Entrep - 2nd Quarter

St.
Paul University Philippines

Tuguegarao City, Cagayan 3500
BASIC EDUCATION UNIT

SENIOR HIGH SCHOOL
DYNAMIC LEARNING PLAN
ENTREPRENEURSHIP
GRADE 12
SECOND QUARTER
Prepared by: Checked by:
MISS. CLARISSA A. DUMANACAL MRS. LOIDA M. ESMUNDO

MISS. MYZEL U. DONAYRE Subject Team Leader
MISS MAICA ANGELICA C. VERDADERO
Subject Teacher
Verified by: Approved by:
MRS. JANETTE T. FERMIN MRS. GLENDA P. CARONAN

Senior High School Coordinator Principal
St. Paul University Philippines
Tuguegarao City, Cagayan
UNIVERSITY VISION-MISSION STATEMENT
VISION
ST. PAUL UNIVERSITY PHILIPPINES is an internationally recognized institution dedicated to

the formation of competent leaders and responsible citizens of their communities, country, and the
world.
MISSION
Animated by the gospel and guided by the teachings of the Church, it helps to uplift the quality of
life and to effect social transformation through:
1. Quality, Catholic, Paulinian formation, academic excellence, research, and community

service.
2. Optimum access to Paulinian education and service in an atmosphere of compassionate
caring; and
3. Responsive and innovative management processes.
The SPUP Vision and Mission are reflected in the Paulinian Core Values Framework and
the SPUP Learning Framework which have been adopted by the university.
The core of the Curricula of Studies is embedded in the Paulinian Core Values (the 5 Cs)
namely: Charism, Charity, Commission, Community and with CHRIST as the CENTER of
Paulinian life.
BEU VISION-MISSION STATEMENT
VISION
St. Paul University Philippines, Basic Education Unit is a Catholic educational institution
committed to the formation of pupils/students with proficiency in basic knowledge, skills, attitudes,
and values responsive to the changing world.
MISSION
Impelled by the Charity of Christ, this institution will become the premier for basic education by
forming academically prepared, morally upright, and socially responsible young Paulinians in the
service of family, church, and society.
PAULINIAN CORE VALUES

(The 5 Cs) and the SPC Education Ministry Basic Education Exit Outcomes
CHRIST (CONSCIOUS) – Christ is the CENTER of Paulinian life. The Paulinian follows and
imitates Christ, doing everything about Him.
The BEU graduates are Mindful, Self-Directed LEARNERS AND ROLE MODELS, who:
 Initiate and sustain undertakings that strengthen their skills, understandings, health,
future opportunities that benefit others.
 Assess their unique personal qualities, thinking processes, and talents, and explain
how strengthening them can open doors to continued learning and personal
fulfilment.
 Explain the elements and factors affecting their decision and actions and the likely
consequences they entail.
 Manage their time and energy to allow for regular periods of planning reflection and
renewal.
 Describe and explain the new possibilities they have developed as the result of self-
initiated projects and learning experiences.
 Describe how their own values and actions mirror the qualities and values of a
Paulinian.
 Offer support, constructive feedback, and praise for the sincere efforts of others.
COMMISSION (COMPETENT) – The Paulinian has a mission – a LIFE PURPOSE to spread the
Good News. Like Christ, he/she actively works “to save” this
world, to make it a better place to live in.
The BEU graduates are Conscientious, Adept PERFORMERS AND ACHIEVERS, who:
 Devote focus time to developing competencies required for sound achievement in a
chosen field and skilled implementation in life’s diverse basics.
 Cultivate specialized knowledge and skills in at least one area of their lives that they
apply in a variety of situations with facility and ease.
 Remain focused on fully completing projects in a timely manner.
 Set realistic improvement goals for themselves that require persistence and involve
continual monitoring by others to validate what has been achieved.
 Openly demonstrate their basic and advanced skills to potential employers and
improve them according to the feedback received.
COMMUNITY (COLLABORATIVE) – The Paulinian is a RESPONSIBLE FAMILY MEMBER
and CITIZEN, concerned with building communities, promotion of peoples, justice and peace, and
the protection of the environment.
The BEU graduates are credible, Responsive, COMMUNICATORS AND TEAM PLAYERS, who:
 Take time before speaking or writing to assess the accuracy and clarity of what they
are about to share, its tone, how it is likely to be received and interpreted.
 Consistently revise intended communications to be clearer, more accurate and
better understood.
 Acknowledge suggestions made by others and respond honestly and
constructively to them regarding their likely consequences.
 Agree to join in group endeavors that bring benefit to all and foster the greater
good.
 Willingly share responsibilities and participate actively to foster group
collegiality, cohesion, and effectiveness.
 Anticipate where extra assistance or support in team activity may be needed, and
spontaneously offer it to bolster team results.
CHARISM (CREATIVE) – The Paulinian develops his/her GIFT/TALENTS to be put in the service
of the community, he/she strives to grow and improve daily, always seeking the better and finer things
and the Final Good.
The BEU graduates are Creative, Resourceful, EXPLORERS AND PROBLEM SOLVERS, who:
 Independently seek out issues, possibilities, and sources of related information for
further investigation and development.
 Search beyond readily available sources of information, resources, and standard
techniques to create workable solutions to existing problems.
 Routinely select issues or problems facing their communities and formulate new
ways they can be understood, addressed, and resolved.
 Experiment with combinations of ideas, data, materials, and possibilities to derive
and test potential solutions to existing problems.
 Use ideas and resources in unconventional ways to plan and design works of
artistic appeal to others
CHARITY (COMPASSIONATE) – urged on by the LOVE OF CHRIST, the Paulinian is warm,

loving, hospitable and “all to all”, especially to the underprivileged.
The BEU graduates are Committed, ADVOCATES FOR PEACE AND UNIVERSAL WELL-
BEING, who:
 Initiate and sustain efforts that draw attention to environmental issues and propose
workable measures to reduce and eventually eliminate it.
 Persist in the face of open resistance to their efforts to teach peace, reduce violence,
and redress the harm being levied against others.
 Join others in operating local projects that tangibly protect and preserve the
environment and all life forms.
 Call attention to the causes and consequences of poverty, and marshal others to
assist those in ill-health and physical need.
 Contribute their time, heartfelt attention, and resources in directly assisting those
who live in little hope of improving their lives
Anchored on the 21st century learning skills, the Curricula of Studies for the different programs are
designed based on the four core concepts/statements adopted by the University for its General
Learning Framework, namely: HUMAN PERSON, COMMUNICATION RESEARCH AND
CLIMATE CHANGE.
MOST ESSENTIAL LEARNING COMPETENCIES

GRADE 12 - ENTREPRENEURSHIP
Quarter Content Standard Performance Most Essential Learning

Standard Competencies
First  The learner  The learner  Discuss the relevance of the
Quarter demonstrates independently course
understanding of key creates/provides a  Explore job opportunities for
concepts, underlying quality and Entrepreneurship as a career
principles, and core marketable product
competencies in and/or service in
Entrepreneurship Entrepreneurship as
prescribed in the
TESDA Training
Regulation
 The learner  The learner Recognize a potential market
demonstrates independently or  Analyze the market need
understanding of with his/her  Determine the possible product/s
concepts, underlying classmates presents or service/s that will meet the
principles, and an acceptable need;
processes of detailed business  Screen the proposed solution/s
developing a business plan. based on viability, profitability,
plan and customer requirements; and
 Select the best product or service
that will meet the market need.
 The learner  The learner  Recognize the importance of
demonstrates independently marketing mix in the development
understanding of creates a business of marketing strategy
environment and vicinity map  Describe the Marketing Mix (7Ps)
market in one’s reflective of in relation to the business
locality/town. potential market in opportunity vis-à- vis: Product;
one’s locality/town. Place; Price; Promotion; People;
Packaging; and Positioning
 Develop a brand name
Quarter 2  The learner  The learner Demonstrate understanding of the
demonstrates independently or 4 Ms of operations:
understanding of with his/her  Describe the 4Ms (Manpower,
concepts, underlying classmates start and Method, Machine, Materials) of
principles, and operates a business operations in relation to the
processes of starting according to the business opportunity:
and operating a simple business plan and  Develop a product description
business. presents a terminal  Create a prototype of the product
report of its  Test the product prototype
operation.  Validate the service description of
the product with potential
customers to determine its
market acceptability
 Select/pinpoint potential suppliers
of raw materials and other inputs
necessary for the production of
the product or service;
 Discuss the value/supply chain in
relation to the business
enterprise and;
 Recruit qualified people for one’s
business enterprise
 Develop the business model
 Forecast the revenues of the
business
 Forecast the costs to be incurred
 Compute for profits
 Manifest understanding of
starting and operating a simple
business
 Implement the business plan
 Identify the reasons for keeping
business records
 Perform key bookkeeping tasks
 Identify where there is a profit or
loss for a business; and
 Generate an overall report on the
activity

SENIOR HIGH SCHOOL
INTRODUCTION
Production management deals with decision-making regarding the quality, quantity,

cost, etc., of production. It applies management principles to production. Also,
production management is a part of business management. It is also called “production
functions”, it is slowly being replaced by operations management.
OBJECTIVES
This module is designed for you to:

1. demonstrate understanding of production management;
2. value the importance of production management in different areas; and
3. evaluate how the technology and Internet take pace in production
management.
LESSON PROPER
The Importance of Production Management to the Business Firm
1. Accomplishment of firm’s objectives

Production management helps the business firm to achieve all its objectives. It
produces products, which satisfy the customers’ needs and wants. So, the firm
will increase its sales and to achieve its objectives.
2. Reputation, Goodwill and Image
Production management helps the firm to satisfy its customers. This increases the firm’s reputation,
goodwill and image. A good image helps the firm to expand and grow.
3. Helps to introduce new products
Production management helps to introduce new products in the market. This helps the firm to develop
newer and better-quality products. These products are successful in the market because they give full
satisfaction to the customers.
4. Supports other functional areas
Production management supports other functional areas in an organization, such as marketing, finance,
and personnel. The marketing department will find it easier to sell good-quality products, and the finance
department will get more funds due to increase in sales.
5. Helps to face competition
Production management helps the firm to face competition in the market. This is because production
management produces products of right quantity, quality, price and time. These products are delivered to
the customers as per their requirements.
6. Optimum utilization of resources
Production management facilitates optimum utilization of resources such as manpower, machines, etc.
So, the firm can meet its capacity utilization objective. This will bring higher returns to the organization.
7. Minimizes cost of production
Production management helps to minimize the cost of production. It tries to maximize the output and
minimize the inputs. This helps the firm to achieve its cost reduction and efficiency objective.
8. Expansion of the firm
The Production management helps the firm to expand and grow. This is because it tries to improve quality
and reduce costs. This helps the firm to earn higher profits. These profits help the firm to expand and
grow.
The Importance of Production Management to Customers and Society:

1. Higher standard of living
Production management conducts continuous research and development (R&D). So they produce new and
better varieties of products.
2. Generates employment
Production activities create many different job opportunities in the country, either directly or indirectly.
Direct employment is generated in the production area, and indirect employment is generated in the
supporting areas such as marketing, finance, customer support, etc.
3. Improves quality and reduces cost
Production management improves the quality of the products, because of the research and development.
The large-scale of production, brings down the cost of production. So, consumer prices also reduce.
4. Spread effect
Because of production, other sectors also expand; companies making spare parts will expand; the service
sector such as banking, transport, communication, insurance, and BPO also expand. This spread effect
offers more job opportunities and boosts economy.
5. Creates utility
Production creates Form Utility. Consumers can get form utility in the shape, size, and designs of the
product. Production also creates time utility because goods are available whenever consumers need it.
6. Boosts economy
Production management ensures optimum utilization of resources and effective production of goods and
services. This leads to speedy economic growth and well-being of the nation.
PRODUCTION
The process and methods used to transform tangible inputs (raw materials, semi- finished goods,
subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services. Resources are
used in this process to create an output that is suitable or has exchange value. Production is the process by
which raw materials and other in-outs are converted into finished products.
The objective of production management is “to produce goods and services of right quality and quantity at
the right time and right manufacturing cost”.
1. Right quality. The quality of product is established based upon the customer needs. The right quality is
not necessarily best quality. It is determined by the cost of the product and the technical characteristics as
suited to the specific requirements.
2. Right quantity. The manufacturing organization should produce the products in right number. If they
are produced in excess of demand, the capital will block up in the form of inventory and if the quantity is
produced in short of demand, it leads to shortage of products.
3. Right time. Timeliness of delivery is one of the important parameters to judge the effectiveness of
production department. So, the production department has to make the optimal utilization of input resources
to achieve its objectives.
4. Right manufacturing cost. Manufacturing costs are established before the product is actually
manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to
reduce the variation between actual and the standard (pre-established) cost.
INPUT THROUGHPUT OUTPUT MARKETING DESIRED

