Management is a science as well as an art.
management concepts such as leadership and job
 It is a body of knowledge whose ideas and
principles have become the basis of organizational
frameworks employed by many businesses and
organizations.
Maneggiare - It is an etymology of “Management” which
means “To Handle Tools and a Horse”.
Planning - A process that includes defining goals,
establishing strategy, and developing plans to coordinate
activities.
Leading – managers help the company achieve its
objectives by influencing their subordinates to perform
the assigned tasks.
Organizing – refers to structuring the business
organization in such a way that employees are grouped
together to perform jobs or tasks.
Controlling – requires managers to identify any deviations
from the strategies and methods used in attaining the
company’s objectives.
Efficiency is the ability to maximize output with minimum
input. It is often referred to as “doing things right”.
Effectiveness is the capacity to attain an intended
objective or result. It is often called “doing the right
thing”.
“Five Factors that influence today’s business
environment”
Globalization refers to the phenomenon of growing
interconnectivity and interdependent relations between
nations.
Technology is one of the main driving forces of business.
Advancements in the area have immensely improved
business trends.
Sustainability in business means that companies should
plan and conduct long-term business operations to ensure
minimal negative impact on the social, cultural, and
economic aspects of their external environment or
community.
**CSR (corporate social responsibility) – is defined as the
willingness of companies to run their business operation
in a sustainable and responsible manner.
Psychology is an important facet (aspect) in management
since it focuses on developing people management skills
and analyzing customer satisfaction.
Ecosystem business ecosystem consists of a group of
firms that provide related products and services.
THE EVOLUTION OF MANAGEMENT THEORIES
the Chinese used the four basic management functions of
planning, organizing, leading and controlling to carry out
vast infrastructure projects and manage various parts of
the expanding Chinese empire.
Greeks developed a scientific approach to work, and
Greek philosophers Socrates and Plato discussed
specialization.
The ancient Romans practiced decentralized
management to effectively manage their vast empire.
the medieval period, Venetians improved production by
standardizing the assembly line, using an inventory
system, and building warehouses.
Frederick Winslow Taylor – introduced and developed the
Scientific Management Theory.
Time Study - Timing how long it takes good workers
to complete each part of their jobs.
Motion Study - Breaking each task into its separate
motions and then eliminating those that are unnecessary
or repetitive.
Frank & Lillian Gilbreth - prolific researchers who used
their families as guinea pig and introduced the Time and
Motion Study.
William Edwards Deming – proponent of the Quality
Management Theory which introduces “Kaizen
Approach”.
Henry Fayol - a French industrialist and the father of
Administrative Management Theory. (14 Principles of
Mgt.)
1. Division of Work into specialized tasks, with specific
duties and responsibilities given to individuals.
2. Authority of managers to delegate work and tasks to
the employees. The employers, in turn, are expected to
comply and exercise their tasks responsibly.
3. Discipline where expectations should be clearly set and
violators of rules must be punished.
4. Unity of Command where an employee should only
report to one supervisor.
5. Unity of Direction which means that the efforts of the
employees are guided toward the attainment of the
organizational objectives.
6. Predominance of the general interest of the
organization over the individual interests of the
employees.
7. Remuneration of the efforts of the employees which
should be systematically rewarded in line with the
organization’s vision and mission.
8. Centralization where the roles of all employees are
clarified, with emphasis on the distinction between
superior and subordinate roles.
9. Scalar Chain which means that the communication
should be open within the chain of command.
10. Order where the organization of jobs and materials
must be done in an orderly fashion.
11. Equity which means that fairness and order must be
practiced maintaining employee commitment.
12. Stability and tenure of personnel to actively promote
employee loyalty to the organization.
13. Initiative to encourage employees to act on their own
in support of the organization’s objectives.
1
14. Esprit de corps to promote teamwork and the unity if
interest between the employees and the management.
Max Weber - a German sociologist, contributed to the
development of administrative management through his
studies of administration and bureaucracy.
Elton Mayo - an Australian psychologist who
used his expertise to implement Improvements in the
workplace. And introduced the Hawthorne Studies.
Abraham Maslow – another person who contributed to
the field of human relations and created a hierarchy of
needs.
Quantitative Management Theory
 Uses quantitative approaches such as statistical
analyses and computer simulations to arrive at a
management decision.
2 Main Branches of Quantitative Management
Management Science – uses mathematics in problem
solving and decision making.
Management Information System – most recent subfield
of quantitative management.
Fred Fiedler’s contingency model - states that the
personality of the leader determines how well he or she
addresses situations in the workplace.
Quality Management - emphasizes consistency in an
organization and minimal to no errors or defects in
production. This ensures quality products and services
that result to high customer satisfaction and increased
revenues.
Different Types of Managers
 The Problem-Solving Manager – focuses on
providing solution to every problem of the
company.
 The Pitchfork Manager – threatens the
employees to work towards a goal.
 The Pontificating Manager – neither follows any
strategy nor prepares for any situation or task and
usually ends up with inconsistent results.
 The Presumptuous Manager – thinks only himself
or herself.
 The Perfect Manager – is open to change and
personal growth.
 The Passive Manager – wants to please everyone
and make the team members happy.
 The Proactive Manager – possesses the good
qualities of the other types of managers.
Top Managers – This level is also called “senior
