SMALL BUSINESS MANAGEMENT

UNIT ONE

operating micro and small

business
means of micro business
Approach

Importance

Characteristic

Merit and demerit

Significance

Establish

Factor

Success & failure

Value adding
Analysis of financial
return
WHAT IS MICRO BUSINESS ? WHAT IS SMALL
BUSINESS ?

 The term of micro and small business are relative

just as the body size of human beings. a person
that you consider long relative to you or some
other individual may be short relative to some
other who is relatively longer.
 Similarly the size of a business is relative. a
business that is considered as small in one country
may be large in some other country.
THERE ARE TWO APPROACH TO DEFINE THE SIZE OF
BUSINESS

 1. some measure of size such as number of

employees, sales volume, asset size, insurance in
force, volume of deposit .
 2. economic control /criteria such as market share,
independence and personalized management .
A. THE SIZE CRITERIA/ QUANTITIVE APPROACH
 The definition of micro and small business varies
from country to country. These business cover a
wide spectrum of business and play an important
role in both developed and developing countries.
 number of employee

 Sales volume

 Asset size

 Insurance in force

 Volume of deposit
B.ECONOMIC /CONTROL CRITERIA
 The consider a business as small the three criteria
that must be satisfied are market share,
independence, and personalized management .
 Small firms share of market is not significant to
influence the process of national quantities of
good sold at any significant extent .
 Independence means that the owner of business
control over business him/her self
 Personalized management refer to the owner of
the business actively participate in all aspect of
the management and in all decision making
process.
 Technology
 Geographical area of operation small business as
one that is independently owned and operated ,
not dominant in its field of operation and meets
certain standards of size in terms of employees or
annual receipts(sales volume)
DEFINE THE SIZE OF BUSINESS BASED ON NUMBER OF
EMPLOYEE USE:

A. 1 up to 19 workers micro or very small enterprise

B. 20 up to 100 worker small enterprise
C. 101 up to 500 worker ,medium enterprise
 Ethiopia uses amount of investment as criteria to
define small and micro business.
1. micro enterprise investment less than Br 20,000
2. Small business investment b/n 20000 and 50000
THE IMPORTANCE OF MICRO AND SMALL ENTERPRISE.
Micro and small business have significant
contribution of the development of economy .
 Job creation small business create more new jobs
than larger business
 Innovation resourcefulness and ingenuity and
contribute a great many innovative idea and
technol0ogical break through.
 Contribution of large business supply and
contribute the product of large business
 Lower cost provide good and service at chaeper
price
 Fill isolated niches provide good and service to
consumer that can not be reached by big
 Better knowledge of customer and market know
the need of customer and have better information
about market than large business
 Product and geographic specialization small
business adopt the product to need of local
customers.
 Flexibility in management do not involve longer
chain of hierarchic management decision
CHARACTERISTIC OF SMALL BUSINESS

 Difficulty of financing the business

 Closely integrated with the need of the local
community.
 The establishment is generally weak ,poorly
 Higher rate of filature
 Low educational level of the proprietor
 Start up capital is contributed by limited number
of individual.
 Poor market research
 Poor qualified personnel
WHY PEOPLE START BUSINESSS
 profit
 Independence
 Opportunity
MERIT AND DEMERIT OF SMALL BUSINESS

1. merit
 more communication

 Skill development

 Enjoyment

2. demerit
 risk

 Stress (mental or emotional tension)

 People conflict

 time devotion
SIGNIFICANT AND IMPORTANCE OF SMALL BUSINESS
1. Economic contribution measured by their
contribution to out put employment, income,
investment, and other indicator .
 Generation and saving of foreign exchange
 Aid big business
 Increase per capital income
 Promote inter -sectoral linkage among the
different sector of the economy.
 Balanced regional development
2. Social contribution
 creation of job opportunity

 Agent of socio cultural infraction

 Positive externalities (infrastructural facilities )

