POB

SBA OUTLINE - Production

Guidelines

• This document is to be used to help gather and brainstorm your thoughts for the various sections of the SBA (Production).

• Answer the questions in each section.

• Complete each section using essay format based on the answers you wrote.

Description of Business• Name of business and who are the owners of the business?

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• Nature of business - (Sole trader, partnership, company with shares?)

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• What good or service will the business produce? Activities of the business?

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• Objectives / mission statement.

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• Proposed start date? Opening days and times?

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Example 1 of Description of Business

The researcher will be establishing a new businesscalled T.A.P which will be an acronym for Techno-Advanced-Properties. The business will be a soletrader and its nature will be retail. The business’objective will be to meet the technological demandof customers and to become one of the leadinginformation technology outlets in the island. Thebusiness will begin its sales with mobile phones andaccessories and as more revenue is obtained it willexpand to offer more items such as laptops,portable USB cables, Memory sticks and portablekeyboards.

Example 2 of Description of Business

A design and sewing business will be established as the ownerswould have the skills in design and sewing, which were acquiredafter leaving secondary school. Mr. John Doe and Ms. Jane Moewill be the business’ owners. The design part of the businesswill be managed by Mr. John Doe, who has a certificate in Artand Design from the University of Trinidad and Tobago, and thesewing part will be the responsibility of Ms. Jane Moe. ThisPartnership business will go by the name ‘Yut Trenz’ and willdesign and manufacture custom-made and made-to-orderclothing designs for young, trendy, males and females. Thebusiness will produce dresses, skirts, pants, blouses, shirts,uniforms, and other apparel, to meet the demands for retail andwholesale markets.The objectives of ‘Yut Trenz’ will be to provide top of the lineaffordable, trendy and fashionable quality apparel to youngpeople making them look and feel at their best.

Justification of location

• State the location of Where it is? • Outline at least 3 reasons to justify location Why is it there? • Good soil, right climate, flat land.• near to supplies of raw material, special labour• close to other firms with which you have linkages ( Is your

product used by another company to make or do something else Is your material input, the product of someone else) previously located there

• near to good supply of utilities e.g. Electricity, water, transport, telecommunications

• Industrial estate- providing factory buildings, warehouses, cheap rent

• Close to the market

Examples 1 Justification of location

The researcher’s business will be located on Broad Street, Bridgetown, Barbados. This location will provide consumers with convenient parking. In addition, rent will be cheaper in this location because there are many other stores in the area. Additionally, the location will provide greater revenue than other locations because of the volume of persons who enter Bridgetown frequently each day.

Examples 2 Justification of locationThis business will require a large space and will be divided intoadministration, manufacturing, and display. Due to this, two units will berented in the newly constructed mall at Scarborough, located at GardenSide Street, to accommodate the needs of the business. This location,while expensive, will be ideal for the following reasons:Firstly, since the establishment of the mall in December, it has attracteda lot of young people due to the video gaming centre, youth trendy shoestores, and fast food restaurants. This provides a situation of marketpull, as the business will be located where potential customers can befound.Secondly, the business will be quite close to the Port of Scarborough, amain transport hub of the Island, thus ensuring easy access to goodswhen shipped from supplies either from Trinidad or abroad, and makingit cost effective in transporting the goods from the port.A third reason why this location will be ideal, is the fact that allamenities necessary such as electricity, water, internet, banking,bathroom, etc., are available and reliable, ensuring the continuity ofbusiness operations at most times.

Your turn - Justification of Location• Where is it located?

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• Three reasons why you pick that location:

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• ________________________________________________________________________________________________________________________________________________________________________

• ________________________________________________________________________________________________________________________________________________________________________

Selection of Labour

• Type of labour necessary – skilled labour, semi skilled labour, unskilled labour

• Number of persons to be employed and their duties or functions of each type of individual

• Outline one reason why this type of labour is necessary

• Wages and salaries

• Where will you find the labour you need?

