MODULE 1:

ORGANIZATION: STRUCTURE, FUNCTIONS, AND OBJECTIVES

Time allotment: 3 hours

Objectives:

Upon completion of this module, students are expected to:

1. Explain the nature and elements of an organizations;

2. Classify the organization and enumerate their advantages and disadvantages;
3. Compare the different types of business; and
4. Identify the environment affecting organizations.

Nature of Organization

- An organization is a group of people who work together to achieve some specific purpose.

Elements of an Organization

Organization embraces some of the crucial elements as follows:

1. Objectives – are defined goals to accomplish as a group.

2. Relationships – organization involves interaction among the people to achieve the goal.
3. Systems – the methods or plan of procedure combined with resources and people to achieve
the objective.
4. Authority – the key to a management job since without authority organized action will be
unattainable.

Classification of Organizations

As to purpose, organization may be classified as commercial and non-commercial organizations.

Commercial or Business Organizations according to ownership:

1. Single Proprietorship – usually managed by one person.

Advantages Disadvantages
o Easiest to start and set up Unlimited liability
o Only one decides for the business Limited resources
o All profits are for the owner All loses are borne by the owner
o The owner, not the business is taxed Limited life
o Easy to dissolve
2. Partnership – When to or more persons bind themselves to contribute resources to a common
fund in their co-owned business for a profit.
Advantages Disadvantages
o Easy to form Unlimited liability
 o Joint resources All partners may be held liable for the action of
One partner
o Lesser Government supervision Consensual and restricted transfer of ownership
o Tax-exempt if professional partnership Limited life
o Corporate tax if commercial partnership
3. Corporation – A more formal business organization than partnership. Composed of five or more
owners generally called “incorporators”, “corporators”, and/or “stockholders”.
Advantages Disadvantages
o Limited Liability Most costly and difficult to organize
o Power of succession Only the BOD and other authorized officers can
Bind the corporation in contract
o Greater source of resources Shareholders have limited access and control
Over management and operations
o Renewable and perpetual life More stringent government supervision and
Restrictions
Taxed at a flat 30% income tax rate

Primary Activities of Businesses

- A business may be classified based on its primary activities. The most common types of
businesses as to their nature or main activities are as follows:
1. Servicing. This type of business render services to clients in exchange for a fee.
2. Merchandising. This business engages in the “buying” and “selling” of goods.
3. Manufacturing. This business converts raw materials into finished goods that are to be sold
at selling price.

Non-Commercial Organizations

Non-commercial organizations are organized primarily not for profit.

1. Public Sector Organization

2. Nonprofit Organization

Key Personnel

Sole Proprietorship Business – Owner and/or the Manager

Partnership – Managing Partner or other partners

Corporation – shareholders