IOM

WEEK 2 PPT (LESSON 1) ?

TRANSFORMATION PROCESS
 Input to Output
 Processes that transform resources (inputs) into finished goods or services for
customers or clients (outputs)
Transformation Processes
1. Transforming goods
- For goods, transformation means there will be physical changes. The output
will be tangible.
- The operation process will be highly automated and mechanized
- - For example: Samsung takes electronic parts, glass, metal, plastic and
changes them into a mobile phone
2. Transforming Services
- For services, transformation means there will be no physical changes. The
output will be intangible.
- The process will rely heavily on staff-humans
- For example: Fed Ex uses its input of staffs, vehicles and delivers delivery
services to the consumers as output
3. Value Adding
- It costs the business money to transform an input into an output.
- As a result, value is added
- Example: There is more value in burger than in the inputs such as bread,
sauce, meat
Ms OF A PROCESS
INDUSTRY CLASSIFICATION

(For reference lang pic eme, eto nakalagay sa pic) :

Primary Sector
- Extract, process, produce and package raw materials and basic foods from
the earth.
Secondary Sector
- Manufacture, process and construct finished goods by transforming raw
materials.
Third Sector
- Services for the general population and businesses to acquire and use
finished goods
Quaternary Sector
- Knowledge and skills for complex processing and handling of information and
environmental technology.
Quinary Sector
- High-level economic and social decision making through responsible
institutions.
PRIMARY INDUSTRY
- The primary sector of the economy is the sector of an economy making direct
use of natural resources, or raw materials
- This includes agriculture, forestry, fishing and mining
SECONDARY INDUSTRY
 - The secondary sector includes industries that manufacture or produce a
finished, usable product or are involved in construction.
- Example: Ullrich Aluminum. Ullrich Aluminum produces a vast range of
aluminum products for marine, industrial, commercial, domestic and designer
applications. Ullrich Aluminum is among the advance guard of a new
technology… Improvements in aluminum metallurgy, quality, and finish
promise to revolutionize this industry
TERTIARY INDUSTRY
- The third sector is the tertiary sector – it sells the finished product, or uses the
finished product to provide a service. Tertiary industries can be tricky to
classify because they often also include processes that fall into the secondary
and quaternary sectors too.
- Examples:


Entertainment  Education

Hospitality industry/tourism  Financial services

Mass media - Banking

Healthcare/hospitals - Insurance

Public Health - Investment management

Information technology  Fast-moving consumer goods (FMCG)

Waste disposal  Professional services

Consulting - Accounting

Gambling - Legal services

Retail sales & franchising  Management consulting
 Real estate
QUATERNARY INDUSTRY
- The quaternary sector of the economy is a way to describe a knowledge-
based part of the economy. This includes services such as:
 Information technology
 Information-generation and -sharing
 Media
 Research and development
 Consultation
 Education
 Financial planning
 Blogging
 designing
QUINARY INDUSTRY
- Quinary activities are services that focus on the creation, re-arrangement and
interpretation of new and existing ideas; data interpretation and the use and
evaluation of new technologies.
- Has been referred to as gold collar professions
- Includes:
 health
 hospitality
 recreation
 senior business executives, government officials, research scientists, financial
and legal consultants, etc.
 The quinary sector also includes domestic activities such as those performed by
stay at-home parents or homemakers. These activities are not measured by
monetary amounts but make a considerable contribution to the economy.

INDUSTRY SECTOR BREAKDOWN

INDUSTRY DEFINE EXAMPLES
Primary Exploit natural resources Mining, farming
and produce raw materials
Secondary Process raw materials and Producing of cars, food,
manufacture finished and clothes
goods
Tertiary Distribute goods and Supermarkets,
provide services hairdressing, travel agents
Quaternary Information-based services Teaching, journalism,
banking
Quinary Decision making; Carpet cleaning, child
Household services care, restaurants

DEFINITION OF TERMS – INDUSTRIAL MANAGEMENT

INDUSTRIAL MANAGEMENT
- The term industrial management is composed of: industry and management
Management as Process
- a Management refers to a series of interrelated functions or elements to
achieve stated objectives through the effective utilization of resources.
- It involves five functions:

1. Planning 2. Organising 3. Staffing 4. Directing 5. Controlling

Management as Process Chart

 Planning: To take decisions and to prepare plans, policies and procedure,

etc.
 Organising: To divide work among individuals & to create authority and
responsibility.
 Staffing: To employ people or to man various positions in the organisations
and provide them necessary training
 Directing: to give instructions to the subordinates.
 Controlling: to compare actual performance with the predetermined
standards and to take corrective actions.

