ENTREPRENEURSHIP

Week 6
4Ms OF PRODUCTION AND BUSINESS MODEL
COMPETENCIES CODE
4. Demonstrate understanding of the 4Ms of Operations:
4.1 Describe the 4Ms (Manpower, Method, Machine, Materials) of CS_EP11/12ENTREP-0h-j-12
operations in relation to the business opportunity:
4.2 Develop the business model CS_EP11/12ENTREP-0h-j-13

Lesson for Discussion:

In developing a business plan, we also have to consider the importance of the 4M’s of operations in all business opportunities.
Because it helps you to identify the problems of the business in the future and in actual situation especially in the production process
and marketing.
In the application of your 4M’s of production, it is best to consider the customer’s point of view in terms of their influences as to
why they will buy a particular product, does your product aim to answer each consumer’s wants or needs and meet up with their
expectations over the product, and how do suppliers, value chain and supply chain affects the business and production.

LESSON 1: 4M’s of Operation in Relation to the Business Opportunity and Developing a Business Model
In your previous lesson, you learned about the 7P’s of Marketing Mix - Product, Place, Price, Promotion, People, Packaging and
Positioning in relation to business opportunity, wherein marketing is about creating and accumulating customers. Marketing plans
are intended to capture a market portion and to setback competitors.

Brand name was also introduced, where it is a name, symbol, or other feature that distinguishes a seller’s goods or services in
the marketplace. Your brand is one of the greatest assets because your brand is your customers’ over-all experience of your business.

Experts believed that a good brand can result in better loyalty for its customers, a better corporate image and a more relevant
identity. The most serious issues in the whole production system are the inputs and the transformation process. Their quality
determines the quality of the output.

The factors involved in the input and the production process are usually referred to as the Four M’s of production, namely
Manpower, Method, Machine, and Materials.
Four M’s
 Manpower
 Method OUTPUT
 Machine
 Materials
1. MANPOWER
Talks about human labor force involved in the manufacture of products. It is measured as the most serious and main
factor of production. The entrepreneur must determine, attain and match the most competent and skilled employees with the
jobs at the most appropriate time period. Educational qualifications and experience, status of employment, numbers of
workers required, skills and expertise required for the job are some of the manpower criteria that must be highly considered by
the entrepreneur.
2. MATERIAL
Talks about raw materials necessary in the production of a product. Materials mainly form part of the finished product.
Just in case the resources are below standard, the finished product will be of unsatisfactory as well. The entrepreneur may
consider cost, quality, availability, credibility of suppliers and waste that the raw material may produce.
3. MACHINE
Discusses about manufacturing equipment used in the production of goods or delivery of services. In the process of
selecting the type of equipment to purchase, the entrepreneur may consider types of products to be produced, production
system to be adopted, cost of the equipment, capacity of the equipment, availability of spare parts in the local market,
efficiency of the equipment and the skills required in running the equipment.
4. METHOD
Production method discusses the process or way of transforming raw materials to finished products. The resources
undergo some stages before it is finalized and becomes set for delivery to the target buyers. The selection of the method of
production is dependent on product to produce, mode of production, manufacturing equipment to use and required skills to
do the work.

PRODUCT DESCRIPTION
It is the promotion that explains what a product is and why it’s worth buying? The purpose of a product description is to
provide customers with details around the features and benefits of the product so they’re obliged to buy.

Know who your target market is, focus on the product benefits, tell the full story, use natural language and tone, use power
words that sell, and use good images. These are guidelines for you to have a good product description; since some customers
are very particular with it since they consider the welfare of their family, if it is safe to use.

PROTOTYPING
A duplication of a product as it will be produced, which may contain such details as color, graphics, packaging and directions.
One of the important early steps in the inventing process is making a prototype. Benefits are the reasons why customers will
decide to buy the products such as affordability, efficiency or ease of use. The features of the product or service merely provide a
 descriptive fact about the product or service. It is better to test your product prototype to meet customers’ needs and
expectations; and for your product to be known and saleable. Pretesting of the product or service is similar to a sample of the
product or service given to the consumer free of cost in order that he/she may try the product before committing to a purchase.

