WELCOME

STUDENTS!
to
School year
2018-
2019
Do’s and Don’ts

Start with a prayer

Attend class everyday
Speak English
Participate in class discussion
Wear proper uniform and ID
Observe cleanliness
Respect others
ALWAYS SMILE
ENTREPRENEURSHIP

CRISTOPHER L. GEVERO
TEACHER
APPLIED TRACK SUBJECT
GRADING SYSTEM:

WRITTEN WORK - 25%

PERFORMANCE TASKS - 45%
QUARTERLY ASSESSMENT - 30%
Course Outline
PART 1: Foundations of Entrepreneurship
Chapter 1: The Entrepreneurial Mindset
Chapter 2: Recognizing, Assessing, and Exploiting
Opportunities
PART 2: Developing the Business Plan
Chapter 3: The Business Plan
Chapter 4: The Marketing Plan
Chapter 5: The Organizational Plan
Chapter 6: The Financial Plan
PART 3: Managing the Entrepreneurial Venture
Chapter 7: Managing the Marketing Function
Chapter 8: Managing the Operations Function
Chapter 9: Managing the Finance Function
Chapter 10: Managing the Human Resource
Function
Schedule of Classes

DAY TIME
MONDAY 3:20 – 4:20 PM
4:20 – 5:20 PM

FRIDAY 1:10 – 2:10PM

2:10 – 3:10PM
Entrepreneurship
Objectives:

Explain the meaning of

Entrepreneur and
Entrepreneurship.
Discuss the importance of
Entrepreneurship
Business – is an activity that is part and
parcel of human society.
- it is an entity in which economic
resources or inputs, such as materials
and labor, are put together and
processed to provide goods or services
or outputs to customers.
 The objective of most businesses is
to earn a profit.
 Profit – is the difference between the
amount earned and the amount spent in
buying, operating, or producing
something.
 Thus, businesses make the goods and
services you/we use each day. That
includes the products and services used
by other businesses as well as those
needed by individual consumers.
 There are generally three types of
business organizations operated for profit:
Classification of Businesses
 Service business
 Merchandising business
 Manufacturing business
 Service business – is a type of business that provides
labor and other services to customers.
Examples are: transportation companies like airlines and
shipping lines; professional services like accounting,
legal, engineering, and customer service; entertainment
like amusement parks and movie houses;
 Merchandising businesses – is a type of business
that purchase products from other businesses like
manufacturers and sell them to customers at a higher
retail price.
Examples are: grocery stores, supermarkets, car dealers,
real estate dealers, and electronics stores.
 Manufacturing businesses – is a type of business
where raw materials are transformed into finished
goods through product-processing, labor, and other
manufacturing processes.
Examples are: Canned goods, automobiles,
manufacturers of soap and detergent, and medical
drugs.
 There are other businesses that cannot be
classified into any of the three types like
Agriculture , Aquaculture , and mining
companies.
The various Forms of Business Organization
 Sole Proprietorship
 Partnership
 Corporation
Sole Proprietorship – is owned by one person who is
usually hands-on in managing the day-to-day activities.
- Many small businesses start in this type of business
ownership.
- Sole proprietors own the entire business, including
all assets and profits. Since they own all the assets,
sole proprietors are also responsible for all the
liabilities of the business.
Advantages of a sole proprietorship:
Total undivided authority;
Low organizational cost and license fees;
Tax savings; and
No restrictions on type of business (as long as it is
legal).
 Disadvantages of a sole proprietorship:
 Unlimited liability;
 Limitation on size (and thus on fund-raising
power); and
 Limited by management’s ability to be jack-of-all-
trades.
Partnership – is a form of business organization
where ownership of the business is shared by two or
more members.
 The partners mutually agree as to how decisions
will be made and how the profits and losses will be
shared.
 They also agree on how future partners will be
admitted and how disputes will be resolved legally.
Advantages of a Partnership
 Wider capital base

-Having more partners involved in the business

allows for diversification of the contributed
monetary funds.
 More skills and Abilities
 Easier for expansion
 Co-ownership of property