3. Technological and political contribution

 Introducing innovation

 Better production method in terms of the

processing speed ,quality of out put , energy
consumption.
 Improvement of business policies and procedure.
ESTABLISHING MICRO AND SMALL BUSINESS
Factors considered before starting a business are
the following.
1.Selection of business selection of business
depends on the following factors such as:
 personal aptitude

 Personal ability

 Amount of capital and profit (expected

achievement)
 Prevailing level of competition

2. Detailed investigation answer the when, what,

and how question regarding the business
3. Selection of form o f business organization it select
depends on entrepreneur quality, power ,
responsibility, and source of capital
Example sole proprietorship, partnership, and
corporation.
4. Study of legal requirement assess the rule and
regulation of the state to issue the necessary license
for start up.
5. Selection of place and staff suitable place conduct
to the business and skilled and semi skilled human
labor force.
6. Management structure modern business
management and office is equipped with the
necessary equipment to enhance the workability and
efficiency.
FACTOR CONTRIBUTING FOR THE SUCCESS OF SMALL
BUSINESS.

 determination of objective : what will be done by

the business.
 Planning: the business will have travel to be able to
achieve its objective.
 Sound organization: efficient number of employees
having different talent and skilled relevant.
 Adequate capital: / life blood of business/

 Efficient management

 : systematic research for new knowledge

 Business Research good will: reputation for honest

and good behavior
 Satisfied customer
SUCCESS VS FAILURE STORIES OF SMALL BUSINESS
 small entrepreneur
 Poor availability of infrastructure

 Obsolete technology (old technology)

 Market problems

 Poor managerial and organizational skills

From the above motioned problem the small

entrepreneur has weak bargaining power to deal
with suppliers and financial institution, have a
high incidence of sickness ( due to wrong choice of
product, poor managerial skill, lack of experience,
poor quality of products and unable to invest in
R&D)
VALUE ADDING
 Value adding is a strategy of which should be
adopted by entrepreneur through offering more
benefit to the customer.
 The way of value adding :
 Customization: delivering the product or service to fit
the specific need of customer.
 More convenience and faster service: providing your
product or service more convenient to the customer
more better then competitors.
 More /better service and extraordinary guarantee
 Coaching, training or consulting and membership
benefit program helping customers know how tom use
our products .
ANALYSIS OF FINANCIAL RETURN
 Rate of return on investment(ROI)
 ratio of money gained or lost on an investment
relative to the amount of money invested
 A percentage return based on capital invested
 Measure of how effectively the company is using
resource
 A measure of investment profitability rather than
investment size
TWO WAY OF CALCULATING ROI
1. Direct way
ROI(in %)= net profit (after taxes)* 100
investment
2. Indirect way
ROI(%)= net profit(after tax) * sales *
100
investment investment
HOW TO INCREASE ROI
 Increasing the profit margin
 Increasing sales

 Decreasing investment through careful and

efficient asset management
SPOTLIGHT SMALL BUSINESS FOR FAILURE
 Over or under pricing for good and service
 Not understanding business cycle
 Carrying habit of personal extravagant into business
 Buying too much on credit
 Not allowing for setbacks and unexpected expense
 Borrowing money without planning going in to
business with little or no experience or without first
learning something about it
 Attempting to do too much business with little capital
 forgetting about tax, insurance, and other costs of
doing business .
SPOTLIGHT ON SMALL BUSINESS SITUATION FOR
SUCCESS

• when the customer require a lot of personal

attention
• When the product isn't easily made by mass
production technique e.g. tailored and out body
work
• When sales aren't large enough to appeal to a
large firm
• When a large business sell a franchise operation to
local buyers.
CHAPTER TWO
marketing management
WHAT DOES THE TERM MARKETING MEAN?

