AE 24 Lesson 1-3 PDF

**AE 24** **Chapter Introduction** **[Strategic business]** analysis involves the thorough evaluation of all facets of enterprise operations that starts with a good foothold in the knowledge and application of basic principles of economics, human resource management, production and operations mana...

**AE 24** **Chapter Introduction** **[Strategic business]** analysis involves the thorough evaluation of all facets of enterprise operations that starts with a good foothold in the knowledge and application of basic principles of economics, human resource management, production and operations management, marketing management, as well as financial management to aid in decision-making, **[Economic analysis]** allows business managers to compare the different types of needs, goods, resources, and the outcomes from combining those resources in the larger view of local and global economic activities. **[Human resource management]** underscores the process of developing a job analysis as a requisite for the creation of a human resource management plan. Meanwhile, **[knowledge of production and operations management]** will clarify the processes involved in answering the questions of *what, how, and for whom to produce*. The production and operations management areas of planning and control, materials management, inventory management, and project and supply chain management are important to appreciate to ably apply them when one conducts strategic business analysis. **[Economic activities]** are further fueled by marketing initiatives. Marketing management allows for the movement of goods from production to consumption side and creates other economic activities in between. Finally, **[financial management]** puts the valuation of economic activities in place. This is the area where costs are accounted for, and where receipts are reconciled with expenses to determine the financial viability and sustainability of a business enterprise. This chapter explains the important ideas, theories, and concepts in business management to aid any business manager to craft a strategic business plan. **LESSON 1 -- ECONOMIC PRINCIPLES** *[Lesson Introduction ]* **[ECONOMICS]** - is the study of how to manage money and the financial status of an individual, an enterprise, an organization, or a country. - Managing a household or an organization requires different skills that will come handy in regular day-to-day transactions one may have. - At the core of economics studies are concepts such as **scarcity**, **unlimited needs and wants, alternatives**, **choice**, and **foregone benefits**. - In a more business-like scenario, is the economic aspect of budgeting and financial management. - Learning **how to invest, how to spend, and how to save money** are other critical aspects of economic understanding. - Classified into **two branches**, **[microeconomics and macroeconomics]**, the principles and concepts apply similarly but different in scope. - The former only deals with **individuals, households,** and **specific companies**. - The latter deals with the **society as whole** and its **dynamic relationship with the rest of the world**. - This lesson will provide the perspective of **integrating economic knowhow in business analysis approach** and in the **strategy development of a business organization.** *[Lesson Presentation]* **[Economic issues]** - permeate society in various ways. **[Economic principles and concepts ]** - can be found in everyday dynamics, from large scale activities such **as movements in the stock market,** **government directives on poverty and health care**, and **multi-nation involvement in trade**, to as simple as ***fluctuations in the market price of basic commodities***. **[Critical and complex economic issues]** - ***impact the lives of ordinary people in the same way that they affect businesses.*** - To better understand the interplay of economic factors in both household and business situations, it is best to first appreciate some basic economic ideas. - Economics seeks **to answer the question of what, how, and for whom a good or service is produced**. - Economic realities and situations are in fact closer to us than we imagine them to be. - Economic activities **begin with an individual**, progressing to the small unit of society, which is the household, on to the larger entities such as companies, and the international communities. - At the core of any **economic concern** is an **[individual\'s wants and needs]**. - Understanding economics is a futile exercise if scarcity is not discussed and if people need **not choose among existing alternatives and practice trade-offs.** - If existing resources can address every individual\'s needs and wants, there is no need to study economics. - However, just as these needs and wants are infinite, most resources are finite and scarce. **[Scarcity of resources]** - leads one to explore the **economics of things**. - Scarcity should [not be confused with shortage. ] - It refers to the [existence of limited resources that are not enough to address unlimited human needs or demands.] **[Shortage]** - refers to a market occurrence whereby the **demand is more than the supply available at a given time.** - Therefore, properly allocating these resources according to a larger vision and direction of individuals, households, companies, and international communities becomes more critical. - Satisfying the needs and wants of various entities are the driving force of all economic activities and eventually defines the prospective prosperity of individuals, companies, and communities. - If the cause of understanding economics is the persistence of resource scarcity, the lessons of economics **allow one to optimize the utilization of these scarce and limited resources**. **[Rationalization]** - allows one to evaluate the value of the goods being obtained based on the cost that must be expended for its exchange. When an individual finally makes a purchase, it comes because of carefully evaluating the intrinsic and extrinsic value of the good in question and only pays for it if it is worth its price. [**Scarcity of resources** ] - evolves into the identification of alternatives and a decision for trade-off. - The rational mind allows one to end up with a right decision after a review of all available possibilities. - When **money is spent** on a particular product over other possible and equally valuable alternatives, a **[choice] is made**. - The **loss from setting aside the value** of pursuing other alternatives with the same amount is referred to as the **[opportunity cost]**. - It is normal for individuals to compare varying alternatives, looking at their quantifiable and nonquantifiable values, assessing possible losses and gains, and evaluating available options before a choice is made. - As there are **no perfect choices**, just as information is not one hundred percent obtained, [every choice has positive and negative consequences]. - As one studies economics, it is important to point out that there *are terminologies* that are commonly encountered that may *have a different meaning* from its usual purpose. For instance, [free resources are not actually resources that can be obtained and used without costs.] - On the other hand, costs in economics can be either **intrinsic or extrinsic**, that is, a cost with no actual cash outlay or a cost with identified cash effect. Oftentimes, there is a need to identify assumptions in order to simplify the complexity of economic issues. - However, details and big pictures will continue to re-emerge all throughout one\'s study of economic issues and activities and it is important to critically appreciate them as they affect models and assumptions differently. - **[Human needs and wants]**, when *not satisfied,* results to a *[feeling of inadequacy or distress]*. - Generally, **human needs and wants** *[involve]* other **noneconomic factors** such as *[political, emotional, social, technological, emotional, and even legal]*. - Consider how each person **needs both** **food** and **shelter**, although both are essential, the first one is a [requirement to survive] while the other is something necessary [for protection against unpredictable natural elements.] Using this example, it is also safe to say that human beings have needs and wants that are either primary or secondary. **[Primary Needs]** - are those that are **essential for one\'s survival**, these are resources that an **individual cannot live without**. - Food is clearly an example of a need, just as shelter that is at the barest of minimum is. **[Secondary Needs]** - are those that are directly associated **with one\'s happiness**, or a **person\'s elevated status in society**. - These secondary needs are what we refer to as **[wants]**. - However, under normal circumstances, *condominium living* in a posh development area is already *considered as a want.* **[Goods and services]** - are created with fixed and variable inputs. - **[Fixed inputs]** are present in short-run production. However, all inputs can be made variable in a long-run production period. - **[Utility]** is the degree of satisfaction derived from the consumption of a good or service. - When satisfaction is gained from any of the economic activities, other principles come into play. - The principle of **[reduced usefulness]** or **[diminishing marginal utility]** - in economics comes from the *continued use of the same amount of product over a period of time*. - It is no longer rational to continue the use and spending for a product when its degree of usefulness or utility has been maximized, or saturation point has been reached. - On the economic activity of production, a **fixed input** can *[only be useful until its maximum output]*. Hence producers should be aware of the principle of diminishing marginal returns. - When the *consumption of a product* **is lower than** *the amount of energy spent on it*, **[diminishing returns]** happen. - In the same way, while buying something, you evaluate the utility derived from it with each unit and the cost you are paying for it. In the beginning, the benefits are higher than the value, but gradually, they decrease with continuous consumption. - This law is very useful in our daily life. **[Economic activities]** - refer to production, distribution, and consumption of goods and services. - The goods that go around these economic activities are classified as to either tangible or intangible. - The former are goods with physical identity, while the latter refers to services. - Using this definition, **economic activity** would refer [to the movement of both goods and services in a production, consumption, and distribution process to satisfy human needs and wants]. - The [magnitude, type, and extent of resource] involvement [*differ* in every economic activity]. - are motivated by either [directly or indirectly] satisfying human needs and motivations. - This is the reason why human needs and wants are identified as the fundamental cause of any economic activity. - However, the way an economic activity is chosen to satisfy the same type of need or want differs from one individual to another. - Varying individual resources, priorities, situations, motivations, preferences, and level of satisfaction dictate the multiple ways by which needs and wants are met. **[Economic Resource]** - is a means by which an individual\'s needs and wants may be directly or indirectly satisfied. - For example, a cup of rice is an economic resource as it provides the food requirement of an individual, just as a rice plantation is an economic resource because it provides the rice requirement of a community or a company. - A teacher is an economic resource for those with teaching and learning needs, just as a lawyer is an economic resource for those requiring legal services. - There are many different examples of economic resources that can be found in everyday settings, and these resources differ in category depending on the nature or level of scarcity, form, or renewability. - Various types of goods become the object of multiple economic activities that aim to satisfy different needs and wants. - The question is whether these goods satisfy needs and wants in a direct or indirect manner. - Goods that directly satisfy human needs and wants are classified as **[consumption goods]**. - Example would be a cup of rice in a restaurant menu. - are those goods that [indirectly satisfy] human needs and wants. - Example would be gasoline, which is needed to fuel a car to be able to provide a means of transport. - Depending on how it was used, the same resource can be *[classified both as **consumption and capital goods.