OUTCOMES
Harnessing of Conversion of Goods produced Positioning Customer
human, money and input into output or services Product satisfied
physical resources and the delivered Packaging
Transformation Place Sales volume
Resources process within the People attained
mobilized factory or service Promotion
- Money shop Price Profits
- Men generated
- Machines
- Materials People
- Methods performance
- Mgt.
Internet of Things Technology
The internet of things definition: “Sensors and actuators embedded in physical objects are linked through
wired and wireless networks.” There are a number of similar concepts, but Internet of Things is by far the
most popular term to describe this phenomenon.
FUNCTION OF PRODUCTION PROCESS
1. Selection of product and design. This is the phase where marketing department needs to study and
evaluate the consumer’s needs. They have to think what products satisfy the needs of the consumers.
2. Selection of Production Process. This refers to the strategic decisions of selecting the kind of production
process that a manufacturing plant have. The process flow refers to how factory organizes material flow
using the technology process.
3. Selecting right production capacity. The production manager decides the right production capacity to
match the demand for the product. Excess and shortage of production mark insufficiency. Production
manager must plan the capacity for both short- and long-term production. Selection capacity involves break
even analysis.
4. Production planning. This is the stage where the production manager decides the routing and
scheduling. Routing is the process of deciding the path of work and sequence of operation. Scheduling is
fixing and arranging of the different manufacturing operations in order, including the date and time of each
operation.
5. Production control. The production manager ensures that the production is carried according to the
plan. If he finds deviation in the production immediate action must be done.
6. Quality and cost control. To remain competitive in the market, good quality should be product at the
lowest possible cost. Quality and cost control is the most important function of production management.
Quality of product at every stage in production must be assessed. From procurement, storage, quality and
receipt.
7. Inventory control. Production manager monitors the level of inventories. Overstocking and
understocking of inventory should be avoided. Just-In-Time (JIT) and lean manufacturing are applied to
utilize the resources to the best advantage and minimize or eliminate inventories.
8. Maintenance and replacement of machines. To avoid interruption of production machines and
equipment used should be in good condition. Preventive maintenance schedules should be prepared.
Continuous inspections should be done. Routine check of machines and equipment.
9. Other functions. Training and employing the workforce must be done. Implementing the procedures for
systematic loading of machines, packaging the products for safe distribution and dispatch.
7 Primary Principles of Production Management
Shorter set-up times

By their nature, all set-up processes result in waste; they tie up labor and equipment without adding value.
Training, improved efficiency and giving workers accountability for their own set-ups allowed Toyota to
slash their set-up times.
Small-scale production
Cutting the cost and time spent on set-ups allows a company to produce goods in smaller batches and
according to demand. This results in lower set-up, capital, and energy costs.
Empowering employees
Dividing a workforce into small teams and giving them accountability for housekeeping and various other
tasks has been shown to improve efficiency. Teams are assigned leaders, and the workers within those
teams are trained on maintenance issues - allowing them to deal with delays in the production process
immediately.
Equipment Maintenance
Workers on the line are best placed to deal with mechanical breakdowns and subsequent repairs. They can
react to issues quickly and often without supervision, which allows the production process to restart far
more quickly after a shut-down.
Pull Production
In a bid to minimize inventory holding costs and production lead times, Toyota pioneered a system whereby
the quantity of materials, labor and energy expended at every stage of the process was solely reliant on the
demand for products from the next stage of production.
Often referred to as Just in Time (JIT), this principle was aimed at producing goods according solely to the
demand for them at any given time, thus eliminating unnecessary costs.
Supplier Involvement
Toyota demonstrated that treating component and raw material suppliers as integral components of their
own production process led to a number of benefits. Suppliers were given training in Toyota processes,
machinery, inventory systems and set-up procedures. As a result, their suppliers were able to react
positively and swiftly when problems occurred.
What Are the Main Advantages of an Effective Production Management Solution?
There are several benefits to implementing the basic principles of production management; they include a
good reputation within a specific market and the ability to develop new products and bring them to the
market quickly.
Reducing costs at every stage of the production process provides the main benefit of cutting a company's
overall costs. A manufacturer obviously does not want to incur costs when there are no orders, and an
effective production management solution - such as the one pioneered by Toyota - should make that an
achievable goal.
Because firms adopting the principles of production management can keep a tight lid on their costs, they
can have a competitive edge in the market, and that can allow them to grow far more quickly than would
otherwise be the case.
Companies like Toyota were able to take on the likes of Nissan and Ford in international markets because
their innovative production management solution guaranteed quality for the consumer and lower costs for
the business - and that's why the principles are now being implemented in manufacturing industries across
the world.
FORMATIVE ASSESSMENTS
Now, it is your turn to try these out! These formative assessment aim to help you to
apply what you have learned from the module. It will further help you to assess your ability
in understanding the production management. Therefore, prepares you for the summative
assessment.
LET’S REFLECT!
1. What do you think about production management using Internet of Things

Technology?
2. Does production management using Internet of Things technology streamline production management
processes, and does it increase the economic efficiency of the company’s operation?
SUMMATIVE ASSESSMENT 1:
1. How does research and development got a large-scale of production that brings
down the cost of production?
a. Boosts economy c. Helps to introduce new products
b. Expansion of the firm d. Improves quality and reduces cost
2. Production management improves the quality and reduces costs. How will the
firm earn higher profits?
b. Expansion of the firm d. Right manufacturing cost
3. It is one of the importance of product management that helps the firm to develop newer and better-quality
products. What is it?
4. What deals with decision-making regarding the quality, quantity, and cost of production?
a. Business Management c. Production
b. Operation Management d. Production Management
5. What is this process and method used to transform tangible inputs (raw materials, semi-finished goods,
subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services?
a. Business Management c. Production
b. Operation Management d. Production Management
6. What is the important parameters to judge the effectiveness of production department? So, the production
department has to make the optimal utilization of input resources to achieve its objectives.
a. Right manufacturing cost c. Right quantity
b. Right quality d. Right time
7. It is determined by the cost of the product and the technical characteristics as suited to the specific
requirements. What production objective is this that the product is established based upon the customer
needs?
a. Right manufacturing cost c. Right quantity
b. Right quality d. Right time
8. What is it that established before the product is actually manufactured?
9. Production management ensures optimum utilization of resources and effective production of goods and
services. What do we call this that leads to speedy economic growth and well-being of the nation?
10. What is this production activities that create many different job opportunities in the country, either
directly or indirectly?
a. Boosts economy c. Generates employment
For items 11-20: Read each statement carefully. Write true if the statement is true, and false if otherwise.
11. Operations is the process used to transform tangible inputs and intangible inputs into goods or
services
12. The quality of product is established based upon the customer need and is determined by the cost of
the product and the technical characteristics as suited to the specific requirements.
13. Timeliness of delivery is one of the important parameters to judge the effectiveness of production
department. So, the production department has to make the minimal utilization of input resources to
achieve its objectives.
14. In right quantity, if there is a greater production of products than the demand, the capital will block up
in the form of stocks.
15. Manufacturing costs should be established after the products are manufactured.
16. Production planning is the phase where marketing department needs to study and evaluate the
consumer’s needs.
17. Inventory control manages the stocks used in the production process.
18. The production manager decides the right production capacity to match the demand for the product.
Excess and shortage of production mark insufficiency.
19. To remain competitive in the market, good quality should be produced at the lowest possible cost.
20. Production control refers to the strategic decisions of selecting the kind of production process that a
manufacturing plant have.
IN A NUTSHELL
The Importance of Production Management to the Business Firm

1. Accomplishment of firm’s objectives
2. Reputation, Goodwill and Image
3. Helps to introduce new products
4. Supports other functional areas
5. Helps to face competition
6. Optimum utilization of resources
7. Minimizes cost of production
8. Expansion of the firm
Function of Production Process
1. Selection of product and design
2. Selection of Production Process
3. Selecting right production capacity
4. Production planning
5. Production control
6. Quality and cost control
7. Inventory control
8. Maintenance and replacement of machines
9. Other functions
VALUES INTEGRATION
In today’s generation, managing the finances is a significant value in one’s life especially the young
ones that we have. Thus, in order to help them manage the said finances we introduce the financial plan.
We know that financial plan is essential in business plan therefore, understanding on how to compute the
said values will help the learner or the future entrepreneurs are critically and logically thinker.
CHARISM (CREATIVE)
I am creative, resourceful explorer and problem-solver expressing my God- given charism.
INDEPRENDENT LEARNING TASK
1. Search for a company in the country that faces a lot of difficulties in Production Management. How
did they address these issues or problems?
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
___________________________________.
REFERENCES
1. K Kotler, P. and K. Keller. Marketing Management, 12th ed. 2006.

2. Chapter Opener Image_ Photographer: rawpixel.123rf.
3. https://www.winman.com/blog/bid/341826/the-basic-principles-of-production-management
CONGRATULATIONS! YOU HAVE COMPLETED LEARNING PLAN 1!


SENIOR HIGH SCHOOL
INTRODUCTION
It goes without saying that a proposed business must show some potential
of making money. Otherwise, prospective investors might not be willing to provide
money to get the business started or to help it grow. That is why it is important to
come up with financial projections.
OBJECTIVES

1. give definition of financial plan;
2. prepare projected financial statements (income statement);
3. undertake a breakeven analysis for a new business venture; and
4. show the solution on how to compute projected income.
LESSON PROPER
WHAT IS A FINANCIAL PLAN?
The financial Plan includes the financial projections of the new

venture. It must provide a summary of the projection sales, the cost of
goods sold, and the general and administrative expenses of the business, at
least for first year and typically for three years.
PREPARING FINANCIAL PROJECTIONS
In preparing financial projections, the entrepreneur must make reasonable

assumptions about revenues, costs, and expenses. Therefore, he must prepare among
others, a sales forecast and an operating budget, which will feed into the projected
income statement.
The table will show the sales forecast of hypothetical shoe retailer named PINOY
CORPORATION. For illustration purposes, we assumed that each pair of shoes sells for PHP 1,000 the
retailer will sell different types of shoes at different prices. Therefore, sales forecast must consider the
product line and the varying price levels.
Table 1. Sales Forecast of Pinoy Corp, First year by Month

MONTH PROJECTED SALES PROJECTED
(UNITS) SALES (PESOS)
January 120 120, 000
February 192 192, 000
March 288 288, 000
April 420 420, 000
May 480 480, 000
June 500 500, 000
July 600 600, 000
August 600 600, 000
September 480 480, 000
October 640 640, 000
November 720 720, 000
December 780 780, 000
Total 5820 5 820 000
The second table will show PINOY CORPORATION’S proposed

operating budget. This budget assumes that the company will have five
employees who will each be paid PHP 15, 000 per month. It also assumes
that the business will incur the following expenses: monthly rental of PHP
30 000 for office and store office, electricity and water bills amounting to
PHP 4 000 per month, a fixed sales expense of PHP 15 000 per month for
promotional activities, insurance expense of PHP 2 000 per month; and
depreciation expense of PHP 5 000 per month.
Table 2. Operating budget of Pinoy Corporation for the First Three Months
Expenses January February March
Salaries 75, 000 75, 000 75, 000
Rent Expense 30, 000 30, 000 30, 000
Utilities 4, 000 4, 000 4, 000
Sales Expenses 15, 000 15, 000 15, 000
Insurance 2, 000 2, 000 2, 000

Expense
Depreciation 5, 000 5, 000 5, 000
Expense
Total Expenses 131, 000 131, 000 131, 000
PROJECTED INCOME STATEMENT
The sales forecast and operating budget illustrated above will then be transferred to
projected income statement, which summarizes the profit, or loss the company expects to
generate within the year. This income statement also includes an estimate of the cost of
goods sold, which, as shown in the next table, assumed to be 40 % of total sales per month.
Table 3. Projected Income First 6 months( in thousand pesos)
JAN FEB MARCH APR MAY JUNE
SALES 120.0 192.0 288.0 420.0 480.0 500.00
COST OF GOODS 48.0 76.8 115.2 168.0 192.0 200.0
SOLD
GROSS MARGIN 72.0 115.2 172.8 252.0 288.0 300.0
OPERATING
EXPENSES
SALARIES 75.0 75.0 75.0 75.0 75.0 75.0
RENT 30.0 30.0 30.0 30.0 30.0 30.0
UTILITIES 4.0 4.0 4.0 4.0 4.0 4.0
SALES 15.0 15.0 15.0 15.0 15.0 15.0
EXPENSES
INSURANCE 2.0 2.0 2.0 2.0 2.0 2.0
DEPRECIATION 5.0 5.0 5.0 5.0 5.0 5.0
TOTAL 131.0 131.0 131.0 131.0 131.0 131.0
OPERATING
EXPENSES
NET PROFIT (59.0) (15.8) 41.8 121.0 157.0 169.0
Table 3.2 Projected Income for the last 6 months in a year(in thousand pesos)
TOTALS
5820.0
2328.0
3492.0
900.0
360.0
48.0
180.0
24.0
60.0
1572.0
1920.0
Formula:
b. Gross margin (GM) = Sales – Less: Cost of Goods Sold
𝑠𝑎𝑙𝑎𝑟𝑖𝑒𝑠
𝑅𝑒𝑛𝑡
𝑈𝑡𝑖𝑙𝑖𝑡𝑖𝑒𝑠
c. Total Operating Expenses (TOE) = ∑
𝑆𝑎𝑙𝑒𝑠 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑖𝑜𝑛
d. Less: Cost of Goods Sold (COGS) = 30% x sales (note the percentage varies depends on
the assumed percent of Cost of goods sold)
e. Net Profit (Loss) = Gross Margin (GM) - Total Operating Expenses (TOE)
In addition to the monthly projections, the entrepreneur must also prepare a

three-year projection of income. The total Year 1 was already computed in Table 3.1
and 3.2. Year 2 and 3 figures were determined using a separate sheet of assumptions.
Note that most of the items under operating expenses (e.g., rent, utilities, insurance,
and depreciation) are assumed to remain constant in the next two years.
Table 4. Pinoy Corporation, Projected Income Statement, First three Years