Money people see marketing only as advertising and

selling. Although selling and advertising are only two of
money marketing functions and often not the most
important ones.
 The term market refers to the group of consumers or
organization that is interested in the product has the
resource to purchase the products.
 Is build and manage profitable customer relationship.
 according to Evans marketing can be defined as the
anticipation and management and satisfaction of
demand through the exchange process.
The basic concept of this definition are
 Anticipation of demand the firm do marketing research
about consumer desire
 Management of demand it include
1. stimulation task the firm do attractive product design
and intensive promotion
2. Facilitation task place convenient and availability of
credit
3. Regulation spreading the demand throughout the year
 satisfaction demand involve fulfilling the expectation
of consumer
 according to Kotler 1996 marketing is social; or
managerial process by which individual and group
obtain what they need and want through creating
and exchanging product s and value with other
the basic concept it included
 Need state of felt deprivation or basic part of
human make up
 Want human need shaped by cultural and
individual personality
 Demand human want backed by purchasing power
 Customer value difference b/n customer gain from
using the product and cost of obtaining the product
ADDIS COLLEGE
 customer satisfaction perceived performance
and buyer expectation
 Exchange the act of obtaining a desired object
from someone by offering something in return
a certain condition in exchange
1. At least two parties must participate
2. Each must be free to accept or reject the other
offer
3. Each party must be able to communicate or
deliver
DISTINICTION B/N MARKETING AND SELLING
Marketing Selling

 It start earlier to the  start only after the

emergence of a product has been
product produced
 customer oriented  product oriented

 Marketing is mutual  Selling concentrated

satisfaction for buyer on the seller interest.
and seller  selling is inside in
 marketing is outside in perspective
perspective
DISTINICTION B/N MARKETING AND SELLING
 marketing start earlier to the emergence of a
product
 Selling start only after the product has been
produced
 Marketing and customer oriented
 Selling is product oriented
 Marketing is mutual satisfaction for buyer and
seller
 Selling concentrated on the seller interest
 marketing is outside in perspective
 Selling is inside in perspective
 Starting focus means ends Perspectiv
concept e
Selling factory Product Selling Profit In-out
concept and through
promotion sales
volume

Starting focus means ends Perspectiv

concept e

Marketing Target customer Integrate Profit out-in

concept market need d through
marketin customer
g satisfacti
on
TYPE OF MARKETING
 there are three distinguished level of marketing
which are :
1. Responsive marketing a commendable form of
marketing by finding and filling need through
identifying a clear existing need and preparing
an affordable solution for it.
2. Anticipative marketing based on developing a
new product which the anticipation of a future
need by thoroughly analyzing customer situation.
3. Need shaping marketing creating market rather
than serving it through producing new product
WAY OF SERVING MARKETING
 There are three way of serving market
1. Mass marketing company offer a standard
product or service to the whole market.
2.Target marketing company design products for
one or more specific segment rather than for the
whole market.
3. Customer level marketing company give customized
service to each customer .
MARKETING MANAGEMENT AND ORIENTATION /
PHIPLOSOPHY

1. Production concept focus on those produce that

it could produce most efficiently and creation or
supply of low cost products that would by itself
create the demand for products .
2. The product concept it hold that consumer will
favor products that offer the most in quality,
performance and innovative feature.
3. The selling concept that consumer will not buy
enough of the firm product unless it undertakes
a large scale selling and promotion effort.
4. Marketing concept the firm achieve goal depends
on knowing the need and want of target market
and delivering the desired satisfaction better
than completion . (sense and response )
5. Societal marketing concept the organization
should determine the need, want, and interest of
target market and deliver the desired satisfaction
more effectively and efficiently.
STEPS IN MARKETING MANAGEMENT PROCESS
1. Analyzing marketing opportunities/conduct
market research .
2. Developing marketing strategies /segment,
target, positioning/
3. Planning marketing programs /marketing mix/
4. Implementation
5. Controlling
1.ANALYZING MARKETING OPPORTUNITIES/
MARKETING RESEARCH

 marketing research it is scientific investigation

based on collecting , processing, and analyzing
data from the market in order to solving
marketing problem
The need for marketing research
 identify and define marketing opportunities &
problem
 To generate ,refine, evaluate marketing action

