Saint Paul’s School of Ormoc Foundation, Inc.

Apitong St., Brgy. Punta, Ormoc City

(053) 255-4712 | getinfo@spsormoc.edu.ph

SENIOR HIGH SCHOOL DEPARTMENT | S. Y. 2020-2021

READING MATERIAL IN ENTREPRENEURSHIP

Second Semester | Finals | Week 4

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INTRODUCTION

The 4M’s of operation concerning business opportunity means that the four critical domains, usually
attributed to manufacturing are: man, machine, material, and method should work together. These four
critical domains are also applicable to business opportunities since business in essence is tied to
manufacturing as well. When putting up a business, manpower is critical as well as the other elements.

WHAT YOU NEED TO KNOW

The 4Ms of Operation

1. Methods

Is the process to be followed in effectively manufacturing or delivering a product or service. It is the day-
to-day operations of a business. Internally, the process must abide by industry standards and policies
(ex. ISO Certification). The entrepreneur must set SOP’s

a. Manufacturing of Goods

• Manufacturing-the process of translating raw materials into finished goods that are
acceptable to the customer’s standards.

3 Elements of Manufacturing

• Inputs - the materials or ingredients to be used in creating the product.

• Process - the transformation phase where inputs are processed by manpower and
machines to come up with the final product.
• Output - the final product of the process stage, which is intended to be sold to target
customers

Manufacturing Site

Where the manufacturing process will take place.

• Home-based - this option is the cheapest and highly flexible. Most start-ups cannot
establish a manufacturing site.

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 • Commercial space for rent - this advisable if the business requires a commercial space
for the processing of goods and if the home option is not viable anymore. It gives the
entrepreneur a more specialized and suited manufacturing site than manufacturing at
home.
• Commercial space purchase - this option requires the biggest amount of capital
expenditure, but it also provides the entrepreneur substantial freedom and flexibility to
design and run the commercial space.

MANUFACTURING PROCESS FLOW

A step-by-step guide of the employees and the manufacturing equipment. The objective of
The Process flow is to ensure that the right inputs are properly used in production, that the
process is performed according to the set standards, and that the acceptable outputs are
produced.

ULTIMATE OBJECTIVE: To ensure that maximum efficiency is met-from the requisition of

materials to processing them into finished goods up to the distribution to the customers.

b. Distribution of Goods and Services

Distribution - It is the process of bringing products or services to customers. In selling physical

goods, the entrepreneur should plan the location, the processes, and the distribution of the
products to the customers. It is not a straightforward process from the entrepreneur to
customers.

Supply Chain/ Distribution Channel - the manufacturer will deliver the products to the
distributors, to the wholesalers, to the retailers, and then finally to the customers.

• Manufacturer - handles the invention, development, and production of the product or

service. Take charge of acquiring materials, production and delivery schedules, product
quality, and inventory or safety management. Manufacturers handle product delivery,
marketing, and selling activities.

• Distributors - are entrepreneurs who often buy products or services from the
manufacturers and sell them at a markup price to either wholesalers or retailers; He/She
is the new owner of the product. Usually buys the product in bulk for a discounted price.
Distributors become wholesalers when they sell the product to another distributor.

• Agents - don’t own the products or services because they do not buy these from the
manufacturer. Instead, they negotiate with buyers as to how much or how many are to be
sold, so the manufacturer will be able to deliver the goods directly to the buyer. They will
get a commission for every product sold.

c. Payment Process

The entrepreneur must also establish a seamless payment process. There are instances when
the customers do not want to pay in cash and are usually attracted by flexible and customer-
friendly payment terms such as credit cards, installment plans, or simple accounts payable or
pautang.

2. Manpower

The right human resources who will handle certain business operations as the business grows, the
entrepreneurs should hire qualified employees that can handle operational functions, so that he or she
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 will be free from daily activities and thus can focus on the strategic and management functions of the
business.

One of the highest costs of operating the business but is also the most instrumental to its success.

a. Job description - enumerates the duties and responsibilities of the potential employee, including
the scope, limitations, and terms and conditions of employment.

PARTS OF THE JOB DESCRIPTION

• Job Title - the heading of the job description is the summary of what the employee will do.
It should be respectable and decent because it will boost the self-confidence of the
employee.

• Compensation and Benefit Range - details the potential salary and benefits that the
employee will get.

• Duties - usually high-level descriptions only.

• Responsibilities and Accountabilities - must be communicated well to the employee so

that he or she knows what to expect with the job.

• Work Schedules - including work hours. The specific days and working hours must be
written so that the employee will be able to align the work schedule with his or her
schedule.

b. Employee Qualification

CRITERIA FOR HIRING

• Educational Background - degree of candidate’s knowledge of basic things.

• Work Experience - will tell the entrepreneur what to expect from the applicant and what
he or she can potentially contribute to the business based on his or her past positions
and experiences.

• Specific Skill or knowledge - important especially in technical jobs that require high
proficiency. Ex. Engineers, scientists, accountants, IT specialist.

• Work Attitude - deals with the worker’s integrity and how he or she deals with his or her
coworkers, bosses, and customers. Ex. of good work attitude: punctual, leadership and
communication skills, team player, making ethical decisions, obeying superiors,
passionate and dedicated to the company.

c. Preparatory Selection of Job Applicants

• After the job description and employee qualifications are finalized by the entrepreneur,
he or she now preselects a set of candidates for the positions required.