(in thousand pesos)
YEAR 1 % YEAR 2 % YEAR 3 %
SALES 5820 100.0 6402 100.0 7042.0 100
COST OF GOODS 2328 40.0 2560.8 40.0 2816.88 40.0
SOLD
GROSS MARGIN 3492 60.0 3841.2 60.0 4225.32 60.0
OPERATING
EXPENSES
SALARIES 900 15.46 1080 16.87 1134 16.10
RENT 360 15.46 360 5.62 360 5.11
UTILITIES 48 0.82 48 0.75 48 0.68
SALES EXPENSES 180 3.09 198 3.09 198 2.81
INSURANCE 24 0.41 24 0.37 24 0.34
DEPRECIATION 60 1.03 60 0.94 60 0.85
TOTAL 1572 27.01 1770 27.65 1824 25.90
OPERATING
EXPENSES
NET PROFIT 1920 32.99 2071.2 32.35 2401.32 34.10
Formula:
𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑦𝑒𝑎𝑟 1 𝑠𝑎𝑙𝑎𝑟𝑖𝑒𝑠
A. % of salaries= 𝑠𝑎𝑙𝑒𝑠
(Note: same process applies to the other operating expenses)
% 𝑜𝑓 𝑆𝑎𝑙𝑎𝑟𝑖𝑒𝑠
B. Value of Year 2 Salaries= X sales of Year 2
100
BREAKEVEN ANALYSIS
Breakeven refers to the volume of sales at which the business neither makes
profit nor incurs loss. The breakeven sales point indicates how many units of the
product the business must sell to cover both variable and fixed costs and expenses.
Fixed Costs: salaries, rent, utilities, sales expenses, insurance and depreciation
Variable Costs: direct labour and materials, cost of goods sold
Formula:
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 (𝑇𝐹𝐶)
Breakeven Quantity (BEQ) =
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒 (𝑆𝑃)−𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡/𝑢𝑛𝑖𝑡(𝑉𝐶/𝑈)
In the projected income statement of Pinoy Corporation (3.1 and 3.2), the cost of Goods sold is 40%
of sales. Given an assumed average selling price of PHP 1 000 per pair of shoes, the variable cost per unit
is PHP 400 Fixed Costs, on the other hand, in Year 1 is PHP1.572 million. Using these figures the breakeven
point will be computed as follows:
𝑇𝐹𝐶
BEQ= 𝑆𝑃−𝑉𝐶/𝑈
1,572,000
BEQ= 1000−400
1,572,000
BEQ= 600
=2,620 units
Each pair of Shoes sold beyond the BEQ of 2620 will result in a profit of PHP 400 per unit, while
sales below the BEQ will result in a loss for the company. If Pinoy Corporation plans to sell several types
of Shoes at different price points, it is possible to allocate fixed costs for each type of shoes. Consequently,
the breakeven point for each type of shoe can be computed based on a weighted basis. Thus, if 45% of the
company’s sales projections can be assumed to be for Shoe A, then 45% of fixed costs should be allocated
for that product.
FORMATIVE ASSESSMENT
Now, it is your turn to try these out! These formative assessment aims to help you to
apply what you have learned from the module. It will further help you to assess your
ability in understanding the financial plan. Therefore, prepares you for the summative assessment.
1. Crispy squash Company is a new business venture. The retailer will sell 25 pesos each cup of a Squash
Fries. Therefore, solve for the following projected sales units and pesos. This budget assumes that the
company will have 3 employees who will each be paid 5,000 pesos/ month. It is also assuming that the
business will have the following expenses: monthly rental of 3000 pesos for store space, water bills of
350/month and electricity amounting to 650/month, a promotional videos amounting to 750/month and
flyers of 750 /month, insurance expense 2000/month, and depreciation for 2000 pesos/month. Moreover,
the company also assumes that the expenses from Jan.-Nov. are constant except for December where the
company will give 13 month pay and a bonus of 5,000 each of the employees. Compute the expenses of
the company for the first year data in table 1.b. The income statement also includes an estimate the cost of
goods sold and assumed to be 30% of total sales per month. Kindly show the Breakeven analysis in each
year for the last part.
PROBLEM SOLVING NO. 1

Crispy squash Company is a new business venture. The retailer will sell 25 pesos each cup of a
Squash Fries. Therefore, solve for the following projected sales units and pesos.
Month Projected Projected

sales(units) Sales
(pesos)
January A.______ 62500
February 2300 57500
March 1575 B.______
April 1625 40625
May 1000 25000
June 1800 45000
July 2340 58500
August 1425 35625
September 1235 30875
October 2220 55500
November 3520 88000
December 5550 138750
Total
C._______ D.______
Projected sales (pesos)
1. a. Projected sales (units) = Price in each unit
62500
= 25
= 2500 units
Let x, be the number of projected sales (pesos)

𝑥
B. 1575 units = 25
=39375 pesos
C. ∑ 𝑝𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝑠𝑎𝑙𝑒𝑠/𝑢𝑛𝑖𝑡𝑠 = 27090
D. Total number of projected sales in pesos =Total number of units x Price in each unit
= 27090 x 25 Php
= 677,250 Php
This budget assumes that the company will have 3 employees who will each be paid 5,000 pesos/
month. It is also assuming that the business will have the following expenses: monthly rental of 3000 pesos
for store space, water bills of 350/month and electricity amounting to 650/month, a promotional videos
amounting to 750/month and flyers of 750 /month, insurance expense 2000/month, and depreciation for
2000 pesos/month. Moreover, the company also assumes that the expenses from Jan.-Nov. are constant
except for December where the company will give 13 month-pay and a bonus of 5,000 each of the
employees. Compute the expenses of the company for the first-year data. The income statement also
includes an estimate the cost of goods sold and assumed to be 30% of total sales per month.
Expenses for each month December expenses
3 employees x 5 000 = 15,000 15 000 x 3 = 45 000 with bonus and 13 month-pay

Rent = 3 000
Utilities = 1 000
Sales Expense = 1 500
Insurance = 2 000
Depreciation = 2 000
Estimate of Cost of goods sold at 30% of total sales per month
Projected Income Statement (Table 2)

Jan. Feb. Mar. Apr. May Jun Jul Aug Sep Oct Nov Dec
Sales 62500 57500 39375 40625 25000 45000 58500 35625 30875 55500 88000 13875
Less: Cost of A.____ 17250 E._____ 12187.5 7500 13500 17550 10687.5 9262.5 16650 26400 4162
Goods sold
Gross 43750 B._____ F. ____ 28437.5 17500 31500 40950 24937.5 21612.5 38850 61600 9712
margin
Operating
Expenses
Salaries 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 4500
Rent 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 300
Utilities 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 100
sales 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 150
expense
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 200
Depreciation 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 200
Total C.____ 24500 24500 24500 24500 24500 24500 24500 24500 24500 24500 5450
Operating
Expenses
Net Profit 19250 D. ____ G.____ 3937.5 -7000 7000 16450 437.5 -2887.5 14350 37100 4262
(Loss)
Sample Computation for the first 2 months (January & February) in the Projected Income
Statement
2. A. Less: Cost of Goods Sold (COGS) = 30% x sales

= .30 x 62 500
COGS = 18750
2. B. Gross margin (GM) = Sales – Less: Cost of Goods Sold

= 57 500 – 17 250
GM = 40 250
𝑠𝑎𝑙𝑎𝑟𝑖𝑒𝑠
𝑅𝑒𝑛𝑡
𝑈𝑡𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2. C. Total Operating Expenses (TOE) = ∑
𝑆𝑎𝑙𝑒𝑠 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑖𝑜𝑛
15000
3000
1000
=∑
1500
2000
2000
TOE =24 500
2. D. Net Profit (Loss) = Gross Margin (GM) - Total Operating Expenses (TOE)
= 40 250- 24 500
= 15750
(Sample Exercise for the Month of March)
2. E. Less: Cost of Goods Sold (COGS) = 30% x sales

= .30 x 39 375
COGS = 11812.5
2. F. Gross margin (GM) = Sales – Less: Cost of Goods Sold

= 39 375- 11812.5
GM = 27562.5
2. G. Net Profit (Loss) = Gross Margin (GM) - Total Operating Expenses (TOE)
=27562.5 -24 500
= 3062.5
Projected Income Statement for the First Three Years (Table 3)

In addition to monthly projections, the entrepreneur must also prepare a three-year projection
income. The total for Year 1 was already computed in Table 2. Note that most of the items under operating
expenses are assumed remain constant in the next two years.
Year 1 % Year 2 % Year 3 %

Sales 677250 100 720450 100 750652 100
Less: Cost of goods sold 203175 30 216135 30 225195.6 30
Gross margin 474075 70 504315 70 525456.4 70
Operating Expenses
Salaries 210000 31.007752 215000 29.84246 215000 28.64176742
Rent 36000 5.31 36000 4.996877 36000 4.795830824
Utilities 12000 1.77 12000 1.6656257 15000 1.998262844
Sales Expenses 18000 2.66 18000 2.4984385 20000 2.664350458
Insurance 24000 3.54 24000 3.3312513 24000 3.19722055
Depreciation 24000 3.54 30000 4.1640641 30000 3.996525687
Total operating 324000 47.827752 335000 46.498716 340000 45.29395779
Expenses
Net Profit (loss) 150075 22.172248 169315 23.501284 185456.4 24.70604221
Note: The computation from the percentage is the same as the computation that we have in Table
2. Please take note that the 30% is the cost of goods sold. Thus, we assumed that all sales per year is 100
percent giving as the Gross margin of 70%.
BREAKEVEN ANALYSIS
In the projected income statement of Crispy Squash Corp. table 2, the cost of goods sold is 30% of
sales. Given an average selling price of Php 25, the variable cost per unit is Php 7.5 Fixed Costs, on the
other hand, in Year 1 is Php 324 000. Using these figures, the breakeven point will be computed as
follows.

324 000
(BEQ) = 25−7.5
324 000
(BEQ) = 17.5
(BEQ) = 18, 512 units
Each sold crispy squash beyond the BEQ of 18, 512 will result in a profit of Php 7.5, while sales
below the BEQ will result in a loss for the company.
2. Solve for the Breakeven analysis for Year 2.

335 000
(BEQ) = 25−7.5
335 000
(BEQ) = 17.5
(BEQ) = 19, 142 units
IN A NUTSHELL
 The financial Plan includes the financial projections of the new venture. It must provide a summary
of the projection sales, the cost of goods sold, and the general and administrative expenses of the
business, at least for first year and typically for three years.
 In preparing financial projections, the entrepreneur must make reasonable assumptions about
revenues, costs, and expenses.
 Breakeven refers to the volume of sales at which the business neither makes profit nor incurs loss.
The breakeven sales point indicates how many units of the product the business must sell to cover
both variable and fixed costs and expenses.
VALUES INTEGRATION
In today’s generation, managing the finances is a significant value in one’s life especially the young
ones that we have. Thus, in order to help them manage the said finances we introduce the financial plan.
We know that financial plan is essential in business plan therefore, understanding on how to compute the
said values will help the learner or the future entrepreneurs are critically and logically thinker.
CHARISM (CREATIVE)
Organice Corp. is a new business venture. The retailer will sell 350 pesos each clothes.
Therefore, solve for the following projected sales units and pesos. This budget assumes
that the company will have 7 employees who will each be paid 2000 pesos/ month. It is also assuming that
the business will have the following expenses: monthly rental of 5000 pesos for store space, utilities
amounting to 1500/month, a fixed sales expense 3000/month, insurance expense 2000/month, and
depreciation for 2000 pesos/month. Moreover, the company also assumes that the expenses from Jan.-Nov.
are constant except for December where the company will give 13 month- pay to the employees. The first
six months of operations is provided. Compute the expenses of the company for the first-year data in table
1.b. The income statement also includes an estimate the cost of goods sold and assumed to be 35% of total
sales per month. Kindly show the Breakeven analysis in each year for the last part
PROJECTED SALES IN A YEAR
MONTH PROJECTED PROJECTED

SALES(UNITS) SALES (PESOS)
January 190 66500
February 1. 87500
March 2. 113750
April 3. 225750
May 4. 175000
June 5. 84000
July 6. 157500
August 7. 420000
September 3450 8.
October 2025 9.
November 6570 10.
December 8795 11.
Total
EXPENSES IN A YEAR
Directions: Solve the following expenses: Month of December, the total expenses in each month and the
total expenses for a year.
Expenses January February March April May June July August September October November December Totals
Salaries 14000 14000 14000 14000 14000 14000 14000 14000 14000 14000 14000
Rent 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
Expense
Utilities 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
Sales 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
Expense
Insurance 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Expense
Depreciation 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Expense
Total
Expenses
PROJECTED INCOME IN A YEAR

Directions: Solve the projected income in a year using the data above.
Jan. Feb. Mar. Apr. May Jun Jul Aug Sep Oct Nov Dec. Totals
Sales
Less: Cost of
Goods sold
Gross margin
Operating
Expenses
Salaries
Rent
Utilities
Sales Expense
Insurance
Depreciation
Total Operating
Expenses
Net Profit (Loss)

PROJECTED INCOME IN THREE YEARS
Directions: Solve and complete the projected income in 3 years.
Year 1 % Year 2 % Year 3 %

Sales 100 950000 100 2145500 100
Less: Cost of goods sold 3018400 35 332500 35 35
Gross margin 5605600 65 65 1394575
Operating Expenses
Salaries 182000 26.84 11.91
Rent 60000 2.53 1.58
Utilities 18000 3.16 30000 1.4
Sales Expenses 36000 4.74 45000
Insurance 24000 5.26 50000
Depreciation 24000 5.79 55000
Total operating Expenses 320000 48 469600
Net Profit (loss) 7030175 924975
BREAKEVEN ANALYSIS:
Directions: Compute the breakeven analysis in each year. Show your solutions in the space provided.
INDEPENDENT LEARNING TASK