Example 1 – Selection of LabourThe business will need a mix of skilled and unskilled labour. There will be a total of ten permanent employees where four will be skilled workers, four will be semi-skilled and two will be unskilled.The skilled workers that will be necessary are: two experienced cashiers whose duties will be to receive monies paid by customers, and operate the cash register on a daily basis. They will need to know how to use a cash register correctly, portray good customer service and have at least three CXCs including mathematics. In addition, two store clerks will be hired to assist cashiers and help customers find what items they seek to ensure that the best customer service is provided. Experience as a store clerk will be necessary; they must portray good customer service and have knowledge of technological accessories. They will be required to have at least three CXCs including mathematics.The business will also employ four semi-skilled workers as sales assistants who will keep track of stock and inspect all incoming stock. Knowledge of inventory control will be essential. They will be required to have at least 2 CXCs including mathematics. Last but not least two unskilled workers will be hired as two hygiene technicians whose duties will be to mop and sweep the entire store including its bathrooms every day which will ensure that the store is in sanitary condition. No previous experience or CXCs are required but they must be committed to the success of the business. These types of labour are all required as a successful business will need workers with different abilities and qualities in order to progress efficiently. The skilled workers will take care of the level of customer service at T.A.P and securing the income of the company. The semi-skilled workers will ensure that the company’s stock is correct and genuine and the unskilled workers will ensure that the hygiene of the company is maintained. All of the workers will therefore contribute to T.A.P’s success.

Example 2 – Selection of LabourYut Trenz’ will employ young people who have the same passion as John Doe and Jane Moe to see the local fashion in Tobago grow and develop. Individuals will be sourced from the University of Trinidad and Tobago, YTEPP and other educational institutions offering Fashion and Design, as well as persons with talent and potential in the fashion world.

To begin this venture three skilled workers will be employed who are formally qualified in Fashion and Design. These three workers will be responsible for assisting Ms. Jane Moe in the cutting, sewing, and preparation of the clothing items. These individuals should be multi-skilled, since they may be operating in different areas as the need arises.

The owners, having the managerial and professional skills will manage the establishment, and assist each other in the supervision of the retail operations.

In addition, two semi –skilled workers will be required in the retail operations, assisted by one unskilled worker. The semi-skilled workers will take measurements of potential clients, display clothing and be responsible for cashing, while the unskilled worker will be responsible for keeping the physical environment of the business clean at all times.

Selection of Labour• Total number of employees to be hired.

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• Type of Labour used (skilled, semi skilled, unskilled. The number of skilled, semi skilled and unskilled workers.

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• Role and Responsibility of worker #1

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• Role and Responsibility of worker #2

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• Role and Responsibility of worker #3

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• Role and Responsibility of worker #4

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• Role and Responsibility of worker #5

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Source of Capital• How much does it cost to establish the business?

• Identify the amount of money for Fixed Capital and how will it source it.

• Identify the amount of money for Working Capital and how will it source it.

• Identify Items of Fixed Capital that will be used in the business (sewing machine, filing cabinets, computers).Where will you these items from?

• Identify what working capital the business will need (raw materials-e.g. cloth, office supplies e.g. envelopes, money in the bank, utilities, wages etc)

Example 1 Source of CapitalThe fixed capital of T.A.P will be a start-up capital of a low-interest loan of $40,000 from Republic Bank, and $30,000 of personal savings. Fifty thousand dollars ($50,000) of the fixed capital will be needed to: renovate and refit the premises; purchase glass casing for the counter, storage drawers and cashier counters. These items will be purchased from Dacosta Mannings and Courts. The source of twenty thousand dollars ($20,000) from personal savings will be needed for working capital for at least the first six months of business operations to be able to: pay salaries; purchase business stock such as business stock such as mobile phones of brand names: Nokia, Samsung, Blackberry, Apple, LG and HTC; hard cases and protective screens for mobile phones which will be shipped in from overseas suppliers; pay rent and pay water, electricity and other utilities.

Example 2 Source of CapitalThe owners together, contributed the sum of $375,000 towards the establishment of the business. The amount of $200,000 will go towards fixed capital, and $175,000 towards working capital. The total capital will be obtained from personal savings, loans from parents and other family members, a grant from the Youth Department and Enterprise Assistance Fund of the Tobago House of Assembly, and a loan from NEDCO. A current account and credit card will be opened and obtained from the First Citizens Bank of Trinidad and Tobago. Fixed capital items will include sewing machines, cutting tables, display shelves, equipment & supplies (scissors, markers, measuring tapes, rulers, glue, irons, etc.), and a point of sale system. These items will be purchased from Designers International (large machines and related items) and local businesses such as Buttons Plus (small apparel items such as scissors, glue guns) in Trinidad. The owners will use their personal computers and vehicles to assist in the business operations, in the initial stages. Working capital expenses will include materials (cloth, thread, zips, paint, etc.) which will be purchased from Jimmy Aboud in Trinidad and Parker Traders in Tobago, office stationery (from Office Express Limited in Tobago), rental of space (for the first six months), and workers’ salaries (for the first four months).