SUPPLIER
An entity that offers goods and services to another business. This entity is among of supply chain of a business, which may
offer the main part of the value contained within its products. Certain suppliers may even involve in drop shipping, where they ship
goods directly to the customers of the buyer.

Suppliers are your business partners; without them your business will not live. You need them as much as you need your
customers to be satisfied. But as an entrepreneur you have to choose a potential supplier that has loyalty and value your
partnership; a supplier that would lead you to the fulfillment of your business objectives, mission and vision.

Value chain is a method or activities by which a company adds value to an item, with production, marketing, and the provision
of after-sales service. The main goal and benefit of a value chain, and therefore value chain analysis, is to make or support a
competitive benefit.

A supply chain is a structure of organizations, people, activities, data, and resources involved in moving a product or service
from supplier to customer.

The main objective of supply chain management includes management of a varied range of components and procedures, for
instance, storing of raw materials, handling the inventory, warehousing, and movement of finished product from the point of
processing to the point of consumption.

Business model describes the reasons of how an organization creates, delivers, and captures value in economic, social,
cultural or other contexts. The development of business model construction and variation is also called business model innovation
and forms a part of business plan.

It is a company's plan for how it will make revenues and make a profit. It describes what products or services the business
plans to manufacture and market, and how it plans to do so, as well as what expenses it will incur.

There are important phases in developing your business model, namely; Identifying the specific audience; establishing
business process; recording a business resources; developing strong value proposition; determining key business partners; and
creating a demand for today’s generation strategy and be open for innovations.

After developing a business model, we will proceed in developing a business plan. To be able to successfully complete this
module, you need to prepare a business plan and operate your plan and finally keep records of your business transactions.

Business plan is an important tool for you to have an idea about the future of your business. Your business plan will be your
guide in the moment you will be implementing and operating your business proposal.

You can also make use of the business plan in securing investment capital from financial institutions or lenders. It can also be
used to influence people to work for your enterprise, to secure credit from suppliers, and to fascinate potential customers.
 Read the stories of Jessie, Mercy and Monna below to fully understand the importance of having a business plan:

“Jessie is the eldest of five children of Mr. & Mrs. Natividad. The family is having difficulty to support for their everyday
needs. Because of this, Jessie tried to enter selling banana cue and with his dream to make his business grow, he put up many
stalls in the community without considering the advises of his friends to make a business plan before implementing his
decision. After a few months his stalls shutdown.”

“Mercy is the youngest in the family. She found out that she loves to cut hair and apply make up to her friends. Until such
time that her friends introduced her to their friends too for haircut and make up when there are occasions. Few months after,
Mercy was told by her friends to put up a beauty parlor in their place. So she asks her mother who is also a businesswoman to
teach her how to make a business plan and eventually ended with a successful business.”

“Monna is a diligent student. Because of her knowledge gained from school about business plan she was able to enhance
her skills in business and finally found herself into his laundry shop business.”

Each scenario taught us that business is not just about how much income or profit you can get but it’s about the life of your
business. And in having a business, you also have to consider technological forces, Social forces, Political forces, Cultural
forces, Economic forces and Legal forces.

The following are the components found in a Business Plan.

I. Executive Summary
 is part of the business plan which is the first to be presented but the last to be made.
 In your executive summary, grab attention with a compelling hook, introduce your company and its mission,
clearly state the problem you solve and your solution, briefly identify your target market, and outline your
business model; optionally, include key financial highlights and state the purpose of the plan.

II. Company Description

 n your company description, concisely state your business name and legal structure, articulate your mission
and optional vision, briefly describe your products/services and their value, and mention your target market;
optionally, introduce key team members.
III. Market Analysis
 Thoroughly describe your target market, analyze your competition, assess market size and growth, and
discuss relevant industry trends.
IV. Products and Services
 Detail your product or service offerings, highlight their unique features and benefits, and explain your pricing
strategy.
V. Marketing and Sales Strategy
 Outline your marketing plan, including your target audience, key messages, and marketing channels; then,
describe your sales plan, outlining your sales channels, sales processes, and team structure.
VI. Operations Plan
 Explain your production or delivery process, describe your location, and list the key resources needed for your
business.
VII. Management Plan
 Introduce the key members of your management team, emphasizing their relevant experience and expertise.
VIII. Financial Plan
 Present your start-up costs, funding sources, projected income statement, and projected cash flow.
IX. Appendices

ENTREPRENEURSHIP
Week 6
4Ms of PRODUCTION AND BUSINESS MODEL
Assessment and Activities
Name: _____________________________________ Grade & Section: _____________ Score: _____
A. TRUE OR FALSE: Write TRUE if the statement is correct, otherwise write FALSE if the
statement is incorrect on the space provided.