1. Why is it important for a new business venture to prepare financial projections?
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
____________________________________________________.
2. Is it possible for a new business venture to be profitable and yet have financial trouble?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
____________________________________________________________.
REFERENCES:
1. K Kotler,P., and K. Keller.Marketing Management, 12 th ed. 2006.
3. Pathways to Entrepreneurship, Phoenix Publishing House


SENIOR HIGH SCHOOL
INTRODUCTION
According to the business dictionary, operations is defined as jobs or tasks of one or more elements or
subtasks, performed typically in one location. Operations transform resource or data into desired goods,
services, or results, and create and deliver value to the customers. Two or more connected operations
constitute a process, and are generally divided into four basic categories: (1) processing, (2) inspection, (3)
transport, and (4) storage. There is a need to put these funds in income generating financial instruments. In
both cases, the acquisition and use of funds must be well managed for the benefit of the firm. To understand
how to the company manages its finance function, the basic principles of financial management will be
discussed as the initial theme of the chapter. We will likewise explore other topics, including the challenges
of raising funds, the choice between debt financing and equity financing, alternatives on raising funds for
micro and small enterprises, and the role of social bricolage in financing entrepreneurs.
OBJECTIVES

1. demonstrate understanding of operation management;
2. apply the 6 Ms in the transformation process;
3. perform transformation process (IPO).
LESSON PROPER
The 6M’s of OPERATIONS
1. Method
Everything has a right way to do and this right way is known as a method in management. It means an art
of doing. It is a set of procedures and instructions, these are visible methods of a company: Plans, Policies,
Procedures, and Data. The less visible ones include a company’s norms and its culture. The norms and
culture of the society around it and the methods of its customers, suppliers, associates, and competitors.
2. Manpower
When examining the Methods, you now have in place, what is the ideal number of people it will take to
perform these methods and what positions should they be in? How will the personnel be trained and
measured for performance? What is the “cycle time” of each part of the Method?
3. Machine
Machines are the basic tools to produce goods or to generate services. Selection of an appropriate machine
not only enhances efficiency but also saves time and increases revenue. The organization budget are the
crucial criteria while purchasing a machine. Maintenance and overhauling issues along with its life span
also cannot be overlooked. Determining accessibility of the facilities, vehicles and tools needed to
maximize the efficiency and productivity.
4. Material
Material is a basic ingredient in management be it a service industry or a product industry. Most of the
industries locate them self-nearby to the availability of material. Inventory numbers, raw material levels,
quality of obtained materials, set size, surplus/waste materials and shelf life.
5. Money
Management is done to meet day to day business requirements and the funds involved in meeting those
requirements are known as working capital.
6. Management
Management by objectives. This involves setting objectives and targets for different aspects of the
organization. The manager’s job is then to make sure that these objectives are achieved given an allocated
amount of resources. The objectives will either be achieved, exceeded, or fallen short of requiring remedial
action where appropriate.
PRODUCT DESCRIPTION
Product Features
A feature is a fact about your product. Describe the features of your product/service in terms of texture,
color, taste, size, shape and weight. Also include the name of your product and how it looks when you give
it to the customer.
Product Benefits
A benefit is an explanation of what that feature does for your customer. What is the benefit of your product?
How will your product help your customer? How can make the life of your customer easier, richer, or more
pleasurable?
VALUE CHAIN
A value chain is the whole series of activities that create and build value at every step. The total value
delivered by the business is the sum total of the value built up all throughout the business.
PRIMARY ACTIVITIES
https://www.tutor2u.net/business/reference/introduction-to-production-operations
Your primary activities must answer the following questions:

• What do you need to produce?
• How do you produce it?
• How do you distribute it? Where will you distribute it?
• What are your marketing activities?
• What are your sales activities?
• What are your after sales services?
SECONDARY ACTIVITIES
Your secondary activities must answer the following questions:

• How do you procure necessary resources for the enterprise?
• What’s the needed manpower? How do you hire? Compensate? Retain? Or even fire out, if necessary?
• What are the procedures? Policies? Necessary technical knowledge?
• What is the management infrastructure? Organizational chart? Planning? Finance?
Direction: Choose the letter of the best answer. Write the letter on a separate sheet of paper.
1. It is a fact about your product that describe your product/service in terms of texture, color, taste, size,
shape, and weight. What is it?
a. Product benefits
b. Product features
c. Product sample
d. Product output
2. What is this that involves setting objectives and targets for different aspects of the organization?
a. Machines
b. Management
c. Money
d. Materials
3. It is about how organizations produce or deliver the goods and services that provide the reason for their
existence. What is it?
a. Business Management
b. Operation Management
c. Production
d. Production Management
4. Who are they who push and sell the products to the customers?
a. Machines
b. Manpower
c. Method
d. Money
5. What do we call this working capital that meet day to day business requirements and the funds involved
in meeting those requirements?
a. Machines
b. Management
c. Money
d. Materials
6. It means an art of doing. It is a set of procedures and instructions, these are visible methods of a company:
Plans, Policies, Procedures, and Data. What is it?
a. Machines
b. Manpower
c. Method
d. Money
7. It is an explanation of what that feature does for your customer. What is it?
a. Product benefits
b. Product features
c. Product sample
d. Product output
8. It is the whole series of activities that create and build at every step.
a. Operation
b. Product
c. Production description
d. Value chain
9. What is this basic tool that produce goods or to generate services?

a. Machines
b. Management
c. Money
d. Materials
10.What is this basic ingredient in management be it a service industry or a product industry?

a. Machines
b. Management
c. Money
d. Materials
IN A NUTSHELL
Operations can be seen as one of many functions within the organization like for example,
marketing, finance, and personnel. The operation function can be described as that part of the organization
devoted to the production or delivery of goods and services. This means all organizations undertake
operations activities because every organization produces goods and/or services.
There are six Ms of operations: method, manpower, machines, materials, management, and money.
These six are very important in operating a business. Product features and benefits give complete
descriptions to the consumers which lead to a buying customer. Value chain is the whole series of activities
that create and build value at every step. The total value delivered by the business is the sum total of the
value built up all throughout the business.
VALUES INTEGRATION
In today’s generation, managing how your business will operate is a must because it will determine
how will it be going and to achieve its goals. Thus, in order to manage it properly, you need to take a look
on your available resources especially the 6 Ms.
CHARISM (CREATIVE)
Direction: For items 1-10, read very well the concepts below and match Column A with Column B.
__________ 1. Money a. it is the whole series of activities that create and build at every step
__________ 2. Manpower b. it is the funds involved known as working capital
__________ 3. Management c. it is the tangible goods/services that we offer to our customers
__________ 4. Method d. it means an art of doing and a set of procedures and instructions
__________ 5. Materials e. they are the one who push and sell the products to the consumer
__________ 6. Machine f. it is the basic tools to produce goods or generate services
__________ 7. Operation g. it is the basic ingredients in mgt. be it a service/product industry
__________ 8. Value Chain h. it is the transformation of input to output
__________ 9. Process i. this involves setting objectives and targets in the organization
__________ 10. Product j. it is how the organization produce or deliver the goods and services
For items 11-20, write TRUE if the statement is correct and FALSE if otherwise.
11. What is the ideal number of people it will take to perform methods is one question we should consider
in identifying the manpower of our business.
12. Materials are the basic tools to produce goods or to generate services.
13. Everything has a right way to do and this right way is known as a method in management
14. Selection of an appropriate machine not only enhances efficiency but also saves time and increases
revenue.
15. Machine is a basic ingredient in management be it a service industry or a product industry.
16. Capital is the funds involved in meeting the requirements of the operations of a business.
17. Management This involves setting objectives and targets for different aspects of the organization.
18. What is the “cycle time” of each part of the Method is one question to consider in the manpower.
19. Method means the art of doing and is a set of procedures and instructions visible to a company.
20. Determining accessibility of the facilities, vehicles and tools are needed to maximize the efficiency and
productivity.
Perform the transformation process. Think of an input and transform it into and output. Take a picture of
you input before it transformed into output. Don’t forget also to take a photo on the transformation stage
and its output. After performing the transformation process, answer the question below.
Why have you chosen that product or output? Give advantages and disadvantages of it.
____________________________________________________________________________________
____________________________________________________________________________________
_______________________________.
REFERENCES
1. K Kotler,P., and K. Keller.Marketing Management, 12 th ed. 2006.

SENIOR HIGH SCHOOL
INTRODUCTION
In the previous chapter, discussed how resources are being managed for the production activities of
an enterprise, using the Input-Process-Output (IPO) framework. The company utilizes various inputs and
processes them into final product outputs. But these inputs, whether raw materials or factor inputs, have
their respective price tag; and the firm has to spend money these inputs. This is the reason why money is
very crucial in the secure operations of a business enterprise. The firm will need money to buy raw
materials. In the same light, the firm will need money to pay for the compensation of its employees and
managers and for the capital equipment and other physical assets of the firm. Even rent for land, royalties
for a technology and extractive fees on natural resources have to be paid. It is in this light that this chapter
focuses on the finance function of an enterprise. There are two major reasons for managing the financial
resources of a company. First, as mentioned earlier, the firm will need funds to finance the acquisition of
inputs of production as well as the other dimensions of a firm. Second, if the company has excess funds
there is a need to put these funds in income generating financial instruments. In both cases, the acquisition
and use of funds must be well managed for the benefit of the firm. To understand how to the company
manages its finance function, the basic principles of financial management will be discussed as the initial
theme of the chapter. We will likewise explore other topics, including the challenges of raising funds, the
choice between debt financing and equity financing, alternatives on raising funds for micro and small
enterprises, and the role of social bricolage in financing entrepreneurs.
OBJECTIVES

4. define debt and equity financing and explain how they differ;
5. explain the basic principles of financial management;
3. explain why raising a capital for a new venture is a challenge for entrepreneurs;
4. describe the different sources of capital for entrepreneurial ventures;
5. explain why direct and indirect social ties are important when money from external investors;
and
6. explain why some entrepreneurs resort to social bricolage.
LESSON PROPER
PRINCIPLES OF FINANCIAL MANAGEMENT
As mentioned earlier, the two dimensions of financial function of a company consist of the acquisition
of funds and the optimal use of funds. Thus, we can define financial management as a dimension of
management that pertains to the acquisition, financing, and management of monetary assets to achieve
certain organizational objectives. These tasks can be achieved by using principles of sound financial
management. The following 10 guiding principles have been incorporated in the corpus of several textbooks
in financial management.
Principle l: An investment project with a higher return may also have higher risks. There is a trade-
off between risks and returns. When you put your money in a project that promises higher returns
to be prepared for a corresponding higher risk attached to it. Because of this principle, there is a
need for the firm to undertake rigorous study on projects that promises huge returns because they
may expose the company to huge risks and possible losses.
Principle 2: The value of money changes over time. Because money is considered both as a medium
of exchange and as a store of value, the value of a PHP 100,000 today is more compared with PIIP
100 000 next year. Thus, there is a trade-off between using money today to buy a computer or using
the money next period to acquire the same computer. Those that acquired the computer today
currently enjoy the benefits of a computer, while those that postponed their Consumption are
making a sacrifice until the next period. Thus, it is better to have the money now than to have the
money in the future. This is also the principle behind the payment of interest on borrowed funds.
Principle 3: Cash, not profit, is the basis for creating value. Firms create wealth or value through
investment. Since cash, not accounting profit can be reinvested; it can create value for the firm. This
is because accounting profit is a recorded value but does not reflect the firm’s actual cash on hand.
For example, allowance for depreciation is an expense and can reduce the accounting profit of the
firm. However, although depreciation is an expense there is no monetary outlay on the part of the
firm, resulting in a net cash flow higher than the recorded accounting profit.
Principle 4: In creating value, it is important to consider incremental cash flows. In introducing a

project, there is a need to compare the cash flow generated when a project is implemented with the
cash flow if the project was not implemented. This has to be done because the introduction of a new
project may have affected the cash flows of existing projects. For example, a bakery introducing
pan de abodo may increase sales and cash inflows, but this may reduce the demand for regular pan
de sal and reduce the cash flow. Thus, the net or incremental cash flow should be considered.
Principle 5: In a competitive market it very difficult to reap huge profits. Any abnormally high
profit in a competitive market can easily be reduced and removed with the ease of entry of new
players in the market. Thus, there are limited opportunities of creating value based on the normal
profit in a competitive market. In such a case, there are two options open for the firm to create value.
They can either differentiate their product or reduce its cost of production to reap profits from the
market.
Principle 6: You cannot outsmart an efficient capital market. Because all information is incorporated
in the price of securities in an efficient capital market, the participants are quick to react on changes
in prices, what affect share prices are sound decisions of the firm that lead investors to buy their
securities and other financial instruments. Shareholders’ valuation of the security and their demand
for it are influenced by the financial health of the company as reflected by their cash flows. Thus,
the firm cannot artificially mask its financial standing to attract demand for its security.
Principle 7: Creating value for the firm is tempered by the agency problem. The agency problem
arises when the interests of the managers are not aligned with the interests of the shareholders. For
example, increasing the value of the shareholders equity may not be the primary objective of the
managers. Thus, when managers pursue their own interests rather than the interest of the owners,
the optimal wealth of the company is not attained.
Principle 8: Taxes may influence business decisions. Cash flows from a project may increase tax
liabilities of the company, thus reducing the net or incremental cash flow. On the other hand, to
attract more foreign investment government can provide fiscal incentives like tax holidays,
accelerated depreciation to companies that employ more workers, spend on R&D and other capital
expenditures. These tax rebates can increase cash flows for these targeted companies.
Principle 9: Not risks are created equally. Firm face numerous risks. Some can emanate from within
and others can come outside the company. In addition, the probability of occurrence and gravity of
their impact on the company may also vary. In the light of variability of risks, a sound financial
management demands diversification of assets to increase the value of the firm by minimizing the
expectation of risks.
Principle 10: In creating value for the firm, the financial managers must be ethical in their actions
and decisions. This includes competence, confidentiality, integrity, and objectivity in their conduct.
Since trust is the basis of commercial transactions, unethical behavior of managers can lead to loss
of confidence on the firm. This, in turn, may erode the value of the company in the market. Beyond
ethical behavior, firms may engage in activities and programs that project them as socially
responsible firms. This proactive stance of firms is believed enhance value of the firm.
As seen from the discussion, these principles are focused on the second motivation of financial
management, which is the optimal use of funds. As such, these principles are applicable to companies that
are large, have excess funds, and trade their bonds, stocks, and other commercial papers in the capital
market. Thus, these guiding rules can be very relevant to businesses operated by what we referred to in
earlier chapters as Schumpeterian entrepreneurs. For microenterprises increasing the value or wealth of the
enterprise although a legitimate objective, may not be their immediate concern. Many of these small
enterprises are interested in the acquisition of funds to finance the operations of their business.
Whether the firm is large or small, or whether the enterprise is more interested in the acquisition of
funds or the optimal use of funds, the financial health of the company is an important information that
stakeholders would like to know. It is for this reason that companies, big or small prepare various financial
reports to indicate their financial status.
RAISING CAPITAL FOR NEW VENTURES:

