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ORGANIZATION AND MANAGEMENT

1st QUARTER

Module 1:
NATURE AND CONCEPT OF MANAGEMENT

Definition of Management
 Refers to the act or bringing together the work activities to achieve the organization’s goals
and objectives. Basically, it means teamwork.
 It is essentials in any organization, leader-manager must realize the important of people
working harmoniously with the aim of effectively reaching the target goals of the company

Management defined by Management Guru’s:

 "Management is a multi-purpose organ that manages business and manages managers and
manages workers and work." Peter Drucker.
 According to Mary Parker Follet, "Management is the art of getting things done through
people." Mary Parker Follet.
 According to Harold Koontz, “Management is an art of getting things done through and with
the people in formally organized groups. It is an art of creating an environment in which
people can perform and individuals and can co-operate towards attainment of group goals”.

Characteristics and Nature of Management

A. Management is goal oriented: management is not an end in itself. It is a means to achieve
certain goals. Management has no justification to exist without goals. Management goals are
called group goals or organizational goals. The basic goal of management is to ensure
efficiency and economy in the utilization of human, physical and financial resources. The
success of management is measured by the extent to which the established goals are
achieved. Thus, the management is purposeful.
B. Management is universal: Management is an essential element of every organized activity
irrespective of the size or the type of the activity.
C. Management is continuous process: The cycle of the management continues to operate as
long as there is organized action for the achievement of group goals. Management is an
ongoing process and is also a neverending process. Management is dynamic and the cycle is
continuous.
D. Management is multi-disciplinary: Management techniques, principles and theories are
drawn from other disciplines such as engineering, anthropology, sociology and psychology. It
depends on wide knowledge and practice derived from various discipline.
E. Management is intangible force: Management is evidenced by the results of its efforts
through others. Management is unseen and invisible force. It cannot be seen, but its
presence can be felt in the form of results in very type of organization.
F. Management is situational: There is no best way of doing things. To solve a particular
problems conditions and situations must be taken into account. Management is a system of
authority: Management provides the direction of every activity of an organization.
Management forms system of authority or a hierarchy of command to control the activities
and give smooth direction.
G. Management is both a science and an art: Science is a systematized body of knowledge
based on certain principles that are generally applied. Scientific knowledge is observed
through the process of critical and continuous observation and intelligent speculation.
Accordingly, management as a science is based on principles instead of a traditional way of
doing things in trial and error method.
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Management Functions:

1. Planning – is the process that involves the setting of the organization’s goals,
establishing strategies and developing plans of action.

2. Organizing – demands assigning tasks, setting aside funds and bringing harmonious
relations among the individuals and work group in the organization.

3. Staffing – is the process of identifying, attracting, hiring and retaining people with the
necessary qualifications to fill the responsibilities of current and future jobs in the
organization.

4. Leading – involves inspiring and influencing people in the organization to achieve a

common goal.

5. Controlling – ensures that the work performance of the organization’s members are
aligned with the organization’s values and standards through monitoring and correcting
their actions.

Evolution of Management Theories:

1. Pre-Scientific Management Period (18th Century)

Factory System – land, buildings, hired labor, and capital are made available to
the entrepreneur, who strives to combine these factors in the efficient achievement of a
particular goal.
2. Classical Theory
a) Scientific Management Theory (1856-1915) by Frederick W. Taylor also known as
the “Father of Scientific Management”.
- makes use of the step by step, scientific methods for finding the single best way for doing
a job.
b) General Administrative Theory (19th century) by Henri Fayol (1841-1925) widely
regarded as the father of modern management
- Concentrates on the manager’s functions and what makes up good management
practice or implementation.
c) Bureaucratic Model - Max Weber (1864-1920)
- systematic formation of any organization and is designed to ensure efficiency and
economic effectiveness.
3. Neoclassical Theory:
- gave greater emphasis to individual and group relationship in the workplace. The neo-
classical theory pointed out the role of psychology and sociology in the understanding of
individual and group behavior in an organization.