 To monitor marketing performance

MARKETING RESEARCH PROCESS /5 STEP
SCIENTIFIC APPROACH TO M.R/

 defining the problem

 Analyzing the situation

 Getting problem specific data

 Interpreting the data

 Solving the problem

1. Specifying research objective
2. Prepare a list of the needed information
3. Designing the research data collection project
4. Selecting a sample type
5. Determining sampling size
6. Organizing and caring out fieldwork
7. Analyzing the collected data and reporting the
finding
 marketing opportunities as an area of buyer need
and interest in which there is a high probability
that a company can perform profitably by
satisfying that need.
Source of marketing opportunities
 Supplying something in short supply

 Supplying an existing product in a new way

 Supplying a new product or service

 way of building demand
 getting/attracting new customer by promoting
superior value/acquisition/
 Keeping current customer/retention/
 Growing current customers by delivering superior
satisfaction
MARKETING MANAGER FRAME WORK
2. DEVELOPING MARKETING STRTAEGIES
o Marketing manager is not concern with serving all
customers in every way . Instead marketer want to
serve selected customers that they can serve well
and profitable
o There are three major element marketing
strategies those are segmentation, targeting, and
positioning.
MARKET SEGMENTATION
 The process of dividing heterogeneous market in
to homogenous market.
 Thee marketing manager can be grouped in various
group
I. geographic segmentation.
II. Demographic segmentation.

III. Psychographic segmentation.

IV. Behavioral segmentation.

 Behavioral segmentation
A. occasion segmentation

B. Benefit segmentation

C. User status
D. Usage rate
 REQUIREMENTS FOR EFFECTIVE SEGMENTATION
 measureable
 Accessible

 Substantial

 Differentiable

 Actionable
TARGET MARKETING
 It is the process of evaluating each market
segmentation attractiveness, and selecting one or
more segment to enter
 In evaluating different market segment a firm
must look at three factors segment size, segment
attractiveness, company objective and resource.
 After evaluating different segments the company
must now decide which and how many segment it
will target.
A. undifferentiated /mass marketing offer one
product for the whole market.
B. Differentiated /segmented marketing design
separate offer for each.
C. Concentrated/niche marketing a firm goes after
a large share of one or few segments or niches.
D. Micro marketing tailoring product to the need
and want of specific individual and local
customer group.
 THREE BASIC STRATEGIES

 market development strategy. The firm find new

market for its current product
 Product development strategy the firm tries to
develop new and improved product to its current
market.
 Diversification strategy design new product to sell
to new type of customers
MARKET POSITIONING
 Arranging for a product to occupy a clear ,
distinctive and desirable place relative to
competing product in the minds of target
customers.
 STEPS IN POSITIONING STRATEGY

A. Deciding the position which are relevant to

target market.
B. Evaluating which position the organization can
effectively deliver.
C. Communicating the selected position through
promotion and sales message.
 3. PLANNING MARKETING PROGRAMS /MARKETING
MIX /
Marketing programs is another step in the marketing
management process, and controllable in the
market.
There are four marketing mix
 product

 Price

 Promotion

 Place
PRODUCT
 Product is any thing that can be offered to
market for attention , acquisition and
consumption that might satisfy want or need.
 Product are more than just physical goods
PRODUCT CLASS
1.Consumer product 2. business product
 Convenience good  installation

 Shopping good  Accessories

 Specialty good  Raw material

 Unsought good  Component

 Professional service

 Supplies
SERVICE
 Is any activity or benefit that one party can offer
to another that is essentially intangible and does
not result ownership of anything.
 Service can be characterized by
 intangible
 Inseparable
 Variable
 Perishable
 PRODUCT AND SERVICE IMPORTANT DECISION
 product attributes product quality, feature,
design.
 Branding the name given for a product
 Packaging wrapping a product
 Labeling information appearing
 Product support service
PRICE
 Is amount of money charged for a product /
service .
 The sum of value that consumer exchange for the
benefit of having or using the products.
 FACTOR CONSIDERED WHEN SETTING PRICE OF A
PRODUCT
 marketing objective

