4 M’s of Operations in Relation to the

Business Opportunity and Developing a

Business Model

What’s In

In your previous lesson, you learned about the 7P’s of Marketing Mix; Product,
Place, Price, Promotion, People, Packaging and Positioning in relation to business
opportunity, wherein marketing is about creating and accumulating customers.
Marketing plans are intended to capture a market portion and to setback competitors.
Brand name was also introduced, where it is a name, symbol, or other feature
that distinguishes a seller’s goods or services in the marketplace. Your brand is one
of the greatest assets because your brand is your customers’ over-all experience of
your business.
 Experts believe that a good brand can result in better loyalty for its customers,
a better corporate image and a more relevant identity.

What is It

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.

Input Production
Output
Process

Figure 1.1. The Three Important Elements in the Production System

The Input includes the following:

1. Manpower
2. Materials
3. Machine
4. Design
 5. Instructions
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.

Four M’s

 Manpower
 Method
OUTPUT
 Machine
 Materials

Figure 1.2. The Four M’s in the Production System

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.
MAN MACHINE METHOD
Skill Design
Technology Installation Schedule
Organization
Improve
Resources Supplies Procedure
Process Communications

Equipment
Design Budget

Attribute
Quality Demands
MATERIAL OTHER
Figure 1.3. Illustration of Four M’s in the Production System

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

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.
Read the different scenarios below to fully understand the importance of
having a business plan.
Scenario 1:
“Jessie is the eldest of the five children of Mr. & Mrs. Natividad. The family is
having difficulty to support their everyday needs. Because of this, Jessie tried selling
banana cue and with his dream to make his business grow, he put up many stalls in
the community without considering the advises of his friends to make a business
plan before implementing his decision. After a few months his stalls shutdown.”
Scenario 2:
“Mercy is the youngest in the family. She found out that she loves to cut hair and
apply make up on her friends. Until such time that her friends introduced her to their
friends too for haircut and make up when there are occasions. A few months after,
Mercy was told by her friends to put up a beauty parlor in their place. So she asks
her mother who is also a businesswoman to teach her how to make a business plan
and eventually ended with a successful business.”
Scenario 3:
“Monna is a diligent student: because of her knowledge gained from school
about business plan she was able to enhance her skills in business and finally found
herself into her laundry shop business.”
Each scenario taught us that a business is not just about how much income or
profit you can get, but it’s about the life of your business. And in having a business,
you also have to consider Technological forces, Social forces, Political forces,
Cultural forces, Economic forces and Legal forces.

The following are the components found in a Business Plan.

• Introduction - this part discusses what is the business plan all about.
• Executive Summary - is part of the business plan which is the first to be
presented but the last to be made.
• Management Section - shows how you will manage your business and the
people you need to help you in your operations.
• Marketing Section - shows the design of your product/service; pricing, where
you will sell and how you will introduce your product/service to your market.
• Financial Section - shows the money needed for the business, how much
you will take in and how much you will pay out.
• Production Section - shows the area, equipment and materials needed for
the business.
• Competitive Analysis - is the strategy where you identify major competitors
and research their products, sales and marketing strategies.
• Market – refers to the persons who will buy the product or services
• Organizational chart - is the diagram showing graphically the relation of one
official to another, or others of a company.