ENTREP EXAM 2 Flashcards
4 Ms of Operations
Methods
Manpower
Machines
Materials
the process to be followed in effectively manufacturing or delivering a product or service.
Methods
the right human resources who will handle certain business operations
Manpower
the technology used in efficiently operating the business
Machines
to be used in creating a product or performing a service, which includes supply chain management.
Materials
The entrepreneur who will engage in producing his or her own products will have to consider the basic guidelines and principles in manufacturing.
Manufacturing of Goods
s the process of translating raw materials into finished goods that are acceptable to the customer’s standards. Is consist of three elements:
Manufacturing
the materials or ingredients to be used in creating the product
Input
the transformation phase where inputs are processed by manpower and machines to come up with the final produc
Process
the final product of the process stage, which is intended to be sold to target customers
Output
in which the manufacturing process will take place
Manufacturing Site
most startups do not have financial capacity to establish a manufacturing site. Thus, their only option is to manufacture goods at home. The cheapest and flexible. The entrepreneur can start with products that are usually manageable to be processed at home such as food products and customized clothes.
Home-Based
This is advisable if the business really requires a commercial space for the processing of goods and if the home option is not viable anymore. It gives that entrepreneur a more specialized and suited manufacturing site than manufacturing at home. Expensive that home-based.
Commercial Space For Rent
this option requires the biggest amount of capital expenditure, but also provides the entrepreneur substantial freedom and flexibility to design and run the commercial space. Compared with renting, purchasing is commercial space is considered more of an investment that an expense.
Commercial Space Purchase
Once the entrepreneur has chosen a manufacturing site, he or she should consider ________, where the delivery of raw materials and finished goods will be conducted. The transportation routes from or to the manufacturing site should be efficient, so that the delivery of raw materials and finished goods will be seamless.
Location
detailed flowchart of the of the service business.
Service Blueprint
is a part of the process where there is an apparent inefficiency and where the customer waits longer, it must be addressed immediately to avoid customer complaints.
Bottleneck
is the process of bringing the products or services to customers.
Distribution
enumerates the duties and responsibilities of the potential employee, including the scope, limitations, and terms and conditions of employment.
Job Description
the heading of a job description, which the summary of what the employee will do. The entrepreneur should devise a respectable and decent job title because the title boosts the self-confidence of the employee.
Job Title
details the potential salary and benefits that the employee will get.
Compensation and benefit range
describe the job that employee will assume with allowance for flexibility.
Duties
must be communicated well to the employee so that he or she knows what to expect with the job.
Responsibilities and accountabilities
including work hours must be clearly indicated in the job description. The specific days and working hours must be written so that the employee will be able to align the work schedule with his or her personal schedule.
Work Schedules
is the set of specific qualities, knowledge and experience, a person must possess to perform a particular job.
Job Specification
Criteria
Educational Background
Work Experience
Specific Skill or Knowledge
Work Attitude
this gives the entrepreneur an idea on the degree of the candidate’s knowledge of basic things.
Educational Background
this will tell him or her what to expect from the applicant and what he or she can potentially contribute to the business based on his or her past positions and experiences.
Work Experience
this one is important especially on technical jobs that require high proficiency. It will be easy for entrepreneurs to place highly skilled people into specialized jobs because they can help right away.
Specific Skill or Knowledge
this deals with the worker’s integrity and how he or she deals with his or her co-workers, bosses, and customers. Entrepreneurs also need people with relationship skills because communication is important in applying their expertise.
Work Attitude
help companies find a set of people suited for their requirements. They usually charge a finder’s fee once the entrepreneur has decided to accept an applicant.
Headhunters
recruit temporary employees under a short contract, usually on a six-month period.
The entrepreneur can also opt to advertise job vacancies via print such as general circulation newspaper or other publications if the intention is to promptly get a candidate from the public.
Manpower Agencies
from friends, relatives, or other business partner with an untainted reputation.
Recommendation and referrals
with the power of the internet, an entrepreneur can easily post job vacancies through his or her website, social media accounts, e-mails, online affiliates, etc.
