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ORGANIZATION THEORIES FOR

EFFECTIVE BUSINESS
MANAGEMENT
for Organization and Management
Senior High School (ABM)
Quarter 2 / Week 1
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FOREWORD

This Self-Learning Kit for Organization & Management

is designed specifically for students in the Senior High
School. This is about organization theories for effective
business management
It is aligned with the K to 12 Curriculum of the
Department of Education following the prescribed MELCs
(Most Essential Learning Competencies.
This is designed to be more comprehensive for learners
even in studying at home.
What Happened
This part contains a review of prior knowledge that has
a great contribution to the focused topic of this module.
This also contains preliminary activities that will awaken the
prior knowledge of the learners and will motivate them to
learn.
What I Need To Know (Discussion)
This section discusses organization theories for
effective business management.
What I have Learned (Evaluation/Post Test)
The exercises found in this section are guaranteed to
develop organizational skills, analyses, and to check the
understanding of the learners about the topic in this
module.
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LESSON ORGANIZATION THEORIES FOR EFFECTIVE

BUSINESS
MANAGEMENT
OBJECTIVES:
K: Identify the different organization theories;
S: Explain the fundamentals of the organizing
function in business organizations;
A: Apply organization theories in solving business
cases.

LEARNING COMPETENCIES:

▪ Apply organization theories for effective business

management.

I. WHAT HAPPENED
PRE-TEST
Direction: Identify the form of business organization as a sole proprietorship(SP),
partnership(P), or corporation(C) from the information provided. Then indicate
whether the given information is an advantage or a disadvantage. Write your
answers on your activity sheet/notebook.
.

A. Business B. Advantage/
Organization Disadvantage
Form

1. Limited Capital ____________ _____________

2. Practically Unlimited Life ____________ _____________
3. Easy to Form ____________ _____________
4. Capacity as a legal entity ____________ _____________
5. Flexibility of Operations ____________ _____________

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II. WHAT YOU NEED TO KNOW

There are two main classifications of theories regarding organizational
design(how management achieves the right combination of differentiation
and integration of the organization’s operations, in response to the level of
uncertainty in its external environment). According to Robbins & Coulter(2009):
Traditional and Modern Traditional pertains to the usual or old fashion ways
while modern refers to contemporary or new design theories.

Traditional Theories include:

Simple

This organizational design has a few departments, wide spans of

control, or a big number of subordinates directly reporting to a manager: has
a centralized authority figure and has very little formalization of work: usually
used by companies that start as entrepreneurial ventures.

Simple Organizational Design

Strengths Weaknesses
❖ Flexible ❖ The risk that
❖ Fast decision-making and overdependence with over-
result dependence on a single
❖ Clear accountability person
❖ No longer appropriate as
the company grows

Functional

This organizational design groups together similar or related specialties.

Jobs are grouped in departments with the specified skills and/or business
functions.

Example of the functional organization includes:

a. An English department for a particular school teaches all the English subject
regardless of what grade level the students are.
b. The municipal water district is responsible for all the water needs in a
particular town.
c. The purchasing department of an enterprise buys all the materials, supplies,
and other resources required by an enterprise, whether these inputs are
required by marketing, finance, accounting, human resources, or other
departments.

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Functional Organizational Design

Strengths Weaknesses
❖ Cost-saving advantages ❖ Managers have little
❖ Management is facilitated knowledge of other units’
because workers with similar function
tasks are grouped.

Divisional

This organizational design is made up of separate business divisions or

units, where the parent corporation acts as overseer to coordinate and control
the different divisions and provide financial and legal support services.

Example of the divisional organization includes

1. NORSU set up university branches located in the different towns in Negros

Oriental.
2. Health Centers set up “barangay health units” to provide the health
services of each barangay in the town.

Divisional Organizational Design

Strengths Weaknesses
❖ Focused on results ❖ Possible duplication of
❖ Managers are responsible activities and resources
for what happens to their ❖ Increased cost and
products and services reduced efficiency

Modern Theories include:

Team Design
This organizational design is made up of workgroups or teams. They define
team structures such as roles and responsibilities, and they collaboratively
identify working arrangements that allow their team to deliver on their purpose
and goals.

Team Organizational Design

Strengths Weaknesses
❖ Better Communication ❖ Potential conflict
❖ Teams Resolve Problems ❖ Some people are not team
Quicker players

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❖ Flexible and Empowered ❖ Under-performing

Workforce employees hide behind
❖ Empowerment of team the team
members and reduced ❖
barriers among functional
areas

Matrix-Project Design

This refers to an organization design where specialists from different

departments work on projects that are supervised by a project manager. This
design results in a double chain of command wherein workers have two
managers - their functional area manager and their project manager-who
share authority over them.