management” or “upper management”. The managers in
this level have titles such as Managing Director, Chief
Executive Office, Chief Operating Officer, Executive VP and
Chairman of the Board and among others.
Middle-Level Management – are assigned to supervise
specific units or departments within the company, and are
highly-specialized in managing the tasks and operations of
their assigned units. They are also responsible for carrying
out the decisions made by the top-level management and
applying them to their units.
Low-Level Managers – they are also called “front-line
managers” or “supervisors”. These managers usually
directly oversee employees or workers and are tasked
with carrying out the decisions communicated by the
middle managers.
Subordinates – the employees under the authority or
control of a superior or manager in an organization.
Stakeholders – groups of people that may be affected by
the actions, policies, or a decision of an organizations.
Management Roles Approach (Henry Mintzberg)
Interpersonal Management Roles
Figurehead – manager performs social, inspirational,
legal, and ceremonial duties.
Leader – is a pervasive presence among subordinates,
although the relationship between the leader and other
members of the group tends to be indirect.
Liaison – the manager is an information and
communication center.
Informational Management Roles
Monitor – manager seeks and receives information from
various sources to evaluate the organization’s
performance.
Disseminator – manager communicates external
information to the organization and facilities information
exchange between subordinates.
Spokesperson – manager relays information to other
groups and entities outside of the company.
Decisional Management Roles
Entrepreneur – manager designs and initiates new
opportunities for the company. An entrepreneur is a risk-
taker and is often involved in start-ups and new projects.
Disturbance Handler – involved in stepping in to deal with
disturbance that arise, evaluate the situation, reallocate
resources, and provide adequate support to the company.
Resource Allocator – manager oversees and controls
resource allocation by evaluating major decisions
involving resources.
2
Negotiator – manager takes charge of communicating and
negotiating with other organizations, and even among the
members of the company.
Management Skills
Technical skills
 Knowledge and proficiency in a specific field
Human skills
 The ability to work well with other people
Conceptual skills
 The ability to think and conceptualize about
abstract and complex situations concerning the
organization
Major Problems Faced by Businesses
Uncertainty – It is uncontrollable external factors like
political, technological, and social forces around the
business.
Globalization – Companies may need to offer new
products and services to better serve new markets.
Innovation – Companies should build more innovative
culture in their respective organizations.
Government Policies – Companies should adhere to the
new government regulations and policies on
environmental, financial, marketing, and other aspects
of business.
Technology – Technological advancements happen fast
and companies should come by investing in new
technologies to take advantage of their benefits before
they become obsolete.
Diversity – diversity adds value to products and services
since different ideas and perspective are utilized in the
process.
Complexity – Globalization and information technology
have led to the emergence of a complex business
environment.
Information Overload – Innovation in information
technology have led to fast-paced communication and the
availability if a large amount of information in the
internet.
Internal Environment – consists of elements that have a
direct impact on the business operations.
External Environment – consists of factors that have
indirect but significant influence on the operations of the
business.
There are two types of External Environment:
Microenvironment – is also known as the “operating
environment”. It consists of the customers, suppliers,
regulatory agencies, and competitors.
Macroenvironment – is also known as the “general
environment”. It consists of the economic, political, social,
legal and technical environment of the business
organization.
Environmental Scanning - is the actual monitoring and
evaluation of information from the external and internal
environment of a business organization.
Three modes of environmental scanning:
1. Ad hoc environmental scanning – is not often
done and is usually applicable only during crisis.
2. Regular Scanning – is usually done at least
once a year or at regular intervals.
3. Continuous Scanning – refers to the
continuous collection of data on a broad range of
environmental factors.
SWOT analysis is a quick and easy technique in analyzing
business situations. It is a versatile tool that can be
applied at the different levels of the company.
Strengths – include the company’s attributes that give a
competitive edge over others.
Weaknesses – are the attributes of a company that need
to be improved or changed.
Opportunities – are factors or events that can give a
positive impact to the company if properly addressed.
Threats – are external factors which may negatively
impact the company.
PESTEL Analysis – is a method used in analyzing the
Political, Economic, Social, and Technological forces
affecting the company.
Political Factors – include tax policies, labor laws,
environmental laws, trade restrictions and tariffs.
Economic Factors – these include economic growth,
interest rates, exchange rates, and inflation rates.
**Economic Growth – an increase in the amount and
value of goods and services produced by an economy for a
certain period of time.
**Exchange Rate – the price of nation’s currency in
comparison to foreign currency.
**Inflation Rate – how fast the general level of the prices
of goods and services increases.
**Tariffs – taxes to be paid in a particular import or
export transaction.
**Quotas – restrictions in international trade by limiting
the number of exports or imports in a country for a
certain period.
Social Factors – Analyzing social factors can also help a
company implement changes and improvements in its
operations, products, and services.
Technological Factors – Internet is the most important
technological factor now a days.
Environmental Factors - An identifiable element in the
physical, cultural, demographic, economic, political,
regulatory, or technological environment that affects the
survival, operations, and growth of an organization.
3
Legal Factors – should be considered includes current and
