BSNES 2 – Business Management

By: Manfred Evanz M. Palcat, CPA

Chapter 1
An Overview of Management and Organization
Introduction

Management is a vital aspect of the economic life of man, which is an organized group
activity. It is considered as the indispensable institution in the modern social organization
marked by scientific thought and technological innovations. One or the other form of
management is essential wherever human efforts are to be undertaken collectively to
satisfy wants through some productive activity, occupation or profession.

Management today is not just an exercise of blind authority or bossism but it implies
scientific thinking, accurate planning and meticulous control to ensure quick and better
results. Management has become a profession in view of the modern business becoming
more sophisticated.

Learning Objectives:

By the end of the chapter, students are expected to:

1. Define and understand management and organization,
2. Explain the basic concepts and principles of management and
organization,
3. Describe the process of management including the functions of
management, and
4. Identify the basic managerial skills.

WHAT IS MANAGEMENT?

Management is a distinct process of planning, organizing, staffing, directing and

controlling, performed to determine and accomplish stated objectives by the use of
human being and other business resources. (Conrado E. Iñigo, Jr.,Ph. D.)

Management is the art of getting things done through people. (Prof. Mary Parker Follett)

Management is the process of planning, organizing, leading and controlling productive

resources, such as people, money, machines, materials and methods. (Feliciano R.
Fajardo)

Management is both a science and an art. It is considered as a science because it has

organized body of knowledge which contains universal truth. It is called an Art because
managing requires certain skills which are personal possessions of managers.
BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

FUNCTIONS OF MANAGEMENT

1. Planning – the process of establishing objectives and suitable courses of action

before taking action. It is deciding in advance on what to do, when to do, and
how to do
2. Organizing – the process of arranging an organization’s structure and
coordinating its managerial practices and bringing together physical, financial
and human resources and developing productive relationship amongst them for
achievement of organizational goals.
3. Staffing – is concerned with evaluation, selection, and development of
employees to fit the needs of the organizational structure
4. Directing or Leading – the process of motivating and influencing task-related
activities of organization members.
5. Controlling – is the process of monitoring actual organizational activities to see that
they conform to planned activities and correcting deviations or flaws, or the
process of measuring and correcting actual performance against standards
established by the organization.

Other functions of management include:

 Communicating – refers to transferring information from one communicator to

another.
 Motivating – refers to the act of giving employees reasons or incentives to work in
order to achieve organizational objectives.
 Decision making – the process by which a decision maker determines the
available alternatives and chooses the best solution that suits a given problem.

IMPORTANCE OF MANAGEMENT

1. Optimum use of resources 7. Stability and prosperity

2. Competitive strength
3. Cordial industrial relations
4. Motivates employees
5. New techniques
6. Effective
8. Team Spirit
9. Effective use of managers
10. Reduces turnover and absenteeism
11. Smooth functioning
12. Sound organization
 BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

PLANNING
– Selecting goals and
ways to attain them.

PERFORMANCE CONTROLLING ORGANIZING

– Attainment of goals; RESOURCES
– Monitoring activities – Assigning responsibility
efficiency and – Men, money, machines
and making corrections for task accomplishment
effectiveness

DIRECTING/LEADING
– using influence to
motivate employees

Process of Management

THE MANAGER

Manager is responsible to see that the organization will achieve its objectives effectively
and efficiently. He is the one who plans, organizes, leads and controls other individuals in
the process of pursuing organizational goals. Managers are vested titles like president,
department head, dean, administrator, supervisor, team leader and the like.

Effectiveness and Efficiency: Basic Requirement in Management

Organization can only survive if management is effective and efficient.

Effectiveness is the degree to which objectives are achieved and the extent to which
targeted problems are solved. In contrast to efficiency, effectiveness is determined
without reference to costs and, whereas efficiency means "doing the thing right,"
effectiveness means "doing the right thing."

Efficiency is the comparison of what is actually produced or performed with what can
be achieved with the same consumption of resources (money, time, labor, etc.). It is an
important factor in determination of productivity.
BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

TYPES OF MANAGERS IN THREE LEVELS OF MANAGEMENT

Small Organizations Medium Organizations Large Organizations

Single Top Top

Manager Managers Managers

Frontline Middle
Employees
Managers Managers

Employees Frontline
Managers

Levels of Managers Employees

(by size of organization)

1. Top-level managers are responsible for the overall performance of the

organization. They formulate strategies, provide leadership, evaluate and shape
the method of organizing and control the direction of the organization in the effort
to accomplish goals. Top managers usually hold titles such as CEO, president,
chairman or senior vice president.

2. Middle-level managers direct the activities of other managers and sometimes also
those of operating employees. They work with top managers and coordinate with
peers to develop and implement action plans to accomplish organizational
objectives. Examples of middle managers are dean of the business school in a
university, plant manager in a manufacturing concern and branch manager of a
trading firm.