• When the business is already sizeable, the entrepreneur may establish a Human
Resource Department (HRD) that will handle the selection and recruitment of candidates.

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 • Choices where to look for potential candidates:
o A personal list of trustworthy people
o Employment agencies or manpower agencies
o Headhunters - help companies find a set of people suited for their requirements
o Manpower Agencies - recruit temporary employees under a short contract (usually 6
mos.)
o Advertise job vacancies via print such as newspaper and other publication referrals
and recommendations from friends, relatives, or business partners.
o Business networks or the people whom the entrepreneur has worked with within the
past.
o Digital media(website, social media, emails, online affiliates, search engines,
podcasts, or blogs)
o Mobile(SMS, mobile apps)

d. Selection of Job Applicants

• Screening and picking the most qualified and most suited candidate for the job.
• Preliminary screening is through qualifications.
• Conduct qualifying exams in Math, English, and Logic
• Qualitative Exams or Psychology tests (essay form or multiple-choice)
• Conduct interview for the shortlisted candidates

e. Job Offer

✓ Once the entrepreneur has been convinced already of the job credentials and the
interview answers of the candidate, the job contract is now prepared.

JOB CONTRACT - generally summarizes the terms and conditions of the candidate's employment
with the business.

• Rank or position of the candidate

• List of responsibilities or deliverables and their scope and limitations
• The salary and benefits including vacation and sick leaves
• Work schedule
• Probationary period if any and qualifications to become a regular employee
• The duration of the contract
• Resignation procedure

f. Employee Development

• Training people-one of the biggest investments of an entrepreneur or a businessman

• An entrepreneur should devise strategies on how to keep employees satisfied working in
the company.

3. Machines

The technology used in efficiently operating the business

• Can be described as the “best friend” of manpower in producing goods and offering services.
• Machines are not limited only to physical equipment but can also pertain to new technologies.
• Without machines, business operations will be cumbersome, costly, and low quality.

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 a. Equipment and Other Facilities

✓ Must be strategically placed in the manufacturing site or the service delivery area.
✓ Must prepare facility plan that details the most economical way to manufacture the
product.
✓ Place the facility where they can be efficiently used.
✓ The site must be adapt to how big or small the pieces of equipment are
✓ The site must be conducive, well-ventilated and well-lit
✓ There should be fire exits and safety reminders
✓ Employees/machine operators should undergo a rigorous training before they operate
the equipment.

b. Telecommunications and Information Technology

✓ Landline Phones - for order-taking, telemarketing, and teleconferencing

✓ Mobile phones - mobile apps for order taking, for payments, marketing, marketing
research, mobile banking, internet promotions.
✓ Laptop and desktop computers - order taking, internet marketing, reports, etc.
✓ POS Machines - charging debit/credit card, tracking sales, storing data, analyzing
purchases, etc.
✓ Accounting & Inventory Software - accounting business transactions, profitability, sales,
inventory, etc.
✓ Web site - order taking, 24/7 marketing, online conversations, collecting customer
information, etc.

4. Materials

Materials to be used in creating a product or performing a service, which includes supply chain
management.

✓ The supplier of the raw materials should have a consistent and sufficient amount of raw
materials and supplies that can accommodate the demand of the entrepreneur.
✓ The selection of suppliers depends on how the suppliers will not cause interruptions in the
production of goods and serving the customers.

MATERIALS REQUISITIONING OPTIONS

a. Manufacturing own products or offer services

• Huge capital must be prepared because all expenses in the manpower, machines, and
materials will be borne by the entrepreneur.
• Risk is larger
• Set of competent employees must be employed to handle machines or service the
customers
• The entrepreneur can closely monitor the quality of products or services
• The entrepreneur has the opportunity to build his or her own brand identity

b. Outsourcing of manufacturing or service activities to a third party

• Process of appointing a third-party manufacturer to do the manufacturing operations of
the business.
• These third-party companies already have expertise in handling and manufacturing these
products or services tailored to the entrepreneur’s needs at lower cost.
• No changes in the brand name and the identity will be implemented because the
entrepreneur still holds the rights to such.
• Saves the entrepreneur from buying expensive machinery
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 ✓ LOGISTICS

• Entrepreneurs can also venture to distribute their products on their own without the aid of a
distributor or agent.
• The entrepreneur will be the one in charge of manufacturing, warehousing, transportation,
inventory management, marketing, and selling the product or service.

▪ WAREHOUSING
Storing the finished goods manufactured in a facility until they are distributed to end-
users. Cost is usually substantial. The entrepreneur should choose whether to buy a
warehouse or rent an inexpensive space.

▪ TRANSPORTATION
Process of efficiently transferring the products to retailers or consumers

o Purchase energy-efficient vehicles

o Use the presence of distribution hubs- where the entrepreneur/manufacturer
combines the goods before delivery to retailers or end-consumers

▪ INVENTORY
Should be tracked religiously. Each of the inventories in the warehouse, distribution
hubs, and manufacturing sites should be monitored.

o The law of supply and demand must be taken into account

o There shouldn’t be
o a surplus of inventory especially if the product is perishable
o Make sure there is enough space to store and stock inventory
o Get insurance for your products
o Manufacture just enough products for the demand. Do not produce too much
product than what is demanded by the customers.

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