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JOHN B. LACSON COLLEGES FOUNDATION – BACOLOD

Alijis, Bacolod City

LEARNING MODULE

CBME 1
(Business Organization and Management)

Name: Joan Aiken Villanueva

Year and Section:

Contact No.

E-mail Address:

Messenger Account Name:

Instructor’s Name:
 Compiled by:

RUTH B. BALAJADIA, LCB, MBA

HOW TO
USE THIS This module in CBME 1 (Business
LEARNING Organization and Management) is for the
MODULE?
use of the students enrolled in all
business courses of John B. Lacson
Colleges Foundation-Bacolod. Each
concept on organization and management
was derived from different references
with the backdrop of Philippine culture
and a bit of foreign settings especially in the business world, on the reasons for
their success or failure in our country.

● The texts and discussion proper, including the

assessments at the end of each lesson, were provided
for you to be used easily and give you insights into the
practice of organization and management in our
country. Since actual practice is not similar with
theory, this material provides you with reality
orientation. The writing style is clear, concise and
logical making it easy to read and understand. Some
words maybe new to you so definition of these terms is
supplied and thus, will augment your vocabulary.

● You are required to complete the activities, assessments

or evaluation at the end of each lesson and submit your
output as scheduled by your instructor.

● In addition, apart from the texts contained in this module, online links were also provided for
you should you need more understanding and comprehension for each topic/lesson. These
links include more discussion about each topic either through a narrative discussion or
videos.

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● Please take time to read the course outline and learning outcomes provided in the next pages
so you will be guided with the lessons and learning process incorporated in this module. You
are also advised to comply all the requirements stated in this module to successfully complete
this course.

CBME 1
BUSINESS ORGANIZATION AND MANAGEMENT

Course Intended Learning Outcomes

At the end of the course, students should be able to:

1. determine the foundation of business and the management principles;

2. identify certain laws and regulations requiring ethical behavior and practices promoting

social responsibility in business organizations;

3. recognize and differentiate the different forms of business ownership;

4. name and explain the basic management functions and their importance in business; and

5. point out and demonstrate the significance of communication.

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 CBME 1 (Business Organization and Management) is an introductory course to all
Business and Management Education courses of the Bachelor of Science in Customs
Administration. It is a study of the basic management concepts and principles, the basic
foundation of business with emphasis on different management functions and activities and their
relations to other business management functions; forms of business organizations in the
Philippines; other management principles as motivation and leadership; including
communication and such other management functions.

This course comprises three (3) modules with

specific lessons and topics for each module arranged
and provided for you to get into the process of
understanding the basic principles of organization and
management.

CBME 1 is your preparatory or a pre-requisite

course to other CBME courses under the BSCA
program. Each lesson will direct you toward the
attainment of learning outcomes through a set of pre-
and post-assessment tasks aligned with the program
outcomes as specified in the course syllabus.

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COURSE OUTLINE FOR PRELIM (Module 1)
UNIT I: The Foundation of Business
Topic 1 - What is Business?
Topic 2 - What is Profit?
Topic 3 - Organization and Management
Topic 4 –Functional Areas of Business
Topic 5 – Management Principles

UNIT II: Ethics and Social Responsibility

Topic 1 –Ethics
Topic 2 – Business Ethics
Topic3 – Social Responsibility
Topic 4 – Corporate Social Responsibility

UNIT III: Forms of Business Organization and Ownership

Topic 1 – Sole Proprietorship

Topic 2 – Partnership

Topic 3 – Corporation

Topic 4 – Cooperative

Topic 5 – Other forms

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UNIT 1: THE FOUNDATION OF BUSINESS

Overview

This lesson covers the important

aspects of a business. As you go
through this course with the aid of
this module, you will explore the
exciting world of business. You
will be introduced to the various
activities in which businesspeople
engage. I will help you understand
the functional areas of business and
how profit plays a role in its
operation including the different
principles of management.

Learning Outcomes

At the end of this lesson, you should be able to:

describe business;
explain how profit plays a role in business;
assess the functional areas of business;
differentiate organization and management; and
name the basic principles of management and
explain each of their concepts.

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To fully understand the important terms or words used in this module, the following terms are
defined.

❖ Accounting – (1) A systematic way of recording and reporting financial transactions for
a business or organization. (2) The process of identifying, measuring and communicating
about an entry to permit informed judgments and decisions by users of the information.

❖ Business - It is a general term, which includes all profit-seeking activities of enterprises

that provide goods and services necessary to an economic system.

❖ Finance – It is defined as the management of money and includes activities such as

investing, borrowing, lending, budgeting, saving, and forecasting.

❖ Management - Management is a process of planning, decision-making, organizing,

leading, motivation and controlling the human resources, financial, physical, and
information resources of an organization to each its goals efficiently and effectively.

❖ Marketing – It refers to activities a company undertakes to promote the buying or selling

of a product or service. Marketing includes advertising, selling, and delivering products
to consumers or other businesses.

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 ❖ Organization - It is an entity comprising a group of people, established to accomplish
certain goals.

❖ Profit - It is the money that remains after a firm deducts its expenses related to producing
and marketing goods or services from its revenues. The firm receives money arising out
of sales, commissions, and the like.

For additional understanding about these terms, please click this link:

https://www.investopedia.com/terms/b/business.asp
https://businessjargons.com/organization.html

What is Business?

✔ It refers to any activity that provides goods or services to consumers for the purpose of
making a profit.
✔ The term business refers to the organized efforts and activities of individuals to produce and
sell goods and services for profit.
✔ A business is defined as an organization or enterprising entity engaged in commercial,
industrial, or professional activities.
o For example, when Steve Jobs and Steve Wozniak created Apple Computer in Job’s
family garage, they
started a business. The
product was the Apple I,
and the company’s
founders hoped to sell
their computers to
customers for more than
it cost to make and
market them. If they
were successful (which
they were), they’d make a
profit.

✔ Before we go on let’s make a couple of important distinctions concerning the terms in our
definitions:
o First, whereas Apple produces and sells goods (Mac, iPhone, iPod, iPad), many
businesses provide services. Your bank is a service company, as is your internet
provider. Hotels, airlines, law firms, movie theaters and hospitals are also service

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 companies. Many companies provide both goods and services. For example, your
local cat dealership sells goods (cars) and also provides services (automobile repairs).
o Second, some organizations are not set up to make profits. Many are established to
provide social or educational services. Businesses can be for-profit entities or non-
profit organizations that operate to fulfill a charitable mission or further a social
cause.

✔ It is important to note also that people have conducted business since ancient times;
historically, businesses have involved mercantile operations, trade guilds, or shared
agricultural production.

Key Takeaways
● In the hope of making profits, businesses produce and market goods and services.

● In satisfying customers’ needs and wants, the firm will generate sales revenues, which
make profits possible.

For additional understanding about this topic, please click this link:
https://www.investopedia.com/terms/b/business.asp
Basedhttps://businessjargons.com/organization.html
on the previous discussion, let us now consider this question:

What is Profit?

✔ It is important to note that profit is the

primary reason why people go into business.
✔ Businesses that do not make profits are
bound for extinction.
✔ Profit is the revenue remaining after all
costs are paid. These costs include labor, materials, interest on debt, and taxes.
✔ Profit is usually used when describing business activity. But everyone with an income
has profit. It’s what left over after paying the bills.

⮚ Profit is the reward to business owners for investing. In small companies, it’s paid
directly as income. In corporations, it’s often paid in the form of dividends to
shareholders.

