FUNCTIONAL AREAS OF

MANAGEMENT
for Organization and Management
Senior High School (ABM)
Quarter 2 / Week 7

1
 FOREWORD

This Self Learning Kit for Organization and Management is an

innovative tool crafted exclusively for Senior High School students. It
assists students in understanding the nature and role in the firm of the
following functional areas of management: Human Resource
Management, Marketing Management, Operations Management,
Financial Management, Material and Procurement management,
Office Management, and Information & Communication Technology
Management.
It is aligned with the BEC of the Department of Education following
the prescribed MELCs (Most Essential Learning Competencies).
This Self Learning Kit is divided into three parts.
What Happened
This section limits on a pre-activity, specifically asking questions to
review the prior knowledge of the learners and that would also lead
them towards the discussion of the new lesson.

What I Need to Know (Discussion)

This section contains the discussion on the nature and role in the
firm of the following functional areas of management: Human Resource
Management, Marketing Management, Operations Management,
Financial Management, Material and Procurement management,
Office Management, and Information & Communication Technology
Management. The topic intends to make the students appreciate the
importance of the different functional areas of management in the
firm.

What I have Learned (Evaluation/Post Test)

The exercises found in this section are guaranteed to develop
analytical skills and to check the understanding of the learners about the
topic in this module.

2
 LESSON FUNCTIONAL AREAS OF MANAGEMENT

OBJECTIVES:
K: Discuss the nature of the different functional
areas of management;
S: Differentiate the role in the firm of the different
functional areas of management;
A: Appreciate the importance of the different
functional areas of management in the firm.

LEARNING COMPETENCY:

Explain the nature and role in the firm of the following

functional areas of management: ABM_AOM11-IIi-39
a. Human Resource Management
b. Marketing Management
c. Operations Management
d. Financial Management
e. Material and Procurement Management
f. Office Management
g. Information and Communication Technology
Management

I. WHAT HAPPENED
To prepare you to become future leaders and managers, you must
become familiar with the functional areas of management – Human Resource
Management, Marketing Management, Operations Management, Financial
Management, Material and Procurement Management, Office Management
and Information and Communication Technology Management. In doing so,
you will be ready for the local and global challenges that you will inevitably
meet in tomorrow’s workplace. Managerial and leadership functions are

3
essentially the same because all these aims to establish an environment for the
effective and efficient performance of individuals and cooperate with one
another in teams/groups of different organizations. Therefore, reading and
understanding this module will be beneficial to all persons who will one day join
organizations – not just business companies but also nonbusiness organizations
such as government, educational, health care institutions, and other non-profit
organizations.

PRE-TEST:
Match the different functional areas of management in Column B with its
definition in Column A. Write the letter of your answer in your activity notebook.
Column A Column B
1. The process of attracting, training, A. Financial Management
developing, and maintain an excellent B. Information and
work force. Communication
2. The process of managerial planning and Technology Management
carrying out of the conception, pricing, C. Human Resource
promotion, and distribution of ideas, Management
goods, and services D. Marketing Management
3. The study of how goods and services are E. Material Management
produces in organizations. F. Operations Management
4. The management and custody of the G. Office Management
organization’s funds, seeing to it that
funds are effectively and efficiently
utilized.
5. These collects, organizes, and distributes
data to be used in making the
organization’s decision-making functions.
6. This involves the planning, design,
implementation of work in an
organization and its offices.

4
II. WHAT YOU NEED TO KNOW
DISCUSSION
DIFFERENT FUNCTIONAL AREAS OF MANAGEMENT

A. HUMAN RESOURCES MANAGEMENT

Human resources, also known human capital, drive the performance of

organizations along with other resources; hence, understanding the HRM
functions of management is very important. These include:

Conducting job analysis. Job analysis is the process of obtaining

information about jobs needed to achieve the organization’s goal/objectives
by determining the duties, tasks, or activities involved in jobs. Job analysis data
maybe gathered through interviews, questionnaires, observation, and diaries.
They may also be collected through position analysis, and competency-based
analysis. Decision-making regarding job-related problems is done objectively
by analyzing the requirements of each job.

Planning labor need and recruiting. It is important to determine the

number and kind of people that may be attracted for employment. External
recruitment enables the organization to fill job openings with special
qualifications and to employ persons with new knowledge, skills, values, ideas,
and perspectives. Internal recruitment may also be done if management finds
it more advantageous to promote or transfer present employees to fill the
available job openings. Recruitment from within company is said to be less
expensive as existing employees no longer need extensive orientation
programs.

Selecting candidates for the job. This involves the matching of people
and jobs. Job specifications help identify the person-job fit and identify their
competencies, their knowledge, skills, abilities, and other factors that may lead
to excellent performance. Managers may use different selection methods
such as interviews, psychological tests, and calling references, among others.