impending legislation that may affect the industry in areas
such as employment, competition, and health and safety.
The Philippine business environment is influenced by a lot
of factors both in the microenvironment and
microenvironment.
One major consideration for Philippine businesses is the
weather.
Aspects of Philippine culture should also be considered by
businesses especially when they endeavor to provide
products and services in the market.
The International Business Environment
Companies decides to expand its business overseas, as
different countries provide a variety of opportunities and
threats for the business.
International environment also consists of the political,
economic, social, and technological environment forces.
BPO (Business Process Outsourcing) – companies hire a
third party or another firm in a country which provides
services such as data center operations, payroll call
center, and others.
**Taboos – are social or religious customs that prohibit,
for example, discussion of a particular practice or
association with a particular person, place, or thing.
Phases of Economic Development
Mercantilism (1500-1780) - Countries used trade to
accumulate wealth and build colonial empires.
Industrial Revolution (1780-1880) - Introduced more
efficient production and operations and mechanization in
factories.
Fordism (1880-1970) - Gave rise to modern production
methods and the rise of multinational corporations
beginning with the Ford Motor Company.
Post-Fordism (1970-2010) - In this period they saw the
prevalence of information technology in business
transactions.
Globalization (2010-Present) - Defined by Economic
Interrelationships on a regional and global scale, and an
emphasis on sustainable development.
FORMS OF BUSINESS ORGANIZATIONS
Sole Proprietorship – are companies owned by one
person who is usually hands-on in managing the day-to-
day activities.
 It is registered to the Department of Trade and
Industry (DTI)
Advantages:
 It is easy to organize
 The single proprietor is the head
 The owner acquires all the profits from his
business
 Least expensive form of ownership
Disadvantages:
 There is only one manager
 The owner has unlimited liability
 Highly skilled employees will not be attracted to
work in the business
Partnership – is a form of business organization where
ownership of the business is shared by two or more
members.
 It is registered to the Securities and Exchange
Commission (SEC)
Kinds of Partnership:
 General Partners - partners have unlimited liability
for the debts and obligation of the partnership
 Limited Partners - have liability only up to the
amount of their capital contributions
 Industrial Partners - does not contribute money but
he is responsible for its management
 Silent Partners - only provide the financial capital but
they do not participate in management
Advantages:
 Easy to organize
 Possibility of bigger resources
 Expansion is also easier
Disadvantages:
 It lacks stability
 Jointly liable for all the obligations and effects
from the decision of other partners.
Corporation – has a distinct personality separate from its
owners. This means that it is treated like an individual
person with benefits from certain rights as well as
obligations and responsibilities.
Advantages:
 A member has limited liability
 It has the most effective means of raising money
capital for its operations, by selling stocks and
bonds.
 It has permanent existence
 Can deduct the benefits it provides to its
employees and consider them as expenses.
Disadvantages:
 It takes longer time the approval of SEC
 Shareholders have little or no participation
 Distribution of income depends upon the
declaration of board of directors.
Cooperative
 Duly registered association of persons with
common bond of interest who voluntarily joined
together.
 Association of group of small producers and
consumers who come together to form a
business.
 It must be noted that no member may own more
than 20% of the subscribed share capital.
Advantages:
 Elimination of middlemen
 Saving in management expenses
 Economy in distribution and production
expenditure
4
  Integration
Disadvantages:
 Lack of capital
 Limited scale
 Lack of prompt decision
Foreign Business Organization
Four (4) forms of foreign Business Organization
 Branch Office
 organized to do the activities of the head office
from the host country
 required to register with the SEC
 Representative Office
 fully supported by the head office and does not
obtain funds from its main office overseas
 Regional Headquarter
 only performs activities that primarily involve
supervision, communication and coordination.
 it serves as a coordinating center to its
subsidiaries, affiliates and branches in the region
and acts as an administrative branch of a
multinational company.
 Regional Operating Headquarter
 administration and planning
 acquisition of raw materials
 marketing
 technical support and communication
 research and development
Classification of Businesses
Service Business - Is a type of business that provides labor
and other services to customers.
Merchandising Business - Is a type of business that
purchases products from other businesses like
manufacturers and sells them to customers at a higher
retail price.
Manufacturing Business - Is a type of business where raw
materials are transformed into finished goods through
product-processing, labor, and other manufacturing
processes.
Business Ethics which are moral principles and standards
that guide business people in their transactions.
Ethical Issue refers to a concern on which an individual
must decide based on several alternatives of what is
morally right or wrong.
Universalism - This is the principle which states that all
people should have certain values like honesty, respect
and cooperation.
Egoism - This is the principle which promotes the greatest
good to oneself. It focused on the perspective that people
ultimately act for self-advancement, no matter how good
their intentions are.
Utilitarianism - This is the principle which focuses on the
greatest good for the greatest number of people.
Relativism - This is the principle which states that ethical
behavior is based on a person’s own and other relevant
people’s opinions and viewpoints.
Virtue Ethics - This is the principle which states that
morality depends on the maturity of a person with good
moral character.
Corporate integrity refers to that sense of “wholeness”
created by the right relationships among the members of
the corporation.
Five dimensions of Corporate Integrity
Cultural Dimension has the most impact on the internal