** ]* - The distinction lies on how the good was used and not on its inherent character. - A cup of rice can be categorized as ***consumption*** good when it is *[purchased and consumed as it is]*. - It becomes a ***capital good*** when it is *[used as an ingredient to create another food]* product or obtained for a different purpose such as producing a rice wine. - Based on **[nature or level of scarcity]**, **economic resources** are *[either scarce or free]*. - **[Scarcity]** is relative to areas or situations such that a resource is only considered scarce if the need for it exceeds the available quantity. - **[Tree Resources]** happen when the available resources exceed the current need for it. - **[Renewability Resources]** are either renewable or nonrenewable. - Renewable resources such as watersheds and forests are regenerative and sustainable although this can usually happen only over a long period of time. - **[Nonrenewable Economic Resources]** such as coal, minerals, and gas are exhaustive and only exist in limited quantities. - consumption of these resources grows exponentially leading to more insufficiency of its quantity to satisfy the long-term requirements of the society. - can also be classified according to their physical form, and are either **natural**, man-made capital or human. - What exists in nature such as **land and bodies of water are [natural resources].** **[Man-made or capital resources]** - are those goods that were produced by men from combining natural resources and were created for an identified purpose. **[Human resources]** - come in the form of labor services such as a doctor, a writer, or a fisherman. - From the simplest way of performing household budgeting to altering a nation\'s trade direction, knowledge of economics provides a huge leverage for an individual, or for a company that he wishes to manage. - After becoming familiar with the concepts of scarcity, choices among alternatives and of trade-off, distinguishing between the classifications of economics resources, and contrasting the various types of goods, connecting these concepts to day-to-day activities will become easier to appreciate. - In particular, one\'s daily activities involve the use of the major economic **concepts and theories** and become valuable in making certain decisions in life. - As one moves up to [decision-making levels], such as when [making investments, returns and profitability] are major considerations. - **Knowledge of economics** allows one to evaluate [available options and the risks] that are associated with every possible alternative. - Huge losses can be minimized, and the possibility of gains can be maximized. - This knowledge to evaluate alternatives in order to arrive at an informed choice is a result of a good knowledge of economics. - One must be able to determine the different choices whether one wants to invest in a fixed deposit, lend someone at an interest, or purchase properties while simultaneously being aware of the risks involved in such alternatives and choices. - And while it is true that the exact future cannot be predicted, anticipating and preparing for possibilities are possible through the knowledge of economics. For instance, economists can speculate the future value of goods traded in the stock, currency and futures market, predict inflation rates based on historical figures, or determine budgetary shortfall according to current economic figures. - Finally, a valuable concept that economics allows one to know is the socioeconomic issues that happen on a regular basis. - Economics explains the causes and effects of poverty, unemployment, income inequality, gross domestic production and gross national product, inflation and deflation, peso exchange rates, low economic growth, or trade deficits and the ways by which they can be addressed. - From the individual perspectives of satisfying needs and wants, to company-affecting decisions that are being made and to national and international society-altering directions, economics presents alternatives and choices for better decisions. **LESSON 2** **HUMAN RESOURCE MANAGEMENT BASICX** [*Lesson Introduction* ] **[Human resources management ]** - involves the [monitoring of the culture of the organization], and is responsible for the recruitment of appropriate workforce, in the recommendation of market-based compensation and benefits that are in accordance with the company\'s current and potential resources and in the crafting of an overall strategic employee development plan. - It is also the **management function** that [conducts research and makes policies and recommendations], which *are implemented to benefit, attract, and retain the best employees*. **[HRM Five Functional Areas]** 1. **[Organizational Design]** - is about ensuring that there is an **employee-job fit for all the positions** in an organization to fulfill its mission. - This is done through the corollary functions of planning and job analysis. 2. **[Staffing]** - Staffing deals with the **recruitment of individuals** whose *skills, abilities, knowledge, and experiences are deemed appropriate for the job*s in the organization that needs to be filled. - Corollary functions to staffing are recruitment and selection. 3. **[Rewards, Benefits, And Compensation System]** - Then there is the design of rewards, benefits, and compensation system that includes compliance, rewards based on job evaluation, and direct and indirect employee benefits and compensation. - Its compliance component includes the legal aspects of human resource management. 4. **[Training And Development ]** - Employee and organizational training and development seek to ensure that employees have the necessary knowledge and skills that will allow them to satisfactorily perform their jobs and steer the company toward its advancement in its sector. 