Orienting and training new employees. This is done in organizations so

that they could contribute to the achievement of their organizational
goals/objectives. The phases involved in this function are:

• conducting needs assessment of the organization, of the person, and of

the task/work;

5
 • designing the training program by considering the institutional
objectives, the trainees’ readiness and motivation, and the principles
oof learning;
• implementation of the training program for non-managerial employees
using on-the-job training, apprenticeship training, cooperative training,
internship, government training, classroom instruction, and e-learning.
• evaluating the training program in order to determine effectiveness,
considering reactions, learning, behavior of the trainees, return on
investment (ROI) or results, and benchmarking.

Managing compensation pay. Compensation or pay represents a

reward received by employees in exchange for their contributions to the
achievement of organizational goals. In doing so, pay equity must be
considered. It must be fair and just, acceptable to all concerned parties, and
commensurate to the value of the work performed. It is important as it
determines job performance motivation of workers.

Providing incentives and benefits. Incentives are generally based upon

a pay-for-performance philosophy which means that a performance
“threshold” or baseline performance level must be reached by an employee
or group of employees in order to qualify for incentive payments. Examples of
individual incentives are bonuses, merit pay, and sales incentives. Group
incentives include team compensation, Scanlon plan, and improshare.
Enterprise incentives are profit sharing, stock options, and employee stock
ownership plans. Benefits, on the other hand, include social security, workers’
compensation, health care and medical educational assistance, vacation
leave, sick leave, life insurance, retirement benefits, and travel benefits. It is
important that incentives and benefits programs be based on specific
objectives compatible with the organizational philosophy and policies and the
organization’s financial standing.

Evaluating employees’ performance. Appraisal of employees is done on

a regular basis to find out who are doing their jobs well and who are not. The
purpose of such evaluation are administrative and developmental.
Administrative purposes include: to aid in decision-making regarding
employee’s pay and promotions, transfers or layoffs, which are based on their
achievements and performance. The developmental purpose of appraisal are
the use of results for discussing employees’ strengths and weaknesses and for
listing down performance improvement needs.

Communicating. To be effective, managers must have good

communication skills, both oral and written and information technology
proficiently. This is necessary to receive and disseminate pertinent information
needed by all organization members in carrying out activities that will lead to

6
the achievement of company goals/objectives. Besides carrying out internal
communication, managers must also have good communication with
customers, suppliers and other stakeholders in the external environment.
Communication may be hindered by barriers and breakdowns in the
communication process. Identifying these barriers and learning how to listen
well will facilitate both understanding and managing process.

Developing employees. Programs should be designed to meet the

special needs of employees which will prepare them for future jobs or roles that
they maybe be assigned to do. These may include: graduate studies, cross-
training, which refers to the process of developing employees to do multiple
jobs within an organization; or ethics training, the process of developing
employees’ moral judgments that will help them determine right and wrong
behavior which they could use in jobs that require more decision-making
functions.

Building employee commitment. This is another important function of HR

practitioner which will bind them to engage in activities that will ensure the
achievement of organizational goal/objectives. This must be followed by
employee accountability or accepting responsibility for one’s actions.

Providing good working conditions. This includes giving a clear

statement of the company’s mission, vision, goals, and objectives; offering a
good compensation and benefits package; preparing a well-ventilated, well-
lit, and pollution free work area for employees; and practicing ethical
management styles.

Handling grievances and industrial relations. When differences arise

between labor unions and management, these are usually settled through the
grievance procedure, wherein the feelings, needs, and desires of both parties
are aired. Managers must try to master the art of handling grievances and
industrial relations to bring peace in their organization. Again, it must be
emphasized that satisfied workers are more motivated workers, which in turn,
makes them more effective and efficient in performing their assigned tasks;
thus, they hasten the attainment of their company’s set goals/objectives.

IMPORTANCE OF HUMAN RESOURCES MANAGEMENT

Human resource management deals with the management of people

– the most important business resource. Money, materials, and information
resources are not capable of moving the business activities without the aid of
the primary performance drivers, human resources. Therefore, mastering the
activities involved in human resource management (recruitment, selection,

7
placement, training, and development) is a must since all other management
activities (planning, organizing, staffing, leading, and controlling) could be
done easily if organization managers practice proper human resource
management.

RECRUITMENT

HUMAN
TRAINING AND SELECTION
DEVELOPMENT RESOURCES
MANAGEMENT

PLACEMENT

Figure 1. Activities involved in human resource management

B. MARKETING MANAGEMENT

As marketing expert Philip Kotler puts it, marketing management “is

essentially demand management.” This is because it involves “influencing the
level, timing and composition of demand” so that an organization may reach
its goals.

The marketing management functions of management include the

following:

Analyzing, planning, implementing, and controlling of goods, services,

and ideas to create exchanges that satisfy customer needs and company
goals. Analyses of demand management starts with the gathering of data
through marketing research. Activities under marketing planning include
decision-making on target markets, market positioning, product development,
pricing, distribution channels, physical distribution, communication, and

8
promotion. The implementation of the marketing plan is formally carried out by
sales managers, salespeople, advertising and promotion managers, and
customer service managers.