relationships in the company.
Interpersonal Dimension focuses on the relationships
among people.
Organizational Dimension considers the main purposes of
the business, particularly the economic and financial
purposes, managerial purpose, and civic purpose.
Social Dimension views the organization as actively
engaging with society.
Natural Dimension looks into how the organization
relates to nature. Managers should consider how their
business operations and activities impact the
environment.
The Nature of Planning
 It involves setting the direction and goals of an
organization, establishing a system that will
define the activities of the organization, and
formulating a plan to ensure that the system
works toward achieving the goals of the
organization.
Vision statement - describes what the company wants to
achieve and where it wants to go in the future.
Graphic - The vision projects to the market the kind of
company that the management wants to create and the
kind of company it aspires to be.
Directional - It describes the path where the company
wants to go and presents specific plans to move forward
in the future.
Focused - The vision is very specific so managers are
properly guided on what to do in terms of resources and
strategies.
Flexible - Although the vision should be focused, it allows
room for managers to change based on market situations,
technological advancements, and customer preferences.
Feasible - The vision is achievable and realistic.
Desirable - The vision is clear on why the path is
practically sensible and serves the interests of members in
the long run.
5
Easy to communicate - The vision is easy to understand,
articulated, and can be simplified into a powerful slogan.
Mission statement - describes a company’s reason for its
existence. It answers the questions why the companies
exist.
Goal - Are specific accomplishments or action plans that
are usually attained after a long period.
Objectives - Refer to action plans that involve shorter
periods and more measurable outputs. These tend to be
more specific and result in tangible outcomes.
Types of Plans
 Strategic Plans – These plans are designed by the
top management such as the CEO or president.
 Tactical Plans – translate broader plans into
functional goals for each area or department.
 Operational Plans – involves the formulation of
ongoing plans that define specific operations of
the organization.
a. Policy – a set of principles that guide managers in
addressing a particular issue.
b. Rule – a regulation which describes and regulates
the functions of an organization.
c. Procedure – a step-by-step process in
accomplishing a task or achieving an objective.
Contingency plan - Is a special plan created for
unexpected scenarios or changes.
Crisis Management Plan – a plan made in preparation for
any kind of crisis such as industrial disasters like fire, or
natural disasters like an earthquake or a typhoon.
Scenario Planning - When company formulates plans for
both positive and negative scenarios that may arise from
the implementation of plans.
Five steps involved in planning process
Formulation of goals and objectives, followed by the
identification if the appropriate courses of action, placing
due regard for their affordability, efficiency, and
practicality.
These courses of action determine the responsibilities
that will be assigned to specific personnel. The
assignment of responsibilities requires setting timelines
for the implementation of each course of action.
The documentation and distribution of the plan to the
people concerned, and review of the plan ensures that
any proposed revisions should be acknowledged,
discussed, and approved.
Corporate Strategy is usually conceptualized by the chief
executive officer and other members of the top
management.
Top management - also formulates the general business
strategy. This concerned with building a competitive
advantage for a single business unit of a diversified
company.
Middle-Mgt. Planning - functional strategy determines a
function or process and is formulated by middle-level
management officers.
Low-level Mgt. Planning - Operational strategy is a
narrower and more focused strategy formulated by low-
level managers or frontline supervisors.
Includes: Financial resources, Human resources, physical
resources.
3 Qualitative Techniques in Planning
Brainstorming – common techniques used by group of
planners. Stimulates thinking and allows the group to
work together in generating ideas.
Nominal group technique – highly structured method that
allows members to give their own inputs based on an
agenda. The structured and formal nature of this method
restricts personal discussion among group members and
minimizes conflict during discussions.
Delphi technique – highly structured technique like the
nominal group technique. However, the difference lies in
the means of formulating courses of action. This
technique does not require a group meeting.
2 Quantitative Techniques in Planning
Decision Tree - excellent tool for weighing different
alternatives.
Payback Method - Managers use this method in
evaluating alternatives in purchasing equipment,
furniture, and fixtures.
Rational or Logical Decision Model – process involves a
logical step-by-step analysis of several possible
contributing factors in making the decision.
Intuitive Decision Model - Managers do not use objective
methods in decision making but instead use their “gut
feeling” and instincts.
Predisposed Decision Model – manager, once he or she
decides on a solution, will no longer look for other
alternative solutions.
Cognitive Biases - Decision making is not perfect it is an
error-free process. One factor that contributes to errors in
decision making is cognitive bias.
Examples of Cognitive Biases
Escalating commitment – type of error happens when a
manager, despite his or her knowledge of a project’s
failure, continues to acquire more resources to pursue the
project instead of abandoning it.
Prior Hypothesis Bias - Manager holds on to his or her
prior belief that a project will succeed even when
evidence to the contrary has been provided.
Representatives - It is the tendency to generalize based
on a small sample or a single experience.
Reasoning by analogy - It refers to the tendency to
conclude that the results of one situation can be repeated
in a similar situation.
6
Illusion of control - It is a type of error that many top- Observe - The manager should gather as much
level managers commit when they become overconfident information as possible regarding the business
regarding their ability to solve problems. environment.

