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Entrepreneurship
Lesson 5
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An
entrepreneurial venture
may also be classified according to its NATURE.
The term
nature
simply refers to whether the business is simply SELLING a product, MANUFACTURING a product, or RENDERING a service to customers.
The classifications of entrepreneurial ventures according to their nature are:
Merchandising
Service
Manufacturing
Agriculture
Hybrid business
Merchandising
is engaged in the BUYING and SELLING of products or goods.
A manufacturing venture is a
producer
of goods or products.
Manufacturing
engages in buying
RAW MATERIALS
and
SUPPLIES
to be processed into finished products.
A
service
provides SERVICES to customers.
2 Classification of Service
Non-professional
service ventures
Professional
service ventures
Agriculture
is engaged in the production of
AGRICULTURAL GOODS
and animals. It may sell its product as RAW MATERIALS or as a FINISHED PRODUCT.
A
Hybrid Business
possesses the characteristics and nature of
COMBINED
TYPES of BUSINESS entities (e.g. restaurants or fast-food)
3 Important elements in the production system:
The Input
The Transformation or Production Process
The Output
Input consists of
Manpower
Materials
Machine
Design
Instructions
Production
is also referred to as the TRANSFORMATION or CONVERSION process.
Output
represents the FINAL PRODUCTS from the production process and is distributed to the customers.
Output
involves the use of FIFO (
First In, First Out
) and GIGO (
Garbage in, garbage out
)
Four M's of Production
Manpower
Method
Machine
Materials
Manpower
– Refers to the HUMAN WORKFORCE involved in the manufacture of products.
Method
– refers to the PROCESS or TECHNIQUE of CONVERTING raw material to finished products.
Machine
– refers to the MANUFACTURING EQUIPMENT used in the production of goods or delivery of services.
Materials
– refers to the RAW materials needed in the PRODUCTION of a product.
Things to consider in selecting the type of equipment to purchase:
TYPES
of product to produce
COST
of equipment
CAPACITY
of equipment
AVAILABILITY
of spare parts in the local market
EFFICIENCY
of the equipment
The
SKILLS
required in running the equipment.
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