Matrix-Project Organizational Design

Strengths Weaknesses
❖ A specialist is involved in the ❖ Task and personality
project conflicts
❖ Increased communication ❖ The potential conflict
efficiency between managers and
❖ Improved employee projects
motivation ❖ Authority confusion
❖ Increased teamwork ❖ Reduced employees
❖ Maximize resource usage effectiveness
❖ Increase professional ❖ Increased management
development overhead costs
❖

Project design
It refers to an organizational design where employees continuously work on a
project.

Project Organizational Design

Strengths Weaknesses
❖ Flexible designs ❖ Task and personality
❖ Fast decision making conflict

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Boundary-less Design

This refers to an organization design where the design is not defined or limited
by vertical, horizontal, and external boundaries. There are no hierarchical
levels that separate employees, no departmentalization, and no boundaries
that separate the organization from customers, suppliers, and other
stakeholders. The key to this design is electronic communication, where
information is shared with the member enterprise with distinct competencies.

Boundary-less Organizational Design

Strengths Weaknesses
❖ Highly flexible ❖ Lack of control
❖ Responsive and draws on ❖ Presents communication
talent where it is found difficulties

III. WHAT HAVE I LEARNED

POST TEST:

1. What are the three traditional organization design theories? Briefly define
each?
2. What are the advantages and disadvantages of simple organizational
design? Do you agree or disagree with these advantages and
disadvantages?
3. Name the different modern organizational design theories? Briefly design
each

Focus Content Organization

4 Sharp, a distinct Substantial, specific, A sophisticated

controlling point made and or illustrative arrangement of
about the topic with content, demonstrating content with evident
evident awareness strong development and/or subtle
and sophisticated ideas transitions.

3 Apparent point made Sufficiently developed The functional

about the topic with content with adequate arrangement of
sufficient awareness of elaboration or content sustains a
the topic explanation logical order with
some evidence of
transitions.

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2 No apparent point but Limited content with Confused or

evidence of a topic inadequate inconsistent
elaboration or arrangement of
explanation content with or
without attempts at
transition.

Source: Rubrics by Jenny Tuazon, BSE_Math

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REFERENCES

Cabrera,H. PhD, Altarejos, A, PhD, Benjamin, R., et al 2016. ORGANIZATION AND

MANAGEMENT. PASIG: VIBAL GROUP.
Orjalo, V., Frias,S. & Pefianco, E., et al 2016. ORGANIZATION AND
MANAGEMENT Phoenix Publishing House

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DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V

Schools Division Superintendent

FAY C. LUAREZ, TM, EdD, PhD

OIC - Assistant Schools Division Superintendent
Acting CID Chief

NILITA L. RAGAY, EdD

OIC - Assistant Schools Division Superintendent

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ARNOLD R. JUNGCO
Education Program Supervisor – (SCIENCE & MATH)

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

MARIA SOLEDAD M. DAYUPAY

Writer

LITTIE BETH S. BERNADEZ

Lay-out Artist
_________________________________

ALPHA QA TEAM
GIL . DAEL
MARIA SOLEDAD M. DAYUPAY
MARIA ACENITH DESPI
JEE LIZA INGUITO

BETA QA TEAM
RICKLEOBEN V. BAYKING
LITTIE BETH S. BERNADEZ
GIL . DAEL
MARIA SOLEDAD M. DAYUPAY
MARIA ACENITH DESPI
JEE LIZA INGUITO
MERCYDITHA D. ENOLPE
RONALD G. TOLENTINO

DISCLAIMER

The information, activities and assessments used in this material are designed to provide accessible learning modality to the
teachers and learners of the Division of Negros Oriental. The contents of this module are carefully researched, chosen, and evaluated to
comply with the set learning competencies. The writers and evaluator were clearly instructed to give credits to information and illustrations
used to substantiate this material. All content is subject to copyright and may not be reproduced in any form without expressed written consent
from the division.

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SYNOPSIS AND ABOUT THE AUTHOR

This Self-Learning Kit (SLK) is all
about organization theories for effective
business management .
In this SLK, you will understand
what are the different organization
theories for effective business. You will
also know how these theories are
applied in various businesses . You can
also see in this self-learning kit the
different choices that a business has in
regards to the organization theories for
effective business management.
As you read and understand the
discussion, you will appreciate the
organization theories for effective
business management.

MARIA SOLEDAD M. DAYUPAY received her Certificate of

Professional Education last March 2013 at Negros College
of Ayungon, Negros Oriental. She was a graduate of
Bachelor of Science in Accountancy Foundation
University, Dumaguete City. She is currently teaching at
Ayungon National High School-SHS, Negros Oriental
handling Accountancy, Business and Management (ABM)
subjects. She is also a Grade 11- ABM adviser.