SOME CHALLENGES
Any business enterprise, big or small, will require a variety of resources to produce. These resources have
their respective price tags. However, these new business ventures may not have enough internal funds to
finance the acquisition of these resources for production. Thus, some companies may have to resort to
external sources of funds. But raising capital from external sources involves several challenges, whether
the funds are meant for small ventures or for large start-ups. According to experts on financial management,
these challenges revolve around the concept of awareness or knowledge— knowledge on one’s firm,
knowledge on financiers, and knowledge on financial venues. These key challenges are as follows:
1. Need to convince the lenders and investors that the firm is a creditworthy business enterprise.
External funding institutions tend to have lukewarm interest on business ventures with inadequately
prepared business and financial plans. This weakness is perceived as lack of knowledge of business
managers on the companies they manage. This inadequacy may arise from the vagueness of the vision-
mission of the firm; and how this over-all goal of the firm is fully articulated by the owners, managers, and
is workforce
In addition, if the firm does not fully understand the market it is entering, it can give signals to
creditors and lenders that the enterprise is not well thought-out. If the firm has limited grasp of the market
clientele, potential rivals, market risks, and future prospects, the owners did not do their assignments of
studying carefully the market and preparing a business plan.
Moreover, creditors and lenders may not view the company favorably if the prospective
entrepreneurs do not know exactly the amount of money that is needed to start their business. “Any amount
that you can lend or invest is highly appreciated” is an unacceptable answer from a company trying to
impress lenders and creditors. Lastly, the quality of the management team and the company’s human talent
can enhance the credit worthiness of the firm.
In order to respond to this challenge, the firm should prepare a business plan that states its vision-
mission and that enumerates the specific strategies and programs that will be pursued. It should also include
a financial plan that lays down how these programs and strategies are going to be funded, as well as a
human resource plan that will map out the implementation of the programs and strategies.
2. In mobilizing funds, a business venture should recognize the perspectives and interests of lenders
and investors.
In the financial plan of a company, there is a need to identify and choose which fund-raising option
the firm will tap to finance the business venture. If it chooses borrowing, it should understand that borrowed
funds must be repaid. In this light, lenders tend to consider the capacity of the firm to pay the loan In
addition; they look on how the firm manages its risks so it can pay its financial obligations to its creditors.
If the lender is a nongovernment agency, it may not charge high interest rates on loans granted to
the company but may consider other indicators. Aside from the repayment of the loan, such nonbank may
look for indicators on the sustainability of the firm and its social contributions.
On the other hand, if the firm chooses an investor as the source of external funds, the entrepreneur should
be aware that investors are always interested in the value of the money that they have invested. In this light,
they are looking at the profitability, cash flows and growth prospects of the firm. These indicators can
increase the value of their equity invested in the company.
Meanwhile, a nongovernment agency can likewise invest in a new business venture. It may not be as
interested in the changes in value of its equity in the firm but on how the firm is answering its social
obligations particularly in generating employment and addressing poverty.
3. Need to understand alternative venues for financial intermediation.

Aside from the usual bank credit and selling equities in the stock market, there are other venues for
raising funds for new business ventures. One option is called crowdfunding which uses social media as
venue for raising funds for the new business venture. Crowdfunding makes use of social ties, connections,
and networks in raising funds for an emerging company. This option is common in developed economies
including the US and Australia. However, it is also beginning to appear in developing countries including
the Philippines. In the Philippines, crowdfunding can be a platform for several types of fund mobilization
including donations (the crowd contributes money to support a worthwhile program), reward-based (the
crowd puts money into the company in exchange for a product or service), equity-based (contributions from
the crowd make them part owners of the business venture) and credit-based (the crowd extends loans to
the firm with the expectation of being repaid in the future).
Although crowdfunding may appear as a simple venue for fund mobilization, it is, however, not that as
easy to pursue. For one, it needs a huge amount of time and resources to project a good image for the new
business venture to potential investors, creditors, and contributors, using connections in the social media.
Aside from a detailed plan as mentioned in the initial challenge above, the new venture must be specific in
stating the exact amount to be raised. Moreover, the new company must have a strategy on how to create
and sustain the interest of future investors, creditors, and contributors using social media. Related to this,
the manager of a crowdfunding site must conduct due diligence on potential applicants to ensure that
potential crowd contributors will not be deceived. And more importantly, the firm using this alternative
venue should know how to manage what is known as the lead investor game. Usually, Investors get
interested in a new business if other eminent investors have previously committed funds to the new firm.
Once these eminent investors come in, they create a bandwagon effect on other the accumulation of funds
for the new firm.
TYPES OF CAPITAL-DEBT
As implied in our previous discussion, the usual financing of firms are creditors and investors. A
large proportion of transactions of commercial banks deal with the extension ventures mainly used as
working capital and the acquisition of capital equipment. On the other hand, large firms that would physical
plant and other strategic projects may resort through the issuance of bonds in the bond market and market.
However, the choice between debt and equity is for firms in managing the finances. Many mature business
enterprises create a portfolio in sourcing of funds for capital accumulation. They simultaneously borrow
money, issue bonds, stocks, and other commercial for the company. In choosing these alternatives, they
weigh costs of every alternative funding source.
ADVANTAGES AND DISADVANTAGES OF CREDIT FINANCING
For a small amount of money that is immediately needed, probably the most efficient route for
sourcing funds. An entrepreneur can talk a nearby commercial bank to secure a loan.
The bank, submission of its business plan, financial plan, various and other documentary
requirements; after careful evaluation, the bank can issue a check or provide a credit line. A major
requirement on the extension of credit is collateral that the commercial bank can acquire in case the fails to
pay its loan.
Although credit financing may appear to pursue, the payment of the loan becomes part of the fixed
cost in the operation of the business does well or not, the firm is obligated to pay the bank and other creditors
if it defaults or become delinquent, the penalties and surcharges can increase loan repayment. Worse, if the
firm cannot pay its obligation and becomes insolvent, the assets of the firm used as collateral are taken over
by creditors.
ADVANTAGES AND DISADVANTAGES OF EQUITY FINANCING

On the other hand, firms can raise funds by issuing stocks and selling them to potential investors
in the stock market. The main advantage of equity financing is the huge amount of money that can be
accumulated. In addition, it can earn substantial savings for not borrowing and servicing debts. These
potential funds can be used by the firm for its operations and further capital expansion. Since the investors
are interested in the value of their share in the company this may pressure the company and its managers
to provide strategic programs for growth. In addition, the experience of venture capitalists and other
investors can be a source of expertise that the firm can harness. These investors can also advise the
management on strategies on enhancing growth, increasing cash flows, and profit.
The main disadvantage in equity financing is the complexities of preparing and issuing bonds,
securities, stocks, and other commercial papers in the capital market. Aside from due diligence and the
provision of documentary requirements, the financial performance of the company must be reviewed,
evaluated, and rated by independent credit rating agencies. This process is not only time consuming but
very expensive. In addition, the management team can have less control and flexibility as investors actively
participate in the drafting of strategic plans for the firm. Lastly, the monitoring cost of the firm increases
as the management team devote more time and resources in the preparation of information and documents
for investors, credit rating agencies, and regulators.
SOURCES OF CAPITAL FOR ENTREPRENEURS
Our discussion above covers issues and concerns that pertain primarily to large-scale enterprises.
These business ventures usually go to formal financial markets including commercial banks, the bond
market, the securities market, the stock market, and even crowdfunding to raise funds for their new projects
and business enterprises. However, there are numerous small enterprises in developing countries, including
the Philippines, that source their funds beyond what were discussed above. A number of micro- and small-
scale enterprises source their funds from their own savings, specialized programs of commercial banks,
government grants and other NGOs, venture capitalists and business angels.
1. Self-financing. Because of the complexities of using the formal financial markets, many
microenterprises normally source their funds from their own savings. In addition, since many of these
microenterprises are household-based and use family members as workers in all likelihood funding sources
also come from family contributions. For example, many households in the Philippines receive remittances
from their relatives working abroad. A number of these remittance-receiving households spend a portion
of the amount received in entrepreneurial activities. These remittance-receiving households that are
engaged in entrepreneurial activities usually have lower income. Thus, they rely on remittance-financed
entrepreneurship to augment their limited income.
2. Borrowing from local credit market. Because of limited income and lack of savings, on the one hand,
and the difficulties of getting credit in the formal financial market, on the other hand, micro and small
entrepreneurs source their financing needs from the informal credit market in their locality. For example,
owners of stalls and other vendors in many public markets in the country depend on a credit mechanism
known as 5/6 system. This means that if an entrepreneur borrows PHP 5000 from an informal credit
provider he has to repay the creditor PHP 6000 or PHP 150 daily for 40 days. Under this condition, the
implied interest rate is more than 180%, computed on an annual basis. Although the interest rate is quite
exorbitant, many vendors continue to get their financing needs from what we refer to as Loan sharks
because of the simplicity and convenience of paying PHP 150 per day compared to submitting the paper
requirements of formal credit institutions.
To address the exorbitant interest rate charged by informal credit providers, a number of these
vendors have organized themselves and formed credit cooperatives. Under this system, a member can
borrow an amount which is a multiple of his share capital and savings in the cooperative. The interest rate
charged is significantly lower than in the informal credit market and the paper and other requirements are
not as cumbersome as in commercial banks. In addition, at the end of the year, part of the net surplus of the
cooperative is returned to members in terms of dividends and patronage refunds.
3. Borrowing from commercial banks. A number of commercial banks in the Philippines have programs
in support of entrepreneurship. For example, the Land Bank of the Philippines has a Microfinance Program
whose objectives is to reach out to the poor and marginalized that have difficulties getting credit from
formal institutions.
SOCIAL BRICOLAGE
In our discussion above on sourcing of funds, entrepreneurs they come from developed and
developing countries, with businesses, big or micro enterprises, seek outside financing formally through
the capital markets or from the informal credit provider or from agencies and non-governmental
organizations. However, there are enterprises known as social enterprises that tend to shy from these
traditional sourcing of finance.
The concept of social bricolage refers to the behavior of social enterprises that improvise in an
environment of meagre resources. Di Domenico, et.al (2010) enumerated six elements of social bricolage
formation, stakeholder participation, and persuasion for support from others. Given these elements we can
understand why social enterprises normally do not seek funds through debt financing and equity financing.
As social enterprises pursue their primary concern of creating a social value instead of profit, they may not
be interested in seeking credit since debt this will increase their cost of production at the expense of its
social impact. In the same manner, they will shy away from equity financing because they are Unattractive
to investors interested in the firm’s profitability instead of its social contribution. Instead, they seek support
from nongovernment agencies as well as national and international institutions for their financing needs.
As a consequence, many of these social enterprises do a lot of improvisation including recycling, to

cut on cost. For example, there are social enterprises that recycle Tetrapaks or packaging of fruit juices and
transform them into wallets, bags and other containers using informal settlers as workers. These enterprises
create employment with low levels of cost since the raw materials are almost free. At the same time, they
contribute to the protection of environment. Similarly, various products are made from water lilies
harvested from Pasig River by a number of social enterprises using social bricolage. As mentioned earlier,
for the sustainability of these enterprises they seek support from nongovernment agencies, national and
international funding institutions. Others persuade global marketing networks to distribute their socially
relevant products in various parts of the world.
Direction: Give what is asked in the items below. Send your answers in the class GC. (15 points)
Items Answer
1. Give the at least 3 principles of financial A.
management. B.
C.
2. Give three at least (3) importance of A.
managing finances to a business or a firm. B.
C.
3. Give three at least (3) relevance of managing A.
finances to you as a student. B.
C.
4. Give three (3) sources of capital to an A.
entrepreneur. B.
C.
5.Give at least three (3) types of capital- debt. A.
B.
C.
I N A NUTSHELL
Principle l: An investment project with a higher return may also have higher risks. There is a trade-
off between risks and returns Principle 2: The value of money changes over time. Because money
is considered both as a medium of exchange and as a store of value, Principle 3: Cash, not profit,
is the basis for creating value. Firms create wealth or value through investment. Principle 4: In
creating value, it is important to consider incremental cash flows. In introducing a project, there is
a need to compare the cash flow generated when a project is implemented with the cash flow if the
project was not implemented. Principle 5: In a competitive market it very difficult to reap huge
profits. Any abnormally high profit in a competitive market can easily be reduced and removed with
the ease of entry of new players in the market. These principles are focused on the second motivation
of financial management, which is the optimal use of funds. As such, these principles are applicable
to companies that are large, have excess funds, and trade their bonds, stocks, and other commercial
papers in the capital market.
Any business enterprise, big or small, will require a variety of resources to produce. These resources
have their respective price tags. However, these new business ventures may not have enough
internal funds to finance the acquisition of these resources for production.
Crowdfunding makes use of social ties, connections, and networks in raising funds for an emerging
company.
The concept of social bricolage refers to the behavior of social enterprises that improvise in an
environment of meagre resources.
VALUES INTEGRATION
In any business undertaking, the firm will need money to buy raw materials. In the same light, the
firm will need money to pay for the compensation of its employees and managers and for the capital
equipment and other physical assets of the firm. Even rent for land, royalties for a technology and extractive
fees on natural resources have to be paid. It is in this light that this chapter focuses on the finance function
of an enterprise. Thus, the very purpose of this chapter is to manage the capital. This chapter focuses on
how to be a rational being in managing finances; how to be wise in terms in managing finances as well as
on how to be resourceful at all costs.
CHARISM (CREATIVE)
Direction: Read, analyze, and answer the following questions. (5 points each)
1. Explain the basic principles of Financial Management.