When expenses are higher than revenue, that’s called a loss. If a

company suffers losses for too long, it goes bankrupt.
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Key Takeaways

To sum it up:
● Profit is income remaining after settling all expenses.

● Three forms of profit are gross profit, operating profit and net profit.

● The profit margin shows how well a company uses revenue.

● Profit drives capitalism and free market economies.

● Increasing revenue and cutting costs increase profits.

What is an Organization?

✔ Remember, most of us have worked in an organization of people – even a family is a type

of organization.
✔ The word is widely used that its meaning can sometimes be lost.

✔ The word means a collection of resources that are working together somehow to achieve
a common purpose.
✔ When we talk about an organization, we are usually referring to a group of people.

✔ It is important to note that organizations of people come in many forms.

o They might be a random group of people who spontaneously came together to
address a short-term need, such as collecting litter along a certain stretch or road.

o Or, it might be a carefully collected, aligned and integrated group of people who
came together for the long-term to address a long-term need, such as stopping
poverty in a certain country.
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 ✔ A mere grouping of people will
not qualify as an organization,
the group must have some
objectives to achieve and to be
able to do so, they must interact,
use knowledge and techniques,
and work together in patterned
relationships.

✔ An overall organization can have

a variety of small organizations
within it, for example, various
departments and teams of people.

✔ The way that people work

together in an organization
depends on a variety of factors,
including the values in their
culture, the nature of leadership
and types of current needs they are working to address.

Functional Areas of Business

1. Management

✔ Managers are responsible for the work performance of other people.

✔ Management involves planning for, organizing, staffing, directing and controlling a

company’s resources so that it can achieve its goals.
o Managers plan by setting goals and developing strategies for achieving them.
o They organize activities and resources to ensure that company goals are met.

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 o They staff the organization with qualified employees and
o direct them to accomplish organizational goals.
o Finally, managers design controls for assessing the success of plans and decisions
and take corrective action as needed.

✔ Koontz and O’Donnel (2019) define management as

the process of designing and maintaining an
environment in which individuals, working together
in groups, effectively and efficiently, accomplished
aims”.

o This definition implies:

1. As managers, people carry out the managerial
functions of planning, organizing, staffing, leading and
controlling.
2. Management applies to any kind of organization.
3. It applies to managers at all organizational levels.
4. The aim of all managers is the same: to create a
surplus.
5. Managing is concerned with productivity; this implies
effectiveness and efficiency

Additional information about this topic, please refer to these

links:

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2. Operations. All companies must convert resources
(labor, materials, money, information and so on forth) into
goods or services. Some companies, such as Apple,
convert resources into tangible products – Macs, iPhones,
iPods, iPads, Others such as hospitals, convert resources
into intangible products – health care. The person who
designs and oversees the transformation of resources into
goods or services is called an operations manager. This
individual is also responsible for ensuring that products are
of high quality.

3. Marketing. Marketing consists of everything that a company

does to identify customer’s needs and designs products to meet
those needs. Marketers develop the benefits and features of
products, including price and quality. They also decide on the
best method of delivering products and the best means of
promoting them to attract and keep customers. They manage
relationships with customers and make them aware of the
organization’s desire and ability to satisfy their needs.

4. Accounting. Managers need accurate, relevant, timely financial information, and

accountants provide it. Accountants measure, summarize and
communicate financial and managerial information and advise
other managers on financial matters. There are two fields of
accounting. Financial accountants prepare financial statements
to help users, both inside and outside the organization, assess the
financial strength of the company. Managerial accountants
prepare information, such as reports on the cost of materials used
in the production process, for internal use only.

5. Finance. Finance involves planning for, obtaining, and

managing a company’s funds. Finance managers address
such questions as the following: How much money does the
company need? How and where will it get the necessary
money? How and when will it pay the money back? What
should it do with its funds? What investments should be
made in plant and equipment? How much should be spent on
research and development? How should excess funds be
invested? Good financial management is particularly
important when a company is first formed, because new
business owners usually need to borrow money to get started.

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 Henri Fayol named these 14 Management
Principles based on fundamental truth. These
principles of management serve as a guideline for
decision-making and management actions. They
are drawn up by means of observations and
analyses of events that managers encounter in practice. Henri Fayol was able to synthesize 14
principles of management after years of study, namely:

1. Division of Labor. This means

breaking a job down into specialized
tasks to increase productivity. For
example, the total job of financing
appliance sales may be broken into
tasks like credit investigation,
collection and accounting.

2. Authority. This is the right given to a person on position

to give orders plus the power to exact obedience. For
example, a sales manager must have the right to expect
from the sales supervisor the required volume of sales for a
given period.

3. Discipline. This provides uniform application of behavior to

certain activities the outcome of which is readily predicted. If
discipline is not practiced, objectives will be very hard to
achieve.

4. Unity of Command. This means that each employee

must have only one supervisor. Reporting to more than
one boss creates and reduces productivity.

5. Unity of direction. This means that the efforts of

everyone in the organization must be coordinated and
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 focused in the same direction. It will be hard to achieve an organizational objective if
some components of the organization are not moving towards the identified objective.

6. Subordination of the individual interests to the general interest. This refers to the
goals of the organization that should take precedence
over individual goals. When the reverse happens, it will
be difficult for the organization to succeed because its
goals will always be set aside.

7. Remuneration. Employees should be paid fairly in

accordance with their contribution to the organizational
effort. This must be applied to pay, bonuses and benefits.

8. Centralization. Power and authority must be

centralized as much as possible. Decentralization
must be instituted, however, when the firm grows to
considerable size.

9. Scalar chain. This means that

subordinates should observe the
official chain of command unless
authorized by their respective superiors to
communicate with each other.

10. Order. This means that human and non-human resources should be in their proper
places. The production manager, for example, must hold office at the production site.

11. Equity. This is the result of kindliness

and justice and is a principle to guide
management-employee relations.

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12. Stability of Tenure. High employee turnover
is counterproductive. To motivate employees
to stay with the company, effective manpower
planning and implementation are necessary.

13. Initiative. Management should encourage

employees to act on their own volition when
confronted with an opportunity to solve a
problem.

14. Esprit de corps. This means that managers

should emphasize teamwork by building harmony
and a
15. sense of unity among employees. Harmony
breeds high morale and is more productive than
discord.

For additional information about this topic, I would like to refer you to:

https://www.youtube.com/watch?v=P14KeNmqqpE
https://www.youtube.com/watch?v=DsYcnapehvA
https://www.dailymotion.com/video/x369g8g
https://steemit.com/english/@styner/social-talk-henri-fayol-s-14-
principles-of-management

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TEST/EVALUATION:

Instructions: Read and provide the answer for each item.

1. In not more than five sentences, cite an example of a business enterprise and explain how
profit plays an important role in their operation. (6 pts)
Rubric: Content – 3 pts; Organization – 2 pts; Spelling & Grammar – 1 pt
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2. Describe an organization you know based on the management principles. (9 pts)

Rubric: Content (named different management principles) – 6pts
Organization – 2pts
Spelling & Grammar – 1 pt
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 UNIT II: ETHICS AND SOCIAL RESPONSIBILITY

Overview

At this point, you already have the

understanding on the concepts of business,
profit, organization and management
including its principles in Lesson 1. This
lesson now presents how important for
business establishments and organizations
to adhere to moral standards. It covers
topics on ethics, business ethics and social
responsibility.