Controlling refers to monitoring of the marketing plan’s progress. Goals

and budgets are set for each month or quarter. A review of the results follows
in order to identify business that are not attaining their goals. Managers of
unsuccessful businesses must explain what the problem is and propose
contingency plans that the management has to take in response to such
negative developments.

Management of marketing resources. Marketing resources include

salespeople, advertising, and marketing research.

a. Management of salespeople involves inculcating the

establishment of satisfying long-term relations with customers,
suppliers, and distributors in order to help their long-term
preference and business. Good marketers and able to maintain
win-win relationships by seeing to it that they always deliver high
quality, good service, and fair and reasonable prices to the key
parties that they deal with over a long period of time.

Figure 2. The marketing mix is an important consideration in marketing

management.

9
 b. Management of advertising. Although used less frequently than
sales calls in business markets, it is still important in marketing. In
can perform different functions such as: build awareness; build
comprehension of the good features of the product or service;
remind prospective customers about the product; provide the
company’s contact information to customers; and lead to
customers to get in touch with sales representatives.
c. Management of marketing research. This involves identifying the
seven characteristics of good marketing research:
1. the principles of the scientific method are used;
2. research creativity is practiced by using innovative ways
to solve marketing problems;
3. multiple methods of research are used in order to adapt
the method of the problem;
4. interdependence of models and data which recognize
that data are interpreted from underlying models;
5. value and cost of information is concerned with
estimating the value of the information against the cost
which helps the marketing research department
determine which projects to prioritize;
6. healthy skepticism enables researches to show a healthy
questioning of the hurried assumptions made by the
managers about how a market works; and
7. ethical marketing research which is concerned with
research that benefits both the sponsoring company and
the consumers; self-serving results may mislead consumers
to buy the company’s product which, in reality, is not
good or effective.

Analyze, plan, and implement marketing programs that aim to b ring

about an expected level and mix of business deals with target markets. It is
important that analysis and planning precede the implementation of the
marketing program, in order to ensure that its aim will be achieved. Strategic
planning for individual business entails defining the business mission, analyzing
the business’ external and internal strengths and weaknesses, and formulating
goals and strategies. In doing so, the implementation of the marketing
program will go smoothly and the chances that it will achieve its aim of
bringing an expected level and mix of business deal with target markets will be
increased.

Stimulate demands for the products of the company. This is achieved by

influencing the level, timing, and composition of demand, bearing in the mind
the attainment of the company’s objectives.

10
 Make crucial decisions that will ensure the company’s competitiveness.
These are decisions regarding target markets, development of products,
distribution of goods, market positioning, and setting the right prices for their
products.

Make sure that marketing techniques employed are efficient, effective,

and socially responsible or ethical. Marketing managers and their team
members must balance their own best interests (big sales commissions,
recognition, or promotion) with the best interests of their company, consumers,
and society.

IMPORTANCE OF MARKETING MANAGEMENT

Marketing management is important because it is the key to

organizational attainment, customer satisfaction, and profit gain. With major
marketing management processes – planning, execution, pricing, and
promotion and distribution of goods, services and ideas to create exchanges
with target groups – satisfying customers and achieving organizational goals
will not be possible.

C. OPERATIONS MANAGEMENT
Business managers today focus on productivity, technology use, quality
of goods and services, customer satisfaction, and speed. They are conscious
that they need to innovate on their processes and activities in order to
succeed in a highly competitive globalized market. Because of these needs,
the operations management functions of management must include the
following:
a. Overseeing the transformation process that change resources into
finished goods and services. In order to do this, managers must address
resource acquisition inventories, facilities, workflows, technologies and quality.
In doing so, productivity and competitive advantage will be ensured as they
accomplish the multiple processes that transform the various resources – in the
form of people, material, equipment, and capital – into quality finished
products and services.
b. Improve of productivity and competitive advantage. Productivity
measures the efficiency by which inputs are turned into outputs. The basic
equation for productivity is:
productivity = output / input
Competitive advantage is the competency of an organization to
outperform a competitor or competitors. To ensure productivity, work
processes must be subjected to complete analysis and redesigned, if

11
necessary, through process engineering. Other ways to ensure productivity are
process value analysis and reengineering. In process value analysis, all
elements of a process and their workflows are analyzed to be able to know
their contributions to key performance results. Reengineering discards work
steps that are not needed, combines other work steps, uses technological
know-how to reduce costs, and ensures efficiency and effectiveness.
Competitive advantage follows when organizations improve their productivity.

PLAN

ACT

+ DO

CHECK

Figure 3. The-Plan-Do-Check-Act cycle is one of the methods that may help

managers improve business processes and production.

c. Managing the sequence of activities and information along the

whole course of the value chain. Proper management of these activities and
information results in the creation of finished products and services that have
value to customers. Elements in an organization’s value chain include inflow of
resources and materials, organizing or resources and materials, creating goods
or services, distributing finished products or services, and serving of target
customers.

