4 M’S OF

PRODUCTION AND
BUSINESS MODEL
The Three Important Elements in the
Production System

Input Process Output

The Input includes the following:

 1. Manpower
 2. Materials
 3. Machine
 4. Design
 5. Instructions
 The Production process, also referred to as the
transformation or conversion process, is the stage of
production where the materials are transformed into the
final product with the aid of manpower and machine.
 The output represents the final product from the
production process and distributed to the customers
The Four M’s in the Production System

4 M’s

1. Manpower
Output
2. Method
3. Machine
4. Materials
Manpower

 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,
number of workers required, skills and expertise required for the job
are some of the manpower criteria that must be highly considered by
the entrepreneur
Materials

 It simply refers to the 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 unsatisfactory as well.
 The entrepreneur may consider cost, quality, availability,
credibility of suppliers and waste that the raw materials
may produce.
Machine

 Machine is 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.
Method

 Method or production method is the process or way of

transforming raw materials to finished products.
 The resources undergo some stages before it is finalized
and become 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

 It is the physical output of the whole production

process.
 It should be valuable and beneficial to the
consumers and should satisfy their basic needs and
wants.
 A product can be heterogeneous or homogeneous
Heterogeneous product

 A heterogeneous product has dissimilar characteristics,

parts, and physical appearance.
 It can be easily identified from other products.
Entrepreneurial ventures that produce heterogeneous
products include makers of furniture, bags, and home
decors.
Homogeneous product

 homogeneous product has a physical appearance, taste, or

chemical content that can hardly be distinguished from
that of the other products.
 Businesses that produce homogeneous products include
makers of soft drinks, and medicines
Guidelines for you to have a good product
description;
 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.
 Some customers are very particular with it since
they consider the welfare of their family, if it is
safe to use.
 Prototype
 A prototype is a duplication of a product as it will be
produced, which may contain such details as color,
graphics, packaging and directions.
 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.
 The entrepreneur’s main concern is the satisfaction of a
customer, for they are the life blood of the business. Without
them, all the efforts, will be wasted as well as the chance to
venture into a new business.
 In a manufacturing venture, the supplier plays a vital role. They 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 who has
loyalty and values your partnership: a supplier who would lead you
to the fulfillment of your business objectives, mission and vision.
 This entity is part of a 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.
How do supply chain management systems coordinate
planning, production, and logistics with suppliers?

 Supply chain management systems automate the flow of

information among members of the supply chain so that they can
use it to make better decisions about when and how much to
purchase, produce, or ship.
 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
 Value chains help increase a business's efficiency
so the business can deliver the most value for the
least possible cost.

 The end goal of a value chain is to create a

competitive advantage for a company by
increasing productivity while keeping costs
reasonable
 Business model
 Business model describes the factors 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 part of a business plan. It is a company's
plan on 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 business resources; developing strong value
proposition; determining key business partners; and creating
demand for today’s generation strategy and being 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
 What is a Business Plan For? Entrepreneurs who plan to enter
any business endeavor must have a business plan on hand to
guide them throughout the process. Different business plans are
prepared for different purposes. There are business plans written
prior to setting up an enterprise, which are similar to a
prefeasibility study and a feasibility study. Many new
enterprises need to convince prospective business investors
about the soundness and potential of their business
 There are business plans that are written during the first few years of
the enterprise in order to guide the entrepreneur on which strategies
would be most beneficial for the enterprise to take. And there are
business plans that are focused on bringing the enterprise to a higher
level of growth, a period where the enterprise has already reached its
peak and would want to enter into another endeavor by creating and re-
establishing itself.
 Clearly, a business plan serves many masters.
 First, it serves the entrepreneur who must set a navigational course.
 Second, it serves investors and cautious financiers.
 And third, it serves the managers and staff of the organization so that
they will know the strategies and programs of the enterprise
 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 – refers to 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