SEQUENCE OF MANAGEMENT FUNCTIONS

Industrial Management

Inputs Transformation Process Output

Men System design Growth and expansion
Materials Production planning and Goods and services
control
Machines Operation management Social responsibility
and control
Technology
Information

Objectives of Industrial Management

 Customer Service
 Efficient Utilisation of Resources.
 Coordination
 Product Quality
 Human Relations

THE MAIN FUNCTIONAL AREAS WITHIN BUSINESS ORGANIZATIONS

- Even in the smallest business a number of key tasks, or functions, must be

done regularly. Stock must be bought, bills must be paid, customers must be
served and customer enquiries must be answered. In a small firm all these
jobs may be done by one or two people. In a large organisation, people
specialise in different tasks. Tesco and Sainsbury's, for example, have buyers
to purchase the stock, accounts staff to pay the bills, checkout staff to serve
customers and customer service staff to answer queries.
Functional areas in business
- In a large organisation, it is usually easier to identify separate functional areas
because people work together in departments. Each department carries out
the tasks that relate to its particular area. The main ones you are likely to
meet in business are shown below.

The purposes of functional areas

The main purpose of functional areas is to ensure that all important business activities
are carried out efficiently. This is essential if the business is to achieve its aims and
objectives. In addition, specific areas will be responsibility for supporting specific types
of aims and objectives, for example:

 sales and marketing will be involved in achieving targets linked to developing

new markets or increasing sales
 human resources will be involved in arranging staff training activities and
supporting the continuous professional development of all staff
 finance will be expected to monitor and support aims and objectives linked to
keeping costs low to improve profitability
 production will be set targets relating to quality or meeting planned production
schedules.

The administration function

Administration is a support function required by all businesses - and this does not mean
just doing keyboarding or filing. Senior administrators carry out a wide range of tasks,
from monitoring budgets to interviewing, new staff for their departments.

The customer service function

All businesses must look after customers or clients who have an enquiry, concern or
complaint. Today, customer expectations are high. When people contact a business
they expect a prompt, polite and knowledgeable response. Unless they get a high level
of service they are likely to take their business elsewhere in the future.
The distribution function
Distribution means ensuring that goods are delivered to the right place on time and in
the right condition. Some companies, such as Amazon and Debenhams, deliver direct
to the customer, particularly when goods are bought online. Other businesses, including
B & Q and Sainsbury's, hold stocks in giant regional warehouses, for delivery to stores
around the area. Superstores may use special vehicles, which can also carry chilled or
frozen items. Other businesses have to move more difficult loads or hazardous
substances, such as large engineering parts, cars or chemicals.

The finance function

Most entrepreneurs consider this is the most important function in the business. This is
because all businesses need a regular stream of income to pay the bills. Finance staff
record all the money earned and spent so that the senior managers always know how
much profit (or loss) is being made by each product or each part of the business and
how much money is currently held by the business. This enables critical decisions to be
made rapidly and accurately because they are based on accurate information. In some
cases, this can mean the difference between the success or failure of the business as a
whole, as you will see in Unit 3.

The human resources (HR) function

The human resources of a business are its employees. Wise organisations look after
their staff on the basis that if they are well trained and committed to the aims of the
business, the organisation is more likely to be successful.

HR is responsible for recruiting new employees and ensuring that each vacancy is filled
by the best person for the job. This is important because the recruitment process is
expensive and time-consuming. Hiring the wrong person can be costly and cause
problems both for the individual and the firm.

The ICT function

Today, even the smallest businesses need someone who understands ICT and what to
do if something goes wrong. This is vital, because the number of crucial business tasks
now carried out on computer and the importance of the data stored in the system mean
that any system failure can be catastrophic.

The marketing function

Marketing is all about identifying and meeting customer needs. Many businesses
consider this so important that they are said to be marketing led. In this case, everyone
in the organisation is trained to put the customer first - from the production worker, who
has to produce high quality goods, to the accounts clerk, who must respond to a
customer enquiry promptly and accurately.
Another way to understand marketing is through the marketing mix which consists of
four P's.