Disadvantages of a Partnership
 Limited Life
 Unlimited Financial Liability
 Limited Sources of Capital
 Unsatisfactory Division of Profits
Corporation
- An entity created by law that is separate and distinct from its
owners and its continued existence is dependent upon the
corporate statutes of the state in which it is incorporates.
- A corporation has a minimum of five and a maximum of fifteen
owners who are called shareholders.
- Each shareholder owns a part of the company and has some
authority over its direction.
- Shareholders elect a board of directors who oversee the major
policies and decisions of the corporation.
There are two types of corporation:
Stock corporation – has capital stock divided into shares and
dividends. Surplus profits are given to shareholders depending on
the number of shares held.
Non-stock corporation – does not issue shares of stock and is
established primary for public interests such as a foundation for
charitable, educational, social, cultural, and other similar
purposes.
WHO WANTS TO BE A
BILLIONAIRE?
 Introduction
Some people make a big deal out of the fact that are
many successful businesses founded by entrepreneurs
who do not have a college degree.
Often cited are:
Apple founder Steve Jobs
Microsoft founder Bill Gates
Facebook c0-founder Mark Zuckerberg
Uber co-founder Travis Kalanick
In the Philippines:
Philippine Airlines and Asia Brewery owner Lucio
Tan
National bookstore owner Socorro Ramos
Zest-O corporation President Alfredo Yao
Mang Inasal founder Edgar Sia II
 What is an Entrepreneur
The term “entrepreneur” comes from the French
word entreprendre which means “to undertake”.
 It is a reference to individuals who have initiated
the establishment of a business enterprise.
 In his classic work The Theory of Economic
Development, Joseph Schumpeter emphasized
the role of entrepreneurs in the process of
economic transformation.
 Through their business ventures, entrepreneurs
introduce to the market, innovations in the form
of new products, new processes, new markets,
and new organizations.
Entrepreneurship is the
capacity and willingness
to develop, organize and
manage a business
venture along with any of
its risks in order to make a
profit.
Entrepreneurship is
the pursuit of
opportunity without
regard to resources
currently controlled.
 
General Guidelines for Business
Plan
Use short bond paper
Aerial 12 – font style and size
1.5 line spacing
Use short white folder with
fastener
Assignment. In a short bond paper, write
your output.

 Interview an entrepreneur from your

neighborhood. Ask for advises and tips
in becoming a successful entrepreneur.
“To any entrepreneur: if you
want to do it, do it now. If
you don’t, you’re going to
regret it.”