IMPORTANCE OF OPERATIONS MANAGEMENT

Through the study of the essentials of operations management,

businesses of different types and sizes may increase their chances for survival
and success in today’s business environment which is characterized as highly
competitive and fast-paced in producing quality products and services.

12
D. FINANCIAL MANAGEMENT
Gaining profit is the main goal of businesses. To attain this goal,
managers must practice good financial management and this, of course,
starts with understanding the financial management functions of
management. These functions include:
Taking charge of the company’s financial policies and strategies,
investments, capital structures, and divided policies. Financial managers of
organizations must formulate sound financial standing plans that will
communicate broad guidelines for their financial decisions and strategies.
These plans include typical financial policies that address the organization’s
investments, capital structures and dividend policies. Investment policy covers
choice of product lines and capital projects. Capital structure policy covers a
working capital policy (for the balancing assets and liabilities) and leverage
policy (for balancing long-term financing). Dividend policy considers the use
of either a systematic pattern of earnings retention or dividend distribution.
Financial management and control. The management and custody of
the organization’s funds also include control which gives an assurance that
funds are properly utilized in order to provide for all the organization’s needs.
Examples of financial standard management and control practices by
organizations are the following:
➢ project management, which makes sure that long-term projects
are implemented according to previously planned budgets and
checks if these have yielded forecasted cash returns
➢ working capital management, which includes cash, accounts
receivable, and inventory management
➢ cash management, which gives an assurance that there is
enough cash balance that maybe used for daily operating needs,
that idle cash in invested through marketable securities, and that
proper cash control are instituted
➢ accounts receivable management, which ensures the
optimization of accounts receivable investments and the
formulation of sound credit evaluation and collection procedures
➢ inventory management, determines inventory levels by making
maximum use of trade-off between inventory carrying cost,
ordering cost, and lost sales opportunities; it also institutes good
stable inventory control procedures
➢ fund sources management identifies short-and long-term funds
that may be available and transacts and keeps watch of credit
facilities with banks and other financial institutions.
➢ dividend policy implementation determines the form and
amounts of dividends and schedules their payment

Financial planning. Financial planning is the process of setting financial

objectives and determining what should be done to accomplish them. This
includes financial forecasting, financial analysis, and financial performance
evaluation.

13
 Financial forecasting involves:

1. Cash budgeting – a forecast of cash needs and sources

2. Profit planning – a forecast of revenues and expenditures
3. Balance sheet forecasting – considers future assets, liabilities,
and the organizations net worth position

Financial analysis involves:

1. Capital budgeting techniques – involves the assessment of

long-term investment
2. Operating leverage analysis – critically examines cost-volume
profit relationship
3. Financial leverage analysis – studies the effect of debt on
income to the organization’s common stockholders.

Analysis of pricing and cost of products, materials, supplies, and

production/manufacturing also fall under financial analysis.

Financial performance evaluation refers to the assessment of financial

ratios to indicate to the overall performance of the organization, as well as the
assessment of market-wide financial indicators.

IMPORTANCE OF FINANCIAL MANAGEMENT

Financial management facilitates the choice investments, financial

policies, and operating mechanism of the organization in order to effectively
achieve its goals and objectives. It includes maximizing its profits as well as
those of its shareholders and stockholders. In doing so, financial managers are
able to maximize the wealth of the organization and its
shareholders/stockholders and satisfy other goals like providing good customer
service, minimizing bankruptcy risks, and actively participating in present
societal concerns.

To accomplish the abovementioned functions that give importance to

financial management in organizations, control techniques, that measure the
company’s financial soundness, management effectiveness, production and
service efficiency, and human resource attitudes and morale must also be
considered. These include the following:

14
Break-even chart – is used by the organization’s financial management
planners and accountants to identify how the various sales levels affect the
income and
profits of the firm.
The break-even
point is the level
of operations
which shows
equal income
and expenses
incurred by the
company.

Figure 4. Break-even chart

Financial statements – include income statement, balance sheets, and

cash flow statements which are carefully analyzed.

Financial ratios – make use of the above-mentioned financial

statements to determine the formulation of a series of ratios that will, in turn,
determine of the company is stable or unstable. Strong or weak and on the
road to bankruptcy; examples of such ratios are rate of return on capital
invested, rate on return of assets, and rate of return on sales, among others.

Another functional statement used in financial management that also

emphasizes its importance is the organization’s budget. This states the amount
of money that the company will spend and receive during a future period of
time. At the end of the period of operations, actual expenses and budgeted
amounts are compared to see whether that the company has operated under
or over budget. Difference allow management to examine specific
expenditures and the reasons behind such. Managers and department heads
will then be forced to quantify their sales objectives and other company
targets because these must be expressed in pesos and not in general
statements or hopeful or optimistic expressions. Budget preparation in financial
management, therefore, is important in management decision-making, and
this must be prepared well on a regular basis by all organizations.