Learning Outcomes

At the end of the lesson, you should be

able to:
1. identify certain concerns relating to laws and
regulations requiring ethical behavior in
business organizations;
2. compare business ethics and corporate social
responsibility; and
3. identify companies that are socially
responsible.

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 Instructions: Before you proceed to the next pages, answer what
is described in each statement. The choices are provided below.
Write the letter of your choice on the space provided after each

1. When movies are produced and shown to the public but not to devalue morals.
_____
2. It is also called corporate ethics.
_____
3. It is a system of moral principles.
_____
4. The moral principles defining right and wrong behavior of business persons and their
agents.
_____
5. Social responsibility as it applies to business.
_____
6. It refers to the concern of business for the welfare of the society.
_____
7. It refers to the study of morals and moral choices of human beings.
_____
8. It means that businesses, in addition to maximizing shareholder value, should act in a
manner that benefits society.
_____
9. It is a form of applied ethics or professional ethics that examines the ethical and moral
principles and problems that arise in a business environment
_____
10. It simply means that the firm must perform its function without harming the community,
instead it must improve the quality of life
_____

a. Business Ethics
b. Corporate Social Responsibility
c. Ethics
d. Social Responsibility

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 For better understanding of this module, these important terms are defined.

❖ Business Ethics - The moral principles defining right and wrong behavior of business
persons and their agents.

❖ Corporate Social Responsibility - It refers to the concern of business for the welfare of
the society.

❖ Ethics – It refers to the study of morals and moral choices of human beings.

● Social Responsibility - It means that businesses, in addition to maximizing shareholder

value, should act in a manner that benefits society.

Before we proceed to the topics, please consider these questions:

● Do you think businesses can use whatever

means, fair or foul, to make profits?

● May a business firm hire someone to spy

on a competitors’ planned moves?

● Will it be all right for a company’s

purchasing officer to receive gifts from a
supplier?

● May a company continue to manufacture

products whose chemical residues harm
the environment?

● These and other similar business

● behaviors happen every now and then, but should the propriety of such actions be the
concern of business firms?
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 Then think about these…

✔ If allowing the foregoing actions become the norm rather

than the exception, would it be to the best interest of
everybody including business firms?
✔ Answers to such kind of question permeate a body of principles that modern business
persons try to consider in the pursuit of their goals.
✔ Philosophers maintain the view that a society that has low regard for morals will
disintegrate after a period of time.
✔ To avoid chaos and destruction, and to make “life in society possible”, adherence to the
practice of moral principles regulating human relations becomes necessary.

What is Ethics?

✔ The behavior of individuals and groups which are governed by standards, rules, and
codes of conduct consist of the subjects covered by ethics

✔ Simply put, ethics is a system of moral principles.

They affect how people make decisions and lead their
lives.

✔ Ethics is concerned with what is good individuals and

society and is also described as moral philosophy.

✔ It involves learning what is right or wrong, and then

doing the right thing – but “the right thing” is not nearly as straightforward as conveyed
in a great deal of business ethics literature.
✔ Ethics covers the following dilemmas:
● how to live a good life

● our rights and responsibilities

● the language of right and wrong

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 ● moral decisions - what is good and bad?

✔ Business ethics, also called corporate ethics, is a form of applied ethics or professional
ethics that examines the ethical and moral principles and problems that arise in a business
environment.

✔ It can also be defined as the written and unwritten codes of principles and values,
determined by an organization’s culture, that govern decisions and actions within an
organization.
o It applies to all aspects of business conduct on behalf of both individuals and the
entire company.

✔ In the most basic terms, a definition for business ethics boils down to knowing the
difference between right and wrong and choosing what to do what is right.

✔ The concept has come to mean various things to various people, but generally its coming
to know what is right or wrong in the workplace and doing what is right – this is in regard
to effects of products/services and in relationships with stakeholders.

✔ It implores them to adhere to certain ethical conduct when dealing with anybody
especially those affected by their business activities.

✔ Note that many people react that business ethics, with its continuing attention to “doing
the right thing,” only asserts the obvious (“be good”, “don’t lie”, etc.), and so these
people don’t tae business ethics seriously. For many of us, these principles of the
obvious can go right out the door during times of stress. Consequently, business ethics
can be strong preventative medicine.

Related topics are also available at:

https://www.youtube.com/watch?v=MzLEyED-xUs 21
https://courses.lumenlearning.com/boundless business/chapter/business-ethics/
https://unity.edu/environmental-careers/employer-cares-business-ethics-and-social-
responsibility/
https://managementhelp.org/businessethics/index.htm#anchor3815179
https://study.com/academy/lesson/business-ethics-social-responsibility-definition-
Managing Ethics in the Workplace

Now, please look into the thoughts and experiences of these experts:

1. According to Brian Schrag, Executive Secretary of the Association for Practical and
Professional Ethics: “Organizations can manage ethics in their workplaces by
establishing an ethics management program. Typically, ethics programs convey
corporate values, often using codes and policies to guide decisions and behavior, and
can include extensive training and evaluating, depending on the organization. They
provide guidance in ethical dilemmas”.

2. Stephen Brenner, a business ethics professor (from the Journal of Business 1992, V11,
pp. 391-399): “All organizations have ethics programs, but most do not know that they
do. A corporate ethics program is made up of values, policies and activities which
impact the propriety of organization behaviors.”

3. Bob Dunn, President and CEO of San Francisco-based Business for Social
Responsibility: “Balancing competing values and reconciling them is a basic purpose of
an ethics management program. Business people need more practical tools and
information to understand their values and how to manage them.” (Extracted from
Complete and Practical Guide to Managing Ethics in the Workplace)

Areas of Concern for Business Ethics

Business ethics covers all areas encompassed by business transactions. The ethical
conduct of business persons may be measured against how the following are adhered to:
1. laws and regulations promulgated by the government; and
2. specific ethical conduct not yet passed into law.

A list of concern relating to laws and regulations requiring ethical behavior is provided as
follows:
1. product safety and quality;
2. fair employment practices;
3. fair marketing and selling practices;
4. the use of confidential information for personal gain;
5. community involvement;
6. bribery; and
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 7. illegal payments to foreign governments to obtain business

What is Social Responsibility?

Lets go back to the definition of social responsibility, which refers to the concern of
business for the welfare of the society.

● This definition indicates that the firm must perform its function without harming
the community; instead it must improve the quality of life. It must produce goods
or services that will not adversely affect any component of the society. It can
make profits but not to the detriment of society.

● Movies, for example may be produced and shown to the public but they must not
be those that devalue morals.

Social responsibility and business ethics are often regarded as the same concepts. However, the
social responsibility movement is but one aspect of the overall discipline of business ethics.

How about Corporate Social Responsibility?

✔ Social responsibility means that individuals and

companies have a duty to act in the best
interests of their environment and society as a
whole.

✔ Social responsibility, as it applies to business, is

known as corporate social responsibility (CSR).

✔ The crux of this theory is to enact policies that

promote an ethical balance between the dual
mandates of striving for profitability and
benefiting society as a whole.

✔ These policies can be either ones of commission (philanthropy – donations of money, time,
or resources) or omission (e.g., “go green” initiatives like reducing greenhouses gases, etc.)

23
✔ Social responsibility and business ethics are often regarding as the same concepts.
However, the social responsibility movement is but one aspect of the overall discipline of
business ethics.

✔ The social responsibility movement arose particularly during the 1960s with increased
public consciousness about the role of business in helping to cultivate and maintain highly
ethical practices in society and particularly in the natural environment.

KEY TAKEAWAYS

● Social responsibility means that businesses, in addition to maximizing shareholder value,

should act in a manner that benefits society.