Framing bias - This kind of bias correlates the outcome

with how a problem or decision is framed.
Availability error - This error is committed by managers
when they immediately use available resources on a
project that is expected to immediately provide profit,
rather than holding off and waiting for a later opportunity
that will generate even greater profit.
Contemporary Structured Decision-Making Models
Kepner-Tregoe Matrix Model – a systematic way of
evaluating alternatives by implementing a rational process
of analyzing aspects of a situation or problem.
Orient - After scanning the environment, the manager
should take a closer look at the information gathered
during the first stage. Cultural beliefs, traditions, values,
and previous buying preferences of consumers should be
carefully studied.
Decide – The manager now decides and chooses the best
possible alternative.
Act - Once an alternative is chosen, the manager puts the
chosen plan into action and supervises its
implementation.

Developed by Charles Kepner and Benjamin Tregoe in

the 1960s.

 Situation Appraisal – assessing the situation, the

manager clarifies aspects of scenario and outlines
possible causes.
 Problem Analysis – the root cause of the problem is
identified.
 Decision Analysis – various solutions and courses of
action are identified and evaluated by conducting
risk analysis.
 Potential Problem Analysis – A possible final
decision is determined and carefully scrutinized.

Vroom-Yetton-Jago Decision Model - originally developed

by Victor Vroom and Philip Yetton in 1973, and revised in
1988 in collaboration with Arthur Jago.

- This model focuses not on identifying possible

decisions, but on selecting the best leadership
style suited for planning and decision-making.

5 Leadership Styles:

 Autocratic I (A1) – the leader is the sole decision-

maker. Using all information available, the
manager makes the decision for the firm.

 Autocratic II (A2) – managers gather pertinent

information from the members of the group but
they do not know the purpose of such
information.

 Consultative I (C1) – leadership style lets the

group members know the problem situation but
the final decision still rests on the manager.

 Consultative II (C2) – manager discusses the

situation with the group and gathers suggestions
from the group members. Manager makes the
final decision.

 Group II (G2) – All the group members are

responsible for coming up with the final decision.

Observe-Orient-Decide-Act (OODA) Loop Model

- Application of military tactics in business situations.

Developed by US Air Force Colonel John Boyd