15
E. MATERIAL AND PROCUREMENT MANAGEMENT

MATERIAL MANAGEMENT

Materials management is a function, which aims for integrated

approach towards the management of materials in an industrial undertaking.
Its main objective is cost reduction and efficient handling of materials at all
stages and in all sections of the undertaking. Its functions include several
important aspects connected with material, such as purchasing, storage,
inventory control, material handling, standardization, etc.

SCOPE OR FUNCTIONS OF MATERIALS MANAGEMENT

Materials management is defined as “the function responsible for the

coordination of planning, sourcing, purchasing, moving, storing and controlling
materials in an optimum manner so as to provide a pre-decided service to the
customer at a minimum cost”.

From the definition it is clear that the scope of materials management is

vast. The functions of materials management can be categorized in the
following ways:

1. Material Planning and Control

Material planning is a scientific technique of determining in
advance the requirements of raw materials, ancillary parts and
components, spares etc. as directed by the production
programme. It is a subsystem in the overall planning activity.
2. Purchasing
Purchasing is an important function of materials
management. In any industry purchase means buying of
equipment, materials, tools, parts etc. required for industry. The
importance of the purchase function varies with nature and size of
industry.
3. Store Management
Stores play a vital role in the operations of company. It is in
direct touch with the user departments in its day-to-day activities.
The most important purpose served by the stores is to provide
uninterrupted service to the manufacturing divisions. Further, stores
are often equated directly with money, as money is locked up in
the stores.
4. Inventory Control or Management
Inventory control is a planned approach of determining
what to order, when to order and how much to order and how

16
 much to stock so that costs associated with buying and storing are
optimal without interrupting production and sales. Inventory control
basically deals with two problems: (i) When should an order be
placed? (Order level) and (ii) How much should be ordered? (Order
quantity).
5. Standardization
Standardization means producing maximum variety of
products from a minimum variety of materials, parts, tools, and
processes. It is the process of establishing standards or units of
measure by which extent, quality, quantity, value, performance
etc., may be compared and measured.
6. Simplification
The concept of simplification is closely related to
standardization. Simplification is the process of reducing the variety
of products manufactured. Simplification is concerned with the
reduction of product range, assemblies, parts, materials and
design.
7. Value Analysis
Value engineering or value analysis had its birth during the
World War II Lawrence D. Miles was responsible for developing the
technique and naming it. Value analysis is defined as “an organized
creative approach which has its objective, the efficient
identification of unnecessary cost – cost which provides neither
quality nor use nor life nor appearance nor customer features.”
Value Analysis focuses engineering, manufacturing and purchasing
attention to one objective-equivalent performance at lower cost.
Value analysis is concerned with the cost added due to
inefficient or unnecessary specifications and features. It makes its
contribution in the last stage of product cycle, namely, the maturity
stage. At this stage, research and development no longer make
positive contributions in terms of improving the efficiency of the
functions of the product or adding new function to it.
8. Ergonomics (Human Engineering)
The word ‘Ergonomics” has its origin in two Greek words Ergon
meaning laws. So, it is the study of the man in relation to his work. In
the USA and other countries, it is called by the name ‘human
engineering or human factors engineering.’ ILO defines human
engineering as, “The application of human biological sciences
along with engineering sciences to achieve optimum mutual
adjustment of men and his work, the benefits being measured in
terms of human efficiency and well-being.”
The human factors or human engineering is concerned with
man-machine system. Thus another definition which highlights the
man-machine system is: “The design of human tasks, man-machine
system, and effective accomplishment of the job, including displays
for presenting information to human sensors, controls for human
operations and complex man-machine systems.”

17
 Human engineering focuses on human beings and their
interaction with products, equipment facilities and environments
used in the work. Human engineering seeks to change the things
people use and the environment in which they use the things to
match in a better way the capabilities, limitations and needs of
people.
9. Just-in-Time (JIT)
Just-in-Time (JIT) Manufacturing is a philosophy rather than a
technique. By eliminating all waste and seeking continuous
improvement, it aims at creating manufacturing systems that is
response to the market needs.
The phase just in time is used because this system operates with
low WIP (Work-In-Process) inventory and often with a very low
finished goods inventory. Products are assembled just before they
are sold, subassemblies are made just before they are assembled,
and components are made and fabricated just before
subassemblies are made. This leads to lower WIP and reduced lead
times. To achieve this organizations, have to be excellent in other
areas e.g. quality.
According to Voss, JIT is viewed as a “Production methodology
which aims to improve overall productivity through elimination of
waste, and which leads to improve quality”. JIT provides an efficient
production in an organization and delivery of only the necessary
parts in the right quantity, at the right time and place while using
the minimum facilities”.