● Critics assert that being socially responsible is the opposite of why businesses exist.

● Socially responsible companies should adopt policies that promote the well-being of
society and the environment while lessening negative impacts on them.

● Companies can act responsibly in many ways, such as promoting volunteering, making
changes that benefit environment, and engaging in charitable giving.

More discussion on social responsibility at:

https://www.investopedia.com/terms/s/socialresponsibility 24
https://managementhelp.org/businessethics/index.htm
 TEST/EVALUATION

Instructions: Provide the answers below. Write your answer on the space provided. Please
refer to page 47 for the rubric.

1. In not less 7 and not more than 10 sentences, compare ethics and social responsibility.
You may give an example to support your answer. (20 pts)
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2. Give two situations where you can consider businesses as ethical and socially
responsible. Provide one paragraph for each situation with at least 5 but not more than 6
sentences per paragraph. (20 pts)

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UNIT III: FORMS OF BUSINESS OWNERSHIP

Overview

After learning the foundation of business and its principles provided in the previous
modules, it is time to identify the form of business ownership a businessperson has to choose.
Since one of the first decisions that a business owner will have to make is how the company
should be structured, this module will guide you through the different forms of business
ownerships and business organizations including the advantages and disadvantages of each form.

26
Learning Outcomes

At the end of the lesson, you:

1. will have knowledge of the different forms of business organizations and how each
differs from the other;
2. enumerate and explain the advantages and disadvantages of each form of business;
and
3. will evaluate what form of business ownership you prefer.

Before we formally discuss the topics, you are required to answer

this pre-test. Provide the answer for the items in column A from column B.

A B

1. It is formed by two or more persons binding themselves together

to contribute money, property or industry to a common fund with
the intention of dividing profits among themselves.

2. It is an artificial being having the rights of succession and the

powers, attributes and properties expressly authorized by law or
incident to its existence. a. Business Trust

3. This type of organization created for the purpose of bringing b. Cooperatives

together several partners to engage in a business activity which is
normally very specialized and which exists for a limited, specific c. Corporation
purpose.
d. Mutual Companies
4. It is an organization composed of individuals or businesses that
have banded together to reap the benefits of belonging to a large e. Partnership
organization.
f. Sole Proprietorship

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5. It is a one-man enterprise because the owner shoulders all the
losses when the business fails but all profits accrue to him if the g. Joint Stock
business prospers Company

6. It is an enterprise chartered by law, with most of the legal rights h. Joint Venture
of a person, including the right to conduct a business, to own and
sell property, to borrow money, and to sue or be sued.

7. It is not organized for profit but to make its members

individually profitable or save money.

8. One of its advantages is ease of formation.

9. It is a company is a financial-service firm (such as an insurance

company or savings and loan association) owned by its policy
holders or depositors

10. It has double taxation.

Introduction

The form of business ownership that will to be adapted is a strategic decision that must be
considered at the inception of the business. The decision may later prove to be supportive of the
objectives of the owners, or may have turned out to be the biggest obstacle.

Careful thinking must be considered in determining the ownership form as each of the
various types has its own unique features, as well as advantages and disadvantages.

There are three major types of business ownership:

1. Sole Proprietorship
2. Partnership
3. Corporation

The minor types consist of:

1. Joint stock company
2. The joint venture
3. Business trust

First, lets discuss…

✔ The sole proprietorship is that type of business

entity owned and operated by a single person.

28
 ✔ It is a one-man enterprise because the owner shoulders all the losses when the business
fails but all profits accrue to him if the business prospers. From his own resources, the
owner provides the necessary funds for operating the business. Decision-making is
monopolized by the owner.

✔ The big percentage of businesses owned by sole proprietors indicate the popularity of this
ownership type. This is so because of certain advantages unique to sole proprietorships.

Now, let discuss to you now the…

1. Ease and Cost of Formation. Among the three forms,
the sole proprietorship is the easiest and least costly to
organize. The only requisites for its legal existence
are the following:
a. the sole owner’s resolve to start operating;
and
b. getting the required permits and licenses.

The cost involved in forming the sole

proprietorship is less than either the partnership or
corporation. This is because only one person makes the
decision in the actual formation of the business. Also,
documentary requirements are not as extensive as those
of the other two forms of ownership.

2. Secrecy. One way of effectively competing with other firms is to know the moves, as
well as the strengths and weaknesses of competitors. The sole proprietor has the
advantage of keeping his intentions secret. As he does not have, and is not required by
law, to share information with anyone, he can proceed with his activities in secrecy. His
competitors can only guess what his intended moves are.

3. Distribution and use of Profits. If because of his efforts, the business made much
profits, the sole proprietor is the sole beneficiary. He does not have to share those with
anyone. If he decides to use the profits for expansion, he is not required to consult
anybody. If he decides to use it anyway he pleases, he is free to do so.

4. Control of the Business. The sole owner is also vested with the power to control solely
the business. This sole authority is very important especially under critical competitive
situations. For instance, a consumer is confronted with a situation where he or she must
choose to buy either from a sole proprietorship, a partnership, or a corporation. If all the
29
 prices quoted by the three firms are identical and the prospective buyer is asking for a
lower one, the sole proprietorship has the advantage of making an immediate decision
while the partners will still have to consult with each other.

5. Government regulation. The sole proprietorship is spared from various government

rules which apply to partnerships and corporations. Also, sole proprietorships are
required by the government to submit fewer reports. Sole proprietorships are also spared
from charter restrictions on operations. An insurance corporation, for example, cannot
engage in the retailing of groceries. On the other hand, a sole proprietorship
manufacturing furniture can switch to selling agricultural products in a few days without
worrying about violating any restriction.

6. Taxation. The net income of the sole proprietorship is treated as the personal income of
the sole owner and is taxed accordingly. This is not true with partnerships and
corporations where their respective net incomes are taxed and will be subject to taxation
again when the owners individually receive their shares of the profits.

7. Closing the business. Sole proprietorships can be dissolved by the owners at will.
Although this is not always exercised, it remains an option of the owners. Once the
owner decides to close shop, he does seek the approval of co-owners or partners for he
does not have any. If business conditions had become unprofitable, the sole proprietor
has the advantage of immediate cessation of operations. This allows him to cut his losses
to the minimum.

Meanwhile, these are the…

1. The owner’s possible lack of ability and

experience. The success of the sole proprietorship
will depend largely on the management skills of
the owner. The firm will need a “generalist” with
sufficient grasp of the various specialized
functions performed like those for marketing,
production, finance, accounting, personnel, and
research. Unfortunately, it is difficult to find
qualified generalists to manage sole
proprietorships. If the sole proprietor lacks the skills of a generalist, then it will be very
hard for the firm to succeed.
2. Difficulty in Attracting Good Employees. Sole proprietorships are not known for
surviving long periods. The existence of a sole proprietorship is co-terminus with the life
of its owner. As a consequence, good employees tend to get employment in a more
stable enterprise which is most often a corporation.

3. Difficulty in Raising Capital. In sole proprietorships, raising capital will depend on the
financial resources of the sole owner. Even if he can obtain credit, the amount will
depend on his sole capacity to pay. This problem is especially felt when business
expansion is required and which becomes more difficult when credit is getting tight and
30
 interest rates become prohibitive. The difficulty in raising additional capital often
aggravates the problem of meeting competition.

