BPK3013 Engineering Economics & Entrepreneurship TOPIC 4: Administration & Operation Plan

BPK3013
Engineering Economics
& Entrepreneurship
TOPIC 4: Administration
& Operation Plan
Contents
Vision and Mission, Objectives & Organizational
Structure
Business Planning: Posts, Job Specification and
Remunerations
-------------------------------------------------------------
Operational Concepts
Business Planning: Labors, Raw Materials and
Overhead
Total Production Costs and Cost Per Unit
Product/Services
Components of A Business Plan
Management/Organizational Plan
Vision, Mission statement/goal
Company’s goal and objectives
Organizational structure
List of number of employees/workers
and its job scope.
Salary/remuneration of each
employees/workers
Vision, Mission statement/goal
Vision defines a long-term goal of a company. It is a
short, succinct, and inspiring statement of what the
organization intends to become at some point in the
future. It is broad, all-inclusive and forward thinking.
Mission is an organization's vision translated into
written form. It makes concrete the top
management's view of the direction and purpose of
the organization. A mission statement should be a
short and concise statement of goals and priorities
Company’s goal and objectives - Company’s goals are
specific objectives that relate to specific time periods and
are stated in terms of facts. The primary goal of any
business is to increase stakeholder/owner value
A simple but effective way to layout the
structure of your company is to create an
organizational chart with a narrative
description.
This will prove that you're leaving nothing to
chance, you've thought out exactly who is
doing what, and there is someone in charge
of every function of your company.
Organization Chart is a diagram
displaying the relationship between work
Positions (or roles) in a Business.
It starts at the top with the highest
management position (usually the CEO)
and progresses down through the
management positions and on to the
technical and administrative positions.
Example: Organizational Structure
Example: Organizational Structure
List of number of employees/workers
and its job scope. E.g.: Task-Based
Administration tasks
Marketing tasks
Operation tasks
Financial tasks
Salary/remuneration of each
employees/workers
List of number of
employees/workers
No. Position Number of

employees
1 Top Manager 1
2 Vice manager 2
3 Accountant 1
4 Marketing executive 1
5 Operation’s manager 1
6 Administrative clerks 3
7 Direct labor 7
Job Scope
No. Position Jon Scope
1 Manager To plan, organize, implement and control the
•
overall operations.
Responsible for the whole performance of the
•
company
To handle problems from the internal and outside
•
of the company.
2 Accountant Responsible for the reporting the financial

•
performance of the company to the top manager.

Salary/Remuneration
No. Position No.
of Monthly EPF SOCSO
Total
emp salary (13%) (2%)
(RM)
loye (RM) (RM) (RM)
e
1 Manager 1 5,000 650 100 5,750
2 Asst manager 2 6,000 780 120 6,900
3 Accountant 1 3,000 390 60 3,450
4 TOTAL xx xx xx xx xx
Components of A Business Plan
Operation/Production Plan
Location
Equipment
Labor
Layout
Manufacturing & Services process
Suppliers
Process flowchart
Expected monthly overhead cost
Total of production per year
Cost of production per unit
Legal environment
Location
space of the office, warehouse, or a
combination (what square footage
needed)
what is the advantage of your location
provide Office/factory layout ( in the
appendices)
Location
Equipment
Outline the equipment needed including
cost (purchase or lease)
Example: lorry, machines, tools, building,
computers and so on.
Equipment Plan
Financing
No. Items RM type
Machineries and
1. equipment 10,000 Bank loan
2. Furniture and fittings 10,000 Bank loan

Hire
purchase
3. Car 30,000
Labor
Refers to a measure of the work done by
human beings.
How many labors do you need? (Full time or
part time)
Break them out by function, and hourly pay.
Raw Material Plan
Monthly (Cost)
No. Items Quantity RM Supplier
1. Facial Scrub 1 50 Nona Roguy
2. Collagen gel 1 100 Sendayu Tinggi
3. Face cream 1 50 Others
4. Foundation 1 100 Nona Roguy
5. Treatment set 1 100 Sendayu Tinggi
6. Normal set 1 100 Others
Total 500
Layout
Refers to the arrangement of machines, equipments,
workers and other facilities used in the operation.
The layout can be based on:
Product-according to the sequence of activity to
produce product
Process – based on production process. It is suitable
for business that produces several products which
need similar process.
Marketing – to utilize the available space to display
product. Mainly for retail business, wholesale,
bookshop and so on.
Layout
Manufacturing & Services process
Supplier-Identify the list of suppliers
that will support your operations
Suppliers Address Materials Expected
purchased volume
Nona Nona Roguy HQ, SB. Beauty
Roguy Cheras, Kuala Lumpur product RM3,000
Sendayu STSB HQ, SB. Petaling Beauty RM3,000
Tinggi Jaya, Selangor product
Others Kuala Lumpur Beauty RM5,000
product
Process’s flowchart
Process flowchart starts from the
production process of a product until its
delivery to the store or to the customers.
Company should develop a process flowchart
or process chart to clearly visualize the
operations process. A process flowchart
symbol is shown in appendices.
Transformation process
Input Transformation Process Output
Process’s Flowchart
Process Flowchart
Expected monthly overhead cost
Overhead cost is a monthly cost that the
business has to commit.
It will affect to the cost of product per unit.
Overhead expenses usually include the
following: travel, maintenance and repair,
equipment leases, rent, advertising & promotion,
supplies, utilities, packaging & shipping, payroll
taxes and benefits, professional services,
insurance, loan payments and depreciation.
Expected Monthly Overhead Cost
Operational Total Monthly
Overhead Cost
Raw materials 500
Utilities 100
Rent 500
Labor 2,400
Maintenance 100
Depreciation (refer to
depreciation schedule in financial plan) 897
TOTAL 4,497
Total Production Cost
Total production cost per year is a total
operation cost incurred per year.
For ABS the production cost will be RM
47,195 i.e. RM41,100 (refer to Cash flow)
+ 6,095 (depreciation)
Cost Per Unit Production
Unit Production Cost

= Total production costs per year
Production’s Volume.
ABS = RM47,195 /900 customers
= RM52/customer
Legal environment
Your operations might need a license or
permit from the local authority or from the
relevant ministries.

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BPK3013

No. Position Number of

2 Accountant Responsible for the reporting the financial

performance of the company to the top manager.

2 Asst manager 2 6,000 780 120 6,900

3 Accountant 1 3,000 390 60 3,450

2. Furniture and fittings 10,000 Bank loan

Unit Production Cost

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