Role of the entrepreneur• Define the term entrepreneur.

The person or persons who make the decision to get into a business venture and puts his personal assets towards it.

• Outline at least 3 functions of the entrepreneur:– Organizing-

– Planning – preparing financial budgets.

– Evaluating – determining how well the business is operating

– Operating the business - Operates the business by organizing the other factors of production or hires others to do so

Example 1 Role of the entrepreneurThe entrepreneur of T.A.P develops a concept plan for the business’ formation and operation; invests his own savings and capital income; accepts responsibility of managing the business and to accept that the business success can be achieved through enterprise, but also to accept the possible risk of failure. The entrepreneur will be actively involved in the running of the business on a day to day basis but will work as the Customer Service Manager and Accountant. Functions of the entrepreneur of T.A.P include: planning the formation and operation of the business; accessing the funds by investing personal savings and capital income; evaluating performance of the employees and operating successfully as the person responsible for financial and marketing management.

Example 2 Role of the entrepreneurAs entrepreneurs, the owners will have the responsibility of ensuring this business venture gets off the ground with the limited resources available. In addition, they will have to spend a number of hours working out details, finalizing the business plan, meeting with loan officers, interviewing applicants, ironing out problems that may surface at times, and a host of other activities. In planning for this business, the owners will share desires and expectations, decide on policies and procedures so that together they can look ahead and determine the short and long term goals of the business. In organizing for the success of this venture the owners must ensure that goals will be fulfilled by ensuring that tasks will be clearly defined and adequate resources (materials and equipment) put in place for the workers. The owners will also be responsible for motivating each other and the workers. The owners and workers will be expected to work hard and sacrifice valuable time towards this venture. At times discouragement may occur and steps will have to be taken to find ways of giving encouragement and being encouraged. Both financial (such as bonuses) and non-financial incentives (such as employee of the month) may be provided to help in motivating all concerned.

Type of production• Identify and explain the type of production (2 Marks) –

define terms.

• What type of production are you doing? E.g.

• Primary-fishing, quarrying, mining

• Secondary-baking, canning, manufacturing

• Tertiary-

• personal services e.g. babysitting, hairdressing, photocopying, secretarial, mechanic OR

• commercial services e.g. transport, insurance, financing, marketing, retailing/wholesaling

Example 1 Type of productionT.A.P will be engaged in the tertiary or service industry business. This business will sell products to customers at affordable costs and offer good quality service in order to meet customer expectations.

Example 2 Type of production‘Yut Trenz’ will be involved in both secondary and tertiary production. The secondary component of the business will be the designing and manufacturing of apparel items, with the use of raw materials such as fabric, ink, thread, etc., producing items of clothing for sale. The tertiary part of the business will be the retail outlet which will display and make available for wholesale and retail sale, our designs and fashions to the general consumer population, and more specifically to our target market, young trendy persons.

Levels of Production

• Identify and explain the level of production define terms.

• What will be your level of production

• Subsistence – supply for home use

• Domestic - supply for community or national use

• Export/Surplus – supply for overseas market

Example 1Levels of Production

The business will operate at the domestic level of production. T.A.P will be a small scale business with minimum staff which will be catering to customers within the country. The business’ projected income (based on the value of stock and the volume of projected sales) does not exceed $1,000,000 per year as it will only be catering mainly to a particular section of society; teenagers and young adults. The business will only have one floor and it will not have much stock. There will be sufficient demand locally to sell all items and provide technological services and there will be no need to sell to a distant or more complex market.

Example 2Levels of Production

In the developing stages of the business, the focus will be at a small scale and surplus level of production . Beginning at this level is important so that the business can establish quality products rather than concentrating on quantity sales. The high quality will be instrumental in gaining confidence in the business by the customers and result in returning customers and even new customers when the word spreads about the high quality products that will be offered. There will be inputs from both the local as well as the international markets as many materials will be sourced from overseas.

Quality Control Measures• Describe at least 2 quality control measures the business

should adhere to (2 Marks) • - What is Quality to you-the state of being free from defects

and significant variations, ensuring customer satisfaction.• - How will you ensure Quality: • - Set standards for inputs- amounts and quality • - Set standards for outputs-what does the customer want? • - What are the standard sizes, colours, shapes, weights,

combination of materials• Assess output for variation e.g. inspect using one’s eyes, using

machines, assess for performance through tests• Keep good records, store material properly, maintain

equipment and tools regularly, keep premises and tools clean, dispose of garbage/waste

• Set standards for workers- wearing caps and masks, proper clothing e.g. overalls, getting medicals

Example 1 Quality Control Measures

The store assistants will make a daily quality report for the entrepreneur; by inspecting every product on arrival, identifying problems and demands to any product to ensure that quality is maintained.

