4 M’s of Operations in Relation

to
the Business Opportunity and
Developing Business Model
ENTREPRENEURSHIP
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.
- 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.
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.
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.
 Forecasting
the Revenues
of the Business
Revenue
is a result when sales exceed the cost to
produce goods or
render the services. Revenue is recognized
when earned, whether paid in cash or
charged to the account of the customer.
Other terms related to revenue includes
Sales and Service Income. Sales is used
especially when the nature of business is
merchandising or retail, while Service
Income is used to record revenues earned
by rendering services.
The entrepreneur would want his/her
forecasting for his/her small business as
credible and as accurate as possible to
avoid complications in the future. In
estimating potential revenue for the
business, factors such as external and
internal factors that can affect the
business must be considered. These
factors should serve as basis in
forecasting revenues of the business.
These factors are:
1. The economic condition of the country.
When the economy grows, its growth is
experienced by the consumers. Consumers
are more likely to buy products and
services. The entrepreneur must be able to
identify the overall health of the economy
in order to make informed estimates. A
healthy economy makes good business.
2. The competing businesses or competitors.
Observe how your competitors are doing
business. Since you share the same market with
them, information about the number of
products sold daily or the number of items they
are carrying will give you idea as to how much
your competitors are selling. This will give you a
benchmark on how much products you need to
stock your business in order to cope up with the
customer demand. This will also give you a
better estimate as to how much market share is
available for you to exploit.
3. Changes happening in the community.
Changes’ happening in the environment such
as customer demographic, lifestyle and buying
behaviour gives the entrepreneur a better
perspective about the market. The
entrepreneur should always be keen in
adapting to these changes in order to sustain
the business. For example, teens usually follow
popular celebrities especially in their fashion
trend. Being able to anticipate these changes
allows the entrepreneur to maximize sales
potential.
4. The internal aspect of the business. Another
factor that affects forecasting revenues in the
business itself. Plant capacity often plays a very
important role in forecasting. For example, a
“Puto” maker can only make 250 pieces of puto
every day; therefore he/she can only sell as
much as 250 pieces of puto every day. The
number of products manufactured and made
depends on the capacity of the plant,
availability of raw materials and labour and also
the number of salespersons determines the
amount of revenues earned by an entrepreneur.
Example: Ms. Fashion Nista recently opened her dream
business and named Fit Mo’to Ready to Wear Online
Selling Business, an online selling business which
specializes in ready to wear clothes for teens and young
adults. Based on her initial interview among several
online selling businesses, the average number of t-shirts
sold every day is 10 and the average pair of fashion
jeans sold every day is 6. From the information gathered,
Ms. Nista projected the revenue of her it Fit Mo’to Ready
to Wear Online Selling Business. She gets her supplies at
a local RTW dealer in the city. The cost per piece of t-
shirt is 90 pesos, while a pair of fashion jeans costs 230
pesos per piece. She then adds a 50 percent mark up to
every piece of RTW sold.
Mark up refers to the amount added to the cost to come
up with the selling price. The formula for getting the
mark up price is as follows:
 Mark Up Price = ( Cost x desired mark up
percentage)
Mark Up for T-shirt = ( 90.00 x .50)
Mark Up for T-shirt = 45.00

In calculating for the selling price, the formula

is as follows:

Selling Price = Cost + Mark Up

Selling Price = 90.00 + 45.00
Selling Price for T-shirt = 135.00
Table 2 shows the projected monthly and yearly
revenue of Ms. Nista’s online selling business.
Computations about the monthly revenue is
calculated by multipying daily revenues by 30 days
( 1 month).
Example, in table 1 the daily revenue is 3,420.00.
To get the monthly projected revenue it is
multiplied by 30 days. Therefore,
Projected Monthly Revenue = Projected daily
revenue x 30 days
Projected Monthly Revenue = 3,420.00 x 30
Projected Monthly Revenue = 102,600.00
On the other hand, the projected yearly
revenue is computed by multiplying the
monthly revenue by 12 months. The calculation
for projected yearly revenue is as follows.

Projected Yearly Revenue = Projected daily

revenue x 365 days
Projected Yearly Revenue = 3,420.00 x 365
Projected Yearly Revenue = 1,248,300.00