 Product - Who are our customers? What do they want to buy? Are their needs
changing? Which products are we offering and how many are we selling? What
new products are we planning? In which areas are sales growing - and how can
we sustain this? For which products are sales static - and how can we renew
interest? Which sales are falling and what, if anything, can we do?

 Price - How much should we charge? Should we reduce the price at the start to
attract more customers - or charge as much as we can when we can? Can we
charge different prices to different types of customers? What discounts can we
give? What services or products should we give away or sell very cheaply - and
what benefits would this bring?

 Promotion - How can we tell people about our products? Should we have
specialist sales staff? Where should we advertise to attract the attention of our
key customers? How else can we promote the product - should we give free
samples or run a competition? Where and how can we obtain free publicity?
Should we send direct mail shots and, if so, what information should we include?

 Place - How can we distribute our product(s)? Should we sell direct to the
customer or through retailers? Do we need specialist wholesalers or overseas
agents to sell for us? What can we sell over the telephone? How can the Internet
help us to sell more?

The sales function

- Sales is a crucial function for all businesses. It is pointless having superb
products or services if no one buy them. For that reason, most businesses
have sales targets as part of their aims and objectives. Meeting these is the
responsibility of the sales staff or sales team.
- The job of the sales staff varies, depending upon the industry. Shops that sell
basic products, such as chocolates or magazines do not need to do much
selling. Most customers call in to buy something, choose the goods they want,
pay and leave.
- Customers expect more help and advice if they want to buy a complex or
expensive item, such as a television or car. Stores which sell these types of
products therefore need trained sales staff who are friendly, knowledgeable
and can describe and/or demonstrate their products and link these to the
customer's specific needs.
The production function
Production refers to the manufacture or assembly of goods. Production must ensure
that goods are produced on time and are of the right quality. Quality requirements can
vary considerably. Whilst an error of 0.5 mm would not matter much for a chair or table,
for an iPod or DVD player it would be critical.

The production function also includes all the following aspects of production:

PRODUCTION PLANNING
- involves deciding what will be made, when, and which machines and operators will be
used. A realistic timescale must be predicted, bearing in mind other jobs that are in
progress

PRODUCTION CONTROL
- means constantly checking progress to make sure that production plans are met - and
taking remedial action if problems occur. This could be because of machinery
breakdown, substandard raw materials or labour shortages.

MACHINE UTILISATION CONTROL

- is concerned with minimising problems by keeping all the equipment and machinery in
good working order. This involves checking to ensure none is overloaded or overused,
without being routinely checked and maintained. This is important because if a machine
malfunctions it may produce damaged goods. If it breaks down altogether then
production of that product will cease. Because this aspect is so important, many
organisations have a maintenance plan, which shows the dates on which machines will
be out of operation for inspection and servicing. These dates are then taken into
consideration when production plans are made.

STAFF UTILISATION CONTROL

- concentrates on making sure all the staff are working effectively and efficiently and
concentrating their efforts on key production areas and targets. This is very important in
industries which are labour-intensive and use more people than machines, such as
assembling circuit boards or sewing jeans.

FINAL QUALITY CHECKS

- make certain that the product is of the correct standard. This can be done in several
ways. Each item may be examined by hand - or passed through a machine which
checks that the size and tolerance is correct. Alternatively, items may be selected for
inspection on a random sampling basis. This would be the case if a large number of
identical items is being produced, such as cups or biros.
The research and development (R&D) function
This function is concerned with new product developments as well as improvements to
existing products or product lines. In many industries, it also involves product design as
well.
Improvements to existing products are often ongoing as a result of market research or
customer feedback. You can see these improvements around you all the time - such as
ring-pull cans, microwavable containers for ready meals, transparent jug kettles and
memory sticks for computers.

Relationships between different functional areas

No functional area in a business organisation can work in isolation. In a small firm, links
and interactions between people responsible for different functions are usually informal
and continuous. Sales people know which customers still owe money and must not be
sold any more goods on credit until a bill has been paid; the manager knows which
members of staff are keen and hardworking, without being told, and a customer query
can quickly be solved by asking everyone in the office for advice.