5. **[Performance Management And Appraisal System]** - Performance management and appraisal uses performance evaluation tools developed or adopted by the organization to help identify interventions to enhance work efficiency. *[Lesson Presentation]* - The dynamic demands and expectations of consumers in both public and private entities, profit, and not-for-profit organizations across the globe necessitate the finding of more value in creating strategically designed human resource units. - A critical and careful assessment of how a company operates to best align with its overall mission and goals results in more positive outcomes for people, systems, as well as technology in the context of human resource management. **[Core Of Human Resource Management]** - is the **[attraction, placing, rewarding, training, and retention]** of the right people *according to the objectives of the organization*. **[Job Analysis]** - outlines the human resource management plan. - Job analysis is the *process of collecting and studying various factors that are related to the operation and responsibilities* of a specific job. - Its immediate products are job description and job specification. - **Job analysis** is [required] in human resource *planning, recruitment and selection, training and development, job evaluation and performance appraisal,* the creation of a compensation and rewards system, and the establishment of health and safety policies. **[Job description]** - contains the *job title, location, summary of duties, machines, tools, equipment needed to perform the job,* and materials and forms that will be used to perform the job, including the supervision that is expected to be given or received, as well as working conditions and possible risks. **[Job specification]** - on the other hand, contains the statement of manpower qualification for a specific job. - This includes the required minimum education, experience, training, judgment, initiative, physical effort, skills, responsibilities, communication level, and emotional and social characteristics. **[Designing organizational structures]** - also considers efficient work process and dynamics. - This being said, due consideration is given not only to the daily processes but more so to the organization\'s priority areas that are more often *accomplished over a longer period*. - Understanding the efficiency of all systems and programs marks the beginning of the analysis on how to better improve results and outcomes. - Additionally, [human resource management] emphasizes *accountability in the design of structures and systems* that involves people and resources. - As such, a *[level of independence and clear standards must be established at the onset]*, to ensure that processes will run smoothly and with the least disturbance or delays. Ensuring the efficient managerial function of ***planning, organizing, directing, and controlling*** are within the context of designing organizational structures. 1. **[Planning]** - pertains to formulating ***[strategies of personnel programs]*** ahead of use and will contribute to overall organizational goals. 2. **[Organizing]** - is an essential *[**process of allocation of tasks** amongst members]* of a specific structure, with identified relationships, responsibilities, and accountabilities within an integrated activity toward the [achievement of a common goal]. 3. **[Directing]** - is a function that *[**allows for the activation** of people at various levels of skills and tasks]*, and ensures that each one is able to maximize his or her contribution to organizational goals. - Given appropriate motivation and reward, directing employees at different levels becomes possible even with the slightest exercise of authority. 4. **[Controlling]** - comes after planning, organizing, and directing, and necessitates the review of the employees\' actual performance. - It also includes verifying deviations and comparing results from identified plans and offering corrective actions for improvement. - Business experts suggest that to be able to predict organizational success is to ensure that the right people are placed in the right position in the company\'s functional process. - The continuous development and evaluation of existing organizational structure play a key role in the initial design, and subsequent re-design of company structures and groupings. - This process of structural assessment and re-design involves the referencing of existing employees and carefully examining if they perform roles that are based on their ability and expertise. - Every employee has the strength and skill set that can be useful for leading a company or organization to a level of success. - Most often, these strengths, when left unrecognized, may cause disillusionment and in some cases shifting roles. - It may also lead to re-formatting in the reporting structure of an organization, as every individual is evaluated for strengths and weaknesses that would maximize potentials and would fit in the organization\'s current goals and larger direction. **[Staffing]** - comes after job analysis and human resource planning. It includes *[recruitment, selection, placement, and orientation]*. - **[Recruitment]** - is the ***process of searching for prospective employees*** and providing an encouraging environment for them to pursue their job application in the organization. - **[Internal recruitment]** can be in any of the following forms: promotion, transfer, job posting, or employee referrals. - **[External recruitment]** can be in the form of advertisement, through direct recruitment, via employment exchanges, using employment agencies, networking with professional associations, campus recruitment, or even word of mouth announcements. - **[Selection] -** is the **process of determining the qualifications knowledge, skills, attitude, experiences, and values** of an applicant with the purpose of ascertaining job suitability. - Selection involves *[screening of applicants]*, having applicants take tests or other *methods of screening and shortlisting such as interviews, reference and background verification, medical job* candidates include *aptitude test, psychomotor test, job knowledge test, vocational or interest test, personality test and group discussion participation test*. - **Interview types**, on the other hand, can be *informal, formal, planned, patterned, nondirective, in-depth, stress, group, or pane*l. - It is normal that the applicant\'s fit to the company culture is considered at this point. **[Placement]** - is the [process of giving the selected candidate the most suitable job in terms of the organizational requirement] and the prospective employees\' qualifications after the formalities of screening. - This phase of matching then leads to eventual orientation. - Varied techniques are adopted to ensure employee orientation and to introduce a new hire to his new work environment, introducing him to people, practices, purposes, and policies of the organization. - A good orientation program is critical in improving employee morale in reducing employee turnover, in curtailing absences, in lessening work accidents, and in avoiding industrial strife. - Screening Job Matching Orientation Work Picture meron No description available. **Placement to Work Performance Flow** **[Human resource management]** - is valuable to