 Cost

 Nature of market /demand

 Competition

 Other environment /government , economy ,

reseller/
 THREE BASIC PRICING MECHANISM
1. cost based pricing
2. Value /customer based pricing
3. Competition based pricing
PROMOTION
 The processes of introducing or communicating
offers to customer through various promotional
techniques.
 Type of promotion mix
A. personal selling
B. Advertising

C. Sales promotion
D. Publicity
PLACE /DISTRIBUTION
 How the product or service are made available to
the target market
 It is activity of moving product from producer to
customer.
 Level of distribution
A. Zero level

B. One level

C. Two level
D. Three level
E. Four level
4 MANAGING THE MARKETING EFFORT /
IMPLEMENTATION

 the marketing manger is responsible to implement

the entire marketing program such as product, place,
promotion, and distribution activity to create ,build
and maintain long term relationship with satisfied
customer.
PLANT LOCATION AND
PLANT LAYOUT
Means

Location analysis
Site economy analysis
Selection criteria
Plant layout
Importance

Essential

Type

Factor influence
Dynamic of plant
layout
PLANT LOCATION
 The selection of particular site for setting up a
business or factory.
 The choice of region, but the choice is made only
after considering cost and benefits of different
alternative site.
what is an ideal location
 an ideal of location is one where the cost of the
product is kept to minimum , with a large market
share, the least risk and the maximum social gain
LOCATION ANALYSIS
 It is dynamic process where entrepreneur analysis
and compares the appropriateness. It consists of
A. demographic analysis study o population in
terms of age, income, sex, education, occupation
B. Trade area analysis : analysis of geographic area
which see accessing of trade area.
C. Competitive analysis it help to judge nature, size
and quality of competition.
D. Traffic analysis about the number of potential
and actual customers passing by proposed site.
E. Site economics evaluate d/f site based on
establishment cost ,and operational cost
SITE ECONOMY EVALUATION
Costs site A Site B
Cost of establishment
land and 350000 230000
building
equipment 60000 60000
transport facility 20000 30000
cost of operation
material 34000 24000
taxes and 10000 7500
insurance
labor 100000 70000
water , power, fuel 10000 8000
584000 429500
SELECTION CRITERIA
 natural condition
 Availability of raw material
 Transport cost to obtaining raw material
 Access to market
 Availability of infrastructure facility
 Availability of skilled and non skilled labor
 Banking and financial institution located nearby
 Location withy link
 Strategic consideration of safety and security
 Government influence /positive ad negative
incentive /
PLANT LAYOUT
 it refers to arrangement of physical facilities
such as machinery, equipment, furniture etc. With
in the factory building in such a manner so as to
have quickest flow of material at the lowest cost
 According to Riggs the over all objective of plant
layout is to design a physical arrangement that
most economically meet the required out put –
quantity and quality.
IMPORTANCE OF PLANT LAYOUT

 it facilitate the production process

 Minimize material handling ,time, and cost

 Easy production flow

 Make economic use of the building

 Promote effective utilization of manpower

 Provide for employee’s safety at work

ESSENTIAL OF PLANT LAYOUT
 proper utilization of available floor space
 Work process without any delay
 Provide enough production capacity
 Reduce material handling cost
 Reduce hazed to personnel
 Utilize labor efficiently
 Increase employee moral
 Reduce accident
 Provide ease supervision and control
 Provide for employee safety and health
 Improve productivity
TYPE OF LAY OUT
 Plant lay out differ from plant to plant, location
to location and industry in industry , but the basic
principle governing plant layout are more or less
the same
 There are three basic categories
A. manufacturing unit
B. Trader

C. Service establishment
1. MANFACTURING UNIT
 in case of manufacturing unit plant lay out may
be four type.
I. Product or line lay out
II. Process or functional lay out

