FACULTY OF CIVIL AND ENVIRONMENTAL ENGINEERING

(BFC34502)
ENTREPRENEURSHIP
SEM I/ SESSION 2018/19
MARKET SURVEY ASSIGNMENT (BNF Hunter)

SECTION : 5
LECTURER NAME : ENCIK KHAIRUL NIZAM BIN MOHD YUNUS
GROUP MEMBER :
MUHAMAD RUZAIN HAMIDON (CF 170089)
SITI ZAHARAH BT AZHARI (CF 170088)
VIKNESWARAN A/L GANES (CF 170206)
NURSYAKIRIN BT MAZLAN (CF 170028)
MUHAMMAD NUR FIRDAUS BIN MOHD HIDIR
NUR HAFIZA BT MD NOOR (CF170097)
 TABLE OF CONTENTS

1.1 LOCATION PLAN

1.2 DESIGN AND PROCESS OF A BUSINESS
1.3 SOURCING OF EQUIPMENT
1.4 PRODUCTION PLANNING AND CAPACITY MANAGEMENT
1.5 INVENTORY MANAGEMENT
1.6 OPERATION COST AND PRODUCT COST
1.1 LOCATION PLAN

It is crucial for an entrepreneur to choose the right location for his business because a good
location can result in higher sales, lower operating cost and higher profit. In general, the choice
of location will depend on the following factors:

 Close proximity to customers.

 High number of potential customers and high population growth.
 Close proximity to raw materials.
 Availability of good infrastructures and facilities

We have a retail location, describe the surrounding area and explain to readers that the location
effective. Let know the readers your location provides access for the clients and suppliers. For
example, our location might make it convenient for your potential clients to park their cars
when they come to your office. We also attach the drawings of the building to show its structure
and size. The drawing more helpful to know the exact place and easier for client to find the
place.

 Availability of manpower.
 Good visibility and easier accessibility.
 Low crime rate and availability of facilities and services such as hospitals,
schools, banks, sport facilities.

1.2 DESIGN AND PROCESS OF A BUSINESS

If you’re a start-up, perhaps one of the greatest challenges you face is the transition to the
growth phase of your product. This transition requires you to meet several needs:

 Documented processes: As the complexity of your organization increases, so does the

need for defined and documented processes. These processes are necessary to promote
smooth operations and planning.

 Organizational structure: While in the incubation phase, you probably didn’t have
any policies or procedures in place. You may not have needed them because your staff
was small, and everyone was up to speed on what was going on.

However, with growth comes the need to add staff, giving rise to the organization chart,
complete with a need for a reporting structure.

 Systematic planning: In the beginning of your new venture, you may have done things
by the seat of your pants. Your staff may have acted on any opportunity that came along
as quickly as possible. But as your enterprise matures and grows, planning becomes
essential because coordinating the organization becomes more difficult.

 Task specialization: As you grow, the need for specialized individuals increases.
Dedicated resources to such tasks as operations, marketing, and sales become
increasingly important, and your firm may establish separate departments. This task
specialization makes seeing the big picture more difficult and requires more
coordination across the organization.

These changes can be difficult for those involved with a start-up. Larger companies often have
different groups that take over product management as a product transitions from one phase to
another. This is often necessary because the skills required in each phase tend to be different.

1.3 SOURCING OF EQUIPMENT

Financial factors

The operations and management plan is designed to describe just how the business functions
on a continuing basis. The operations plan will highlight the logistics of the organization such
as the various responsibilities of the management team, the tasks assigned to each division
within the company, and capital and expense requirements related to the operations of the
business. The financial tables that you'll develop within the operations plan include:

 the operating expense table

 The capital requirements table
 The cost of goods table

There are two areas that need to be accounted for when planning the operations of your
company. The first area is the organizational structure of the company, and the second is the
expense and capital requirements associated with its operation.

Organizational Structure

The organizational structure of the company is an essential element within a business plan
because it provides a basis from which to project operating expenses. This is critical to the
formation of financial statements, which are heavily scrutinized by investors; therefore, the
organizational structure has to be well-defined and based within a realistic framework given
the parameters of the business.

Although every company will differ in its organizational structure, most can be divided into
several broad areas that include:

 Marketing and sales (includes customer relations and service)

 Production (including quality assurance)
 Research and development
 Administration
These are very broad classifications and it is important to keep in mind that not every business
can be divided in this manner. In fact, every business is different, and each one must be
structured according to its own requirements and goals.

Terence P. McGarty in his book, Business Plans That Win Venture Capital, lists four stages
for organizing a business:

 Establish a list of the tasks using the broadest of classifications possible.

 Organize these tasks into departments that produce an efficient line of communications
between staff and management.
 Determine the type of personnel required to perform each task.
 Establish the function of each task and how it will relate to the generation of revenue
within the company.

Once the organization's operations have been planned, the expenses associated with the
operation of the business can be developed. These are usually referred to as overhead expenses.
Overhead expenses refer to all non-labor expenses required to operate the business. Expenses
can be divided into fixed -- those that must be paid, usually at the same rate, regardless of the
volume of business and variable or semi variable those which change according to the amount
of business.