4. Limited Life of the Firm. The existence of the sole proprietorship depends on the
physical well-being of the owner. When he is ill, business operations may be affected.
Prolonged illness may make the firm go bankrupt. His death will mean liquidation of the
firm. In any case, customers and creditors are saddled with some degree of anxiety as a
result of the limited life of the firm. This limits the opportunities for growth and
expansion which could be afforded to the sole proprietorship.
5. Unlimited Liability of the Proprietor. Any liability incurred by the sole proprietorship
extends to the owner’s personal assets. In theory, the sole proprietor could lose “even his
shirt” if all his other assets are not enough to cover all claims against his business.
Unlimited liability is the greatest disadvantage of the sole proprietorship. The lives of
quite a number of former sole proprietors became miserable because of this disadvantage.

✔ A partnership is formed by two or more persons binding themselves together to

contribute money, property or industry to a common fund with the intention of dividing
profits among themselves.

✔ A partnership begins from the time the contract is executed. The articles of partnership
must be registered with the Securities and Exchange Commission (SEC).

Types of Partnerships

Partnerships may be classified according to the liability of the partners. They are as
follows:
1. general partnership, and
2. limited partnership

✔ A general partnership is an association of two or more persons, each with unlimited

liability, who are actively involved in the business.

✔ A limited partnership is an agreement in which the liability of one or more partners is

limited to the amount of assets they have invested in the business.

31
 Table 1. Advantages and Disadvantages of Partnership

Advantages Disadvantages

* Ease of formation * Unlimited liability

* Pooling of knowledge and skills * Limited life

* Availability of more funds * Potential conflict between partners

* Ability to attract and retain employees * Difficulty in dissolving the business

* Tax advantage

Further discussion of the

above are provided in
the next pages
For the …

1. Ease of Formation. Like sole proprietorships, partnerships

are easy to form. The only requirement before the
partnership commences operations is for the partners to
agree on basic aspects of the business like the nature of the
business, location, capitalization, and the like. A written
agreement called the contract of partnership is drawn to
formalize what has been agreed upon.

2. Pooling of Knowledge and Skills. The combined

knowledge and skills of the partners provide the partnership with a distinct advantage.
One partner, for instance, may possess the required skills in manufacturing, while another
has the skills in accounting, and another in marketing. These skills may be used to the
advantage of the partnership. This condition also paves the way for specialization which
is a very important competitive tool in business.

32
3. Availability of more funds. The combined resources of the partners provide a bigger
source of funds. This condition leads to a higher credit rating for the partnership. The
resource potentials of the partners combined with high credit rating result to a formidable
capability for the partnership.

4. Ability to attract and retain employees. Attracting and retaining employees is a

difficulty inherent to sole proprietorships. Partnerships have the ability to overcome this
difficulty by offering partner status to valuable employees. This advantage also
minimizes the potential harm that may be done by a key employee moving to a
competitor.

5. Tax Advantage. The income of the partnership is not taxed separately from the partners’
incomes. Any profits derived by the partners are treated and taxed as their individual
incomes.

In addition, these are the …

1. Unlimited Liability. Partnerships, like sole

proprietorships, are saddled with the disadvantage of
unlimited liability. Although one or two partners may opt
to have limited liability, the remaining partner or partners
carry the burden of unlimited liability.

2. Limited life. When a partner dies or withdraws from the business, the partnership is
terminated. The life of the partnership, in essence, is more limited than the sole
proprietorship. Whereas, the life of the sole proprietorship depends on the state of health
and willingness of all partners. If there are five partners, the risk of discontinuance of the
partnership business is five times greater than the sole proprietorship.

3. Potential conflict between partners. There are occasions when partners disagree on
certain ways of operating the business; and there are many potential areas of
disagreement. Among these are the following:
a. adding new lines;
b. hiring new employees;
c. decisions on credit extensions; and
d. granting employee welfare benefits.

❖ When conflict between partners persists, operations are affected. This

may lead to bankruptcy.

4. Difficulty in dissolving the business. Partnerships are not easy to dissolve as sole
proprietorships. After dissolving the sole proprietorship, whatever assets or liabilities left
are concerns of the sole owner alone. In a partnership dissolution, it may not be easy to
divide whatever assets are left for distribution to the partners. This is because some of

33
 the assets may be fixed or immovable. The more difficult the dissolution becomes when
liabilities are to be shared by the partners.

✔ A corporation is an artificial being having the rights of succession and the powers,
attributes and properties expressly authorized by law or incident to its existence.

✔ The Corporation Law (Act 1459) which took effect on April 1, 1906 governs the
corporate form of business ownership in the Philippines. It provides the requisites in
forming/organizing corporations, defines their powers, fixes the duties of directors and
officers, prescribes the rights and liabilities of stockholders and members as well as the
conditions under which corporations may do business.

● A corporation is an enterprise chartered by law, with most of the legal rights of a person,
including the right to conduct a business, to own and sell property, to borrow money, and
to sue or be sued.

✔ The corporate form of business is the third ownership option open to business persons.
Owners of corporations are called stockholders. They are issued certificates of
ownership called stocks. Some of these are openly traded in the country’s stock
exchange.

1. Limited liability. The liability of the stockholders are limited to the amount of their
shareholding. A stockholder may lose the entire value of his stocks in the event of a
bankruptcy. Beyond the said value, he has no more liability. The limited liability
advantage attracts all kinds of investors, big or small. An investor who has only a few
thousand pesos to spare may become a part owner of the corporation by purchasing a
limited number of shares. Those who have more money may buy more shares.

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2. Ease of expansion. The authority granted to corporations to sell its own shares of stock
provide a means to pool a large amounts of funds. The price per share of stocks could be
made low enough to attract even the smallest investor. As the ownership of the stocks
can be easily transferred, this provides more reason for the investor to buy stocks. The
ability of corporations to accumulate large amounts of capital, make it easier for them to
consider business expansion.

3. Ease of transferring ownership. If a stockholder loses interest in the corporation he

partly owns, he may disassociate himself from it by selling or donating his shares to
another person. In effect, the ownership of a corporation may change as often as it could
without actually dissolving it.

4. Relatively long life. Corporations may be established to have lives of up to 50 years and
may be extended indefinitely through renewals of documents. Since ownership is readily
transferrable, the death or withdrawal of any or all stockholders do not terminate the
corporation. This advantage makes the corporation the most stable among the three
major forms of ownership.

5. Ability to hire specialized management. The expanded operations of corporations make

it possible to divide the overall job into smaller specialized positions. As the various
positions will be quite dissimilar from each other, the demand for management expertise
will be a little more exacting than those required for sole proprietorship or partnerships.
The said requirement pave the way for hiring fully trained management experts. With
specialized management, the corporation is provided with the opportunity to grow and
develop more vigorously.

1. More expensive and complicated to organize. Among the

three major forms of ownership, more time and money are
required to organize a corporation. It takes months or even
years before a corporation can begin serving its customers.
It may start operations only after receiving from the
Securities and Exchange Commission (SEC) a certificate of
incorporation if it finds that the articles of incorporation is
fully compliant with all requirements.

2. Double taxation. The profits derived by stockholders are taxed twice by the
government. First, when the corporation realizes profits, and second, when the individual
stockholders declare as part of their personal income the dividends they receive from the
corporation. This is not a disadvantage of sole proprietorships and partnerships.

3. More extensive government restriction and reporting requirements. Corporations

are subject to stringent government restrictions and are required to submit various reports
on a periodic basis. An example of restriction is the prohibition of certain actions by the
corporation without approval of the SEC. The submission of financial statements is an
example of annual reports required by the SEC. In complying with this requirement, the

35
 corporation is exposing itself to the scrutiny of its competitors. This is so because annual
reports are made available to the public.