the organization as it helps attract and retain the right people. - Valuable to human resource management efficiency is having a good [reward, benefits, and compensation system]. - This process involves *[Wage and salary administration]*, providing incentive and fringe benefits schemes, as well as social security insurance and creation of retirement funds. - **[Compensation]** is a direct reward for the work done benefits emanate from a defined company incentive program. - **[Benefits]** are indirect payments for working beyond what a job requires. - As one motivational tool, rewards, benefits, and incentives may be financial or nonfinancial in nature. - Employers are encouraged to exercise their creativity in developing other types of rewards and benefits, beyond what is government mandated. - Corporate discounts, office perks, childcare facilities, wellness programs, and education fees reimbursement were added to the usual disability and health insurance, stock options, profit sharing, paid parental leaves, and performance bonus. **[Training and development]** - are the process of creating avenues for employee ***improvement, reskilling and up-skilling*** for managerial development, career planning, and transfer or promotion. - **[Training]** - is the imparting of technical and operational skills that are needed for the current job. - **[Development]** - is the process of conducting suitable programs to improve one\'s human and managerial capability to handle a more expansive role in the organization. - Provisions for training and development of employees should be embedded in corporate policies as a way of cementing information on how the company puts a premium on professional development. - In a similar note, *policies on training and development provide the needed direction for the creation of employee development plans as well as performance improvement mechanisms.* - **Training and development** differ in periods, focus, orientation, motivation, objectives, number of beneficiaries, and purpose. - Having the right organizational climate is an emphasis in the task of human-resource management, a climate that celebrates and rewards the advancement of people in their education, exposure, and training because these steps ultimately contribute to a happier work force and a more efficient organization. - **Training and development exercises** make for effective human resource management as they [solidify teamwork and promote team spirit among organizational members.] - In the same way, **training and development programs** [provide excellent growth opportunities for people who have the big potential to move up] in the organizational ladder through [diligence and commitment.] - Ultimately, **having a good training and development program** [improves organizational productivity, affects society and overall work conditions of people, economy, reduces costs, maximizes scarce resources, and improves profits and overall work conditions of people.] **[Performance management and appraisal]** - defines the ***direction and movements of the careers of people in the organization***. - This systematic assessment of an individual\'s job performance and their potential for advancement results in further training, coaching, or correction as needed. - The result of *[performance appraisa]*l may be **promotion, transfer, or retention**. - An *[extreme case]* (worst) would be **demotion, or separation, other than retirement or resignation**. - **Performance management and appraisal** include [setting performance standards, communicating these standards to the employees, measuring the performance, and comparing this to what is identified as standard, providing a venue for the discussion of results as feedback, provision of corrective action when necessary and implementation and regular review]. - Methods for performance appraisal vary from the traditional checklist type that is based on **job analysis**, to conducting confidential *reports, defining critical incidents, ranking, paired comparison, narrative, graphic rating, grading, forced distribution, testing of work sample, nominations, or a combination of types*. - Other organizations utilize the service of professional assessment centers that conduct assessment using curated evaluation models. - Examples of **[curated evaluation models]** would include ***Management by Objectives by Drucker***, the ***Behavioral Anchored Rating Scale or BARS***, the trait-based appraisal, human resource audit, and the ***360-degree performance appraisal***. - Caution must be exercised in the use of performance appraisals that continue to exhibit inherent limitations of central tendency, halo effect, horn effect, leniency or strictness, spillover effect, the fear of losing subordinates, the fear of losing relationships, as well as the loss of goodwill or the wrong use of the methods. - **Human resource management of late** has included new ideas such as artificial intelligence, big data, hybrid work models, healthy organizations instead of mere employee wellbeing, diversity, equity and inclusion, the onboarding of people with power skills, reskilling as much as up-skilling, gig economy concept, and cyber security. - As **technology continues** in its essential role in many organizational functions, the capability of a workforce to integrate and incorporate new and emerging technologies in the performance of work will prove valuable. - A successful organizational design is one that maximizes profits, reduces costs, increases employee and consumer satisfaction, and provides workflow efficiency. After the evaluation, analysis, and development of every area in an organization, a completed structure should be implemented using the new policies that were identified in the process. Working through an enterprise\'s structure, usually from the bottom up, will result in identifying problem areas that are ripe for improvement, make appropriate recommendations, and craft implementation steps within the organizational design. *[Lesson Review]* **[Human resource management]**, - - also referred to as **personnel management**, is a largely overlooked area in an enterprise, and which mainly functions as record keeper and repository of personnel policies and directives that affect the workforce. - It consists of all the activities undertaken by an organization that aims to ensure the effective utilization of employees\' skills and talents to attain individual, group, and enterprise goals. In