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Inputs
Outputs
Organisation
There are four main elements to the system: the inputs, the transformational process which occurs 
within the organisation, the output and then the final consumption of these outputs. The inputs can be 
remembered using a common abbreviation, the 5Ms.
The 
5Ms 
refer to inputs that an organisation requires in order to function. They are: 
1 Materials 
2 Money 
3 
Men (ie human resource) 
4 Machines 
5 Management 
Each of the 5Ms needs to be carefully employed, as each is a valuable resource in enabling the 
organisation to meet its goals.
The competence and skill employed within the organisation should be used in a way to enable the 
transformation of these inputs into something valuable or important to the customer. Mullins (2005) 
noted that organisations even within the same sector may have radically different goals, procedures, 
methods of operating, styles of management, systems, structure and behaviour of staff. Despite these 
differences, Mullins identified four factors that all organisations require in order to function: 

People 
– behind every action, document written, presentation, decision made are 
human 
interactions

Objectives
– which form the 
basis 
of an organisation and determine the nature of the outputs and 
the series of activities to achieve them

Structure
– is needed by which to 
channel and co-ordinate
efforts and interactions 

Management
–
 
is required to
 direct and control 
efforts in order to pursue objectives 
 EXAM FOCUS POINT 
You are not expected to discuss different forms and methods of 
management
. However, it is useful for 
you to appreciate that effective strategic management is at the core of the organisation's ability to 
transform inputs and to be able to offer a competitive offering of value to customers. 
BPP Tutor Toolkit Copy

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CHAPTER 4
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MICROECONOMIC FACTORS