4. Employees lack personal identification with and commitment to corporate goals.

Many stockholders are detached from the daily operations of the corporation. Those who
work for the corporation usually do not own the company’s stocks. The relationship
between the corporation and employees are too impersonal. Employees do not feel deep
attachment to the corporation resulting to less commitment to their work. Employees of
sole proprietorships and partnerships most often know the owners personally. This
feeling of attachment pushed the employee to make the company successful. Such
concern is rarely present in a corporate work atmosphere.

Table 2. A Summary of the Positive and Negative Features of the Forms of Business
Ownership
Area of Concern Sole Proprietorship Partnership Corporation

1. Liability of the Unlimited Limited/ unlimited Limited

owners
2. Ease of expansion Not easy Not easy Easy
3. Life of firm Dependent on the Dependent on the Independent of the
owner partners owners
4. decision-making Can be made quickly Tends to be slower Tends to be the slowest
5. Taxation of once Once twice
income
6. Ease of formation easiest Easy Not easy

✔ A cooperative is an organization composed of

individuals or businesses that have banded together
to reap the benefits of belonging to a large
organization.

✔ Cooperatives are not organized for profit but to

make its members individually profitable or save
money.

Types of Cooperatives
1. Credit union.
36
 2. Producers cooperative
3. Marketing cooperative
4. Consumers cooperative
5. Service cooperative

Mutual Companies
✔ A mutual company is a financial-service firm (such as an insurance company or savings
and loan association) owned by its policy holders or depositors.

Types:
1. Mutual saving banks. It is owned by depositors specializes in savings and mortgage
loans. The profits of the company are credited to the account of the depositors.

2. Mutual insurance company. It is a cooperative corporation organized and owned by its

policyholders. Voting controls is in the hands of those insured. Profits earned by the
company can be used to pay policy dividends to policyholders, and to strengthen the
insurer by building its surplus.

Other Forms of Business Organization

Minor forms of business organization consist of the following:
1. Joint stock company
2. The joint venture
3. The business trust

The Joint Stock Company

✔ The joint stock company is a form of business
enterprise in which the capital is divided into small
units permitting a number of investors to contribute
varying amounts to the total, profits being divided
between stockholders in proportion to the number
of shares they own.
✔ It is largely similar in form to the corporation,
although it has certain features like fewer taxes, greater ease of formation, mobility,
freedom from government regulation.

The Joint Venture

✔ A joint venture is best regarded as a
particular partnership established for a
specific undertaking.

37
 ✔ This type of organization created for the purpose of bringing together several partners to
engage in a business activity which is normally very specialized and which exists for a
limited, specific purpose.

✔ It is mostly formed for the purpose of producing a movie or a concert, engaging in oil or
mining exploration, constructing a major project such as a dam or an airport, or perhaps
the underwriting or selling of securities.

The Business Trust

✔ The business trust is a legal form of organization in which a trustee is appointed to

manage the business and its operations through a trust relationship.

✔ Under the trust agreement, the owners of property, securities, or other assets convey these
to a trustee in exchange for transferable trust certificates. The certificates entitle the
owners to participate in the profits of the operation. The liability is transferred to the
trustees, however.

TEST/EVALUATION. To test your comprehension of the

topics discussed, answer what is required for each item. See the rubric on page 47.

1. List down the forms of business ownership and name and explain 2 advantages and
disadvantages of each form. (20 pts)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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 ________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

2. If given the opportunity to start your own business, which form of business ownership do
you prefer most? Why? Support your answer. (20 pts)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________________________

COURSE OUTLINE FOR MIDTERM (Module 2)

UNIT IV: DECISION-MAKING

Lesson 1 – Decision-making, defined
Lesson 2 - Steps in the Decision-Making Process

UNIT V: PLANNING
Lesson 1 – Planning, defined

39
 Lesson 2- The Planning Process
Lesson 3– The Types of Plans

UNIT VI: ORGANIZING

Lesson 1 – Reasons for Organizing
Lesson 2 – Organizing, defined
Lesson 3- The Organizational Structure and its Determinants
Lesson 4– The Formal Organization
Lesson 5 - Informal Groups
Lesson 6– Basic Organizational Design

UNIT VII: STAFFING AND ORGANIZATION

Lesson 1 – Introduction
Lesson 2 - Staffing, defined
Lesson 3 – The Staffing Procedures

UNIT IV: DECISION-MAKING

Overview

In this lesson, you will have a

realization on the importance
of decision-making and its
processes in business
organizations. You can also
apply your knowledge in
certain situations through a
case study/analysis.

40
 Learning Outcomes
At the end of the course, you should be able
to:

explain what decision-making in business

is all about; and
illustrate the decision-making process and
explain how they are applied in business

Before we proceed to the subject matter, you are required to answer this
Before we proceed to the subject matter, you are required to
pre-test
answer this pre-test.

Test 1. Re-Arrangement Type. Arrange the following steps in the decision-making process.
Write the answer on the space provided.

● Analyzing the environment

● Diagnosing the problem

● Developing viable alternatives

● Implementing the decision

● Evaluating and adapting the decisions results

● Evaluating the alternatives

● Making a choice

● Articulating the problem or opportunity

Step 1. _____________________________________
Step 2. _____________________________________
Step 3. _____________________________________

41
 Step 4. _____________________________________
Step 5. _____________________________________
Step 6. _____________________________________
Step 7. _____________________________________
Step 8. _____________________________________

Test 2. Multiple Choice. Select the letter of the correct answer.

1. It is the process of selecting among alternatives representing potential solutions to the

problem
a. Choice –making c. Decision-making
b. Control d. Feedback

2. It is the process of defining the problem and identifying and choosing alternative
courses of action in a manner appropriate to the demands of the situation.
a. Choice –making c. Decision-making
b. Control d. Feedback

WHAT DO YOU NEED TO KNOW?

Now, let us begin with the Introduction…

✔ Managers of all kinds and types are
primarily tasked to provide leadership in
the quest for the attainment of the
organization’s objectives. If he is to
become effective, he must learn the
intricacies of decision-making. Many
times, he will be confronted by situations
where he will have to choose from among
various options. Whatever he chooses, it
will have effects, good or bad, immediate
or otherwise, in the operations of his organization.

✔ The manager’s decision-making skills will be very crucial to his success as a

professional. A major blunder in his decision-making may be sufficient to cause the
destruction of his organization. On the other hand, when good decisions are made, the
right environment is provided for continuous growth and success of any organized effort.

42
Decision-making, defined.

✔ Decision-making may be defined as the process of defining the problem and identifying
and choosing alternative courses of action in a manner appropriate to the demands of the
situation.

● The definition indicates that the manager must adapt a certain procedure designed
to determine the best option available to solve certain problems.

✔ Decisions are made at various levels (i.e., top, middle and lower levels) and at various
management functions (i.e., planning, organizing, staffing, directing and controlling).
Since this so, decision-making is regarded as “the heart” of all the management functions.

Here are now the steps in the decision-

making process

1. Diagnosing the problem

2. Analyzing the environment
3. Articulating the problem or
opportunity
4. Developing viable alternatives
5. Evaluating the alternatives
6. Making a choice
7. Implementing the decision
8. Evaluating and adapting the
decisions results
These steps are further discussed:

✔ In Diagnosing the Problem as the first step, if the manager wants to make an intelligent
decision, his first move must be to identify the problem. If the manager fails in this
aspect, his next moves will be useless. If the manager is not able to identify the real
problem, the solution he will offer will be irrelevant and may even be costly and
destructive. Being able to identify the real problem is tantamount to having the problem
half-solved.