In addition, the researcher will only order products from original distributors ensuring that genuine products are obtained at the best prices.

Example 2 Quality Control Measures

In ensuring that there will be a consistent high quality product, ‘Yut Trenz’ will put measures in place to maintain high standards. Firstly, the business will utilize only high quality materials from reputable suppliers and quality checks on every item will be carried out before the apparel is made available to the customers. Secondly, the machines will be regularly maintained to ensure efficient and effective operations by Daniel & Edmond, a specialist machine firm in Trinidad and Tobago.

Use of Technology

• Identify at least two technologies to be used in your business. Explain how technology is used to enhance the efficiency of the business, (benefits of technology to your business) give examples.

• How will you make use of technology. REMEMBER TECHNOLOGY IS ANYTHING WHICH AUTOMATES YOUR BUSINESS.

• Examples of technologies are: computers, software programs, e-commerce, e-marketing, CAD, CAM etc.

Example 1Use of Technology

The business owner will purchase cash registers with bar code scanners which will be placed at each cashier counter. This will allow for accurate calculations and the barcoding will save time as there will be many consumers in the store at the same time. The business owner will also use the internet by creating a website allowing consumers to view the company’s contact information, items sold, the available stock, and order items online. This will ensure that the best customer services are provided, by making it possible to meet customer needs wherever they are.

Example 2Use of Technology

High technology will be used to assist the general operations of the business. Computers and Computer Aided Designs (CAD) applications will assist in laying out and developing designs to come up with creative and fashionable designs. The will also be the sewing machines which will be capable of many varying stitches and embroidery designs. In addition, the social networking site, Facebook will be used to help in posting latest designs, so the customers will be able to view and order products via telephone, without having to physically visit the business.

Linkages• Define the terms linkage, and forward and backward

linkage. • an industry which is associated or connected to other

industries in such a way that the existence of one is dependent on the other, or it enhances the other’s production process. These industries are also referred to as ‘spin-off’ and ‘screwdriver’ industries) give an example of forward and backward for your business.

• Forward Linkages"- The finished producer of one industry becomes the raw materials of another industry.

• Backward linkages" - backward linkages occur when the demands on an industry lead to the establishment of other industries to provide for the needs of this industry.

• Outline 1 benefit of that linkage

Example 1 LinkagesThe business will buy accessories from overseas suppliers such as Shanghai, Chinaand Tainan, Taiwan. This will be a backward linkage which will allow the entrepreneur to minimize delivery time and transport costs and to maintain a close relationship with suppliers to ensure product quality.

Example 2 LinkagesBoth forward and backward linkages would be established with this new business venture. The government of Trinidad and Tobago has identified the local fashion industry as an industry that would be developed in order to assist in diversifying the economy. This business will form forward linkages with the fashion houses such as modelling agencies and other clothing stores in Trinidad catering for young trendy fashionable persons. Backward linkages will be formed with local producers and supplies of beads, leather, cotton, and other local materials, as well as the foreign businesses from which the specialist sewing machines will be purchased and the local business providing the maintenance service for the machines. These linkages will help ensure the business’ survival, and eventual growth and development.

Potential for Growth

• Explain potential for growth internally and externally• Do you see a large enough market for your products so that

you can grow.• What can you if your market grows? Hire more labour?

Move to a larger building, buy bigger machinery, offer additional products, services

• Show evidence of potential for growth; market research suggesting that there is room for growth in the market.

• Examples of Internal growth – New product line– Additional service– Increase marketing to increase sales

• Examples of external growth– New branch (local or overseas)– Franchise

Example 1 Potential for Growth

The business will begin sales with only mobile phones and accessories. As time progresses, the company will grow to meet the wants and needs of consumers more readily and efficiently. Internally, the business will be looking to increase its product line. This will entail hiring more people to handle the increasing volume of items. The increased product line will include products such as wireless modems, portable USBs, memory sticks, laptops, anti-virus programs, blank CDs and blank DVDs. Externally, the researcher will be looking to establish a new business outlet outside of its current location. This new location will be situated in Speightstown, in the north of the island, thereby allowing consumers to conveniently access products from any side of the island; from the north in Speightstown and from the South in Bridgetown.