Hawthorne Experiment (1927-1932)

- brought out that the productivity of the employees is not the function of only
physical conditions of work and money wages paid to them. Productivity of employees
depends heavily upon the satisfaction of the employees in their work situation.

4. Modern Theory (System Approach)

- considers an organization as an adaptive system which has to adjust to changes in
its environment. An organization is now defined as a structured process in which
individuals interact for attaining objectives.

"System“ - is derived from the Greek word “to bring together or to combine”.
- is a set of interconnected and inter-related elements or component parts to
achieve certain goals.
Contingency Theory - analysis and understands these inter relationship so that
managerial actions can be adjusted to demands of specific situations or circumstances.
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Functions, Roles and Skills of a Manager:

Managerial Levels:
1. Top-level Managers -the general or strategic managers who focus on long-term
organizational concerns and emphasize the organization’s stability, development,
progress and over-all efficiency and effectiveness.
2. Middle-level Managers-are the tactical managers in charge of the organization’s middle
levels or department. They formulate specific objectives and activities based on the
strategic or general goals and objectives developed by the top-level managers.
3. Frontline or Lower-level mangers- also known as operational managers and are
responsible for supervising the organization’s day-to-day activities.

Managerial Skills:
1. Conceptual Skills - enables a person to thinks of positive solutions to complex
problems, has the ability to visualize abstract situations and develop a holistic view of
their organization.
2. Human Skills - enable managers to relate well with people, communicate, inspire and
motivates an individual or work group.
3. Technical Skills - are important for managers for them to perform their task with
proficiency with the use of expertise and employs varied techniques and tools to be able
to yield good quality products and services for their company.

Module 2:
Environmental Forces and Environmental Scanning

BUSINESS ENVIRONMENT - refers to the factors or elements affecting a business organization.

Environmental Forces and Environmental Scanning

 The environment in which a business operates is a major consideration in determining an
organization’s design structure.
 Considerations such as uncertainty, procurement, and competition are linked with the
external environment.
 A company’s strategy and approach to operations must also be aligned with the limitations of
its external environment.

Definition of Terms:

1. Environmental scanning - means seeking for and sorting through data about the
environment
2. External business environment - refers to the factors/elements outside the
organization which may affect, either positively or negatively, the performance of the
organization.
3. Internal business environment - refers to the factors/elements within the organization
which may affect, either positively or negatively, the performance of the organization .
4. Micro-environment - includes those players whose decisions and actions have a direct
impact on the company. Production and selling of commodities are the two important
aspects of modern business.
5. Macro-environment - includes trends in the gross domestic product (GDP, inflation,
employment, spending, and monetary and fiscal policy.

The various constituents of micro-environment are as under:

1. Suppliers of inputs: An important factor in the external micro-environment of a firm is
the supplier of its inputs such as raw materials and components. Normally, most firms
do not depend on a single supplier of inputs. To reduce risk and uncertainty business
firms prefer to keep multiple suppliers of inputs.
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2. Customers: The people who buy and use a firm’s product and services are an important
part of external micro-environment. Since sales of a product or service is critical for a
firm's survival and growth, it is necessary to keep the customers satisfied. A concern for
customers’ satisfaction is essential for the success of a business firms. Besides, a
business firm has to compete with rival firms to attract customers and thereby increase
the demand and market for its product.
3. Marketing intermediaries: In the firm's external micro-environment, marketing
intermediaries play an essential role of selling and distributing its products to the final
customers. Marketing provides an important link between a business firm and its
ultimate customers.
4. Competitors: Different firms in an industry compete for sale of their products. This
competition may be based on pricing of their products and non- price competition
through competitive advertising such as sponsoring some events to promote the sale of
different varieties and models of their products.
5. Publics: Finally, publics are an important force in external microenvironment.
Environmentalists, media groups, women’s associations, consumer protection groups,
local groups, Citizens Association are some important examples of publics which have an
important bearing on the business decisions of the firm. The existence of various types of
publics influences the working of business firms and compels them to be socially
responsible

