4M's production and Business Model

1. LESSON 4 – 4 M’s of Production and Business Model

2. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
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.

3. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
4 M’s of Production
 Manpower
 Materials
 Machine
 Method
OUTPUT
Transformation
Process

4. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
Manpower
• Talks about human labor force involved in the manufacture of
products.
• It is considered 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.

5. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
Manpower
• 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.

6. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
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.

7. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
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.

8. LESSON 4 – 4 M’s of Production and Business Model
4 M’s of Production
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.

9. Product Description
Product Description
• Is the promotion explains what the 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.

10. 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.
Prototyping

11. Prototyping
• 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.
Prototyping

12. Definition of Terms
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.

13. 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.
Definition of Terms

14. 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.
Definition of Terms

15. Business Model

16. BUSINESS MODEL
Launching a new business does not proceed without
choosing how the business will make money. A business model
shows how the business makes money.
The business model is the mechanism through which the
company generates its profits.

17. BUSINESS MODEL
It describes how the
company is positioned within its
industry's value chain, and how it
organizes its relations with its
suppliers, clients, and partners in
order to generate profits.

18. Business Model
A business model is more like a revenue model. Different
companies have different business models.
For instance, Netflix makes money using a subscription model.
Customers pay a monthly fee to access both the physical and
digital content libraries of Netflix.
This form makes it easier for them (the customers) because they
don’t have to spend money buying their discs or DVDs anymore.
Revenue - the money generated from normal business operations.
- also known as sales on the income statement.

19. Business Model
Business Model Examples:
The Business Model of Production
- It's the most basic business model, the company sells the
products and services it produces. In order for that business model
to be viable, the company needs to generate enough sales to
cover its production, distribution, and storage costs.

20. Business Model
The Business Model of Production - Examples

21. Business Model Examples
The Advertising Business Model
- the goal is to generate revenues by selling advertising space. This
business model is slightly more complex than the production model
given that the company first need to invest in order to create a
large audience before it can attract advertisers.

22. Business Model Examples
The Advertising Business Model - Examples

23. Business Model Examples
Business Model Based on Commission (or distribution)
- The company acts as an intermediary between the seller
and the buyer and takes a cut of every sell it helps generate.
This business model is generally less risky than the two previous ones
(and therefore less profitable) as the level of investment required
can be minimal.

24. Business Model Examples
Business Model Based on Commission (or distribution) - Examples

25. Business Model Examples
The Subscription Business Model - The company receives
revenues from its subscribers at regular intervals. This business
model has one clear advantage:
• the company knows in advance how much revenues it is
going to generate.
The flip side is that, it often takes several months to recover the
subscriber acquisition costs leading to a lower cash generation at
the beginning of the cycle.

26. Business Model Examples
The Subscription Business Model - Examples

27. Business Model Examples
The Accessories Business Model
- The company offers one product for free or at a price close
to its production cost and generates a profit on the sale of
accessories.
The classic example of this business model is the sale of razor
blades: razors are sold for nothing, but you have to continually buy
expensive blades to be able to use them.

28. Business Model Examples
The Accessories Business Model - Example