CHAPTER 8: The Business Enterprise Sales – the result of giving an item in exchange of

something
A business enterprise is an organization that is
Cost – the amount paid or charged for something
engaged in commercial activities – the trade of goods or
Profit – the excess of revenue over expenses, it is also the
services, or both with consumers. The goals of a business
excess of the selling price of goods over their cost
enterprise, basically to earn profit is the monetary reward
Manufacturing – the process of transforming raw materials
obtained from managing a successful business. The basic
profit equation is defined as the total revenues or sales less
into finished goods or products
cost and expenses.
Services – the rendering of work for others, involving the
Equation -> Total Sales – Cost and Expenses = Profit skills and expertise of people
Trade – is the buying & then selling of good w/o causing
Cost and expenses are the amounts that have to be any major change in the form of the products
paid for or spent by the business in its operation. Some
examples of these cost and expenses are raw materials,
salaries of labourer.
CHAPTER 9: Three Main Functions in Organization
Goals of Business
 Operations – involves the creation of goods and
 earning profit services
 personal satisfaction of being in control and  Marketing – refers to the totality of activities
producing results involved in the transfer of products from the
 gives an opportunity to be of service to society producer/seller to the customer/buyer, including
advertising, promotions, and selling, for the aim of
The Three Main Types of Entrepreneurial Business customer satisfaction
 Manufacturing – involves the process of  Finance – deals with the management of revenues
transforming raw materials into finished goods or and money resources
product Production and Operations Management
 Raw Material – are the components
that make up the finished product Production
 Direct Labor – is the work done by - is defined as the creation of goods and services
laborers as they convert the raw - involves a series of processes that convert a raw material
materials into something into something useful
 Factory Overhead – refers to the Operation Management
resources needed in the - is involved with the management of systems and
transformation of raw materials into processes that create goods and/or provide services
goods - involves the planning, implementation, and control of
 Process – the manufacturing process production processes to ensure smooth and efficient
that converts materials to finished production
goods - it brings together the 6M’s which are men, money,
 Service Business – involve the rendering of work machines, materials, methods, and markets to satisfy the
for others, involving the skills and expertise of needs and wants of people
people
 Trading or Merchandising – is the buying and
selling of goods, w/o causing any major change in
the form of the products.
 Retail Trading – when goods are sold in
small quantities
 Wholesale Retail – when goods are
sold in large quantities

Glossary
Revenue – income produced by a given source
Examples of Operations Marketing Mix
Operations in a garment manufacturing company: - refers to what has been called the 4P’s:
* Design, cutting, sewing, production, and inventory > Product – is defined as an item that satisfies a
control, quality control, packaging, purchasing, facilities consumer want or need
layout > Price – is the amount a customer pays for the
Operations in a restaurant: product
* Food preparation, cooking, baking, plating, serving, > Promotion – refers to all of the
cleaning, dishwashing methods of a commercial that a marketer may
Operations in a laundry shop: use to provide information about the product
* Weighing, sorting, soaping, rinsing, drying, ironing, > Placement/distribution – refers to providing the
folding product a place which is convenient for
consumers to access or buy

Some years after the 4P’s were conceived, marketers

Products: Goods and Services
developed 3 more P’s to include services marketing
Products which are manufactured or created or
> Physical Evidence – design of the store
done, are either goods of services.
> People – producers and consumers
Characteristics of a good: > Process – all the how’s
* it is a tangible product
In 1990 Robert F. Lauterborn proposed a four C’s
* consistent product definition
classification which is more consumer-centered version of
* productions is usually separate from consumption
the 4P’s
* it can be inventoried
> Consumer wants and needs
* low customer interaction
> Cost
Characteristics of a service: > Communication
* intangible product > Convenience
* product and consumed at the same time
* often unique Market Segmentation
* high customer interaction
- this means dividing a market composed of people with
* inconsistent product definition
different kinds of characteristics and need, into various
* often knowledge – based
groups which may exhibit some common needs, for which
particular marketing mixes can applied.
Ten Critical Areas of Operation Management
* Service and Production The Basis of Marketing Segmentation can be the following:
* Quality Management * Geographical – customers can be segmented accdg, to
* Process and Capacity Design location, population, density, and climate
* Location * Demographic – customers can be segmented accdg. to
* Layout Design age, gender, civil status, education, profession, family,
* Human Resources and Job Design organization, religion
* Supply - chain Management * Psychographics – accdg. to social issues, such as religion,
* Inventory Management politics, or work, or accdg. to personal interest such as
* Scheduling family life, food, health and friends
* Maintenance * Behavioral – customers may be segmented accdg. to
show often they buy, user status, user rate, user loyalty
and readiness to buy
Marketing
- plays a vital and very important role in business Market Targeting
- it has been defined as the processing of planning and - means evaluating potential and commercial attractiveness
executing the conception, promotion, and distribution of of the market segments identified by looking at the ff,
goods and services to create exchange that will satisfy factors: segment size and growth, segment attractiveness,
individual and organizational objectives. and company objectiveness and resources
- then after evaluating, it means selecting the market  Income Statement – the main statement for
segment that a business will focus on measuring the firm’s profit ability over a period of
time
Product Positioning means communicating a product’s
 Cash Flow Statements – compares two time
image in comparison to competitors in the market.
periods of financial data and shows how cash has
changed in the revenue, expense, asset, liability,
and equity accounts during those time periods

Identifying Identifying Sourcing of Funds

possible Market Market Product the
target Segmentation Targeting Positioning marketing
markets mix 1. Equity –for most small and medium enterprise
savings continue to be the main source of financing
2. Venture Capital – organizations that provide seed
capital to entrepreneurs w/ business ideas that
shows potential
Finance
3. Loans – private and government banks/lending
-refers to the procurement, mobilization, and accounting of
facilities provide loans for SME’s which can offer
financial resources. The accounting function prepares a
collateral.
record of the financial affairs of the company
- for a start-up business, bookkeeping and accounting are
functions within the finance field. Bookkeepers are
responsible for recording and classifying the accounting
transactions of the business firm and techniques involving
recording those transactions.

Two Types of Bookkeeping systems:

 Single - Entry Bookkeeping – involves recording

transactions as a company pays bill and makes
deposit into the company account. This system is
effective for small companies with a low volume of
transactions.
 Double – Entry Bookkeeping – is for companies
which has certain size and complexity, two entries,
at least, are made for each transaction.

Three Basic Accounts of Companies

 Assets – are those things the company owns such

as inventory & accounts receivables
 Liabilities – are those things the company owes
such as what they owe to their suppliers (accounts
payable) bank, and business tax and any other debt
on the banks
 Equity – is the ownership entrepreneur and any
investors have in the firm

Three Most Important Financial Statements:

 Balance Sheet - a statement showing what the

entrepreneur owns (assets) and what the owes
(liabilities and equity)