III. Fixed position or location lay out

IV. Combined or grouped lay out

A. PRODUCT OR LINE LAYOUT
 machine and equipment are arranged in one line
depending upon the sequence of operation
required for the product.
 The material move from one work station to
another sequentially with out any backtracking .
e.g. Lathe drill grinder assembly paint shop
ADVA AND DISADVA OF PRODUCT LAY OUT
Advantage Disadvantage

 Low cost of material  High initial capital

handling
 Heavy overhead charge
 Smooth operation
 Breakdown of one
 Continue flow
production machine will stop the
 Optimum use of floor
whole production
space process
 Less investment  Lesser flexible
 Low cost of
manufacturing per unit
 Quicker out put
SUILTABILITY / WHEN P/L IS USEFUL/
 mass production
 Simple and repetitive manufacturing process

 Operation time for different process is more or less

equal
 Reasonable stable demand for the product

 Continuous supply of material

B. PROCESS LAYOUT
 this type of lay out machine of similar type are
arranged together at one place.
Note product A product B
Drill Planning Grinding
1 2
3 5
2 5
milling 1 Welding Assemble

3 4 4
6 6
ADVANTAGE & DISADVANTAGE
Advantage Disadvantage

 Lower initial capital  material handling cost

investment are high
 Overhead costs are low
 More skilled labor is
 Breakdown of one
machine does not result required
in complete work  Time gap or lag in
stoppage
production is higher
 Supervision can be
effective and specialized  Needing greater
 Greater flexibility of storage space
scope of expansion  Costly supervision
SUITABILITY
o products are not standardized
o Quantity produced is small
o There are frequent change in design and style
o Machines are very expensive
C. FIXED POSITION OR LOACTION LAYOUT
 The major product being produced is fixed at bone
location .
 Equipment ,labor, and component moved to that
location . Ship building yard
 Ship building yard

Labor
Equipment finished
product
material
ADVANTAGE & DISADVANTAGE
Advantage Disadvantage

 It save time  Production period is

 The lay out is flexible as very long ,capital invest
change in job design heavy
and operation  Very large space is
 It is more economical required for storage
being executed  several operation
simultaneously carried out
 Adjustment can be simultaneously
made to meet shortage confusion and conflict
of material or absence may be created among
of worker. different worker group
SUITABILITY
 manufacture of bulky and heavy product e.g.
generator , air craft, ships and other
 Construction of building flyover dams
D. COMBINED LAY OUT
 combination of the product and process layout or
other combination are found.
 E.g. for industries involving the fabrication of part
and assembly fabrication tends to employ the
process layout , while assembly area often employ
the product lay out .
2. TRADER
 When the outlet carry almost same merchandise ,
customer s usually buy in the one that is more
appealing to them.
 Thus customers are attracted and kept by good
layout that is good lighting ,attractive color , good
ventilation , air conditioning ,modern design ,and
event music .
THREE KINDS OF LAYOUT IN RETAIL OPERATION
A. self service or modified self service lay out
B. Full service layout
C. Special layout
 self service cut down on sales clerk time and
allow customers to select merchandise for
themselves.
 Full service provide area and equipment
necessary in such case
 Special to special store to be set up e.g. TV
repair, ice cream.
3. SERVICE CENTERS AND ESTABLISHMENT
 Service establishment such as motel, hotel,
restaurant, must give due attention to client
convenience, quality of service e efficiency in
delivering service and pleasi9ng office ambience .
FACTOR INFULENCE LAYOUT
 factory building/ nature and size of building/
 Nature of product /uniform and custom made
product/
 Production process

 Type of machinery/general & special purpose

machine
 Repair and maintenance

 Human needs

 Plant environment /heat, light, noise, ventilation

/
DYNAMICS OF PLANT LAYOUT
 Plant layout is dynamic rather than a static
concept meaning thereby if once done it is not
permanent in nature rather improvement or
revision in the existing plant layout.
 Revision of plant layout in the following reason

 Increase in the out put of existing product

 Introduction of new product &diversification

 Technological advancement

 Deficiencies in the lay out unnoticed by the lay out

engineer in the beginning .
PRODUCTION PLANNING AND CONTROL
 production management
Product design
Factor

Type

Manufacture process
Volume variety
Factor

Production planning &

control
Step planning& control
PRODUCTION MANAGEMENT
 production system is a system whose function is
convert a set of input in to a set of out puts.