Scope of Material Management

Material and Stores Inventory Other

Planning Purchasing Related
Management Management
Control Functions

1. Standardization
2. Simplification
3. Specifications
4. Value Analysis
5. Ergonomics
6. Just-in-Time

Figure 5. Scope of Materials Management

18
IMPORTANCE OF MATERIAL MANAGEMENT

The importance of material management:

1. The material cost content of total cost is kept at a reasonable level.

Scientific purchasing helps in acquiring materials at reasonable prices.
Proper storing of materials also helps in reducing wastages. These factors
help in controlling cost content of products.
2. The cost of indirect materials is kept under check. Sometimes cost of
indirect materials also increases total cost of production because there
is no proper control over such materials.
3. The equipment is properly utilized because there are no break downs
due to late supply of materials.
4. The loss of direct labor is avoided.
5. The wastages of materials at the stage of storage as well as their
movement is kept under control.
6. The supply of materials is prompt and late delivery instances are only
few.
7. The investments on materials are kept under control as under and over
stocking is avoided.
8. Congestion in the stores and at different stages of manufacturing is
avoided.

PROCUREMENT MANAGEMENT

Procurement management is the strategic approach to managing and

optimizing organizational spend. It involves acquiring quality good and service
from preferred vendors within stipulated budget on or before deadline. The
procurement management process includes sourcing, requisitioning, ordering,
expediting, inspection, and reconciliation.

STEPS IN THE PROCUREMENT PROCESS

Procurement involves much more than just handing over the company
credit card and paying for a purchase. And effective procurement strategy
includes everything from identifying which goods and services a company
needs right through to maintaining the right documentation and records.

19
Overview of the procurement process:

1. Identify which goods and services the company needs

2. Submit a purchase request
3. Assess and select vendors
4. Negotiate price and terms
5. Create a purchase order
6. Receive and inspect the delivered goods
7. Conduct three-way matching
8. Approve the invoice and arrange payment
9. Recordkeeping

Keep in mind, how a company shapes its internal procurement process

will be influenced by factors like the company’s size, industry, available human
resources, and organizational structure.

IMPORTANCE OF PROCUREMENT IN A BUSINESS

Procurement is important in business because it directly impacts a

company’s profit. For an organization to be profitable, the cost of procuring
goods needs to be less than the amount it sells those goods for, minus whatever
costs are selling them.

In addition, procurement is linked to several core business functions

within an organization. So, it should always be considered critical part of nay
organization’s corporate strategy.

To understand this, consider how procurement can influence the four

pillars of corporate strategy.

• Corporate Identity
o What does our company do and stand for?
o What beliefs inform our business model?
• Market Placement
o Who are our customers?
o What do they want?
o What do they believe?
• Company Capabilities
o What are our strengths and weaknesses?
o Does our strength support our long-term goals?
o How do we want to grow?
• Management Issues
o Do we need to hire/develop talent to lead us to our goals?

20
 o Does the company have the resources needed to achieve our
goal?

Procurement touches on each of these components. For instance,

procurement and corporate identity intertwined. If your business is building (or
has built) its identity around an environmentally conscious ethic, then your
procurement strategy should reflect that decision. Policies should be in place
to ensure you are sourcing from companies with similar ethics, or that your
sourcing materials that are not environmentally hazardous.

A company’s procurement strategy should also be shaped with its

market placement, company capabilities, and management issues in mind.
The company needs the right people in place to put into action the
beliefs/philosophies you want your business to be governed by. Dealings with
vendor should reflect company philosophy.

F. OFFICE MANAGEMENT
Office management refers to the process of planning, organizing,
guiding, communicating, directing, coordinating, and controlling the activities
of a group of people who are working to achieve business objectives efficiently
and economically.
Office management is not only necessary to business organization but
also essential to non-business organization. In modern internet society also,
there is a need of direction to the individual effort towards common purpose
or objective. The direction is given from a place i.e. office.
The process can be treated as office management. A business is carried
on by businessman with the help of group of persons. This group of persons has
different interest, talent, and motto. So, it is the function of office management
to organize, guide and control the activities of such group or persons to
achieve business objectives.

ELEMENTS OF OFFICE MANAGEMENT

Elements of office management are termed as pillars of a building. If

pillar is strong, certainly, the building is also strong. Hence, efficient functioning
of office management is based on the elements of office management.

1. Personnel
Office personnel are performing the office work. Generally, the
selection and placement of office personnel is carried on by the

21
 office manager in small organization. In large organization, staffing is
carried on by the human resource management department.
In both the case, the office work is to be performed by
allocating the work to each individual according to their efficiency,
guide the personnel to do the work with the help of means available
in an office within a specified time and control the activities of office
personnel. The office manager has to do all these activities.
2. Means
Means refers to tools used to perform the office work. Means
include pen, pencil, eraser, paper, ink, office forms, typewriter,
computer, printer, calculator, and the like. Adequate tools have
been supplied in an office and put them to the most efficient and
economical objectives.
3. Environment
The nature of business determines the environment of an office.
The various office works have to be carried on under a particular
condition or environment. A working environment is created and
maintained for the smooth performance of office work. It is the duty
and responsibility of an office manager to bring suitable environment
by adopting various procedures and practice.
4. Purpose
The office personnel must be aware of the purpose for which a
particular work is carried on and the impact of such work on others’
performance. The office manager teaches the purpose office
personnel. If not so, the performance of office work does not bring
the most efficient and economical use of office resources and
achieve the objectives.