Digital Media
generally summarizes the terms and conditions of the candidate’s employment with the business
Job Contract
is one of the biggest investments of an entrepreneur or a businessman. Therefore, the entrepreneur must devise strategies on how to keep employees satisfied working in the company.
Training People
usually a one-to-two-day session that summarizes the history of the business, its vision, mission, policies and procedure, culture, and norms of the business.
Employee Orientation
are the bases of the entrepreneur for rating the performance of the employee-if the employee is exceeding the expectations, meeting expectations, or seldom meeting expectations.
Key Performance Indicator KPI and KRA
the most practical tool in training the employee under a supervision of a team leader or manager. This will spare the entrepreneur the cost of further classroom training because the employee is already productive and exposed to the real job and what he or she experiences front the ______ training will serve as learning experience.
OJT
is a training program wherein an expert team member is assigned to assist the new employee in his or her function. The objective of the expert employee is to train the new employee until he or she masters the job.
Buddy System
on the other hand, is a training program for supervisors, wherein they will be mentored by senior executive or senior officer of the business.
MENTOR-MENTEE PROGRAM
ensure the business operations still continue even in their absence or the absence of key employees, or when they decide to resign or retire.
Succession Plan
Entrepreneurs/manufacturers can also venture into distributing their products on their own without the aid of a distributor or agent. This is where the entrepreneur/manufacturer is responsible for manufacturing, warehousing, transportation, inventory management, marketing, and selling the product or service.
Logistics
is storing the finished goods manufactured in a facility until they are distributed to end users. Warehousing cost is usually substantial. Therefore, the entrepreneur should think of ways on how to reduce the cost of warehousing by either buying an economical warehouse or renting an inexpensive space.
Warehousing
major cost in logistics management. It is the process of efficiently transferring the products to retailers or consumers. The entrepreneur or manufacturer must purchase energy-efficient vehicles that can carry a reasonable amount of merchandise to prevent inefficient trips.
Transportation
is where the entrepreneur combines the goods before delivery to the retailers or end consumers.
Distribution Hub
Each of the inventories in the warehouse, distribution hubs, and manufacturing sites should be monitored. The law of supply and demand must always be taken into account. There shouldn’t be a surplus of inventory especially if the entrepreneur is selling perishable goods. The entrepreneurs must also knowledgeable about the life span of the products that will be sold. The entrepreneur must ensure there is enough space to store and stock inventory, depending on storage requirements.
Inventory
According to __________ in his article “Developing a Great Business Model” on the Entrepreneur Website, the entrepreneur must adapt the dynamics of traffic lights in developing the business model. These are the three ”green lights” or the positive signals that can help entrepreneurs develop ideal business models and eventually succeed. The three “red lights” or negative signals that entrepreneurs should be wary of.
Don Deebelak
These are often misinterpreted as affluent or high-end customers, but this is not always the case. A high-value customer is someone who is easy to find, someone who is willing to pay a price that will reasonably profit the entrepreneur, someone who is easy to persuade with the least promotional effort, and someone who can join the bandwagon of customer that, when consolidated, can generate a substantial amount of revenues aligned with the profit objectives of the entrepreneur.
Target high-value customers
The value proposition and unique value proposition should always kick in as compelling reasons for customers to choose your product or your service. The entrepreneurs must position the unique attribute of his or her product or service. He must devise an efficient distribution system where the flow of goods or service delivery is convenient, fast, and available when needed.
Offer products or services with great value
There are two ways of reasonable profits, increasing markup and decreasing operational costs. The most practical way to achieve reasonable profits though is to decrease operational costs. This is because increasing the markup, as compared with the prices of competitors, will decrease the attractiveness of the product or service.
Offer products or services with reasonable profits.
The entrepreneur must calculate the cost and profit associated with serving the customer before pursuing the business. There are times when entrepreneurs are blinded by how big the profit margin can be for a sale of a particular product or service. The term lifetime value of a customer was coined to understand the potential value that a customer can bring to the business in the long run. But there are obvious red flags, which are collectively called customer satisfaction costs, that can impede the success of an entrepreneur.
