Lesson 5

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Cards (21)

  • 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:
    1. Merchandising
    2. Service
    3. Manufacturing
    4. Agriculture
    5. 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
    1. Non-professional service ventures
    2. 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:
    1. The Input
    2. The Transformation or Production Process
    3. The Output
  • Input consists of
    1. Manpower
    2. Materials
    3. Machine
    4. Design
    5. 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
    1. Manpower
    2. Method
    3. Machine
    4. 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:
    1. TYPES of product to produce
    2. COST of equipment
    3. CAPACITY of equipment
    4. AVAILABILITY of spare parts in the local market
    5. EFFICIENCY of the equipment
    6. The SKILLS required in running the equipment.