Example 2 Potential for Growth

Projections for the business will show an anticipated growth, both internally and externally, in the business’ operations within the next five years. The internal growth will be growth in the customer base, as word spreads about our high quality affordable fashionable clothing designs, leading to returning customers and new customers on a regular basis. This will require an increase in the number of employees, more specialized work operations, and possibly the incorporation of more technology in the business’ operations to meet the growing needs of the expanding customer base. The potential for expansion externally will involve the opening of branches throughout Trinidad and Tobago, and even in other Caribbean territories, or possibly even the purchase of a business such as an on-line distributor or a supplier of local sewing materials.

Government Regulations

• State any government regulations that relates to the business

• - What do you need to know about government regulations?

• - regulations about Dangerous Drugs, Fair trade, payment of taxes e.g. Land And Buildings Tax and VAT , collecting VAT from customers, Health and Safety of workers, Consumer rights of exchange and redress, paying rates e.g. water rates, insurance on vehicles, paying National Insurance

Example 1 Government Regulations

The government regulations, National Insurance (NIS), PAYE, and Value Added Tax (VAT) will have a financial effect on the company. The business will need to register with the relevant authorities. The National Insurance policy is designed to benefit employees e.g. if they become sick National Insurance would provide an income, however it is an expense to the business as the employee only pays a portion of the NIS earnings while the company has to pay a portion as well.The entrepreneur will develop a system to make the required payments and to claim refunds of VAT on imports.

Example 2 Government Regulations‘Yut Trenz’ will abide by all government regulations and guidelines established for businesses doing business in Trinidad and Tobago, and more so the Partnership Act. Firstly, the owners will register the business as a partnership with the Registrar of Business so that the partnership will be legally recognised as a legitimate business. In addition, income taxes will be paid by the owners and all employees to the Board of Inland Revenue, as well as contributions made to the National Insurance Scheme and Health Surcharge. The business will ensure that Health and Safety Standards will be maintained by having a Health and Safety Officer contracted to the firm, ensuring that employees will be working in an environment that will be safe and healthy. The business will also be guided in its employment practices, in ensuring that there will be no discrimination in hiring, providing the necessary vacation and other leave, in offering fair wages that exceed the minimum wage established by the government, and providing employees with the require break times, such as a one hour lunch period.

Ethical Issues

• Discuss any ethical issue of production that relates to the business environment

• What are ethical issues?

• Problems which require choice of either right way or wrong way.

• Examples of ethical issues– Improper waste disposal, littering and pollution,

Bribing officials, not providing true reports to other owners, giving customers poor quality products or bad service

Example 1 - Ethical Issues

There is an ethical issue regarding the quality of the products which T.A.P will sell. Customers like to know that they are getting good quality and long lasting products for their money. T.A.P will aim to ensure that all products bought for sale will be authentic and of good quality at a fair price.Also, another ethical issue that must be highlighted is the fact of selling what is advertised. Fake advertising is a high concern in the retail industry. The company will aim to prevent misleading advertising, so customers will trust this business and want to purchase more products from it and they will want to advertise the company verbally to their friends and families which will increase the company’s total customers.

Example 2 - Ethical IssuesAll designs, while some may be inspired by other designers, will be unique and original. No other designer’s work will be copied and branded as the property of the business. In this way, the business will be known for its integrity and always have the trust and confidence of its suppliers and customers. This will help ensure its survival and future growth as the market will continue to support the business in its endeavours. The materials to be used will always be original and authentic and never to be substituted for inferior or imitations, especially in circumstances when original high quality materials may be difficult to acquire. This again will help to promote the business as a quality business, always delivering quality products to its customers, and will consequently ensure its survival and continued growth. Any price increases will be done based on economics and not the personal feelings of the owners. This will help to its customers to fully understand and appreciate price increases and continue their support to the business. All waste material will be disposed of in the appropriate manner, either through the garbage collection service or the owners arranging to have it delivered to the dump site, and never carelessly thrown into the environment. This will promote the business as environmental friendly and encourage its support by its customers and lead to an increase in its customer base, especially those who are environmentally friendly.

Bibliography

• A bibliography is always in alphabetical order.• A bibliography is the final page in a document.

Books• Include these details: Author´s name: Surname first,

then first name or initials• Year of Publication (in brackets)• Title of Book in ITALICS or underlined if handwritten• Publisher• Place of Publication•

Example: Smith, Kate (1998), Life in Asia, Collins, Melbourne