Conversion
Inputs Out puts
process

Land good & service

Building
Raw material control

Labor
Machine
Other
PRODUCTION DESIGN
 it is strategic decision as the image and profit
earning capacity of a small firm depends largely
on product design.
 Consists of form and function

 The form designing include shape, size, color, and

appearance of product.
 Functional design working condition of the
product
VARIOUS FACTORS ARE CONSIDERED BEFORE
DESIGING

 standardization
 reliability

 Maintainability

 Servicing

 Reproducibility

 Sustainability

 Product simplification

 Quality commensuration with cost

 Product value

 Consumer quality

 Need and test of consumers

DESIGN OF PRODUCTION SYSTEM
 Production system is frame work within which the
production activities of an enterprise take place.
 An appropriate designing of production system
ensure the coordination of various production
operations.
TYPES OF PRODUCTION SYSTEM
A. continuous production
B. Job or unit production
C. Intermittent production
A.CONTINUOUS PRODUCTION
 production of standardized product with a
standard set of process and operation sequence in
anticipation of demand.
 It known as mass flow production or assembly line
production .
 It require high investment in machinery .
B. JOB OR UNIT PRODUCTION

 It involves production per customers specification

each batch or order consists of a small lot of
identical products and different from other
batches .
 It is appropriate for heterogeneity products
C. INTERMITTENT PRODUCTION
 Goods are produced partly for inventory and
partly for customer order.
 E.g. component part like electric and automotive
equipment.
MANUFACTURING PROECESS
 the process of production required by these three
different types of production system are distinct
and require different condition for their working.
 Types of manufacturing process
A. jobbing production
B. Batch production

C. Mass or flow production

D. Process production
A. jobbing production product are produces as per
the requirement and specification of the
customer.
B. Batch production different product are
produced separately one after the other.
C. Mass or flow production huge quantities same
product it manufactured at a time and is
stocked for sale.
D. Process production production run is conducted
form indefinite period.
 VOLUME VARIETY /TYPE OF PRODUCTION PROCESS

Process

degree of line

repetitiveness batching

jobbing

one many
FACTOR AFEFECTING THE CHOICE OF
MANUFACTURING PROCESS

 Effect of volume/variety
 Capacity of plant

 Lead time

 Flexibility and efficiency

PRODUCTION PLANNING & CONTROL
 the ability to look a head organize and coordinate
and having plenty of driving force and capacity.
 it required for economical production .

 Important of production planning & control

A. optimum utilization of capacity.
B. Inventory control

C. Economy in production time/turnover/

D. Ensure quality
STEP OF PRODUCTION PLANNING AND CONROL
production planning and control

Production planning Production control

planning Dispatching

routing Follow-up

scheduling inspection

Loading Corrective
PRODUCTION PLANNIG
A. planning technique of for seeing every step in long
series of separate operation each step to be taken
at the right time and in the right place .
B. Routing path and sequence are established .
Perform these operation the proper class of
machine and personnel required are work out.
 analysis the article to determine what to make
and what to buy.
 Determine the quality and type of material
 Determining sequence
 Determine lot of size
 Determine scrap factor
 Analysis cost article
 Organization of production control form
C. Scheduling working out of time that should be
required to perform each operation.
production schedule the amount of work which can
easily be handled by plant and equipment without
interference .
D. loading is execution of the schedule plan as per
the route chalked out it includes the assignment of
work to operator at their machine or places.
PRODUCTION CONTROL
A. dispatching order for starting operation
 movement of material to d/f worker
 Movement of tool & fixture for machines