Overhead expenses usually include the following:

 Travel
 Maintenance and repair
 Equipment leases
 Rent
 Advertising & promotion
 Supplies
 Utilities
 Packaging & shipping
 Payroll taxes and benefits
 Uncollectible receivables
 Professional services
 Insurance
 Loan payments
Overhead

In order to develop the overhead expenses for the expense table used in this portion of the
business plan, you need to multiply the number of employees by the expenses associated with
each employee. Therefore, if NE represents the number of employees and EE is the expense
per employee, the following equation can be used to calculate the sum of each overhead (OH)
expense:

OH = NE × EE

1.4 PRODUCTION PLANNING AND CAPACITY MANAGEMENT

Production planning is one of the most important criteria for the operation management
for who that want to start running a business. Production planning are function to establishing
an overall level of output. It states that an entrepreneurs must design adequate production
facilities to produce outputs that fulfil sales forecast. In addition, the process also includes any
other activities needed to satisfy current planned levels of sales, while meeting the firm's
general objectives regarding profit, productivity, lead times, and customer satisfaction, as
expressed in the overall business plan.

The production planning process requires the comparison of sales requirements and
production capabilities and the inclusion of budgets, pro forma financial statements, and
supporting plans for materials and workforce requirements, as well as the production plan itself.
A primary purpose of the production plan is to establish production rates that will achieve
management's objective of satisfying customer demand. Demand satisfaction could be
accomplished through the maintaining, raising, or lowering of inventories or backlogs, while
keeping the workforce relatively stable.

Benefit of Production Planning

 The production planning process typically begins with an updated sales forecast
covering the next 6 to 18 months. Any desired increase or decrease in inventory or backlog
levels can be added or subtracted, resulting in the production plan. However, the production
plan is not a forecast of demand.

An effective production-planning process will typically utilize explicit time fences for
when the aggregate plan can be changed (increased or decreased). Also, there may be
constraints on the degree of change (amount of increase or decrease).

The production plan also provides direct communication and consistent dialogue
between the operations function and upper management, as well as between client need to
ensure smooth running function, satisfied guest and fair profits. As example BnF Hunter
provide a large amount of flower and chocolate depend on the number of order and the design
that customer request. The communication link whether using Instagram, Facebook and email
between BnF Hunter and customers always run and if customers have the problem they can
ask for help or advice from BnF Hunter.

Capacity management is defined as the management of the limits of an organization's

resources, such as its labour force, manufacturing and office space, technology and equipment,
raw materials, and inventory. Capacity management also deals with the capacity of an
organization's processes.

Capacity management also refers to the ability to meet a customer’s requirements with
the available resources like machinery, factory, labour, raw materials. Generally the required
outputs during manufacturing resource constraints are met by working overtime or redeploying
the workforce. Capacity planning is done on the basis of projections for future product demand,
labour and equipment requirements. Time and Capacity are the two main constraints in
capacity management. Capacity can be divided into three type:

 Potential Capacity – It is for the long term and indicates the available capacity
at hand which can be utilized to influence the planning of senior management.
 Immediate Capacity – It is the maximum available capacity which can be
utilized in the short term (on a day-to-day basis).
 Effective capacity - It is the part of the total available capacity which can
actually be put into use.
Capacity management important because Inadequate or improper capacity management can
affect a company's financial performance and impede its business prospects. Since capacity
constraints in any process or resource can be a major bottleneck for a company, capacity
management is of critical importance.
1.5 INVENTORY MANAGEMENT
1.6 OPERATION COST AND PRODUCT COST

Operation Cost:

Operating costs are expenses associated with the maintenance and

administration of a business on a day-to-day basis. The operating cost is a component
of operating income and is usually reflected on a company’s income statement. While
operating costs generally do not include capital outlays, they can include many
components of operating a business including:

i. Accounting and legal fees

ii. Bank charges = Bank Loans.
iii. Sales and marketing costs
iv. Travel expenses
v. Entertainment costs
vi. Non-capitalized research and development expenses
vii. Office supply costs
viii. Rent= Office and Equipment.
ix. Repair and maintenance costs = Equipment and Office.
x. Utility expenses = Equipment and Others materials.
xi. Salary and wage expenses = Labours salary and products.

Operating Cost, OC = Cost of Goods Sold + Operating Expenses

By example:

Cost of Goods Sold = RM 10

Operating Expenses = RM 20

So, OC = RM 10 + RM 20 = RM 30
Product Cost

It refer to the costs incurred by a business when manufacturing a good or

providing a service. Production costs include a variety of expenses, such as labor, raw
materials, consumable manufacturing supplies, and general overhead. Additionally,
taxes levied by the government or royalties owed by natural resource extracting
companies are also considered production costs. Recall that product costs include
direct material, direct labor, and manufacturing overhead. The three are detailed
below:

i. Direct material: The cost of bouquet of flowers and goods.

ii. Direct labor: The cost of wages and benefits for the labours. For example
rider and flowering design labour.

iii. Manufacturing overhead (indirect material): The cost of materials use to

make bouquet and present.

iv. Manufacturing overhead (indirect labor): The cost of wages and benefits
for the security guards to overlook the manufacturing facility

v. Manufacturing overhead (other): The cost of factory rent and cost of factory
utilities.

Example: 10 Order for package A (Flowers and Chocolate).

To produce the packages, incurred costs of:

Flowers= Rm 5

Wages labours= Rm 7/hours/person (x 10 labours)

Others materials= Rm 8

Total Product Cost= Rm 5 + Rm 70 + Rm 8

= Rm 83 (10 order)

= Rm 83/10

= Rm 8.30 (1 order)