Entrepreneurship-Business-Plan-Part-V-VI-VII.pptx

education

1. ORGANIZATIONAL PLAN, PRODUCTION PLAN, AND OPERATION PLAN Part V, VI, VII of Business Plan

2. Objectives: At the end of this lesson, the learner should be able to implement the business plan. Specifically, the learner must be able to : Identify the important areas in the organization plan, Determine the critical areas in the production plan, and State the significant factors in the operation plan.

3. Vocabulary list: Suppliers – refer to individual persons or companies that provide the required materials , parts, or services to the business. Creditors – refer to banks , financial institutions , and financial intermediaries engaged in the lending of money to the borrower usually for a fee or charge in the form of interest. Liability - is an obligation between one party and another not yet completed or paid for. Demand - is an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service. In transit - means that the product is no longer in the custody of the seller , but the buyer has not yet received it.

4. The fifth part of Business plan The organization plan provides a detailed description or areas of the business in terms of the following: Form of the business organization Liability of the owner or owners Organizational structure Roles and responsibilities Salary requirements An organizational plan is  made up of several separate hierarchies and catalogs that are related to one another . These hierarchies and catalogs are also consist of relationships between and lists of organizational objects . Organizational Plan

5. Forms of the Business Organization A business organization can come in the form of a sole proprietorship , a partnership , or a corporation . There must be a purpose for the selection of the most appropriate business form.

6. The factors affecting the selection of the most appropriate business form include the following : Capital requirement Liability of the owner or owners Management and supervisory skills Tax implications Government intervention Nature of the Business External financing requirement

7. Liability of the Owner or Owners This section describes the extent of the owner’s financial obligations with creditors . The creditors can be in the form of individual persons , suppliers of raw materials and supplies , or financial institutions . The extent of financial liability can either be limited or unlimited .

8. Organizational structures The organizational structure of the business is usually shown or reflected in the organizational chart . It shows and defines the hierarchy of the different positions in the organization and the interrelationships of the different offices or departments. The organizational chart depicts the flow of communication within the organization, and the line and staff authority that must be observed and executed.

9. Roles and Responsibilities The roles and responsibilities of the various positions in the business organization must be clearly defined in order to minimize and avoid misunderstanding and overlapping of functions.

10. Salary Requirements The organizational plan must show the total estimated monthly and annual salary requirements of the business. All other mandatory benefits like the employer’s contributions to the Social Security System (SSS), Pag- Ibig , and Philhealth must likewise be specified.

11. The sixth part of Business plan Production Plan The Production plan presents or describes activities related to the production of goods. The production plan is the result of the industry analysis , particularly the study of supply and demand and consumer behavior

12. The production plan usually includes the following areas: Production Schedule Production Process Processing Plant and equipment Sources of Material Production Cost NOTE: This section basically applies to manufacturing entities . For service entities, this section must be modified and labeled as Service Provision Plan .

13. Production Schedule The production schedule presents the total number of goods to be produced and the expected time to produce them. The total number of units to produce, however, is usually affected by the following factors : 1. Demand for the product 2. Availability of resources 3. Capacity of the plant

14. The primary factor that influences the number of goods to be produced is market demand . The entrepreneur must produce goods based on the total demand of the consumers . The second consideration is timing . Producing the goods exactly at the time when the consumers need them is an excellent production practice. In production :

15. This section of the plan must show the estimated cost of production. The three elements of cost , namely labor , direct materials , and factory overhead must be properly described and accounted for. The total cost of the proposed product may serve as the basis in setting its selling price, which not be lower than its production cost. Production Process

16. The seventh part of Business plan Operational Plan The operation plan is a major section of the business plan that outlines the various activities, from the acquisition of raw materials to the delivery of the products to the target consumers .

17. Evaluation of suppliers Materials requisition and receiving procedures Storage and inventory control system Shipment system and control Functions of support services The operation plan commonly covers the following areas:

18. Evaluation of Suppliers The new basic entrepreneurial concept of quality management, control starts from the suppliers of raw materials. It used to be a common practice that a business starts to implement its control system upon receipt of the materials. The business must conduct a critical evaluation of the suppliers of raw materials and establish harmonious working relationships with them to reduce the threats they posed.

19. Materials Requisition and Receiving Products The procedures in requisitioning raw materials and other manufacturing supplies and receiving them must be explained in the operation plan. This section covers the following areas: Basis of receiving the raw materials Comparison of the order and receipt Quality of materials received The basis of the receiving report is the purchase order of the business. It must be signed by authorized personnel. After the inspection, the person receiving the materials usually prepares the receiving report.

20. Storage and inventory control system The operation plan describes how the business stored the finished goods and protects its inventory against possible theft and losses. Goods that have been completed in the processing plant are transferred to the warehouse or storeroom. This section deals with the following: Owning or renting a warehouse Management of the warehouse Procedures in the transfer of goods. Control of inventory in the warehouse

21. Shipment System and Control The basis of sales invoice and other shipment documents are the purchase order received from the customers. The sales contract and shipping documents must be properly approved before the product is shipped to the customers. This section covers the following: Approval of shipping and sales documents Terms of shipment Manner of shipping the product Other terms and conditions like sales contract.

22. Functions of Support Services The operation plan defines and describes the functions of other support services relative to the acquisition , processing , and shipment of goods to the customers. It also includes the important role of other support services such as the maintenance personnel and the security officers and staff. Most businesses consist of three or four functional areas that involved in selecting machinery and equipment for production of goods and services as follows: Finance Marketing Operation Human resources

23. ORGANIZATION PLAN This section describes the form of the business organization, the liability of the owner, the organizational structure, the role of the owner, and the proposed salary. Form of Business Organization Liability of the Owner Organizational Structure Role of the Owner Proposed Salary

24. PRODUCTION PLAN This section presents the production schedule, production process, equipment required, sources of materials, and estimated production cost. Production Schedule Production Process Equipment Required Sources of Materials Estimated Production Cost

25. OPERATION PLAN This section presents the evaluation of suppliers, purchase procedures, storage and inventory control, and sales procedures. Evaluation of Suppliers Purchase Procedures Storage and Inventory Control Sales Procedures

26. Write True if the statement is correct. Otherwise write False and state your reason briefly/change the word/s that make it false . Any form of business organization fits the proposed business. In most instances the sole proprietor and partners have limited liability. The different positions and the relationships of the positions in the business are usually depicted in the organizational chart. The roles and responsibilities of the management must also be included in the organizational plan. The production schedule shows the total material needed to produce a product. The production schedule reflects the exact process of making a product. The selection of the production plant site must be provided with a clear description as to its proximity to the source of raw materials. The suppliers of raw materials need not be reviewed and evaluated as long as they extend credit terms to the business. Anybody in the business can receive the goods shipped by the supplier as long as the order has been authorized. The functions of other service departments need not be included in the operation plan since they do not have any direct participation in making the product

27. Activities Quiz

28. Look for words inside the box which are connected to Organization Plan , Production Plan , and Operation Plan .

29. Thank you!..

30. Activity: Justify Me:True or False True False, unlimited True True True False, production process True False, need to be reviewed True False, need to be included

31. ORGANIZATION PLAN Form of the business organization Liability of the owner or owners Organizational structure Roles and responsibilities Salary requirements PRODUCTION PLAN Production Schedule Production Process Processing Plant and equipment Sources of Material Production Cost OPERATION PLAN Evaluation of suppliers Materials requisition and receiving procedures Storage and inventory control system Shipment system and control Functions of support services