broader terms, all decisions that affect the workforce of the organization are subsumed under the human resource management function. - **Human resource management** should [increase employees\' job satisfaction and meet their ultimate purpose of self-actualization] within a stimulating work environment where they perform their specific roles. - **Human resource management** should be able [to assist the organizational workforce in achieving their personal goals] even as they contribute to the bigger mission of the company where they work. - In this function of the organization, employees must be led to develop and maintain a quality work life, that should redound to a desirable professional and personal situation. - Company performance is only ensured when there is an efficient and quality human resource management system. **LESSON 3 PRODUCTION AND OPERATIONS MANAGEMENT BASICS** *[Lesson Introduction ]* **[Product or service]** - is the primary object of consumer interest in a market. - The **need- and want-satisfying capacity** of an item determines its value as a product or service. - While most products are created for an identified need or want, some products are developed for a need or want that is yet to exist. - The process and systems that convert raw materials to another product are the core of production and operations management. **[Production and operations management]** - involves the **[major areas of production]** [planning and control], [project management], [supply chain management], and [inventory management]. - **Production and operations management** finds its [value in connecting consumer demands] and the [capacity of business enterprises to provide such demands] through the use and combination of various economic resources. - **Production and operations management** identifies the *[process that transforms raw materials to finished products]*, and *[the series of processes that convert to a service.]* - During production and operation, other types of utilities are formed. **[Types of Utilities]** 1. **[Place utility]** happens when there is a change from the place of availability to the place of use through transportation. - For example, transporting harvested rice to the brewery for rice wine production. 2. **[Time utility]** happens when the input or the output is stored as part of the utilization process of the consumers. - An example would be imported meat products in cold storage. 3. **[Form utility]** happens when inputs change in size, weight, color, shape, or all at the same time as it converts into a consumer product. - An example would be converting the fiber of a pineapple fruit to fabric and then to a ready-to-wear dress. 4. **[Service utility]** happens when service is rendered to a client either directly or indirectly. - An example would be healthcare professionals to COVID-19 patients, or computer graphic designers to online buyers. 5. **[Knowledge utility]** happens when information is imparted to customers through presentations in the form of advertisements. - An example would be giving information about a vitamin\'s ingredients and health benefits through the product\'s television advertisement. - ***Production management*** encompasses *[production planning]* and *[development, production]* *[administration]*, i*[mplementation]* function and other allied activities such as standardization, simplification, specialization, quality control, and research and development. - ***Production system*** on the other hand deals with the functions of *[converting inputs to output using processes]*, on demand forecasting, and on manufacturing control. *[Lesson Presentation]* **[Production Process]** - refers to *[manufacturing activities]* that result in either semifinished product, finished product, or a by-product. **[Operations Process]** - refers to *activities that result in the availability of a complete service* or an allied service. **[Production And Operations Management]** - is the application of the management functions of [planning, organizing, directing, and controlling] in the process of manufacturing goods or in the provision of a service. - Regardless of the type of product or service, the activities that happen in the creation of goods are in many ways similar. - A set of inputs would undergo a process to create outputs. - This process is in the form of manufacturing operation, assembly of parts, finishing of parts, and inspection of quality and quantity. - In between these processes is the movement and storage of raw materials, unfinished goods, and finished products. **[Organizations]** - are *[designed mainly to produce products or services. ]* - If these organizations must survive and grow, the operations function must be undertaken in the most economical manner possible. - As most companies are expected to make profits, any activity, including those for operations, must be managed to contribute to the accomplishment of such objectives. **[Production]** - is about the *[creation of all goods and services]*, regardless of type or kind. **[Operations]** refer to *any process that accepts inputs and uses resources* to change those inputs in useful ways. **[Production Management And Operations Management]** - play an important role in an organization in increasing efficiency and productivity. While **[Operations Management]** - is focused upon administration, planning, and execution of operations involved in production of goods and services and trying to minimize the resources, at the same time increasing output, operations management is more concerned with input/output and churning out products in the shape of desired finished product. **[Production Management]** - deals with planning, control, and decision making necessary for carrying out the production process. - Defined as the design, operation, and improvement of the systems that create and deliver the firm\'s primary products and services. Foremost in production and operations management, is the twin issue of *[effectiveness and efficiency]*. **[Effectiveness]** - refers to goal achievement **[Efficiency]** - is related to the cost resource utilization involved in the production and operation activity. **[System ]** - provides an efficient and effective framework of activities necessary to attain an objective. - It is a dynamic arrangement of elements, each designed to interact with the other, and thus it is more than just a static combination. **[Element]** - consists of men, materials, machines, process, and