______________________________________________________________________________
______________________________________________________________________________
___________________________________________________________________________.
2. Explain why raising capital for a new venture is a challenge for entrepreneurs.
-
______________________________________________________________________________
______________________________________________________________________________
_________________________________________________________________.
3. Explain why some entrepreneurs resort to social bricolage.
______________________________________________________________________________________
______________________________________________________________________________________
___________________________________________________________________________________
4. What are the consequences of not fully understanding the different principles of financial
management?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________.
Direction: Make a simple poem regarding the learning’s that you acquired in managing the finances. (4
Stanzas only with rhyme and with no meter). (20 points).
Rubrics:
Content -5
Organization and structure -5
Creativity -5
Mechanics like with rhyme, 3 stanzas etc. -5
Total -20
REFERENCES:
1. Petty, J. William, Sheridan Titman, Arthur J. Keown, Peter Martin,John D. Martin, and Michael
Burrow “ Principles That Form Financial Management. “Financial Management: Principles and
Applications, 2015
2. “NLDC. National Livelihood Development Corporation”.
3. http:// www.nldc.gov.ph.
4. Arguelles, C.G.” Taking Back Migrants: A Theoretical Investigation on the Low Propensity of
Entrepreneurship in OFW-dependent Households.” 2016


SENIOR HIGH SCHOOL
INTRODUCTION:
While entrepreneurs need to mobilize physical and
financial resources to get their business started, it is critical for
them to develop the capabilities of their employees and build
human capital if they aim for long term growth. In this module,
we begin presenting two different paradigms in managing people.
We will discuss how business can attract, nurture, engage, and retain employees through the
implementation of the basic human resource functions. We will end by discussing the
situational leadership model, which allows entrepreneurs to adjust their leadership style to
fit their employees.
OBJECTIVES:
At the end of the end of this module, you should be able to:
a. Differentiate the strategic human resource approach and the integral human
development approach in managing employees;
b. Discuss how a business can attract, nurture, engage, and retain the talent it needs
to ensure its continues growth;
c. Discuss how companies can build commitment among its employees.
ALTERNATIVE APPROACHES TO MANAGING PEOPLE
There are two approaches that entrepreneurs can adopt in managing its employees.
I. The first is the strategic human resource management (HRM) approach, which is mainstream.
II. The second is the integral human development (IHD) approach, which has emerged as an
alternative paradigm.
I. Under the strategic HRM approach, managers design the

components of the HRM system so that they are consistent with each
other and with the organization's structure, strategies, and goals.
The goal of strategic HRM:
 To develop a human resource management system that enhances an organization's efficiency,

quality, innovation, and responsiveness to customers which, in turn, build competitive advantage.
 human resources are primarily seen as instruments for achieving organizational goals.
 Their contributions can be maximized through the effective implementation of the various HR
functions, including recruitment and selection, compensation and benefits, training and
development, performance evaluation, quality of work life, and employee, and labor relations,
II. The integral human development (IHD) approach, on the other hand, is anchored on the principles
of human dignity and the common good. Respecting human dignity is based on the conviction that each
person, regardless of age, condition, or
ability, is an image of God and so is
endowed with an irreducible dignity or
value. That each person is an end in
himself or herself, never merely an
instrument valued only for its utility-a
who, not a what; a someone, not a
something." Common good, on the other
hand, is defined by the Second Vatican
Council as the sum total of social
conditions which allow people, either as
groups or as individuals, to reach their
fulfilment more fully and more easily."
The various facets of integral human development are as follows:

bodily development, cognitive development, emotional development, social development, aesthetic
development, moral development, and spiritual development.
The manifestations of human development at work are described in Table 11.1.
Table 11.1. Integral Human Development at Work

IHD Dimensions Description
Bodily Developmet The physical structure of the workplace and the design of work
processes and equipment are calculated to protect employees'
health and to respect their overall physical well-being
Cognitive development Employees' expected contributions to the work process are made
intelligible to them. Jobs are kept smart" to exercise and develop
employees' talents and skills. Overall, employee’s cognitive
abilities are matched to proportionately challenging work
Emotional development Through the freedom to take initiative without fear of reprisal,
employees exercise responsibility and accept accountability for
their work.
Social development The organization encourages appropriate expressions of
collegiality in the workplace. It also exhibits a social conscience,"
encouraging the same in employees, and supporting employees
initiatives to serve the wider community
Aesthetic development Craftsmanship is encouraged Within the limits prescribed by their

uses, products are designed and manufactured with an eye for
beauty, elegance, and harmony with nature. Services are
conceived and delivered in ways that honor the dignity of both the
provider and the receiver.
Moral development The organization's managerial practices and work rules recognize
that human acts are as such moral acts Working relationships
demonstrate respect for human dignity of each party to them.
Work is understood as a vocation, and valued as collaboration, in
the presence of God, for one's fellow human being good of one’s
Spiritual development fellow human beings.
Adapted from diffel und Naughton (2001)
ATTRACTING AND RETAINING TALENT
Attracting talent involves the human resource functions of recruitment and selection Recruitment refers to
activities that influence individuals to apply for a job and to accept jobs that are offered to them. Selection,
on the other hand, is the process by which an organization chooses from the pool of applicants the person
that best fits the requirements of the job
Entrepreneurs starting their businesses recruit people by

tapping their own social network, by getting referrals, by
tapping employment agencies, by going to schools,
colleges, and universities; and by participating in job fairs
Companies are now also recruiting online by posting job
openings in their websites, by utilizing job boards, and by
tapping social media, especially through Facebook and
LinkedIn
Before selecting people, the entrepreneur must be clear on

what specific tasks and activities the new employee must perform. This can be done through aform of job
analysis. After this, the entrepreneur must define what knowledge, skills, and experience is are needed to
perform the job well. This is known as competency profiling. For entrepreneurs starting out their
businesses, it would help to translate the results of the job analysis and competency profiling into a brief
written description of the major duties and responsibilities that the new employee must perform (see Figure
11.1 for a sample job description).
Figure 11.1. Job Description of a Sales Associate

General description
Reporting directly to the store manager, sales associates are responsible for selling
the company's products and assisting customers with their product needs They engage customers
by asking them questions and by providing them information about the product's features and
benefits. They also handle returns of merchandise, and help in stocking and maintenance
activities.
Specific duties and responsibilities
1. Acknowledge and greet customers when they enter the store or when they approach the area
where the associate is working
2. Engage the customer through conversation Determine the customer's needs
Provide information about the product (eg, features, values and benefits) when
customers seek information,
4. Know where products are located within the store.
5. Suggest additional items and services that the customer might not have anticipated
they will need.

6. Correctly handle all register transactions
7. Handle returns or complaints graciously,
Treat associates, customers, and vendors courteously
9. Ensure that the store is neat, clean, and organized throughout each business day
10. Actively participate in all programs and procedures that drive sale.
11. Participate in store opening and store closing duties
19. Perform related duties, as required
Minimum qualification, training, and experience
1. Must have some high school education
2. Must have proficient communication skills in English and Filipino
3. Must be proficient in Math
4. Must be able to work in a standard workday as set by the company
5. Must have a flexible schedule and be able to work evenings workers, and holidays if required
6. Previous sales experience is a plus
The job description, as shown above, is important because it

provides the basis for choosing among potential employees
When conducting the job interview and when subjecting
applicants to work sampling (ie, requiring the applicant to
perform a small sampling of actual job activities), the
entrepreneur can use the job description as guide in assessing
the fitness of employees for the job.
Another important human resource function that is critical in

attracting and retaining talent is the administration of
compensation and benefits. This function deals with every type
of reward employees receive for performing their duties and responsibilities These would include wages,
salaries, bonuses, commissions, incentives and both financial and nonfinancial perks. An attractive
compensation package or the promise of potential rewards is an important consideration, especially among
highly-qualified and skilled individuals
1. Discuss the difference between the strategic human resources approach and the integral
human development approach in managing employees. Which do you think is more
appropriate in the Philippine setting? Explain your answer.
2. If business venture does not have the financial resources to pay employees very high
salaries, are there other ways it could attract and retain the talent needs to grow the business?
3. Many studies indicate that job hopping (i.e., moving quickly from one job to another) is
the “new normal” for millennials. What do you think are the reasons for this? What are the
implications of this development to entrepreneurs with new ventures and their human
resource managers?
VALUES INTEGRATION
It is also worth noting that individuals who are highly committed to

their organizations demonstrate higher willingness to share and make
sacrifices to help their organizations especially during hard times.
They are likely to exhibit organizational citizenship or actions that
go beyond the formal requirements of the job. Clearly organizational
commitment works to the benefit of the company. Steve Jobs, the
late cofounder, chairman, and CEO of Apple, Inc., captured this in
his words: "The only way to do great work is to love what you do.
CHARISM (CREATIVE)
1. What are the two approaches in managing employees?

a. Strategic Human Resource Management Approach and Integral Human Development Approach
b. Standardized Strategy and Zone of Proximal Development
c. Integral Human Development Approach and Strategies in Teaching
d. Strategic Human Resource Management Approach and Integral Source of Development
2. This kind of approach has emerged as an alternative paradigm.

a. Approaches in Social Sciences
b. Strategic Teaching Approach
c. Strategic LAN Approach
d. Strategic HRM Approach
3. Which among the following is true about the goal of strategic human resource management approach?
a. Enhances organizations efficiency
b. Nurturing the young learners
c. Responsiveness to calls
d. Coping with the environmental issues
4. They are primarily seen as instruments for achieving organizational goals.
a. Human Resources
b. Managers
c. Board of Trustees
d. Sharehoders
5. The following are functions of Human Resource, EXCEPT?
a. Quality of Work Life
b. Recruitment and Selection
c. Performing Arts
d. Compensation and Benefits
6. It is anchored on the principles of human dignity and the common good.

a. Quality of Work Life
b. Integral Human Development
c. Integral Functions
d. Integral Growth of Employees
7. This is based on the conviction that each person, regardless of age, condition, or ability, is an image of
God and so is endowed with an irreducible dignity or value.
a. Following work ethics
b. Good manners
c. Respecting human dignity
d. Moral standards
8. Jobs are kept smart" to exercise and develop employees' talents and skills. What is this?
a. Spiritual Development
b. Cognitive Development
c. Aesthetic Development
D. Bodily Development
9. Through the freedom to take initiative without fear of reprisal, employees exercise responsibility and
accept accountability for their work
a. Moral Development
b. Aesthetic Development
c. Emotional Development
d. Bodily Development
10. Working relationships demonstrate respect for human dignity of each party to them.
a. Bodily Development
b. Social Development
c. Emotional Development
d. Moral Development
11. Services are conceived and delivered in ways that honor the dignity of both the provider and the
receiver.
12. The organization does not encourage appropriate expressions of collegiality in the workplace.
13. Entrepreneurs starting their businesses recruit people by tapping their own social network.
14. Apprenticeships are frequently used in skilled trade or craft jobs.
15. 16. Attracting talent involves the human resource functions of recruitment and selection.
17. Before selecting people, the entrepreneur must be clear on what specific tasks and activities the new
employee must perform.
18. The job description is important because it provides the basis for choosing among potential
employees.
19. Another important human resource function that is critical in attracting and retaining talent is the
administration of compensation and benefits.
20. For entrepreneurs starting out their businesses, it would help to translate the results of the job analysis
and competency profiling into a brief written description of the major duties and responsibilities that the
new employee must perform.
INDEPENDENT LEARNING ACTIVITY:

1. Look for a business in your locality. Identify a job or position in that business. Interview
the owner (or manager) about the duties and responsibilities associated with this job or
position, and what he considered in hiring the person currently performing the job. Interview
also the employee currently occupying the position, and ask him or her what tasks and
activities he or she is expected to perform. Using the inputs you gathered from your
interviews, create a written job description like the one we have previously discussed, for
the said position.
2. Conduct an interview or a group discussion among employees of a particular business in

your locality. Ask them to assess the company they worked for in terms of how it nurtures
the different facts of integral human development (IHD) among its employees. You may
ask them to rate their company using the scale below, and also to explain why they rated the
company that way.
5- the company nurtures this among employees to a very great extent

4- the company nurtures this among employees to a great extent
3- the company nurtures this among employees to a moderate extent
2- the company nurtures this among employees to a slight extent
1- the company does not nurture this among employees
IHD Dimensions SCORE EXPLANATION
Bodily development
Cognitive development
Emotional development
Social development
Aesthetic development
Moral development
Spiritual development
In 5-10 sentences, answer the following.