1. Output represents the final products from the production process and distributed to the customers.
2. The 4M’s in the production operation are the materials, manpower, machine and money.
3. Manpower in production operation refers to the workers involved in the production of goods.
4. Product description is the marketing copy that explains what a product is and it’s benefits.
5. Prototype is a replica of a product.
6. Product to produce is one of the factors to be considered in the production method.
7. Educational qualifications and experience are criteria in considering manpower.
8. Skills and expertise are not important in considering manpower.
9. Benefits are the reasons why customers will decide to buy the products.
10. Machine refers to the manufacturing equipment.
11. Supplier is an entity that supplies goods and services to another organization.
12. Supply chain is a system of organizations, people, activities, data and properties involved in moving a
product or service from supplier to customer.
13. Business model describes the rationale of how an organization makes, transports, and
captures value in economic, social, cultural or other contexts.
14. In selecting the type of equipment to purchase, the entrepreneur may consider cost and capacity of the
equipment.
15. Value chain is the process or activities by which a company adds cost to an article, that includes production,
promotion, and providing of after-sales service.

B. MULTIPLE CHOICE. Encircle the letter of the correct answer only.

1. Which of the following refers to the human workforce involved in the manufacture of products?
A. Materials B. Method C. Machine D. Manpower
2. The 4M’s of production are as follows except ONE.
A. Management B. Manpower C. Method D. Machine
3. Which of the following refers to the marketing copy that explains what a product is and why it is worth
purchasing?
A. Prototype B. Product description C. Business Model D. Suppliers
4. It represents the final products from the production process and distributed to the customers.
A. Input B. Supplies C. Output D. Materials
5. It is a replica of a product.
A. Prototype B. Product description C. Business Model D. Suppliers
6. Which of the following refers to the system of organizations, people, activities, information, and
resources involved in moving a product or service from supplier to customer?
A. Supply chain B. Value chain C. Business model D. Prototype
7. Which of the following is the process or activities by which a company adds value to an article, including
production, marketing, and the provision of after- sales service?
A. Supply chain B. Value chain C. Business model D. Prototype
8. It describes the rationale of how an organization creates, delivers, and captures value in economic,
social, cultural or other contexts.
A. Prototype B. Product description C. Business Model D. Suppliers
9. It is an entity that supplies goods and services to another organization.
A. Prototype B. Product description C. Business Model D. Suppliers
10. Which of the following refers to the manufacturing equipment used in the production of goods or
delivery of services?
A. Machine B. Manpower C. Method D. Materials
11. It refers to the process or technique of converting raw materials to finished products.
A. Machine B. Manpower C. Method D. Materials
12. It simply refers to the raw materials needed in the production of a product.
A. Machine B. Manpower C. Method D. Materials
13. Statement I- Skills and expertise is not important in considering manpower.
Statement II- Benefits are the reasons why customers will decide to buy the products.
A. Only Statement I is true. C. Both Statements are true.
 B. Only Statement II is true. D. Both Statements are false.

14. Statement I- Educational qualifications and experience is one of the criteria in considering manpower.
Statement II- Product to produce is one of the factors to be considered in method or production
method.
A. Only Statement I is true. C. Both Statements are true.
B. Only Statement II is true. D. Both Statements are false.

15. Statement I- In selecting the type of equipment to purchase, the entrepreneur may consider cost and
capacity of the equipment.
Statement II- The purpose of a product description is to supply customers through details around the
features and benefits of the product.
A. Only Statement I is true. C. Both Statements are true.
B. Only Statement II is true. D. Both Statements are false.