✔ Second is analyzing the environment, where the environment where the organization is
situated plays a very significant role in the success or failure of such an organization. It
is, therefore, very important than an analysis of the environment is undertaken. The
objective of environmental analysis is the identification of constraints, which may be
spelled out as either internal or external limitations.

43
✔ The third step is articulating the problem or opportunity, which emphasizes, that a
problem is really an opportunity to improve one’s standing. If one wants to benefit from
solving a problem or exploiting an opportunity, a solution that will effectively address the
situation is required. A good solution must be chosen from among several alternatives.

✔ Fourth step is developing viable alternatives when, often times, a problem may be
solved by any of the solutions offered. In solving a problem, however, the best among
the alternative solutions must be considered by management. This is made possible by
using a procedure with the following steps:
1. prepare a list of alternative solutions;
2. determine the viability of each solution; and
3. revise the list by striking out those which are not viable.

✔ The fifth step, is evaluating the alternatives which happens after determining the
viability of the alternatives and a revised list is made, an evaluation of the remaining
alternatives is necessary. This is important because the next step involves making a
choice. Proper evaluation makes choosing the right solution less difficult.

❖ How the alternatives will be evaluated will depend on the nature of the problem, the
objective of the firm, and the nature of the alternatives presented. Each alternative
must be analyzed and evaluated in terms of value, cost and risk characteristics.

✔ Making a Choice occurs when after the alternatives have been evaluated. This is the
point where he must be convinced that all the previous steps were correctly undertaken.

✔ Choice-making refers to the process of selecting among alternatives representing

potential solutions to the problem. At this point, specific effort should be made to
identify all significant consequences of each choice.

❖ To make the selection process easier, the alternatives can be ranked from the best to
worst on the basis of some factors like benefit, cost and risk.

✔ After a decision has been made, implementing the decision follows. This is necessary,
or decision-making will be an exercise in futility. Implementation refers to carrying out
the decision so that the objectives sought will be achieved. To make implementation
effective, a plan must be devised.

❖ At this stage, the resources must be made available so that the decision may be
properly implemented. Those who will be involved in implementation must
44
 understand and accept the solution. Otherwise, the execution of the plan will be a
failure.

✔ The final step is evaluating and adapting the decisions results. In this step, the results
expected may or may not happen. It is, therefore important for the manager to use
control and feedback mechanisms to ensure results and to provide information for future
decisions.

❖ Feedback refers to the process which requires checking at each stage of the process
to assure that the alternatives generated, the criteria used in evaluation, and the
solution selected for implementation are in keeping with the goals and objectives
originally specified.

❖ Control refers to actions made to ensure that activities performed match the desired
activities, or goals, that have been set.

❖ In this last stage, the manager will find out whether or not the desired result is
achieved. If the result was positive, one may assume that the decision made was
good. If negative, further analysis is necessary.

45
HOW MUCH HAVE YOUR LEARNED?
Instructions: Read and understand this case study and answer the questions
provided. Write your answer on the next page.
Case No. 1
Title: JONA CAR RENTAL: Before the Next Teardrop Falls
For fourteen months, Mr. Jose Naguimbing acted as general manager of
Jona Car Rental. The company has branches in Angeles City, Olongapo City and
Baguio City. The main office is located in Makati City.
Jose succeeded his brother Pedro who founded the company and was
well-liked by his subordinates. The car rental company was very lucrative when
Pedro left it to establish another business.
Jose was very enthusiastic during the first few months of his stewardship.
At the fifth month, his staff members began losing confidence in his abilities to
run the firm. One time, when a purchase order for three units of Toyota car was
presented to him by the office manager for his signature, he signed it
immediately. The manager filed the order with a dealer on the same day. The
next morning, however, Jose instructed the office manager to cancel the order.
He also directed the manager to buy three units of Mitsubishi cars from a dealer.
When the position of branch manager for Angeles City became vacant, he
appointed someone whom his immediate staff thought to be the least deserving of
the three candidates. After three months, his staff members were proven right:
the revenue of the branch has drastically reduced. Compared with a competitor in
the area, the performance of the branch was dismal.
When Jose decided to establish another branch, he asked his staff to
identify three potential sites for him to choose from. He picked Laoag City. It
turned out that Laoag has the weakest potential. In contrast, the competitor who
put up a branch in Santiago City in the same year was registering substantial
revenues. Santiago City was one of the potential sites forwarded to Jose for
consideration.
What would you suggest to Mr. Jose Naguimbing to improve
his performance? (20 pts)
Is there anything that Pedro missed when he allowed his
brother Jose to succeed him? What Pedro should have done before
leaving the company? (20 Pts)

46
Please provide your answer here.

1. Answer must be in 2 paragraphs, with at least 3 but not more than 5 sentences per paragraph.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

2. Answer must be in 2 paragraphs, with at least 3 but not more than 5 sentences per paragraph.
______________________________________________________________________________
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______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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______________________________________________________________________________

RUBRIC

(20 points)

Criteria Points Your

5 3 2 0 Score

Demonstrates strong Demonstrates very general Demonstrates limited

knowledge or knowledge or knowledge or understanding
understanding of the topic understanding of the topic of the topic
Content

Writing flows smoothly Sentence structure and/or Sentence structure and word
from one idea to another word choice sometimes choice make reading and

47
 Organizatio interfere with clarity understanding difficult
n and
Clarity

Language There is no error in There are some errors in There are multiple errors in
grammar, spelling and grammar, spelling and grammar, spelling and
Mechanics
punctuations. punctuations. punctuations.

Submitted on or before the Submitted after

Timeliness
deadline the deadline

Student’s Score >>>>>>>>>>

UNIT V: PLANNING

Overview

After learning the basics of

business, its time for me to
introduce to you now the first of
the different management
functions. In this lesson you will
learn to appreciate the importance
of planning for lifelong learning.
You can also apply the concept and
processes in planning and discover
why it is the first step among the
basic management functions.

48

Learning Outcomes

At the end of this

 able to:
explain planning, its nature
and its importance to
business organizations;

enumerate the planning

process and explain its
execution:

name and differentiate the

types of plans; and

have an appreciation of the

importance of planning for
lifelong learning.

Before we proceed to the main topic, first, let me test what you
already know by answering the questions below.

1. How do you define and explain planning?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

2. Is your decision to enroll in this college and the course you have chosen involves
planning? Support your answer.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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 ________________________________________________________________________
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Introduction

Planning is prepared for tomorrow today; it is the activity that allows managers to
determine what they want and how to get it: they set goals and decide how to reach them.

Planning answers six basic questions in regard to any intended activity – what, when,
where, who, how and how much.

● The “what” is the goal or goals, the things or states of being we do not now have.
These may be long-term or short-term goals.
● The question of “when” is a question of timing; each long-term goal may have a
series of short-term goals that must be achieved before the long-term goal can be
reached.
● The “where” issue concerns the place or places where the plans and planning will
reach their conclusion.
● The question of “who” asks which specific people will perform specific tasks
essential to the plans.
● The “how” issue involves methods of short- and long-term goals: what specific steps
are to be taken in what sequence; the answer will outline a path to be taken by
personnel involved in the planning.
● The question of “how much” is concerned with the expenditure of resources that are
determined to be essential to reach goals.

Planning defined.

