different purposes. There are business plans written prior to setting up an
enterprise, which are similar to a prefeasibility study and a feasibility study. Many new enterprises need to convince prospective
business investors about the soundness and potential of their business.
 There are business plans that are written during the first few years of the enterprise in order to guide the entrepreneur
on which strategies would be most beneficial for the enterprise to take. And there are business plans that are focused on
bringing the enterprise to a higher level of growth, a period where the enterprise has already reached its peak and would want
to enter into another endeavor by creating and re-establishing itself.

Clearly, a business plan serves many masters. First, it serves the entrepreneur who must set a navigational course.
Second, it serves investors and cautious financiers. And third, it serves the managers and staff of the organization so that they
will know the strategies and programs of the enterprise.