– Catherine Cook, My Yearbook

What is a Business Plan?
Business Plan – is a document that describes the various
external and internal elements involved in starting a
business or in expanding an existing venture, amidst a
dynamic business environment.
- Is a formal statement or document that contains the plan
for the business that is to be launched, if it is start-up
business, or of the expansion of the business, if a business
already exists.
- it integrates the different functional plans such as
marketing, manufacturing, finance, and human resource
management, taking into consideration the overall strategy
of the business.
What are the parts of a business Plan?
Executive Summary - the executive summary is usually a
one-page overview of the business and highlights the
important points of each section of the business plan. It
briefly states the conclusion that the business is worth
pursuing. The executive summary is the last portion of the
plan to be written.
Vision Statement and Mission Statement – The vision
statement describes where the business is headed and the
future state that it plans to be. The mission statement
describes what the business does. Or what the business is
all about.
Business Description – This provides a complete
description of the business – its products or services
and organization. It can also include the registrations,
location, and premises.
Industry Background – This portion describes the
business environment and mentions the industry
where the business is categorized, as well as how this
industry is performing in the present and the
projections for the future.
Competitor Analysis – This is the identification and
analysis of the various competitors of the business.
Marketing Plan - The market analysis describes the
market conditions and the marketing plan that the
business will deploy, including how the products and
services will be priced, promoted and distributed. It
contains key marketing targets and strategies for
delivering on these targets.
Operations Plan - The operations plan discusses how
the products and services will be produced, as well as
the personnel, purchasing, processes, machines, and
equipment to be used.
Management and Organization Plan – The
management and organization plan describes the
business structure, the organization chart, the
qualifications of the management, and the
responsibilities of all involved in the business.
Financial Plan - The financial plan contains the
financial statements that will show the profitability,
liquidity, and stability of the firm, as well as the
sources of funding. It contains costing and financial
projections.
Appendices – The appendices are additional
information that provide support to the information
presented in the business plan. These may include
resumes, maps, and other necessary information.
Investment Requirements and Production/Servicing Costs
- The entrepreneur needs to determine how much money is
needed to start the business opportunity with consideration to
the technologies and operational levels required. In this respect,
there are three investment that need to be funded:
1. Pre-Operating Costs – these are the costs related to the
preparation for the launch of the business. These include the
pre-feasibility study, market research, product development,
organizational development, and initial promotional costs.
2. Production/Service Facilities Investment – this refers to the
long-term investment for the actual business establishment,
including investment in land, buildings, machinery, equipment,
computers, software, furniture, vehicles, etc. if the business
would be renting or leasing space, the leasehold improvement
(or renovation) would also be part of the facilities investment.
3. Working Capital Investment – this includes the investment
needed to operationalize the business, composed of cash,
accounts receivables, and inventories (raw materials, work-in
process, and finished goods). The entrepreneur must see to it that
he or she has enough cash to cover the inventories to be
purchased (or manufactured), the accounts receivable to
accommodate customers, and the operating expenses to be
incurred. These operating expenses would include the following:
a. Employee salaries, wages, and benefits
b. Rent and lease expenses
c. Utilities
d. Transportation
e. Fees and licenses
f. Office supplies, etc.
in effect, this part of the business plan asks two questions:
1. Do I have enough resources to cover the necessary
investments?
2. Would my sales estimates be significantly higher than my
monthly production/service costs in order to produce
profits?
Financial Forecasts and Determination of Financial
Feasibility
 The entrepreneur should now be able to proceed in
constructing his or her enterprise’s financial forecasts for the
business. The financial forecast refer to the monetary
transactions that the business is expected to engage in.
ultimately, the end result of the financial forecasts will
indicate the feasibility of the enterprise.
 Financial forecasting calls for the creation of the four critical
financial statements:
 (1) Income statement; (2) Balance sheet; (3) Cash flow
statement; and (4) Funds flow statement.
Income Statement
The income statement is a financial statement that measures
an enterprise’s performance in terms of revenue and
expenses over a certain period. Simply put, the formula is:
REVENUES-EXPENSES=INCOME or PROFIT (LOSS)
from revenues forecasted (quantities sold times the
prices they are sold for), the entrepreneur must subtract
the estimated cost of goods sold corresponding to the
forecasted sales. This should give the gross profit. From
the gross profit, the operating expenses must be
deducted to arrive at the operating profit. Then, the
taxes due are subtracted to derive the net profit after
taxes. An example of a simple income statement is
shown in next slide.
Monthly income Statement of Mang Juan’s
Manufacturing

Gross Sales
Php750,600
Less: Cost of Goods Sold 468,487

Gross Profit 282,113

Less: Operating Expenses 166,145

Operating Profit 115,968

Less: Taxes 21,392

NET PROFIT AFTER TAXES Php94,576

Part II Business Implementation
GOODS vs. SERVICES
Product – applies to anything that is offered to satisfy the needs
and wants of consumers, whether these are tangible goods or
intangible services.
Goods – refer to tangible products that consumers can actually
observe with their senses. Goods are objects with physical
manifestations and attributes that can be detected by our senses.
Services – refer to intangible offerings that are abstract in nature
and cannot be observed with our senses. In fact, a key
characteristic of services is that the act of delivery itself is the
product.
Ex: Banking, investments, and insurance
Hotel accommodations
Restaurants, bars, and catering
News and entertainment
Transport, Education, Health care,
Professional consultations
Deceptive ads are those that make false
statements about or misrepresent the product,
for example, the picture presented in the
advertisement is different from the actual
product.

Deceptive ads may occur not only through

sentences or propositions but also through
pictures, individual words, or through certain
combinations of objects which can deceive
(betray or cheat) the eye and the mind.
BRANDING

Brand – is a mark of distinction that can be sensed usually in

the form of names or terms, signs or symbols, design
elements, or even a combination of these, and is utilized for
the purpose of identifying and distinguishing the goods or
services of one provider from another.