3. Lower-level managers or frontline managers are responsible for leading

employees in day-to-day tasks, which contribute to the organization’s goals. Of
the various levels of managers, they are the ones in direct contact with the
employees. Apart from performing managerial functions, their tasks include
correcting of errors or solving problems directly related to the production of goods
and services.
BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

TYPES OF MANAGERS

Managers may be different from one another in terms of the work they do. They may be
briefly described as follows:

1. Functional Managers – supervises the work of employees engaged in specialized

activities such as accounting, engineering, food preparation and the like.
2. General Managers – they are responsible for the work of several different groups
that perform a variety of functions.
3. Lines mangers – directly concerned with accomplishing the goals of the
organization. The decisions they make with regards to operations are expected to
be final and must be implemented. For example, university president, dean and
department heads all have line responsibilities.
4. Staff managers – in charge of units that provide support to the line units. In doing
their work, they use special expertise to advise the line workers. Director of
personnel and controller are examples of staff managers.
5. Administrators – managers working in the government or non-profit organizations.
Examples include school administrators, provincial administrators and hospital
administrators.
6. Entrepreneurs and Small Business Owners – a person who establishes and operates
an innovative business.
7. Team Leaders – a manager who coordinates the work of a small group of people,
while acting as a facilitator.

ROLES OF MANAGER

Category Role Activity

Interpersonal – pertains to
relationship with others and are
related to the human skills.
Informational – describes the
activities used to maintain and
develop an information network.
Decisional
Figurehead Performs ceremonial and symbolic
duties such as receiving visitors and
signing legal documents.
Leader Directs and motivates subordinates.
Trains, counsels and communicates
with subordinates.
Liaison Maintains information links both
inside and outside of the
organization. Uses internet to access
mails, phone calls and meetings.
Monitor Seeks and receives information,
scans periodicals and reports, and
maintains personal contacts.
Disseminator Forwards information to other
organization members, send
memoranda and reports, and makes
phone calls.
Spokesperson Transits information to outsiders
through speeches, reports and
memoranda.
Entrepreneur Initiates improvement projects,
identifies new ideas, and delegates
responsibilities to others.
BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

Disturbance handler Takes corrective action during

disputes or crises, resolves conflicts
among subordinates, and adapts to
environmental crises.
Resource allocator Distributes resources and schedules,
and sets budgets and priorities.
Negotiator Represents department or company
during negotiation contracts, sales,
purchases and budget
determination.

MANAGEMENT SKILLS

Technical skills refer to the abilities to use special proficiencies or expertise in performing
specific tasks. They refer the use of tools, techniques and specialized knowledge.
Examples of technical skills include an accountant preparing a financial report, an
architect working on a building plan and a professor writing a book.

Human skills or interpersonal skills refer to the abilities to work well in cooperation with
other persons, whether they are subordinates, peers or superiors. A person with good
human skills will have a high degree of self-awareness and a capacity for understanding
or empathizing with the feelings of others.

Some of the human skills necessary for managers are effective oral and written
communication, creating positive attitude toward others and in the work setting,
developing cooperation among group members and motivating subordinates. Human
skill is difficult to master; thus emotionally sound mangers perform this skill better than
those who are not.

Conceptual skills refer to the ability to see the organization as a whole and solve
problems in ways that benefit the total system. Managers who possess this skill are
expected to analyze and solve complex problems. Thus, the manager with good
conceptual skills will have the mental capacity to (1) identify problems and opportunities,
(2) gather and interpret relevant information, and (3) execute problem-solving decisions
that serve the organization’s purpose.

In a company, a manager’s conceptual skills are required in decisions such as those that
affect the selling procedures of the organization in choosing where to establish a branch
of the company.

Diagnostic skills refer to the ability to investigate a problem and then to decide on and
implement a remedy.

Political skills refer to the ability to obtain power and prevent others from taking it away.
BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

WHAT IS AN ORGANIZATION?

Organization is a collection of people working together to achieve a common purpose.

A mere group of people may not qualify as an organization unless it has some objectives
to achieve. To achieve this, people must interact with each other, use knowledge and
techniques, and work together in patterned relationships. The function of organization is
to achieve a common goal, which is very hard or impossible to do when acted
individually.

ORGANIZATIONS

Government Private

Corporate Non-corporate Profit Seeking Not-for-Profit

Types of Organizations

CHARACTERISTICS OF AN ORGANIZATION

The following, among others, are the common characteristics shared by organizations:
 Coordinating effort
 Common goal or purpose
 Division of labor
 Hierarchy of authority

BASIC PRINCIPLES OF MANAGEMENT AND ORGANIZATION

There are certain principles considered in the study of management and organization,
to wit:
1. Management Principles
a. Division of labor
b. Hierarchy of authority
c. Discipline
d. Unity of command
e. Unity of direction
f. Subordination of individual interests to the general interest
g. Remuneration – fair payment to employees
h. Centralization of power and authority
i. Scalar chain – observance of official chain of command
j. Order – resources are properly placed and utilized
BSNES 2 – Business Management
By: Manfred Evanz M. Palcat, CPA

k. Equity – resulting to kindliness and justice in treatment people

l. Stability of tenure – employees stay longer in the organization
m. Initiative
n. Esprit de corps – teamwork

2. Principles of Organization
a. Principle of Objective – The objective of the organization must be
determined and laid out clearly because I will serve as the guide to the
people in the organization in doing certain activities in the attainment of
the goals.
b. Principle of Analysis – Managers must be able to identify the problems,
analyze these problems and come up with feasible solutions.
c. Principle of Simplicity – Only activities that are necessary should be
undertaken and eliminate those which are not important.
d. Principle of Functionalization – Organizations are built to cater the needs of
a group of individuals and should function for that purpose.

Educating managers is very important in an organization in order to make sure that

managers possess the required human, technical and conceptual skills that they can use
in the effective and efficient performance of their jobs.