What personal insights did you get from the interview or the group discussion? Would you
like to work for a company like this? Why or why not?
________________________________________________________________________
____________________________________________________________
________________________________________________________________________
____________________________________________________________
________________________________________________________________________
____________________________________________________________
REFERENCES:
 Jones, G.R., and J.M. George. Essentials of Contemporary Management. 2nd ed. Burr
Ridge, Illinois: McGraw Hill Irwib, 2007.
 Compendium of the Social Doctrine of the Church.” Pontifical Council for Justice
and Peace 108.
 “Pastoral Constitution Gaudium et SPes.” Second Vatican Ecumenical Council 26.
 Alford, H., and M. Naughton. Managing as If Faith Mattered: Christian Social
Principles in the Modern Organization. Notre Dame University Press, 2011.
 Miranda- Guillermo, L. “Bookshop Thrives with Humanistic Approach,” 2013.
business.inquirer.net/143529/bookshop-thrives-with-humanistic-approach-to-
business
 Meyer, J.P., and N.J.Allen. Commitment in the Workplace: Theory Research and
Application. Thousand Oaks, CA: Sage, 1997
 Sharma, P., and P.G Irving. Four Bases of Family Business Successor Commitment:
Antecedents and Consequences.” Entrepreneurship Theory and Practice, 12-33, 29.


SENIOR HIGH SCHOOL
INTRODUCTION:
While entrepreneurs need to mobilize physical and
financial resources to get their business started, it is critical for
them to develop the capabilities of their employees and build
human capital if they aim for long term growth. In this module,
we begin presenting two different paradigms in managing people.
We will discuss how business can attract, nurture, engage, and retain employees through the
implementation of the basic human resource functions. We will end by discussing the
situational leadership model, which allows entrepreneurs to adjust their leadership style to
fit their employees.
OBJECTIVES:
At the end of the end of this module, you should be able to:
a. Differentiate the strategic human resource approach and the integral human
development approach in managing employees;
b. Discuss how a business can attract, nurture, engage, and retain the talent it needs
to ensure its continues growth;
c. Discuss how companies can build commitment among its employees.
NURTURING AND ENGAGING TALENT
While financial rewards are important, entrepreneurs should not underestimate the power of other aspects
of employment in keeping valuable talent, especially those that belong to Generation Y (millennials). Some
young professionals, for example, might be willing to receive relatively lower compensation in exchange
for flexible work arrangements, which would allow them to spend time for their other interests off the job.
They also appreciate programs that promote health and wellness through better nutrition and regular
exercise programs. It seems that there is some truth to what F&H Solutions Group COO Brad Federman
said: "Paychecks can't buy passion."
What are the different ways of nurturing employees?
Training helps employees do their current work better. This would include on-the-job training, which
involves a trainee working alongside more experienced employees who could teach them the tasks they
need to perform; job rotation, which allows employees to perform different jobs and which provides
exposure to a variety of tasks; apprenticeships, which are frequently used in skilled trade or craft jobs.
Development, on the other hand, prepares individuals for future positions or responsibilities within the
business. Popular methods would include job rotation, job coaching or mentoring by seasoned managers,
and assigning employees with potential to committees or task forces to help solve particular problems
within the organization. Companies might even send employees to attend minars off-the-job, whether these
are within the country or abroad,
Training and development efforts are best done in

tandem with performance evaluation, which are
meant to determine the extent to which employees
perform their work effectively. Managers can use
this to pinpoint employees' areas for development,
and to help them achieve their potentials on the job
BUILDING EMPLOYEE COMMITMENT
Retaining valuable talent depends a great deal on building organizational commitment--the extent to which
an individual identifies with and is involved in his or her organization, and is, therefore, unwilling to leave
it. Entrepreneurs must make sure that as the business grows, employee commitment does not wane.
THREE KINDS OF ORGANIZATIONAL COMMITMENT:
1. Continuance commitment refers primarily to the costs of leaving. For example, an employee might
have second thoughts leaving a company because this might mean giving up an attractive compensation
package or being away from close friends.
2. Affective commitment refers mainly to a person's positive feelings toward the company and what its
core values are.
3. Normative commitment refers to an employee's feeling of obligation to others (eg, the business owner
who gave him his first job, a manager who has served as a mentor) who might be negatively affected by
their departure.
Three kinds of Organizational Commitment:

e. Normative Commitment
f. Affective Commitment
g. Continuance Commitment
______ 1. “ I will not leave the company because I will be leaving a best friend behind.”
______ 2. “ I cannot resign because I become expert as a finance manager because of my employer.”
______ 3. “ I will continue my service here because I learned to love my workplace.”
______ 4. “ I will retire working here because I am grateful with the values they show to the workers.”
______ 5. “ My uncle gave this job for me so I will not dishearten him by leaving.”
VALUES INTEGRATION
It is also worth noting that individuals who are highly committed to
their organizations demonstrate higher willingness to share and make
sacrifices to help their organizations especially during hard times.
They are likely to exhibit organizational citizenship or actions that go
beyond the formal requirements of the job. Clearly organizational
commitment works to the benefit of the company. Steve Jobs, the late
cofounder, chairman, and CEO of Apple, Inc., captured this in his
words: "The only way to do great work is to love what you do.
CHARISM (CREATIVE)
1. Training helps employees do their current work worst.
2. On-the-job training involves a trainee working alongside tenured employees who could teach
them the tasks they need to perform.
3. Job rotation allows employees to perform different jobs and which provides exposure to a variety
of tasks.
4. Apprenticeships are not frequently used in skilled trade or craft jobs.
5. Development prepares individuals for future positions or responsibilities within the business.
6. Job rotation is one of the popular method in developing an employee.
7. Training and development efforts are not the best tandem to be done with performance evaluation.
8. Training and development are meant to determine the extent to which employees perform their
work effectively.
9. Continuance commitment refers mainly to a person's positive feelings toward the company and
what its core values are.
10. Affective commitment refers primarily to the costs of leaving.
11. Normative commitment refers to an employee's feeling of obligation to others.
12. The business owner who gave him his first job, a manager who has served as a mentor falls under
continuance commitment.
13. An employee might have second thoughts leaving a company because this might mean giving up
an attractive compensation package or being away from close friends is an example of a
normative commitment.
14. Training shows that you're committed to providing your employees with the resources needed to
ensure they're doing a good job.
For 15-20., write an assessment to the following questions. (3 points each)
15-17. Why do employees need to show dedication in their work?

18-20. What is the importance of on-the-job training?
INDEPENDENT LEARNING ACTIVITY:

1. Explain in 5-10 sentences the famous quotation of Brad Federman “Paychecks can’t buy
passion.”
2. Being a future professionals enumerate and discuss at least 5 steps and tips to show
commitment in a particular company.
REFERENCES:
 Jones, G.R., and J.M. George. Essentials of Contemporary Management. 2nd ed. Burr
Ridge, Illinois: McGraw Hill Irwib, 2007.
 Compendium of the Social Doctrine of the Church.” Pontifical Council for Justice
and Peace 108.
 “Pastoral Constitution Gaudium et SPes.” Second Vatican Ecumenical Council 26.
 Alford, H., and M. Naughton. Managing as If Faith Mattered: Christian Social
Principles in the Modern Organization. Notre Dame University Press, 2011.
 Miranda- Guillermo, L. “Bookshop Thrives with Humanistic Approach,” 2013.
business.inquirer.net/143529/bookshop-thrives-with-humanistic-approach-to-
business
 Meyer, J.P., and N.J.Allen. Commitment in the Workplace: Theory Research and
Application. Thousand Oaks, CA: Sage, 1997
 Sharma, P., and P.G Irving. Four Bases of Family Business Successor Commitment:
Antecedents and Consequences.” Entrepreneurship Theory and Practice, 12-33, 29.


SENIOR HIGH SCHOOL
INTRODUCTION
If a new business venture is properly managed, it should follow

a steady, if not rapid, growth trajectory. Once the business overcomes
the birth pains, the entrepreneur must continue to look for opportunities
to grow his business. In this module, we will identify the different
growth strategies that an entrepreneur can implement, and cite examples
of Filipino-owned enterprises that have successfully scaled up their
operations. Then, we discuss both positive and negative implications
that growth brings to the company and the entrepreneur. We will also
identify the different exit strategies that an entrepreneur can adopt, if he
chooses to transfer business ownership to another person, sell it to
another party, or if the business does not perform as expected.
OBJECTIVES:
a. Identify the different growth strategies that entrepreneurial ventures can adopt
b. Discuss the implications of growth on a firm and on the entrepreneur
c. Identify the different exit strategies that entrepreneurial ventures can adopt
GROWTH STRATEGIES
Entrepreneurs can utilize the classic Ansoff Matrix as a guide in

charting the growth of their companies. The growth strategies,
according to the Ansoff Matrix, are as follows:
(a) market penetration.
(b) market development,
(c) product development, and

(d) diversification.
MARKET PENETRATION STRATEGY
Utilizing this strategy means selling more of the company's existing products or services to its existing
customers, preferably on a more frequent basis, through price discounts, more aggressive promotion and
distribution efforts, or modest product improvements.
Fast-food establishments located near office buildings, for example, can come up with promos (eg,
discounted combo meals) to encourage its existing customer base of office workers to visit them three or
four times a week rather than just twice a week.
MARKET DEVELOPMENT STRATEGY

Utilizing this strategy means selling the company's existing products to new markets. This can be done by
targeting new geographical markets, catering to new demographic markets, or selling to industrial buyers
what was once sold only to households.
New Geographic market. This means selling existing
products to customers in new locations (eg, other cities,
other provinces, or other countries. For example, Bo's
Coffee Club, which started out as a coffee place in Cebu,
has since branched out to Metro Manila and other parts of
the country. Mang Inasal, which set up its first
branches in Iloilo and Capiz, similarly expanded across
the archipelago.
New demographic market. Demographics are statistical

characteristics of human populations (eg, age, sex,
education, income). Selling to a different demographic
group means offering the same product to a segment of a
market that has a different set of characteristics. For
example, mobile phone manufacturers might initially
target young professionals who have the money to buy
cell phones, but could later target the teenage market too.
Expanding to industrial buyers. Small businesses might begin selling their products to individuals, but
later graduate to servicing industrial buyers Some bakeries, for example, started selling bread to a small
neighborhood. Then later supplied hotel chains
with bread and baked goods. Small
furniture workshops might later expand to
provide the furniture needs of large
business establishments.
PRODUCT DEVELOPMENT
STRATEGY
Using product development strategy means creating new products and services targeted at the firm's
existing markets. This is a logical strategy, especially for companies that understand the needs of their
customers well. Companies can expand their product range by coming up with product innovations,
acquiring rights to produce someone else's product, or buying in a product and "branding" it.
Selecta Ice Cream, for example, has come up with variety
of flavors, from which its loyal customers can
choose. These include the Classic Flavors such as
Chocolate, Ube, Strawberry, and Mango; the
Supreme Flavors such as Rocky Road, Quezo Real, Mango
& Cashews, and Macapuno Ube Langka; and the Co-
Brand Flavors such as Hershey's Milk Almonds, Mrs.
Fields Chewy Chocolate Chip Cookie, and Oreo
Cookies and Cream.
Suyen
Corporation, the company behind Bench, has built a formidable
portfolio of brands, which made it the leading lifestyle retailer in
the Philippines and the region." Its portfolio includes local apparel
and accessories such as Bench, Bench Body, Bench for Her,
Human, Kashieca, and Bench Accessories, international apparel
and accessories such as Celio, American Eagle Outfitters, Karen
Millen, La Senza Lingerie, and Vero Moda; and shoes and bags
such as Aldo, Charles & Keith, Pedro, Call It Spring, and Repetto.
DIVERSIFICATION STRATEGY
The use of diversification strategy means growing the business by introducing new products in new
markets. This is the most capital-intensive, and probably the riskiest, among the four types of growth
strategies because this requires both product and market development efforts.
Diversification can be done through vertical integration or horizontal integration.
I. Vertical integration means expanding the scope of business operations by cither moving backward or
moving forward the value chain. Backward (or upstream) integration refers to taking a step back on the
value-added chain toward the raw materials, while forward (or downstream) integration refers to taking a
step forward on the value-added chain toward the customers.
II. Horizontal integration, on the other hand, occurs at the same level of the value-added chain. It involves
a product or service from a different, but complementary, value-added chain.
IMPLICATIONS OF GROWTH FOR THE FIRM AND THE ENTREPRENEUR
A business venture derives several benefits from growth.
First, it derives cost advantages due to economies of scale. Because the company's level of production
rises, the cost per unit of output decreases due to fixed costs being spread out over more units of output.
Second, a bigger firm gains bargaining power. It is able to get better prices from suppliers, who might be
willing to give a substantial discount for large purchases; or get lower interest for loans from commercial
banks.
Third, growing big enhances the legitimacy of the business, as customers, creditors, investors, and other
stakeholders will think that it is now more stable and worth being associated with.
In other words, the entrepreneur gains more power and access to resources as the business grows bigger.
CHALLENGES FOR GROWING BIG COMPANIES
i. First, the pursuit of growth is bound to increase the