The following are the functions of a brand:

It identifies the product or services – enabling consumers
to accept, reject, or communicate their opinions about it to
others.
It communicates messages - to the market and to the
public at large, whether the messages are intentionally or
unintentionally generated.
It functions as a legal property – allowing its owner to
invest in building up the value of the brand.
 Elements of the Brand
Trade name – the trademarked name by which the product is to be
known as Coca-cola, Google, and Jollibee. Trade names are
registered through the Intellectual Property Office.
Generic category – the category in which the brand would fall
under, such as beverage, search engine, or quick service
restaurant. The Intellectual Property Office requires that brands
explicitly specify the categories that they would fall under.
Logo – the visual symbol or image that will identify the product,
such as the distinctive partially bitten apple image for Apple, the
stylized script letters of Coca-Cola, or the three-point star of
Mercedes-Benz. Logos are also registered alongside the trade
name.
Tagline – an optional catchphrase, such as BDO’s “We find ways”
Shapes – the actual shape or form of the product or packaging,
such as the pinched contour of a bottle of Yakult.
Colors – a Yellow Cab store is quickly distinguishable from afar
thanks to its bold yellow signs with black letterings.
Sounds – such as advertising jingles, or even very short intro
sounds such those heard upon starting up a computer.
The market

the market for a product can be categorized as follows:

Potential market – These are those who express some level of
interest in a product.
Available market – is the subset of the potential market who have
interest, income, and access to the product.
Qualified available market – this is a further refinement of the
available market since it may be possible that those who have
interest, income, and access, nevertheless cannot get the product
due to technical issues such as laws (e.g., minimum age
requirements for liquor) or distribution constraints (e.g., remoteness
of their location).
Served market – also known as the serviceable available market.
This is the market that the company can actually service with its
current state of logistics.
Penetrated market – this is the subset of the market that is
already actively using the product.
Recognizing a need or want
Needs, Wants, and Demands
 We all have needs. We need food, clothing, and
shelter. We need to be educated. We need to be
heard, to be loved, and to be understood.
 Needs – are the state of felt deprivation about
something that is deemed.
 So consumers can have a multitude of needs. But
what do consumers want?
 You need safe water, but you want ultraviolet
technology that would kill those pesky bacteria.
 You need to eat, but you particularly want a
double-patty cheeseburger.
 Now did you spot the difference?
 Wants – are the specific manifestations of needs.
 You need transportation, but in particular you
want a classic Mustang convertible.
 You need a writing instrument for communicating,
but you want a Pelikan M640 polar lights special
edition fountain pen.
 Admit it, you want a lot of things. It is the net
result of a consumerist culture.
 You want specific brands of clothes, you aspire for
particular high-end gadgets, and perhaps you
want to travel to a number of exotic destinations.
 These are all wants because they are specific
manifestations of your various needs.
Now, if you want something and you actually have
the money to buy it, then this want now becomes a
demand.

 Demands – are wants that are backed by

purchasing power.
- Without this purchasing power, a want is simply
something on someone’s wish list.
Rubric for Actual Product Exposure (3 days)

Attendance 25
Met the target (sales) 25
Teamwork 25
 Attractiveness and Creativity 25

TOTAL 100
Jan. 30, 2018
In ½ lengthwise piece of paper answer the
following questions. Write only the letter.
Test-1 Multiple choice (20 items)
1. The Sole proprietorship form of business organization
_____________________.
a. Must have at least three owners in most state
b. Easy and cheap to organize.
c. Generates 90% of business revenues.
d. Used by large businesses

2. The partnership form of business organization

_____________________.
a. Has limited liability
b. Enjoys an unlimited life
c. Co-ownership of property
d. Limited by management’s ability to be jack-of-all-trades
3. A business organized as a corporation
________________.
a. Is not a separate legal entity in most states
b. Requires that stockholders be personally liable for
the debts of the business
c. Is owned by its stockholders
d. Terminates when one of its original stockholders
dies

4. Which of the following is not an advantage of the corporate

form of business organization?
a. Transferability of ownership
b. Unlimited life
c. Ability to obtain capital
d. Tax savings
5. A small neighborhood barber shop that is operated
by its owner would likely be organized as a
_______________.
a. Joint venture
b. Partnership
c. Corporation
d. Proprietorship

6. Johanna and Justine Mae met at law school and

decide to start a small law practice after graduation.
They agree to split revenues and expenses evenly. The
most common form of business organization for a
business such as this would be a __________________.
a. Joint venture c. Corporation
b. Partnership d. Proprietorship
7. It is a type of business that sell products they purchase
from other businesses to customers.
a. Merchandising business
b. Manufacturing business
c. Marketing business
d. Advertising business