information network designed and located to interact harmoniously. - In production and operations management, emphasis is also given to the attainment of right quality, which is based upon the customer\'s needs. **[Right Quality]** - is not necessarily the best quality. - It is determined by the cost of the product and the technical characteristics as suited to the specific requirements. **[Right Quantity]** - is also important, emphasizing that the manufacturing organization should produce the products in the right number. - If they are produced more than demand, the capital will block up in the form of inventory and if the quantity is produced in short of demand; leads to shortage of products. **[Right Time]** - is also an important parameter to judge the effectiveness of a production department, which must aim to make the optimal utilization of input resources to achieve its objective. **[Right Manufacturing Cost]** - must be established before the product is manufactured. - Hence, all attempts should be made to produce the products at pre-established cost, to reduce the variation between actual and the standard pre-established cost. - It is also in production and operations management that the location of facilities is given important consideration. **[Location Of Facilities For Operations]** - is a long-term capacity decision, which involves a long-term commitment about geographically related factors that affect a business organization. - The purpose of the manufacturing location study is to find the optimal location that will result in the greatest advantage to the organization. **[Layout Decisions]** - include the capacity of the organization to make substantial investment in money and effort, its commitment to maintain the facility, and a full evaluation of cost efficiency to the operations. - **Organization's Decision for its Operations Layout** - Inefficient Operations - Accidents Or Safety Hazards - Changes In The Design Of Products Or Services - Introduction Of New Products Or Services - Changes In The Volume Of Output - Changes In The Methods Or Equipment - Changes In Environmental Requirement - Changes In Legal Requirement - Morale Problem **[Productivity]** - is the aim in production and operations management. - The efficient combination of land, labor, capital, and management to optimally produce goods and services determines the level of operational productivity. - Before an enterprise is organized, *product design* *[is **decided**]*. - Having a single product creates a more focused posture on production and operations management, and the single product success can be the springboard for developing a whole product line in the future. - The design of the product remains to be a critical decision for a business owner. - The uniqueness of a product or service determines its market success. - - Similarly, product design is dynamic in the context of changes in consumer preferences, economic situation, sociological and demographic factors, as well as political and legal challenges. **[Product design]** - deals with conversion of ideas into reality, and every business organization must design, develop, and introduce new products as a survival and growth strategy. - Developing the new products and launching them in the market is the biggest challenge faced by the organizations. **[Process design]** - is a macroscopic decision-making of an overall process route for converting the raw material into finished goods. - These decisions encompass the selection of a process, choice of technology, process flow analysis and layout of the facilities. - Hence, the important decisions in process design are to analyze the workflow for converting raw material into finished product and to select the workstation for each included in the workflow. **[3 Categories Of Production Processes]** - flow production, batch production, or unit production. 1. **[Flow Production]** - which is also referred to as mass production, denotes a production process that runs in sequence. - This type of production process is suitable for high demand goods, where a steady flow of operation is necessary. - Quality control can be ensured in the type of raw materials used in the manufacturing system before the final product is brought out of the manufacturing facility. 2. **[Batch Production]** - divides production output in component parts. - In this category, the whole production process is divided in parts, with the unfinished product in the form of various finished parts. - Batch production is applicable for a product that uses different machines and tools depending on the parts to create. - *[Quality can be checked at every batch production]*, and production parts can be made available at another functional area. 3. **[Unit Production ]** - happens when production is made according to when the customer specifically requires it. - Production processes of this nature follow a standard, quality, and specification in size, weight, form, color, and packaging. - This type of production process is best used for products that do not require repetitive steps, nor has high demand. - Its cost concerns also limit its use **[Production planning and control]** - is about implementing plans in terms of job schedule, machine appropriation, and actual workflow. - As production requires the successful conversion of raw materials to finished products whether in parts or as a whole, the role of a production manager becomes critical. - The production manager ensures that the process is rolled out as planned in accordance to earlier decisions on what, how, and when to produce. Similarly, plans are to be carried out with the optimum cost efficiency and utmost quality standard. - The control functionality can be seen in producing better quality products at the best reasonable price within the most systematic manner. - **Planning in production** is in foreseeing probable glitches in the production process and finding remedies for their early solution. - A well-oiled production planning and control system ensures that production schedules are met, that materials, men, and machines are efficiently maintained and optimally functioning, that the production process is well integrated for efficiency and economy, and that workload is regulated. - A production planning and control system is created with the aim of maximizing the use of economic inputs, determining the requirements of production in men, machines, and materials, and ensuring that