Entrepreneurship

Quarter 2 – Module 1- The 4Ms of Production in Relation to the Business Opportunity

If Sales is the engine that powers Auto Salvage yards then Production is the drive train that gets
us where we are going. Production is both reactive and proactive almost simultaneously. It
reacts to what is sold today and must meet the expectations set by the sales team; also, it must
anticipate what most likely will be needed in the near future. The key for production is to have
procedures and processes that can accomplish both. Operations Management then controls the
implementation of the business plan. Once our procedures are set up to maximize efficiency, it
is time to train the production staff on their individual responsibilities centered on the 4Ms of
Production. So, what are the 4Ms of Production? It is the Method, Manpower, Machine and
Materials. They are also called as the four critical domains, usually associated to manufacturing.
These four are also related to business opportunities since most business is tied to
manufacturing also. The businessman per se should into account.

1. Methods - suggest the process of combining raw materials and how these are going to
be transformed using the other factor inputs of production. This resource input is also
called technology or techniques of production since it prescribes the intensity in the use
of factor inputs.

If labor is abundant and cheap in the locality, the firm might use more labor-
intensive techniques. This only means that they will use labor more than other factor
inputs. However, if labor is expensive and capital is cheap the firm or company may
implement a capital-intensive technology. This means that will use more capital
compare to the other factor inputs.
 Ex. Now in the production of pandesal,the mixing of ingredients will use manual
labor intensively as applied by small bakeries. On the other hand, large bakeries in urban
areas will use modern baking equipment and utensils that are capital intensive.
2. Manpower – the right human resources who will handle certain business operations.
It is one of the highest cost of operating the business, but also the most instrumental to
its success.
- It does not only include labor or muscular power nut also intellectual, creative abilities
and other qualities of individuals that can contribute to the production.

As the business grows, the entrepreneurs should hire qualified employees that
can handle operational functions even without his assistance, so that he will be free
from daily activities and can focus on thinking of new strategies and functions of the
business.

Ex. In the production of pandesal, manpower resources include the baker, and
his assistants who will implement the recipe using the available equipment, and
technology. The manager, sales clerks , and janitors are also part of the manpower of
the bakery

3. Machine – technology used in efficiently operating the business. It was also

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. It also represents all manmade physical capital used in the
production process. Aside from machines the tools, durable equipment, and the
physical plant are also part of it. Without machines, business operations will be too
unmanageable, costly and with low quality.

Ex. In the production of our pandesal, the machinery comprises the oven, baking
utensils and the bakery itself.

4. Materials – to be used in creating a product or performing a service, which includes

supply chain management

Ex. In the process of producing pandesal, we need several materials that serve as
intermediate inputs which include flour, sugar, butter, eggs, salt and other
ingredients.

Make sure that your supplier of raw materials should have consistent and have
sufficient amount of supplies that can accommodate the demand of your company .
The selection of the supplier depends on how they will not cause interruptions in
the production of goods and serving customers.
Materials Requisitioning Options
 Manufacturing own products or offer services – if this is the case entrepreneurs
need to prepare huge capital for the materials, machines and manpower which
we all know will cause the company a greater risk. However, through this
entrepreneurs can closely monitor the quality of his product and can build his
own name overtime making his own brand identity.
 Outsourcing of manufacturing or service activities to a third party – this is the
process where a company appoint a third party manufacturer to do the
manufacturing operations of the business. Expertise wise these third party
companies have more experience and can handle manufacturing products
tailored to the entrepreneur’s needs at a lower cost. It also saves the
entrepreneur from buying expensive machineries, but has it also has its risk such
as: Profit shared with the third party, they run out of supply, when the outsource
party closes its business and if they produced sub-standard products.

When outsourcing the entrepreneur must protect its product through a

trademark or a patent and a noncompeting or nondisclosure agreement.
 Patent – the right to protect the entrepreneur regarding the product or
service.
 Trademark – a sign or symbol that helps to distinguish the product from
the others
 Nondisclosure Agreement – states that the third party will be given full
access to any confidential information provided that it should be
disclosed to anyone else.
 Purchasing own products or services from present suppliers – this is where
entrepreneurs purchased finished products from manufacturer or offering the
services of another company. The company can save the cost of the machines
and manpower. However, the entrepreneur cannot own the brand name of the
product or service and the manufacturer is not restricted to sell to the
entrepreneur’s competitors.

Traditionally, these are the crucial four (4) domains of production where one
cannot function properly without the other. However, allow me to add another
M in this list.

Money – it is a financial resource used to purchase all the resources needed by

the firm for its operation. The owners of the company contribute seed money for
the initial operations of the firm. It is also needed to purchase raw materials, pay
salaries of the workers and managers and durable equipment needed for the
company.

In the economic analysis of production, the resource inputs mentioned above

are grouped into two major categories – intermediate inputs and factor inputs.

 Intermediate inputs – are semi-processed materials that need further

transformation to produced a finished product. They are also called raw
materials or materials.
 Factor inputs – are the transforming inputs that will process the
intermediate inputs into finished products. They are also called productive inputs
because of their transforming properties. This includes labor (manpower), capital
(machinery), land and technology (method).

While money does not have a direct participation in the physical transformation
of the intermediate inputs, it is very crucial in the production process. As
mentioned earlier, we use it to purchase materials, pay workers’ salaries and
wages and even the machineries we use.

Now that we already know how important 4Ms are in the business process
together with the 7Ps of marketing mix, we can definitely make the Ayalas or
even the Lopezes run for their money right? We should only need to understand
and know how to entice our prospective buyers to buy our products.

How will we do that? Definitely through an effective product description, you

can guarantee that they will hit that “add to cart” button in an instant. Product
description is one of the important aspect of selling, you have to visualize what
your target market will patronize and would like to have. Here’s the 3 Rules to
Visualize a Product Descriptions That Sell.
1. Know who your target audience is – you might want to highlight the things
that might interest your potential buyers. You can actually do this by
knowing what specific demographics you are going to cater. Is it for teens?
Young professionals or Seniors. By knowing such you will have a specified
goal to achieve once you roll your product.

2. Focus on the Product Benefits – know the difference between product

features and benefits. A product feature is a factual statement about the
product that provides technical information. A product benefit, on the other
hand, tells how the product can improve the buyer’s life. If you are the
customer I know you will choose the latter. However, you can always convert
the features into benefits.
 3. Use good product images – aside from the description, a quality image will
do the trick. Why? Because 63% of customers think that a product image is
more important than the description or even the reviews. So an important
aspect of your product description is actually in the photo itself. Quality
photos will show the customer all of the key features about your product.
They will also allow the customer to imagine having this product in her life.

Once you already have a clear vision of what should be the description of
your product. We can now create our own prototype.

What is Prototype?

You have visualize a great product. You can imagine how this particular
product will make a change and how it will be a great help to make our life
easier. However, what we have in mind is sometimes a lot difficult to explain
so we create a mock-up of what the final product will look like, that is a
prototype. A Prototype is an initial creation of a product that shows the
basics of what product will look like, what it will do and how it will work.
However, it is not meant to be the final version as there will be lots to
improve.

Advantages of Prototypes:
1. Creating prototype gives you the opportunity to test and refine the functionality of your
design.
2. It makes it possible to test the performance and quality of the materials.
3. It will help you describe your products more effectively with potential buyers.
4. It will encourage others to treat you more seriously