8. It is a type of business that change basic inputs into

products that are sold to customers.
a. Merchandising business
b. Manufacturing business
c. Marketing business
d. Advertising business
9. It refers to an entity in which economic resources or
inputs, such as materials and labor, are put together and
processed to provide goods or services or outputs to
customers.
a. Selling Operation
b. Manufacturing operation
c. Business
d. Contract/Agreement

10. It is the difference between the amount earned and the

amount spent in buying, operating, or producing something
a. Input c. Product
b. Resources d. Profit
11. It is a mark of distinction that can be sensed usually in
the form of names or terms, signs or symbols, design
elements, or even a combination of these, and is utilized for
the purpose of identifying and distinguishing the goods or
services of one provider from another.
a. Trade name c. Brand
b. Product model d. Positioning

12. It refers to anything that is being marketed, whether it is

a tangible product (such as grocery items), an intangible
good, a service, a place, or even a person.
a. Market c. Demand
b. Supply d. Product
13. It refers to the state of felt deprivation about
something that is deemed to be necessary.
a. Needs c. Marketing
b. Wants d. Demand

14. It refers to the specific manifestation of needs.

a. Needs c. Marketing
b. Wants d. Demand

15. It refers to wants that are backed by purchasing

power.
a. Needs c. Marketing
b. Wants d. Demand
16. It is also known as the serviceable available
market, this is the market that the company can
actually service with its current state of logistics.
a. Penetrated market c. Available market
b. Served market d. Potential market

17. This is the subset of the market that is already

actively using the product.
a. Penetrated market c. Available market
b. Served market d. Potential market

18. They are those who express some level of

interest in a product.
a. Penetrated market c. Available market
b. Served market d. Potential market
19. This refers to a financial statement that measures an
enterprise’s performance in terms of revenue and expenses
over a certain period.
a. Income statement c. Balance sheet;
b. Cash flow statement d. Funds flow statement.

20. This refers to advertising that make false statements

about or misrepresent the product.
a. Displacement ads c. Deceptive ads
b. Disgraced d. discredited ads
Test – II Enumeration (20 points)
Give what is asked:
1 – 3. Three investment requirements that need to be funded
4 – 8. Categories of Market
9 – 11. Types of Businesses
12 – 14. Forms of Business Organization
15 – 17. Functions of the brand
18 – 20. Elements of a brand

Test – III (Essay 15 points)

1. What are the various/major forms of business
organization? Compare and contrast. Make a table if
necessary. (10pts)
2. Write a short essay why most large businesses are
organized as corporations. (5pts)
 Define marketing in your own words, based
on what you understand about it thus far.
 Give one example of product that you
regularly see around you and describe how
they are “marketed”.

What is Marketing?
We begin with a definition of marketing as
presented by the American Marketing Association:
 “Marketing is the activity, set of institutions, and
processes for creating, communicating,
delivering, and exchanging offerings that have
value for customers, clients, partners, and society
at large.
 To a layman, marketing will indeed be all about
selling a product. But to a marketing professional,
marketing is a process.
 Marketing is a set of processes because
there are essential tasks that have to be
engaged in order to produce a viable
marketing strategy .
 Marketing is an organizational function
because it is a core task that is expected of
a modern organization, whether or not it
operates for profit.
 Marketing is also the delivering of value to
customers. Marketing is not out to fool
customers, to cheat them of their money, or
to sell them something that they do not
want. In fact, the building of customer
relationships is very important in
marketing. So if a company tries to fool a
customer with a subpar (minimal)
 Marketing is also about
communication. In fact, there is a
trend toward using the term
“marketing communications” rather
than just “marketing”. This reflects
the fact that selling a product is really
all about properly communicating that
product to the market and to the
world at large.
 Advertising, Selling, Sales people,
Retail stores and merchants, Promos
and giveaways, Press releases,
Product development.
 Every time you go to a convenience store to buy a
snack, it is actually the end result of a marketing
process. It begins with the snack manufacturer
doing research in order to identify what snacks
are already in the market, what customers are
looking for, and spotting potential market gaps
that can still be filled. Next, the manufacturer
profiles the intended market, understanding their
demographics, economics class, lifestyle, and a
whole slew of other data. The manufacturer then
conceptualizes the product, down to elements
such as package design and branding, as well as
its suggested retail price. Next, the manufacturer
identifies the most feasible channels through
which the product should be pushed in order to
reach the consumers. In this case, convenience
stores being one.
Finally, the manufacturer may engage in
communication efforts in order to alert the
market about the existence of its product. All
of that would have happened before you
finally get to buy the snack from your
neighborhood store.