External Macro Environment Apart from micro-environment, business firms face large
external environmental forces. An important fact about external macro environmental forces is
that they are uncontrollable by the management. Because of the uncontrollable nature of
macro forces a firm must adjust or adapt it to these external forces. These factors are:
1. Economic Environment - includes all those forces which have an economic impact on
business. Accordingly, total economic environment consists of agriculture, industrial
production, infrastructure, and planning, basic economic philosophy, stages of economic
development, trade cycles, national income, per capita income, savings, money supply,
price level and population.
2. Political-legal Environment - includes the activities of three political institutions,
namely, legislature, executive and judiciary which usually play a useful role in shaping,
directing, developing and controlling business activities.
3. Technological Environment: Technological environment is exercising considerable
influence on business. Technology implies systematic application of scientific or other
organized knowledge to practical tasks or activities. Business makes it possible for
technology to reach the people in proper format.
4. Global or International Environment: Global environment plays an important role in
shaping business activity. With the liberalization and globalization of the economy,
business environment of an economy has become totally different wherein it has to bear
all shocks and benefits arising out of global environment.
5. Socio-cultural Environment - include people’s attitude to work and wealth, ethical
issues, role of family, marriage, religion and education and also social responsiveness of
business.
6. Demographic Environment - includes the size and growth of population, life expectancy
of the people, rural-urban distribution of population, the technological skills and
educational levels of labor force.
7. Natural Environment - is the ultimate source of many inputs such as raw materials
and energy, which firms use in their productive activity. The natural environment which
includes geographical and ecological factors such as minerals and oil reserves, water and
forest resources, weather and climatic conditions are all highly significant for various
business activities.
8. Ecological Environment - laws have been passed for conservation of natural resources
and prevention of environment pollution. These laws have imposed additional
responsibilities and costs for business firms.
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A SWOT analysis is a technique used to determine and define your Strengths, Weaknesses,
Opportunities, and Threats (SWOT). SWOT analyses can be applied to an entire company or
organization, or individual projects within a single department. Most commonly, SWOT
analyses are used at the organizational level to determine how closely a business is aligned
with its growth trajectories and success benchmarks, but they can also be used to ascertain
how well a particular project – such as an online advertising campaign – is performing
according to initial projections.

Porter’s Five Forces analysis is a framework that helps analysing the level of competition
within a certain industry. It is especially useful when starting a new business or when entering
a new industry sector. According to this framework, competitiveness does not only come from
competitors. Rather, the state of competition in an industry depends on five basic forces: threat
of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute
products or services, and existing industry rivalry.

A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a framework or

tool used to analyses and monitor the macro-environmental factors that may have a profound
impact on an organization’s performance. This tool is especially useful when starting a new
business or entering a foreign market. It is often used in collaboration with other analytical
business tools such as the SWOT analysis and Porter’s Five Forces to give a clear
understanding of a situation and related internal and external factors. PESTEL is an acronym
that stands for Political, Economic, Social, Technological, Environmental and Legal factors.

Definition of Terms:
Competitive mindset - is the ability to adapt to environmental uncertainties, understand and
predict the various changes, opportunities and threats that may affect the organizations in the
future.
Business prediction, also known as business forecasting, is a method of predicting how
variables in the environment will alter the future of business. It could be used in making
decisions regarding offshoring, branching out locally, and expanding or downsizing the
company.
Benchmarking is defined as the process of measuring or comparing one’s own products,
services, and practices with those of the recognized industry leaders in order to identify areas
for improvement. Best practices of said industry leaders are observed so that understanding
their competitive advantage would be easier.
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Module 3
Forms and Economic Roles of Business Organization
A. Partnership
- consists of two or more persons who bind themselves to contribute money or industry
to a common fund, with the intention of dividing the profits among themselves.

Advantages
 Partnerships are relatively easy to establish; however, time should be invested in
developing the partnership agreement.
 With more than one owner, the ability to raise funds may be increased.
 The profits from the business flow directly through to the partners’ personal tax
return.
 Prospective employees may be attracted to the business if given the incentive to
become a partner.
 The business usually will benefit from partners who have complementary skills.

