4 M’s of Production and Business Model

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 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.

This module will guide you to demonstrate understanding of the 4M’s of operations and for you to be able to:

• Describe the 4M’s (Manpower, Method, Machine, Materials) of operations in relation to the business
opportunity;
• Develop a product description;
• Create a prototype of the product;
• Test the product prototype;

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.

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.

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.

Machine

- Discusses about manufacturing equipment used in the production of goods or delivery of services.

Module 4 - 4 M’s of Production and Business Model pg. 1

Four M’s
• Manpower
• Method
• Machine
• Materials

OUTPUT

- 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.

Method

- Production method discusses the process or way of transforming raw materials to finished products. The resources
undergoes 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

- 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.

Module 4 - 4 M’s of Production and Business Model pg. 2

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.”

Module 4 - 4 M’s of Production and Business Model pg. 3

“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.

• Introduction- this part discusses what is the business plan all about.

• Executive Summary- is part of the business plan which is the first to be presented but the last to be made.

• Management Section- shows how you will manage your business and the people you need to help you in your
operations.

• Marketing Section- shows the design of your product/service; pricing, where you will sell and how you will introduce
your product/service to your market.

• Financial Section- shows the money needed for the business, how much you will take in and how much you will pay
out.

• Production Section- shows the area, equipment and materials needed for the business.

• Competitive Analysis- is the strategy where you identify major competitors and research their products, sales and
marketing strategies.

• Market- The persons who will buy the product or services

• Organizational chart- is the diagram showing graphically the relation of one official to another, or others of a company.

Module 4 - 4 M’s of Production and Business Model pg. 4