production is done at the right time with the right quantity and quality. - The availability of products in accordance with the requirements of the marketing department of an organization is also ensured in production planning and control, in as much as adequacy of stocks is monitored for contingencies and information is gathered to guide in policy and future decision- making. - The scope of production planning and control encompasses those that concern production materials, manpower, methods, machines and equipment, routing of work, establishment and estimation of work standards, leading and scheduling, dispatching, expediting, inspection, evaluation, and cost control. - Challenges in production planning and control would be how to combine functions, how to follow-up on production backlogs, and when to proceed with a re-planning. **[Production planning and control]** varies depending on products, manufacturing facilities and organizational nuances. - The best type of production is one that requires little or no control at all. - As a management tool, controls need not be elaborate and complex but simple enough yet able to create an efficient operation of optimal production at the least cost. **[Project management]** - evolved from Henry Gantt\'s famous Gantt chart and Henri Fayol\'s Five Management Functions of planning, organizing, commanding, coordinating, and controlling. - A **project** is an organized initiative that has a concept phase, a project initiation phase, planning, execution, monitoring and control, and a project closure. While it may appear to be overwhelming to an inexperienced individual, project management systems are meant to simplify and break down milestones for time and resource use efficiency. - A good knowledge of project management presupposes an appreciation of work integration, scope, time, cost, quality, procurement, human resource needs, communication and its channels, risk, and stakeholder management. **[Supply chain management]** - is the management of a network of business activities and processes that includes procurement, manufacturing, transportation of finished goods, warehousing, distribution, and inventory management. - With a global business scenario, the expanse of supply chain management is magnified and characterized by geographically distinct markets, by diversely obtained raw materials, by more efficient manufacturing and procurement processes elsewhere, and by cheaper labor markets abroad. - **Supply chain management** involves a broad function that sees planning, design, control, and implementation of processes related to procurement, manufacturing, distribution, and sales functions of an enterprise. - The *[network of service providers]* of the supply chain process, called **[vendors]**, are efficiently coordinated and integrated by supply chain managers to ensure that production and distribution and all other activities in between will not be vulnerable to the risks of distance and time. - Not to be confused with simple *[logistics]*, **supply chain management** goes beyond the management of the flow of goods as it also deals with securing and exchanging information, data, and documents between transacting parties. - **[Logistic]**s acts as the post-procurement function of delivering raw materials from the source to the production plant, and the transportation of finished goods from the production to the various points of distribution. **[Warehouse management]** - completes the logistics process in ensuring the security and safety of goods, finished or unfinished, at any stage of raw materials procurement, production, and distribution. - Normally outsourced, or performed by a third party, the value of warehousing activities and companies would be in the extent of their reach and multi-location presence, especially when one speaks of global production and distribution. **[Production and operations management]** - is continuously influenced by an ever-changing global environment and must therefore adjust to the challenges, trends, and developments in this area. - Adaptation to the global context, in entering in supply chain partnerships, in just-in-time performance and real-time monitoring, to mass production and customization, to bespoke trends, and rapid product development and high valued and diverse workforce, production and operations management will remain a dynamic area that is worthy of focus in doing strategic business analysis. *[Lesson Review]* In strategic business analysis and planning, the production and operations management aspect would include plans on schedule, materials requirement, purchasing activity and control, capacity management, sales and operations, as well as plans on manufacturing and enterprise resources. Production and operations management outlines the process of product creation and service provision that enterprises provide to the market. The process flow of producing goods and services varies depending on the nature of the product. Tangible products are created from combining raw materials as inputs put together by labor using human capital. Services, on the other hand, are provided through the rendering of transactions in service entities such as in banks, schools, or hospitals. Often, manufactured products are also part of some service delivery. In ensuring that products and services reach its final user, production and operations management enters the picture in the form of creating a system for efficiently utilizing inputs of materials, equipment, labor, money, methods, and management to create outputs of value. A good production and operations management system allows for the continuous search for new products and services to offer the public. It also meant practicing creative and sustainable means to improve product designs, packaging, raw materials requirement, service delivery experience, and similar innovations to please consumers. It is also in production and operations management where data is obtained to anchor major management decisions such as changing raw changing final product form, increasing or reducing production quantity, using technology, modifying a procurement system, to subcontract or augment production capacity, or whether to shift from being labor to capital intensive in the production process. Ultimately, production and operations management balance the need to provide consumers with the best product in the most economical way, using an optimal process that maximizes manpower efficiency.