Disadvantages
 Partners are jointly and individually liable for the actions of the other partners.
 Profits must be shared with others.
 Since decisions are shared, disagreements can occur.
 Some employee benefits are not deductible from business income on tax returns.
 The partnership may have a limited life; it may end upon the withdrawal or death of a
partner.

Types of Partnerships:
1. General Partnership - partners divide responsibility for management and liability, as
well as the shares of profit or loss according to their internal agreement. Equal shares
are assumed unless there is a written agreement that states differently.
2. Limited Partnership and Partnership with limited liability
“Limited” means that most of the partners have limited liability (to the
extent of their investment) as well as limited input regarding management
decision, which generally encourages investors for short term projects, or for
investing in capital assets. This form of ownership is not often used for
operating retail or service businesses. Forming a limited partnership is more
complex and formal than that of a general partnership.
3. Joint Venture
Acts like a general partnership but is clearly for a limited period of time or a
single project. If the partners in a joint venture repeat the activity, they will
be recognized as an ongoing partnership and will have to file as such and
distribute accumulated partnership assets upon dissolution of the entity.

B. Sole Proprietorship - is the simplest form of business and the easiest to register and is
owned by an individual who has full control/authority of its own and owns all the assets,
as well as personally answers all liabilities or losses.

Advantages
 Easiest and least expensive form of ownership to organize.
 Sole proprietors are in complete control, and within the parameters of the law, may
make decisions as they see fit.
 Profits from the business flow-through directly to the owner’s personal tax return.
The business is easy to dissolve, if desired.
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Disadvantages
 Sole proprietors have unlimited liability and are legally responsible for all debts
against the business. Their business and personal assets are at risk.
 May be at a disadvantage in raising funds and are often limited to using funds from
personal savings or consumer loans.
 May have a hard time attracting high-calibre employees, or those that are motivated
by the opportunity to own a part of the business.
 Some employee benefits such as medical insurance premiums are not directly
deductible from business income (only partially as an adjustment to income).

C. Sole Corporation - A mixture of the features of a sole proprietorship and a corporation

is found in a new entity authorized under the Revised Corporation Code — the One
Person Corporation. An OPC is registered in the same manner as other corporations with
the SEC, except that it is composed of only one person, just like a sole proprietorship.
D. Corporation - is a juridical entity established under the Corporation Code and registered
with the SEC. It must be created by or composed of at least 5 natural persons up to a
maximum of 15, technically called “incorporators”

Advantages
 Shareholders have limited liability for the corporation’s debts or judgments against
the corporation.
 Generally, shareholders can only be held accountable for their investment in stock of
the company. (Note however, that officers can be held personally liable for their
actions, such as the failure to withhold and pay employment taxes.
 Corporations can raise additional funds through the sale of stock.
 A Corporation may deduct the cost of benefits it provides to officers and employees.
 Can elect S Corporation status if certain requirements are met. This election enables
company to be taxed similar to a partnership.
Disadvantages
 The process of incorporation requires more time and money than other forms of
organization.
 Corporations are monitored by federal, state and some local agencies, and as a result
may have more p
 Paperwork to comply with regulations.
 Incorporating may result in higher overall taxes. Dividends paid to shareholders are
not deductible from business income; thus, this income can be taxed twice.
E. Cooperative
- is an organization established for the purpose of purchasing and marketing the
products of its members, i.e., shareholders, and/or procuring supplies for resale to the
members, whose profits are distributed to the members (in the form of patronage
dividends), not on the basis of the members' equity.
According to REPUBLIC ACT 9520 also known as "Philippine Cooperative Code of
2008".
The primary objective of every cooperative is to help improve the quality of life of its
members.
Towards this end, the cooperative shall aim to:
a. Provide goods and services to its members to enable them to attain increased income,
savings, investments, productivity, and purchasing power, and promote among
themselves equitable distribution of net surplus through maximum utilization of
economies of scale, cost-sharing and risk-sharing;
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b. Provide optimum social and economic benefits to its members;

c. Teach them efficient ways of doing things in a cooperative manner;
d. Propagate cooperative practices and new ideas in business and management;
e. Allow the lower income and less privileged groups to increase their ownership in the
wealth of the nation; and
f. Cooperate with the government, other cooperatives and people-oriented organizations to
further the attainment of any of the foregoing objectives.