pressure on the company's existing set of employees to
produce or sell more. If not managed properly, this
could result into any or all of the following problems:
decrease in employee morale, stress and burnout, and
increase in employee turnover. These could affect the
quality of service that the company provides, ultimately
affecting customer satisfaction, as well. This can be
addressed by ensuring appropriate staffing levels,
making sure that employees are properly compensated
and recognized for their efforts, and by establishing a
strong team spirit through enlightened and nurturing
HR practices.
ii. Second, growth means having to deal with a greater number of concerns which take so much of the time
and energy of the entrepreneur. Imagine being in charge of marketing, operations, HR, and finance, all at
the same time. The question is: Does the entrepreneur have all of the skills and experience needed to run
an increasingly complex business? If not, this can serve as a limit to the growth of the company. This can
only be remedied by hiring qualified managerial talent that can bring the business to the next level.
iii. Third, rapid growth could result into the company's resources being stretched too thinly. For example,
an unusually big order from a customer is an opportunity that small business would not want to forego, but
would require additional working capital. Growth might also require the acquisition of new equipment and
the hiring of either regular or contractual employees so as to expand capacity. Conceivably, a rapidly
growing firm becomes vulnerable to unexpected expenses that just might go out of control. The
entrepreneur can address these by pouring in more money to the firm, by getting other people to invest in
the business, by availing of a loan, by implementing strict financial controls, or by tempering the pace of
growth.
EXIT STRATEGIES
Entrepreneurs decide to “exit” the business for a variety of

reasons. Some want to spend their time on another endeavor,
perhaps another business. Others might be preparing for
retirement. Some might want to cash in by selling the business to
an interested buyer willing to pay big amount. Others are forced
to cease operations because of continuing losses or because of
bankruptcy. In this module we will discuss several exit strategies.
1. SUCCESSION IN A FAMILY-OWNED BUSINESS
Some entrepreneurs reach a point in their lives where they want to

enjoy the fruits of their labor. They want less stress and more leisure
time for themselves, something they cannot do if they are still actively
engaged in managing the business. However, they want to keep the
business under the control and management of the family. So they
choose to transfer ownership of their businesses to family members.
They can do this gradually by sharing power with their chosen
successors, exposing them to the various aspects of the business until
they gain enough confidence and experience to eventually take over.
Some set up a trust--an agreement between the entrepreneur and
a trustee («g., bank officers or attorneys). The trustee receives
legal title to the property (eg, stock in the company) and hold it
for the beneficiaries of the trust (eg, entrepreneur's children). The
entrepreneur, therefore, retains control of the company for a
limited period of time, after which the beneficiaries receive the
title of the stock and assume control of the business
2. SELLING THE BUSINESS
Entrepreneurs also have the option to sell the business. They may decide to sell their equity to insiders (i.c.,
their managers and employees) or to outsiders (i.e, individual or institutional buyers).
 Management buyout. When an entrepreneur decides to sell the business, he could offer it to top
managers, who are not co-owners of the business. These individuals presumably understand the
company's products and services, it finances, its structure, its culture, its various stakeholders, and
its prospects for the future, and might be interested to become the new owners of the business. If
they have enough cash, they can make an outright purchase, or they can negotiate an agreement,
under which they make a down payment and then pay the balance over a period of time.
 Another option is the leveraged buyout. Under this arrangement, the managers borrow money from
a bank in order to pay the owner an agreed-upon price. The lenders can, then, accept an equity
position in the company or ask the new owners to pledge their stock as collateral for the loan. Since
the new owners involved in a leveraged buyout are already running the business, there is not much
disruption in the company's operations
Employee stock ownership plan. (ESOP). An employee
stock ownership plan involves giving employees shares
in the company as a bonus, depending on the
profitability of the company. Under an ordinary ESOP,
the entrepreneur sets up an employee stock ownership
trust (ESOT) and contributes a certain percentage of the
company's payroll annually in the form of cash or stock.
If the contributions are in cash, the trust purchases
shares of the company's stock at fair market value. If the
contributions are in stock, the shares are simply held in
the trust for employees. In this way, ownership is
gradually transferred to the employees.
The ESOP can also take the form of a leveraged plan.

Under this arrangement, the ESOT borrows money from
a bank or other financial institution and uses the loan to
buy stock from the company.
The company guarantees that it will contribute

sufficient funds or stock to the ESOT to cover both the
principal and interest of the loan, and it pledges stock in
the company as collateral for the loan.
The ESOP provides a mechanism to reward employees who have been loyal to the venture, particularly
during difficult times. It also allows entrepreneurs to gradually exit from their companies. Over a period of
time, such plans allow entrepreneurs to transfer ownership of the business to employees.
Sale to outsiders. While many businesses

founded by entrepreneurs are sold to insiders,
others are sold to people who are not currently
involved in the company. Potential buyers
include direct competitors who want to expand
their market share, nondirect competitors who
wish to enter into market the entrepreneur's
company currently serves, and noncompetitors
who see the company as a good investment
opportunity.

If the entrepreneur has decided to sell the business, but does not need to sell immediately, he can do the
following activities that can raise the value of the business:
(a) concentrate on keeping costs under control:
(b) focus on getting healthy margins;
(c) ensure that the capital equipment are up-to-date and properly maintained:
(d) maintain a good management team; and
(e) get all financial statements in order
BANKRUPTCY
Bankruptcy happens when a company cannot pay its debts. In other words, it lacks the resources to meet
its existing obligations.
Tell-tale signs of bankruptcy include the following:
(a) the sudden departure of top people;
(b) supplies and materials needed to meet orders are lacking
(©) large and increasing discounts to customers;
(d) payroll taxes are not promptly paid;
(e) demands from creditors that payments be made in cash; and
(f) growing complaints from customers about poor service and product quality.
For most companies, the chances of recovering from bankruptcy are slim. Most of them must liquidate or
sell their assets so that they could pay off their creditors. The company, therefore, ceases to exist.
Other companies engage in reorganization--efforts to save the company from liquidation. In this case,
creditors give bankrupt companies a chance to pay their debts gradually. These companies must present a
plan showing how future income will be budgeted and how their liabilities will be paid. This is permitted
by the courts only when there is a reasonable chance for the company involved to actually repay a sizeable
portion of its debts. Some of these companies manage to recover, and ultimately survive.
1. What do you think is the most appropriate growth strategy for small- or medium- scale company? Explain
your answer.
2. What are the implications of rapid business growth to the entrepreneur? What do you think should he do
to manage this growth properly?
3. Why do business go bankrupt? What do you think are the main reasons for the failure of many businesses,
especially micro and small scale enterprise? What can be done to keep small businesses viable and to
increase their chances of growing bigger and stronger?
VALUES INTEGRATION
Entrepreneurship, just like any human activity, is exciting precisely because it is uncertain. There
is both the risk of failure and the promise of success. Many of our successful entrepreneurs started out with
ideas that failed, but they persevered until they found the right formula. This is a testament to their tenacity:
As F. Scott Fitzgerald once said, "never confuse a single defeat with a final defeat."
CHARISM (CREATIVE)
1. Market Penetration Strategy means selling more of the company's existing products or services to
its existing customers.
2. One of the most frequent basis of market penetration strategy is modest product improvements.
3. Market Development Strategy can be done by targeting new geographical markets.
4. New Geographic market means selling existing products to customers in new places.
5. Demographics are statistical characteristics of mortality rate and death rate.
6. Selling to a different demographic group means offering the same product to a segment of a
market.
7. Small businesses begin to sell their products to wider scope of customers.
8. Companies cannot expand their product range by coming up with product innovations.
9. Exit strategy is the most capital-intensive, and probably the riskiest.
10. Diversification has four types namely: horizontal, vertical, conglomerate and concentric.
11. Horizontal integration means expanding the scope of business operations by cither moving
backward or moving forward the value chain.
12. Vertical integration occurs at the same level of the value-added chain.
13. Bankruptcy happens when it lacks of resources to meet its existing obligations.
14. Growing complaints from customers about poor service and product quality is a sign of
bankruptcy.
15-17. Why do business owners need to value their customers?
18-20. Provide ways and means on how to avoid bankruptcy
INDEPENDENT LEARNING ACTIVITY

1. Interview an entrepreneur in your locality. Find out what he or she has done for his business to grow.
Under which of the four growth strategies does this fall? What facilitated or hindered the entrepreneur’s
attempts to grow his or her business?
2. In some fishing communities, fisher folk would convert some of their catch into dried fish or dried squid,
and then sell these directly to the market, rather than the middlemen. This is an example of forward
integration. Come up with other diversification strategies that farmers, fisherfolk, or traders in your locality
can adopt. What resources would they need to execute this strategy well?
3. There is a general assumption that rapid growth is good for business, and that “bigger is better.” But
there is also a belief that “small is beautiful,” meaning that some businesses are better served by keeping
the scope of its operations manageable. Choose one from the assumptions and come up with arguments and
evidences to support your positions.
REFERENCES:
 Ansoff, I. “Strategies for diversification.” Harvard Business Review 35, no. 5 (September 1957):
113-124.
 “Selecta Ice Cream Scoops of Happiness.” www.catjuan.com/2014/06/18/selecta-ice-cream-
scoops-of-happiness/
 www.bench.com.ph/brands.php
 Gulle, J. “Grow Your Business Through Vertical Integration.” Entrepreneur Philippines. Accessed
2012. www.entrepreneur.com.ph/startup-tips/grow-your-business-through-vertical-integration.
 Hisrich, R., M.Peters, and D. Shepherd. Entrepreneurship, 9 th ed. McGraw- Hill International
Edition, 2013.
 Baron, R., and S.Shane. Entrepreneurship: A process Perspective, 2 nd ed. International Student
Edition. South-Western Cengage Learning, 2008.

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Paul University Philippines

BASIC EDUCATION UNIT

DYNAMIC LEARNING PLAN

Prepared by: Checked by:

MISS. CLARISSA A. DUMANACAL MRS. LOIDA M. ESMUNDO

Verified by: Approved by:

MRS. JANETTE T. FERMIN MRS. GLENDA P. CARONAN

BASIC EDUCATION UNIT

UNIVERSITY VISION-MISSION STATEMENT

ST. PAUL UNIVERSITY PHILIPPINES is an internationally recognized institution dedicated to

1. Quality, Catholic, Paulinian formation, academic excellence, research, and community

BEU VISION-MISSION STATEMENT

PAULINIAN CORE VALUES

CHARITY (COMPASSIONATE) – urged on by the LOVE OF CHRIST, the Paulinian is warm,

MOST ESSENTIAL LEARNING COMPETENCIES

Quarter Content Standard Performance Most Essential Learning

BASIC EDUCATION UNIT

Production management deals with decision-making regarding the quality, quantity,

This module is designed for you to:

The Importance of Production Management to the Business Firm

1. Accomplishment of firm’s objectives

The Importance of Production Management to Customers and Society:

INPUT THROUGHPUT OUTPUT MARKETING DESIRED

FUNCTION OF PRODUCTION PROCESS

7 Primary Principles of Production Management

Shorter set-up times

What Are the Main Advantages of an Effective Production Management Solution?

1. What do you think about production management using Internet of Things

The Importance of Production Management to the Business Firm

INDEPRENDENT LEARNING TASK

1. K Kotler, P. and K. Keller. Marketing Management, 12th ed. 2006.

CONGRATULATIONS! YOU HAVE COMPLETED LEARNING PLAN 1!

BASIC EDUCATION UNIT

This module is designed for you to:

WHAT IS A FINANCIAL PLAN?

The financial Plan includes the financial projections of the new

PREPARING FINANCIAL PROJECTIONS

In preparing financial projections, the entrepreneur must make reasonable

Table 1. Sales Forecast of Pinoy Corp, First year by Month

The second table will show PINOY CORPORATION’S proposed

Expenses January February March

Salaries 75, 000 75, 000 75, 000

Rent Expense 30, 000 30, 000 30, 000

Utilities 4, 000 4, 000 4, 000

Sales Expenses 15, 000 15, 000 15, 000

Insurance 2, 000 2, 000 2, 000

PROJECTED INCOME STATEMENT

In addition to the monthly projections, the entrepreneur must also prepare a

Table 4. Pinoy Corporation, Projected Income Statement, First three Years

PROBLEM SOLVING NO. 1

Month Projected Projected

Let x, be the number of projected sales (pesos)

C. ∑ 𝑝𝑟𝑜𝑗𝑒𝑐𝑡𝑒𝑑 𝑠𝑎𝑙𝑒𝑠/𝑢𝑛𝑖𝑡𝑠 = 27090

PROBLEM SOLVING NO. 2

Expenses for each month December expenses

3 employees x 5 000 = 15,000 15 000 x 3 = 45 000 with bonus and 13 month-pay

Estimate of Cost of goods sold at 30% of total sales per month

Projected Income Statement (Table 2)

2. A. Less: Cost of Goods Sold (COGS) = 30% x sales

2. B. Gross margin (GM) = Sales – Less: Cost of Goods Sold

TOE =24 500

2. E. Less: Cost of Goods Sold (COGS) = 30% x sales

2. F. Gross margin (GM) = Sales – Less: Cost of Goods Sold