 Beginning of work on each operation

 Recording of time and cost of each operation

 Movement of work from one operation to another

 Supervision of work

B. Follow up every production programme involves

determination of the progress of work.
 Measure are taken to ensure the completion of
work by the planned date.
C. Inspection insure the quality of good
D. Corrective measures corrective action may involve
those activities of adjusting the route,
rescheduling of work changing the work loads ,
repair and maintenance of machinery and
equipment .
QUALITY AND PRODUCTIVITY
 MEAN
SIGNIFICANT

METHOD

PRODUCTIVITY

SIGNIFICANCE

MEASUREMENT

FACTORS
QUALITY CONTROL
 quality is the conformance to established
standard
 quality control is consists of all those activities
which are designed to define , maintain, and
control specific quality of product within
reasonable limits.
 it is determination of quality standard and
measurement and control necessary to ensure
the established standard.
SIGNIFIOCANT OF QUALITY CONTROL
 it help to improve the brand image
 It facilitate standardization

 To reduce cost by cutting waste

 Increase sales turnover

 Face competition more effectively in domestic as

well as international
 It help to determine cost and price at competition
level
 quality standard prescribed by the government
METHODS OF QUALITY CONTROL
traditionally there are two method of quality
control
1. Inspection
2. Statistical quality control
A. Inspection there are three important aspect

1. process inspection /check raw material,

machine/
2. Product inspection/sales of good free from
defect/
3. Inspection analysis/careful analysis of
inspection analysis /
B. Statistical quality control/S.Q.C/
Controlled is selected and statically checked to
insure that the established standard of quality
are maintained.
I. Quality control chart graph on which the
characteristics of samples are plotted.
upper quality level

lower quality level

ii. Acceptance sampling sample product is checked.
Full lot is rejected if the percentage of defective
item is more than the predetermined limit
otherwise the whole lot is accepted.
PRODUCTIVITY
 Refer to physical relation b/n the quality
produced (output) and the quantity of resource
used in the course of production(input).
 productivity = output

input
The difference b/n productivity and production
Productivity relative term ratio b/n total out put
and total input.
Production is volume of out put
Production may increase but [productivity may
decline due inefficient use of resource
SIGNIFICANCE
 cut down cost per unit and improve profit
 Customer gain lower priced product
 Worker paying higher rate
 Better chance to exploit export opportunities
 Generate more employment opportunity
MEASURMENT OF PRODUCTIVITY
 Total productivity index= total out put
total input

o Partial productivity e.g.

Labor productivity index = out in unit
manpower worked
Management productivity index = out in unit
total cost management
FACTOR IONFU;LENCING PRODUCTIVITY
1. human factor
 Ability to work

 Willingness to work

2 . Technological factors
 Size & capacity of plant

 Product design

 Timely supply of material

 Repair and maintenance

 Plant layout and design and etc…

3. Managerial factors/competence & attitude of
manager/
4. Natural factors /physical, geographical &climate
condition/
5.Sociological factors social customs tradition and
institution influence/
6.Political factors /law,Order, stability of
government harmony b/n state/
7. Economic factors /size of market banking and
credit facility, transport/
ORGANIZATION AND MANAGEMENT
 o& m the study of aims at drawing up on effective
organization and management structure to
achieve the entrepreneur objectives.
O & M GENERALLY ENCOMPASS THE FOLLWING
ASPECT

 form of organization
 Organogram/ organizational structure/

 Staffing pattern

 Pre-operating activity

 Schedules of pre-operating activities via Gannt

chart
 Pre-operating cost
FORM OF ORGANIZATION
 Partner ship
 Cooperation
 Cooperative
 Sole proprietorship
ORGANIZATIONAL STRUCTURE
 Consist the following element
A. identification of the major and key activities to
be done to meet the project objective
B. Grouping of these activities in to related
function
C. Assigning various function to spercific position
D. Determination of relationship of various
activities to achieve coordination
E. Fixing of responsibility and authority for each
task
ORGANIZATIONAL STRUCTURE
Organogram Manager

administration Finance Marketing Production

personnel treasurer Marketing

Production man
manager
Book keeper Sales
representative
collector

supervisor supervisor

Forman Forman

worker worker