Module 4:
PLANNING

Planning - is the process by which managers establish goals and define the methods by which
these goals are to be attained. It requires decision making, which is choosing among alternative
future courses of action. It may also be treated as a process of thinking before doing.

Basic Components:
Goals represent an end state – the targets and results that managers hope to achieve.
Action statements represent the means by which an organization goes ahead to attain its
goals.

DIFFERENCE BETWEEN GOALS AND PLANS

Goals are the target or desired ends that the management wants to reach while plans are
the action or mean that administrators/managers intend to use to achieve organizational
goals.

IMPORTANCE OF PLANNING
1. Provides direction
2. Reduces uncertainties
3. Maximizes usage of resources
4. Establishes goals and standard

TYPES OF PLANS
1. Strategic Plan – This is a high-level overview of the entire business, its vision,
objectives, and value.
This plan is the foundational basis of the organization and will dictate
decisions in the long-term. The scope of the plan can be two (2), three (3), five (5), or
even 10 years. The strategic plan must be forward-looking, robust but flexible, with a
keen focus on accommodating future growth.

Components of a Strategic Plan

 Vision – Where does the organization want to be five years from now? How does it
want to influence the world?
 Mission – The mission statement is a more realistic overview of the company’s aim
and ambitions. Why does the company exist? What does it aim to achieve through its
existence?
 Values –These values will guide managers and influence the kind of employees you
hire.
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2. Tactical Plan – A tactical plan answers "how do we achieve our strategic plan?" It
breaks down the broader mission statements into smaller, actionable chunks.
Creating tactical plans is usually handled by mid-level managers.

Components of Tactical Plan:

1. Specific Goals with Fixed Deadlines: The tactical plan will break down the
broad ambition into smaller, actionable goals. The goal should be highly specific
and have fixed deadlines.
2. Budgets: This should include the budget for hiring personnel, marketing,
sourcing, manufacturing, and running the day-to-day operations of the company.
3. Resources: The tactical plan should list all the resources you can gather to
achieve the organization’s aims. This should include human resources, IP, cash
resources, etc.
4. Marketing, Funding, etc.: Finally, the tactical plan should list the organization’s
immediate marketing, sourcing, funding, manufacturing, retailing, and PR
strategy.
3. Operational Plan – This plan describes the day-to-day running of the company.
- The operational plan is created to achieve the tactical goals within a realistic
timeframe and the responsibility of low-level managers and supervisors. This plan is
highly specific with an emphasis on short-term objectives.

Types of Operational Plan

1. Single Use Plans – These plans are created for events/activities with a single
occurrence. This can be a one-time sales program, a marketing campaign, a
recruitment drive, etc. Single use plans tend to be highly specific.
2. Ongoing Plans – These plans can be used in multiple settings on an ongoing basis.

 Policy – A policy is a general document that dictates how managers should approach
a problem. It influences decision making at the micro level. Specific plans on hiring
employees, terminating contractors, etc. are examples of policies.
Example: “All servers and crews must be at least 18 years old.” “Zero-
tolerance” for harassment.” “Observe proper dress code.”

 Rules – Rules are specific regulations according to which an organization function.

The rules are meant to be hard coded and should be enforced stringently.
Example: “No smoking within premises”, or “Employees must report by 9 a.m.”
 Procedure – A procedure describes a step-by-step process to accomplish a particular
objective.
Example: Detailed guidelines on hiring employees (screening, interview,
assessment, background check, medical, decision)

DEFINITION OF TERMS
 Goal-setting - the identification of targets or desired ends that management wants to
reach.
 Vision - a mental image of what the organization will be in the future as desired by
the company management and employees.
 Mission - basic purpose of an organization and range of their operations.
 Objectives - steps needed in order to attain desired ends.
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Module 5:
ORGANIZING
Organizing - involves assigning tasks, grouping tasks into departments, delegating authority
and allocating resources across the organization. During the organizing process, mangers
coordinate employees, resources, policies and procedures to facilitate the goals identified in the
plan.

