Nature of enterprise

The enterprise and business on the market economy

 

Economics and Production Organization

 

Nature of enterprise  

 

• Function of subsystems:

Marketing

Production

Finance

Innovations

The personnel

Management

 

 

 

 

 

• Purpose of enterprise
• Objectives of enterprise
• Production as a system
• Example

 

Purpose of enterprise

 

• High quality of output
• High labor productivity 
• Low cost of production
• Maximum profit in long-term prospect

Objectives of enterprise

 

 

• full and timely satisfaction of requirements of the consumers
• competitiveness of  production on the basis of  high  quality of output
• flexible updating of production  on the new demands of customers
• Effectiveness of production
• Favorable and safety labor conditions
• Personal trainings

 

Nature of enterprise

 

The enterprise is a basic primary economic unit in economic system which targeted on making and realizing production process

Has subsystems:

• Production/Operations
• Finance
• Marketing

 

 

Enterprise

 



 

Operations function consists of all activities

 

 

 

directly

 

related to producing goods or providing services.

 

Finance

 

Production/

Operations

 

Marketing

 

Organization

Business Operations Overlap

 

Marketing

 

Production/

 

Operations

 

Finance

Production

 

Input

 

Production

 

Output

Factors of Production

 

Factors	Resources	Economic benefit

Land

 

• a factor of production comprising all naturally occurring resources
• Natural resources are fundamental to the production of all goods, including capital goods.

 

• capital good, or simply capital in economics, is a manufactured means of production.
• Capital goods are acquired by a society by saving wealth which can be invested in the means of production.

Wage labor

 

• is the socioeconomic relationship between a worker and an employer, where the worker sells their labor under a formal or informal employment contract

Capital

 

• In economics, capital, capital goods, or real capital are those already-produced durable goods that are used in production of goods  or services

 

• capital is one of the factors of production

Physical Capital

 

• Two types
• Real (fixed)-
• Working-

Types of Operations

 

Operations

 

Examples

 

Goods Producing

 

Farming, mining, construction

 

,

 

manufacturing, power generation

 

Storage/Transportation

 

Warehousing, trucking, mail

 

service, moving, taxis, buses,

 

hotels, airlines

 

Exchange

 

Retailing, wholesaling, banking,

 

renting, leasing, library, loans

 

Entertainment

 

Films, radio and television,

 

concerts, recording

 

Communication

 

Newspapers, radio and television

 

newscasts, telephone, satellites

Manufacturing vs Service

 

Characteristic

 

Output

 

Customer contact

 

Uniformity of input

 

Labor content

 

Uniformity of output

 

Measurement of productivity

 

Opportunity to correct

 

Manufacturing

 

Tangible

 

Low

 

High

 

Low

 

High

 

Easy

 

High

 

Service

 

Intangible

 

High

 

Low

 

High

 

Low

 

Difficult

 

Low

 

quality problems

 

High

Food Processor

 

Inputs

 

Processing

 

Outputs

 

Raw Vegetables

 

Cleaning

 

Canned vegetables

 

Metal Sheets

 

Making cans

 

Water

 

Cutting

 

Energy

 

Cooking

 

Labor

 

Packing

 

Building

 

Labeling

 

Equipment

Hospital Process

 

Inputs

 

Processing

 

Outputs

 

Doctors, nurses

 

Examination

 

Healthy patients

 

Hospital

 

Surgery

 

Medical Supplies

 

Monitoring

 

Equipment

 

Medication

 

Laboratories

 

Therapy

Value-Added

 

•

 

The difference between the cost of inputs

 

and the value or price of outputs.

 

Inputs

 

   Land

 

   Labor

 

   Capital

 

Transformation/

 

Conversion

 

 process

 

Outputs

 

   Goods

 

   Services

 

Control

 

Feedback

 

Feedback

 

Feedback

 

Value added

Operations Interfaces

Function of subsystems

 

• Marketing – to come out on top on sales of production of a certain kind on the market
• Production – to reach the highest labor productivity and the minimum cost price at production of demanded quality.

 

• Finance – to keep and support at necessary level all kinds of financial resources.

 

Function of subsystems

 

• Innovations – to win leading positions on input of new kinds of production, using on researches and workings out certain percent of profit.
• The personnel – to provide the conditions necessary for development of creative potential of workers and increase of their level and interest in work.
• Management – to define critical areas of administrative influence and the priority problems providing reception of planned results.

General shifts of enterprise

 

• The technological unity – means close interrelation of  all  parts of enterprise which is supplemented with presence of factory services
• The organizational-economic unity - organization of production on a commercial basis
• Economic independence – provides a self-sufficiency by real and working  capital, independent sale of production,  financial report.

Production as a system

 

• Departments
• Shops
• Sections
• Workplaces

 

 

• Personal
• Inventories

ExampleOJSC "Glubokoye dairy-canning factory" ОАО «Глубокский МКК»

 

• The main production units (milk processing and output of the production), workshops and auxiliary units:
• canning shop;
• butter workshop;
• whole-milk processing shop;
• workshop of dried milk;
• can workshop.
• Auxiliary units include
• boiler room
• ammoniac compressor-house;
• electric shop;
• machine workshops;
• motor transport shop;
• building site;
• battery-house;
• electrolytic- house;
• smithy;
• laundry

 

 

• Для осуществления производственной деятельности на организованы цеха основного производства (переработка молока и выпуск продукции), цеха и участки вспомогательных производств.
• Оонсновные производственные подразделения:
• консервный цех;
• маслоцех;
• цельномолочный цех;
• цех сухого молока;
• жестянобаночный цех.
• К вспомогательным подразделениям относятся:
• котельная;
• аммиачная компрессорная;
• электроцех;
• механические мастерские;
• автотранспортный цех;
• ремонтно-строительный участок;
• аккумуляторная;
• электролитная;
• кузница;
• прачечная.
• http://glmkk.by/ru/production/price

 

Structure of enterprise

 

• Production structure

 

• Organization structure