Lesson 3-Production Plan(2ND QUARTER)

Case Study: Business Structure

  • Sarah loves baking and decides to start her own business from home.

    • Manages baking, marketing, and finances.

    • Operates under her name, keeps profits, personally responsible for debts.

  • Type of business structure:

    • A) Partnership

    • B) Corporation

    • C) Sole Proprietorship

    • D) Limited Liability Company (LLC)

  • Answer: C) Sole Proprietorship

    • Definition: This type is owned and managed by a single person.

Page 6

Case Study: Going Public

  • Software company founded by Emily and Jake plans to go public for expansion.

  • Desire to protect personal assets from business debts or lawsuits.

  • Plan to issue stocks to investors.

  • Type of business structure:

    • A) Sole Proprietorship

    • B) Partnership

    • C) Corporation

    • D) Limited Liability Company (LLC)

  • Answer: C) Corporation

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Rationale for Business Structure

  • Emily and Jake choose a corporation for:

    • Going Public: Raise capital by selling shares.

    • Stocks: Ownership representation in a publicly traded company.

    • Example: Buying stock represents ownership (owning 1% of a company with 100,000 shares).

    • Limited Liability: Protects personal assets from business risks.

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Nonprofit Organization Case Study

  • Friends want to start a nonprofit for local art programs, plan to file incorporation paperwork.

  • Responsible for drafting articles of incorporation.

  • Term describing individuals responsible:

    • A) Directors

    • B) Shareholders

    • C) Founders

    • D) Incorporators

  • Answer: D) Incorporators

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Business Plan Requirements

  • SSS, Pag-ibig, Philhealth under salary requirements. Answer: True

  • Manager oversees overall management. Answer: True

  • Organization structure prevents overlapping tasks. Answer: True

  • Consider education levels for positions in business plan. Answer: True

  • Highest position in organizational structure is at the top. Answer: True

  • Salary requirement included in organizational plan. Answer: True

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Roles and Responsibilities

  • Entrepreneur prepares structure and hires qualified personnel. Answer: True

Production Plan

Production System

  • Steps to convert ideas/raw materials into marketable products/services.

    • Inputs: 1. Manpower 2. Materials 3. Machine 4. Design 5. Instructions

    • Production Process: Materials transformed into final product.

    • Outputs: Final products distributed to customers.

Four Ms of Production

  1. Manpower: Human workforce involved.

    • Considerations: qualifications, status of employment, number needed, background checks, wages, availability.

  2. Method: Process of converting raw materials.

    • Factors: product type, production mode, required skills.

  3. Machine: Manufacturing equipment used.

    • Selecting criteria: product types, cost, efficiency, spare parts availability.

  4. Materials: Raw materials needed.

    • Selection factors: cost, quality, supplier credibility.

Production Plan Components

  • Details related to goods production, based on industry analysis.

    • Includes:

      • Production schedule

      • Production process

      • Processing plant and equipment

      • Sources of materials

      • Production cost

Payment Terms and Production Cost

  • Key Elements of Payment Terms:

    • Payment method, due date, discounts, late penalties, advance payments.

  • Production Cost Elements:

    • Labor, direct materials, factory overhead.

  • Total cost informs the selling price, which must exceed production costs.

Production Schedule Example

  • Products:

    • Assorted Donuts: 200 donuts/day, 35-45 minutes/set

    • Glazed Donuts: 200 donuts/day, 35-45 minutes/set

    • Iced Drinks: 100 drinks/day, 5-15 minutes/drink

    • Fries: 50 sets of fries/day, 5-6 minutes/set

Production Process for Donuts

  • Details recipe process and ingredients for donuts and coffee setup.

    • Includes steps from mixing ingredients to final preparation.

Estimated Equipment Costs

  • Refrigerators: Php 20,000

  • Donut Fryer: Php 35,000

  • Oven: Php 12,000

  • Total Estimated Cost: Php 79,900

Operational Plan Overview

  • Outlines activities from raw materials acquisition to product delivery.

    • Key Areas:

    1. Supplier evaluation

    2. Material requisition and receiving

    3. Storage and inventory control

    4. Shipment system control

    5. Support services functions

Supply Chain Management

  • Materials Requisition:

    • Detailed process for ordering raw materials, inspection, receiving procedures.

  • Inventory Report:

    • Tracks current stock and informs purchasing decisions.

  • Quality management must start with suppliers.

Purchasing and Distribution Process

  • Purchase Procedures:

    1. Information collection

    2. Supplier selection

    3. Supplier evaluation

    4. Negotiation

    5. Buying supplies

    6. Delivery of supplies

  • Storage Practices: Ingredients stored to maintain quality and safety.

    • Example practices for perishable items.

Marketing Plan Elements

  • Key Sections: Product, Place, Price, Promotion, People, Packaging, Positioning.

    • Core Elements of Marketing:

      • Product must fulfill demand and surpass competitors.

      • Price based on market conditions and competition.

  • Branding Strategy:

    • Differentiation through brand names influencing consumer choices.

Branding Strategies

  • Concept of Needs vs. Wants:

    • Define products/services in relation to customer needs.

  • Brand Strategy Development:

    • Two approaches for brands: line extension and product extension.

    • Case examples for each approach (e.g., products from Pepsi and GE).