Division of Labor involves assigning different tasks to different people in the organization’s
different work units.
Specialization is the process in which different individuals and units perform different task. It
is also the reference of dividing the labor based on the skills performed by their employees.

Integration is another process in the organization’s internal environment which involves the
collaboration and coordination of its different work.

Coordination refers to the procedure that connect the work activities of the different work
divisions/ units of the firm in order to achieve its overall goal. Works may be divided but they
must all be coordinated with each other in order to meet its overall goals or objectives

An organization structure is a system made up of tasks to be accomplished, work movements

from one work level to other work levels in the system, reporting relationships, and
communication passageways that unite the work of different individual persons and groups.
The types of organizational structures include:
a. vertical structure
b. horizontal structure
c. network structure

1. Vertical Structure - clears out issues related to authority rights, responsibilities, and
reporting relationships.
Authority rights refer to the legitimate rights of individuals, appointed in
positions like president, vice president, manager, and the like, to give orders to their
subordinates, who in turn, report to them what they have done.

2. Horizontal Structure refers to the departmentalization of an organization into smaller

work units as tasks become increasingly varied and numerous.

- Horizontal organization have a flat structure that provides greater employee autonomy,
which means there are very few managers and more authority is granted to rank- and-
file employees. This system allows employees to feel empowered, because they can make
important decisions without needing approval from a manager.
3. Line Structure - authority originates at the top and moves downward in a line. All
managers perform line functions, which are functions that contribute directly to
company profits. Examples of line functions include production, finance and marketing
manager. Line organizations are common among small businesses.
4. Line and Staff Structures In mid-sized and large companies, line manages cannot
perform all of the activities they need to perform to run their departments. In these
companies, other employees are hired to help line managers do their jobs.
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These employees perform staff functions. Staff functions advise and support line
functions. Staff departments include the legal department, the human resources
department and the public relations department. These departments help the line
departments do their jobs. They contribute only indirectly to corporate profits. Staff
people are generally specialists in one field and their authority is normally limited to
making recommendations to line managers.

5. Matrix Structure - allows employees from different departments to come together

temporarily to work on special project teams. The purpose of this kind of structure is to
allow companies the flexibility to respond quickly to a customer need by creating a team
of people who devote all of their time to a project. Once a team completes the project, the
team members return to their department or join a new project team. Designing a new
aircraft uses matrix structure.
6. Team Structure - brings together people with different skills in order to meet with
different skills in order to meet a particular objective. Teams have the authority to make
their own decisions. Each team tries to determine what the customer is looking for and
develop strategies with which to meet those needs.

Types of Department:
1. Line departments – deal directly with the firm’s primary goods and services;
responsible for manufacturing, selling, and providing services to clients.
2. Staff departments – support the activities of the line departments by doing
research, attending to legal matters, performing public relations duties, etc.

Departmentalization may be done using three approaches:

1. Functional approach – where the subdivisions are formed based on specialized
activities such as marketing, production, financial management, and human
resources management.
2. Divisional approach – where departments are formed based on management of their
products, customers, or geographic areas covered.
3. Matrix approach – is a hybrid form of departmentalization where managers and staff
personnel report to the superiors, the functional manager, and the divisional
manager.

Types of Organizational Design

Traditional organizational design theories include:

1. Simple - this organizational design has 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 out as
entrepreneurial ventures.
2. Functional - this organizational design groups together similar or related specialties.
Generally, functional departmentalization is utilized and put into practice in an entire
organization. For example: A marketing firm that markets cars and related products like
tires, car batteries, and accessories.
3. 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.

Modern organizational design theories include:

1. Team Design - the entire organization is made up of work groups or teams.

2. Matrix Design - 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.
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3. Boundary-less Design - the design is not defined or limited by vertical, horizontal, and
external boundaries. In other words, there are no hierarchical levels that separate
employees, no departmentalization, and no boundaries that separate the organization
from customers, suppliers, and other stakeholders.

_______________________________ E N D OF 1st Q U A R TE R _______________________________