IMPORTANCE OF OFFICE MANAGEMENT

The following points highlight the importance of office management:

1. Achievement of goals
Office management helps in increases office efficiency, smooth
flow of work, maintaining public relations, minimization of cost,
managing change and accepting the new challenges which help in
achievement of goals of the organization.
2. Increases office efficiency
Office management focuses on office activities and helps office
in economical way.
3. Smooth flow of work
Office management helps in performing efficient and effective
office work. It helps in proper planning and effective control office.
4. Public relations

22
 There must be a good public relation of the organization. The main
purpose of public relation is to make the organization look trustworthy to
all people who deal with it in all its action. It helps in increasing the
goodwill of the organization.
5. Minimization of cost
Office management guides the use of capital, natural, financial,
human and other resources effectively without leakage and wastage
which helps in minimization of cost.
6. Managing change
Office management helps in implementation of plans in right time
and right way. But there may be change in resources, need, technology,
preferences and so on which make it necessary to bring about the
change in plans. Office management makes the office flexible which
helps to manage the change.
7. New challenges
In an office, to achieve goals, many challenges should be faced.
It helps in improving the research and information system. It helps in
managing all the rigid matters.

G. INFORMATION AND COMMUNICATION TECHNOLOGY MANAGEMENT

(ICTM)
Management in the 21st century is driven by information and
communication, and digital network. Computers quickly provide more
information to a greater number of people, groups, and organizations than
ever before. Hence, the study of the information and communication
technology management (ICTM) functions of management is relevant.
The ICTM functions of management include the following:
Developing the organization’s hardware, software, and other computing
and communicating technology. Information Technology (IT) encompasses
different kind of technology, such as different types of hardware (e.g.
computers and printers), software (e.g. operating systems), and computing
and communication technology (e.g. telecommunications and management
of databases). The fast and ever-changing nature of ICT requires managers to
become flexible and open to change.
Developing the organization’s management information system (MIS)
tailored to the needs of the firm’s unit. IT has developed management
information systems which gather, process, disseminate internal and external
information to the company on a timely basis order to support managers in
their tasks. Electronic equipment makes fast and reasonably priced processing
of voluminous amounts of data possible. The computer can process data and
provide logical conclusions and classify and prepare them for use in decision-
making.
Encouraging e-commerce through Internet use. Through e-business
strategies, the company gains competitive advantage over competitors.

23
Common e-business strategies involve business to business (B2B) and business
to customer (B2C) transactions. B2B transactions use IT and web portals to link
companies with members of their supply chains and those dealing with their
resource supplies. B2C transactions also use IT and web portals, but in this case,
the link created is one between the company and its customers. A common
example is e-tailing or the sale of goods directly to customers via the Internet.
Other web-based business models are brokerage, which brings buyers and
sellers together; advertising, which provides information while generating
revenue from advertisements; merchant model, or selling products through the
web; subscription model, the selling of access to a website; infomediary model,
the collecting of information on users and selling it to other businesses; and the
community model which supports websites by asking for donations from users.

B2B
B2C ‘high involvement’
‘low involvement’

Smaller, niche
Target market Larger

Multiple
Purchaser(s) Single

Multiple step
Buying process Single step

Longer
Sales cycle Shorter

Relationship and
Recognition and detailed information
Sales driver
repetition

Figure 6. A comparison between business to business and business to

customer

24
IMPORTANCE OF INFORMATION TECHNOLOGY AND COMMUNICATION
TECHNOLOGY MANAGEMENT

Figure 6. E-commerce transaction

The widespread use of ICT has brought about the emergence of a

“knowledge-based society” due to easy access to information at low costs
through the Internet. Management may use it for its different managerial
functions. It may be

used for scenario planning or identifying future scenarios in the business

environment, which may need careful planning; decision-making through the
use of information generated by IT; aiding team work; facilitating productivity
measurement; easy, low-cost communication; worldwide selling through the
Internet; and many others. It may be said, therefore, that ICT has revolutionized
the business world.