 If there is a way to describe what marketing

is all about in a very concise manner, then it
can be this: Marketing is about meeting
needs profitably. You go into business so
that you get to satisfy the needs of the
market and, in doing so, you also get to
satisfy your organization’s own needs.
Activity: “Let’s do Marketing” (Role-play)
I. Each group is tasked to portray marketing
system/process in a particular area assigned.
II. The presentation is only good for 3-5 minutes.
III. Brainstorming and practice is 10 minutes only
IV. After the presentation, one representative of the
group will orally explain their presentation.
V. Write the name of the members in ¼ piece of paper
Area/place of concern
1. School
2. Mall
3. Coffee shop
4. Bookstore
5. Appliance Center
Rubric for Role Playing
activity
Criteria for Grading

Creativity and Artistic Ability

40%
Relevance of the Content
40%
Voice projection and Stage
deportment (manner) 20%

TOTAL 100%
Organizing and Structuring the Enterprise
The Business Plan must be able to estimate the capital
required by the enterprise. The capital required would be
dictated by the investment in the assets of the enterprise.
These assets are composed of the following:
1. The current assets, which are short-lived assets. They are
composed of:
cash, inventory, accounts receivables, and other current
assets.
2. The long-lived or fixed assets. They are composed of:
Land property, Building, Plant, service vehicle and
equipment
3. The other assets. They are composed of:
Organizational and pre-operating expenses.
The assets of the enterprise are financed by its
liabilities.
these liabilities are composed of:
1. Current liabilities such as suppliers’ credit and other
short-term credit
2. Long term debt
3. Owner’s equity

The way the financial package is called the

capital structure of the enterprise.
The sole proprietorship is mandated by law to register
the business with the proper authorities. All
businesses, in whatever legal form, are required to
secure a mayor’s permit or municipal license before
they can operate in a locality.
Before getting this permit, there are clearances that
must be obtained. These are the following:
1. Barangay clearance
2. Fire safety clearance
3. Certificate of electrical inspection
4. Certificate of occupancy
5. Department of Trade and Industry (DTI) certificate
6. Lease contract if space is leased
7. Locational clearance
 There may be additional requirements depending on
the type of business and the ordinances issued by
the concerned local government.
 It is likewise the responsibility of any enterprise to
register its business with the Bureau of Internal
Revenue (BIR) for taxation purposes. The official
receipts of the enterprise must also be registered
with the BIR. For a sole proprietorship, the tax
identification number (TIN) of the entrepreneur
serves as the enterprise TIN.
MANAGING THE OPERATIONS FUNCTION
Operations management – is about delivering products
and services to customers to meet surpass their
expectations. It is designing, developing, and executing the
Enterprise Delivery System (EDS), from sourcing of the
necessary input to the transformation of these input into the
final output which, in turn assure the intended outcome of
delighting the customers.
Final output – which come in the form of goods or services
(or both).
The three customer output expectations:
1. Quality expectation
2. Delivery expectation
3. Price expectation
(QDP) expectations are crucial to the operations function.
The Six Ms of Operations
1. Money
2. Manpower
3. Management
4. Methods
5. Materials
6. Machinery
The first M, that is, money should flow through the transformation
process before (or just in time) as the five other Ms are needed. The
second M, that is management should also come ahead of the other
Ms in order to design and develop the transformation process.
The technology for the transformation process should have already
been chosen by the EDS designer and developer. This technology
comes in the form of hardware (i.e., all the machinery and equipment)
and software (i.e., all the operating systems and work methods). This
gives us the two additional Ms: Machinery and Methods.
The technology likewise dictate the last two Ms: Materials and
Manpower. Materials are the input that must be converted to the final
output. Manpower enables the entire transformation process to
operate by manning the machines or rendering the services required.
Consider the case of CLG Bakeshop. It produces four
products: ensaymada, egg pie slices, cake rolls, and round
cakes. The cost of raw materials for a typical month is shown
in Table 1 below. Likewise, the overhead, the overhead
expenses are indicated in Table 2.
1. Compute for the total cost of raw materials or ingredients
in table 1.
2. Compute for the total costs and expenses in table 2.
3. Compute for the sales for each product type as well as
total sales in table 3.
4. Compute for the profit of the bakeshop for the month of
May, based on the sales indicated in table 3. is the
bakeshop profitable?
Table 1: Ingredients and costs
Ingredients Cost (in pesos)