Satisfying the customer becomes too costly and irrational
One of the characteristics of an ideal business model is capitalizing on the business’ stature as a market leader through improving the features and benefits of its existing products or services, adding new product lines or services, or expanding by tapping new customers.
Being a market leader is difficult to sustain.
Entrepreneurs did venture in a business enterprise because they want to earn profits for the purpose of sustainability. ROI is very important to the entrepreneur because it validates that the business is doing well and that money is flowing in as expected during the planning stage. Approximately 25% in the first three years of business operations is a sign that the entrepreneur is not operating an ideal business model. Moreover, only less that 50% of the capital required will be allocated to revenue- generating activities such as selling and manufacturing. It is also red flag if the present capacity is also not capable to produce or handle new commitments, additional investments must be made again to accommodate the new demands.
Return on Investment takes too long and too small
simplest form of business. It simply refers to a person who owns the business and is personally responsible for its debts.
Sole Proprietorship or Individual Proprietorship
a legal form of business between two or more individuals who share management and profit.
Partnership
the partners manage the company and assume responsibility for the partnership’s debts and other obligations.
General Partnership
the general partners own and operate the business and assume liability for the partnership, while the ________ serve as investors only. They have no control over the company and are not subject to the same liabilities as the general partners
Limited Partnership
has a separate legal status. It is able to raise large sums of capital through issuing bonds and stock. Corporation income is taxed twice, once as corporate profits, then as personal income or dividends.
Corporation
system made up of tasks to be accomplished, work movements from one work level to other work levels in the system, reporting relationships, and communication passageways that unite the work of different individual persons and groups.
Organizational Structure
the process of finding and attempting to attract job candidates who are capable of effectively filling job vacancies.
Recruitment
the process of choosing the best among applicants, through series of written examinations, interviews, medical examination and training.
Selection
refers to all monetary payments and all goods or commodities used in lieu of money to reward employees.
Compensation
are employee compensation based on the number of hours worked or amount of output produced
Wages
is employee compensation calculated on a weekly, monthly, or annual basis.
Salary
the expenses that an organization incurs not directly tied to a specific function such as manufacturing, production or sales
Administrative Expenses
shows the business’ revenues and expenses incurred over a period of time and the resulting profit or loss. Sometimes called the profit/loss statement.
Income Statement
the amount of the goods or services a business sells to customers
Revenue
the cost of inventory a business sells during particular period is called_________. Only business that have inventory will have this item on their income statement.
Cost of Goods Sold
the difference between revenue and cost of goods sold in the _________.
Gross Profit
after the taxes are subtracted, the result is the __________ or loss for the period.
Net Income
is a financial statement that lists what a business owns, what it owns and how much it is worth at a particular point in time. It illustrates your business’s net worth.
Balance Sheet
Assets=? + ?
Assets=Liabilities + Equity
Items of value owned by business
Asset
are amounts that a business owes to others
Liabilities
the amount remaining after the value of all liabilities is subtracted from the value of all assets.
Owner’s Equity
referred to as liquid assets, can be converted to cash easily
Current Assets
amounts owed to a business by its credit customers.
Accounts receivable
illiquid assets cannot be converted into cash easily, are those that will be used for many years.
Fixed Assets
-are debts that are payable over a year or longer
Long term Liabilities
debts that are due to be paid in full in liability
Current Liabilities
are amounts owed to vendors for a merchandise purchased or credit.
Account Payable
is the left to right comparison of performance for comparative periods. A minimum of three periods may be compared to evaluate increases and decreases. The increases or decreases are expressed as percentage of change.
Horizontal Analysis
evaluates financial statement accounts with each account expressed as percentage of the base account. The performance measurement determines proper balances for given accounts. For both service and merchandizing enterprises, the biggest percentages are for salaries and wages.
Vertical Analysis