25
III. WHAT HAVE I LEARNED
EVALUATION:
A. Direction: Read and analyze each item carefully. Write only the letter of
the best answer in your activity notebook.
1. In business, which sector would deals with all employee matters?
A. Financial C. Human Resource
B. Office D. Marketing
2. Which description best describes what a finance person does?
A. Checks the pricing of products are suitable.
B. Plans and monitors budgets so the business does not lose money.
C. Contacts possible new customers.
D. Installs new software.
3. Marketing management “is essentially demand management”. Who
said it?
A. Philip Kotler C. McCarthy
B. Newman D. William J. Stanton
4. Which of the following is one of the functions of operating
management?
A. Estimates the capital requirements of a business.
B. Helping to design and develop products and services.
C. Encouraging commerce through internet use.
D. Stimulates demands for the products of the company.
5. Which of the following is one of the functions of Information and
Communication Technology Management?
A. Estimates the capital requirements of a business.
B. Helping to design and develop products and services.
C. Encouraging commerce through internet use.
D. Stimulates demands for the products of the company.
6. This is the process of obtaining information about jobs needed to
achieve the organization’s goals.
A. Job specification C. Job analysis
B. Job order D. Part time job
7. This is the actual sequence of activities that results in the production
of goods and services that have values for customers.
A. Value chain C. Productivity
B. Reengineering D. Value analysis
8. This a financial policy which considers whether to follow a systematic
pattern of earnings retention or dividend distribution.
A. Dividend policy C. Investment policy
B. Capital Structure policy D. Dividends
9. This is an electronic business which involves business to business (B2B)
and business to customers (B2C) transactions.
A. Blogging C. Digital marketing
B. E-commerce D. Auction online

26
 10. One of the important functions of material management that
involves buying the equipment, materials, tools, parts etc. that are
required for an industry.
A. Store management C. Inventory Management
B. Material planning and control D. Purchasing

B. Essay. Answer the question succinctly. Write your answer in your activity
notebook.
1. Select one among the functional areas of management for your
future path. Why do you choose this path?

Criteria:
Content – 10 points
Organization - 5 points
Total - 15 points

27
 REFERENCES

A Quick and Complete Guide to Procurement Management 2020. (2019,

December 2018). Retrieved from Kiss Flow Inc.:
https://kissflow.com/procurement/procurement-management-
guide/#:~:text=Procurement%20management%is%20the%20strategic,o
n%20or%20before%20the%20deadline
Importance of Office Management. (n.d.). Retrieved from Tyrocity:
https://tyrocity.com/topic/importance-of-office-management/
Jones, Z. (2015, July 14). E-Commerce Overview. Retrieved from Woodridge
Software: https://encrypted-
tbno.gstatic.com/images/q=tbn:ANd9GcT4xb4FOZfcbqpt-
KSH7snZOcJak_yPMRM5yg&usqp=CAU
Lim, M. (2014, February 07). What is the Difference Between Procurement and
Purchasing? Retrieved from Blog Procurify:
https://www.google.com/amp/s/blog.procurify.com/2014/02/07/what-
is-the-difference-between-procurement-and-purchasing/amp/
Materials Management. (n.d.). 75-105.
Office Management l Meaning and Definition I Elements. (n.d.). Retrieved
from Account Learning: https://accountlearning.com/office-
management-meaning-definition-elements/
Venkatesh. (n.d.). Materials Management: Meaning, Importance and
Functions. Retrieved from Your Article Library:
https://www.yourarticlelibrary.com/material-management/materials-
management-objectives-scope-and-functions/57432
Weebly. (n.d.). Break-Even Analysis. Retrieved from IB Notes:
https://ibnotesbyellie.weebly.com/uploads/5/2/1/1/52113885/1801527.
gif?582
Your Free Templates. (2018, November 26). Marketing Mix Template.
Retrieved from YourFreeTemplates:
https://yourfreetemplates.com//wp-
content/uploads/2018/11/Marketing-mix-2-e1543109705760.png

28
 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)

MARGIE A. QUINDO
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.

29
 SYNOPSIS AND ABOUT THE AUTHOR
SYNOPSIS ANSWER KEY
This self-learning kit discusses about the
nature and role in the firm of the following
functional areas of management: Human Resource
Management, Marketing Management,
Operations Management, Financial Management,
Material And Procurement Management, Office B. Answers may vary

Management And Information & Communication 5. C. 10. D.

Technology Management. Pre-activity starts with

4. B. 9. B.
3. A. 8. A.
a matching type activity where students must 2. B. 7. A.
match the different functional areas of A. 1. C. 6. C.

management with their definitions. By having

Evaluation/Post-test
6. G.
this lesson, learners will be able to discuss the 5. B.
4. A.
nature of the different functional areas of 3. F.
management; differentiate the role in the firm of 2. D.

the different functional areas of management; and

1. C.
Pretest
appreciate the importance of the different
functional areas of management in the firm.

AUTHOR
MARGIE A. QUINDO finished her bachelor’s
degree in Business Administration major in
Management at Silliman University,
Dumaguete City in October 2003. She earned
42 units in Bachelor of Science in Secondary
Education – Crash Program at Foundation
University, Dumaguete City in March 2015 and
passed the Licensure Examination for
Professional Teachers on the same year.
Currently, she is a SHS-Teacher at Giligaon High
School of Siaton 4 District in the Division of
Negros Oriental from 2017 up to present.

30