Flour Php 45,000

Sugar Php 15,000

Butter Php 20,000

Eggs Php 20,000

Cheese Php 10,000

Others Php 10,000

Total
 Table 2: Costs and Expenses per Month
Expenses Amount (Php)

Salaries:
- 1 manager at Php 30,000 a month
- 2 bakers at Php 14,000 a month for each
baker
- 1 baking assistant at Php 8,000 a month
- 1 cashier at Php 17,000 a month
- 1 sales clerk at Php 10,000 a month

Rent Php 15,000

Electricity Php 20,000

Water Php 3,000

Total
 Table 3: Sales for the Month of May

Product Number of Selling Price Sales

Pieces Sold (in Pesos)

Ensaymada 1,000 Php 45

Egg pie 950 Php 35

slices
Cake rolls 450 Php 350

Round 300 Php 500

cakes
Total
Ten Critical Areas of Operations Management
OM has ten critical areas which have to be addressed:
1. Service and product design
2. Quality management
3. Process and capacity design
4. Location
5. Layout design
6. Human resources and job design
7. Supply-chain management
8. Inventory management
9. Scheduling
10. Maintenance

Service and product design – involves deciding whether to offer a

good or a service or both, which goods or services to offer, and how a
good or service is to be designed, composed, and created.
Quality management – means deciding who is responsible for quality.
It also means trying to define quality in a good or service, and how to
build in the quality and ensure that the product and/or service meets
the quality standards or requirements.
Process and capacity design – involves deciding which processes or
operations will be used in order to make the products. It means
determining the order in which these various processes will be
arranged.
Location – means deciding where the best place is to have the factory
or facility. The various systematic methods for determining the location
of the site are used in order to arrive at the best choice that takes into
consideration all the necessary factors, such as nearness to the
sources of raw materials, or closeness to densely populated areas, or
proximity to sources of power or telecommunication sites.
Layout design- refers to finding the best size for the facility or factory
and determining the best layout or arrangement of rooms and various
areas within the facility that maximize their usage and meets the
requirements of the various processes that will take place within the
facility.
Human resources and job design – involves determining how much
the employees and workers can be expected to produce so that
standards can be made. It means taking into consideration their
health, safety, and other needs. It also requires providing a conducive
and motivating work environment for employees.
Supply-chain management – involves determining who and how
many should the suppliers, who provide the raw materials, be. It
means maintaining good working relationships with them. It also refers
to determining whether a business will make some of its spare parts or
materials, or buy them from suppliers.
Inventory management – involves determining how much inventory
or stocks of materials a business should keep or maintain in its
storage area, stock room, or warehouse. It also means finding out
when or how frequently it should buy raw materials from suppliers, and
in what amounts.
Maintenance – involves keeping machines, equipment, and facilities
in good working order. Hence, the people who are responsible for
these task should be identified and a regular plan and schedule for the
cleaning, oiling, recalibration, and other maintenance tasks should be
created and followed.
Balance sheet

The balance sheet is a statement showing what the intrepreneur

owns (assets) and what he owes (liabilities and equity). The
assets must equal the liabilities (debt) plus the equity (owner’s
investment). The owner had used his liabilities and equity to
purchase his assets. The balance sheet shows his firm’s
financial position with regard to assets and liabilities/equity at a
point in time.
Accounting equation is :

ASSETS = LIABILITIES + EQUITY

Assets – these refer to everything that the business owns that can be
used to create value. Assets can be current, which includes cash and
other things that can be easily converted into cash or consumed in the
operation of the business in less than a year. Fixed assets are those,
like land, building, or equipment, which the business can use over a
long period of time.
Liabilities – these represent everything that the business owes to
banks and other creditors. Those that must be paid within a year are
current liabilities, while those that must be paid beyond one year can
be considered long-term liabilities. Businesses incur liabilities if they
purchase raw materials or supplies on credit, if they borrow money to
cover a shortfall in working capital, or if they borrow money to finance
the purchase of fixed assets needed by the business.
Owners’ equity/Shareholders’ equity – Representing the excess
of all assets over all liabilities, this is also known as the net worth of
the business. Shareholders’ equity includes both the owners’ initial
investment and also the net income that the owners decide to retain in
the business.