50
 ✔ Planning may be defined as selecting the best course of action in anticipation of future
trends so that the desired result may be achieved. It must be stressed that the desired
result takes first priority and the course of action chosen is the means to realize the goal.
✔ It is the fundamental management function, which involves beforehand, what is to be
done, when is it to be done, how it is to be done and who is going to do it. It is an
intellectual process which lays down an organization’s objectives and develops various
courses of action, by which the organization can achieve those objectives. It chalks out
exactly how to attain a specific goal.

The Planning Process

1. Setting organizational, divisional, or unit goals. The first task of the manager is to
provide a sense of direction to his firm (if he is the chief executive), to his division (if he
heads a division), or to his unit, (if he is a supervisor). The setting of goals provide an
answer to the said concern. If everybody in the firm (or division or unit, as the case
maybe) is aware of the goals, there is a big chance that everybody will contribute his
share in the realization of such goals.

2. Developing strategies or tactics to reach goals. After determining the goals, the next
task is to devise some means to realize them. The ways chosen to realize the goals are
called strategies and these will be the concern of top management. The middle and lower
management will adapt their own tactics to implement their plans.

Strategy may be defined as a course of action aimed at ensuring that the organization
will achieve its objectives.

A tactic is a short-term action by management to adjust to negative or external

influences. They are formulated and implemented in support of the firm’s strategies.
The decision about short-term goals and the courses of action are indicated in the tactical
plan. An example of tactic is the hiring of contractual workers to augment the company’s
current workforce.

3. Determining resources needed. When particular sets of strategies or tactics have been
devised, the manager will then determine the human and non-human resources required
by such strategies or tactics. Even if the resource requirements are currently available,
they must be specified.

The quality and quantity of resources needed must be correctly determined. Too much
resources in terms of either quality or quantity will be wasteful. Too little will mean loss
of opportunities for maximizing income.

51
 4. Setting standards. The standard for measuring performance may be set at the planning
stage. When actual performance does not match with the planned performance,
corrections may be made or reinforcements given.

Standard may be defined as a quantitative or qualitative measuring device designed

to help monitor the performance of people, capital goods and processes.

An example of a standard is the minimum number of units that must be produced by a

worker per day in a given work situation.

Types of Plans

1. Functional Area Plans. Plans may be prepared according to the needs of the different
functional areas. Among the types of functional area plans are the following:

● Marketing Plan – this is the written document or blueprint for implementing and
controlling an organization’s marketing activities related to a particular marketing
strategy.

● Production Plan – this is a written document that states the quantity of output a
company must produce in broad terms and by product family.

● Financial Plan – this is a document that summarizes the current financial

situation of the firm, analyzes financial needs, and recommends a direction for
financial activities.

● Human Resource Management Plan – this is a document that indicates the

human resource needs of a company detailed in terms of quantity and quality and
based on the requirements of the company’s strategic plan.

2. Plans with Time Horizon. This consist of the following:

● Short-range plans. These are plans intended to cover a period of less than one
year. First line supervisors are mostly concerned with these plans.

● Long-range plans.These are plans covering a time span of more than one year.
These are mostly undertaken by middle and top management.

3. Plans According to Frequency of Use.

● Standing Plans. These are plans that are used again and again, and they focus on
managerial situations that recur repeatedly. This may be classified as follows:

52
 o Policies – These are guidelines to aid managers at every level in making
decisions about recurring situations of function.
o Procedures – These are plans that describe the exact series of actions to be
taken in a given situation.
o Rules – These are statements that either require or forbid a certain action.

● Single-use Plans. These are plans specifically developed to implement courses of

action that are relatively unique and are unlikely to be repeated. This may be
classified as follows:
o Budget – is plan which sets forth the projected expenditures for a certain
activity and explains where the required funds will come from.
o Program – is a single-use plan designed to coordinate a large set of
activities.
o Project – is a single-use plan that is more limited in scope than a program
and is sometimes prepared to support a program

53
54
 CASE ANALYSIS:
Analyze the case by using the format recommended on the next pages. You will be
scored using the rubric provided.

Case No. 2

CAMELOT RECORDS: Those Were the Days

Mr. Miguelito Salde worked very hard as salesman of recorded music. He represented a
company which distributes compact discs and cassette tapes with foreign labels. For about ten years,
he personally called on dealers in Metro Manila and provinces to convince them to buy his products.
His exposure to the industry provided him with the right mindset to establish his own recording outfit.

With is mind working, Miguelito hatched a plan on how he will go about operating his own
company: the Camelot Records. In addition to his knowledge about the market, he collected
information on the production aspect of recording. The plan and the required information were all
stored in Miguelito’s memory.

Later, Miguelito mentally prepared a financial plan, as well as a personnel recruitment

program, no matter how crude they are. When he thought that his business plan is complete, he began
to implement it with the required speed. He worked systematically by following a procedure he alone
knows, and explaining to his recruits the exact functions of each of them.

Within a few months of operating, the company was able to produce two long playing
cassette tapes and CDs with recordings of original Filipino music. Local singers and composers were
tapped. The market received the products with moderate response. Miguelito went on producing
more recorded music until one of the first ten albums became a commercial hit! This feat catapulted
the company to recognition by the industry. The company’s commercial hits were followed by other
hits in succession.

All of the successful moves of the company were made without the benefit of a written plan.
What Miguelito did was to personally supervise all activities from hiring talents to providing
directions to salesmen. This he did vigorously with the company’s total workforce of 51 employees.

As the company grew with more productions and more than 200 employees, Miguelito’s
immediate subordinates are getting worried that their boss must be feeling the burden of a workload
that is getting heavier as the years pass. The staff feels that their leader must begin to delegate some
of the responsibilities to qualified persons. They thought that to be fully organized, a written plan
must be devised so every employee could effectively assist in implementing the various projects of
the company.

When the staff mentioned to Miguelito about the importance of a written plan, Miguelito
replied by saying:

“This company was organized without a written plan; it became successful without a written
plan; it will continue to be so without a written plan.”

55
 RUBRIC FOR CASE STUDY

(Total – 30 Points)

Criteria Score Your

5 3 2 1 0 Score

Identifies and Identifies and Identifies and Identifies and Unable to

Identification of
understands all of understands most of understands understands few identify the
the Main the main issues in the main issues in the some of the main of the main issues in the
Issues/Problem the case study case study issues in the case issues in the case study
s study case study

Insightful and Thorough analysis of Superficial Incomplete Failed to

thorough analysis all the issues in the analysis of some analysis of all provide
of all the issues case of the issues in the issues analysis on
Analysis of the
the case the case
Issues

Comments on Well-documented, Appropriate, well Superficial Little action No action

reasoned and thought out and/or suggested, suggested,
effective
pedagogically comments about the inappropriate and/or and/or
solution or appropriate solutions or solutions to some inappropriate inappropriate
strategies comments, proposals for of the issues in solutions to all solutions to
solutions or solutions, to most of the case study of the issues in all of the
(The solution proposals for the issues in the case the case study issues in the
solutions, to all study case study
may be in the
issues in the case
case already or study
proposed by
you)

Links to Course Excellent research Good research into Limited research Incomplete No research
into the issues with the issues with links with links to any research and mentioned
Readings or
clear links to class to class readings or readings links to any nor link to
Additional readings or other other materials readings any readings
Research materials

Very poor
grammar,
Excellent grammar, Very good grammar, Good grammar, Poor grammar, spelling and
Language
spelling and spelling and spelling and spelling and punctuations
Mechanics punctuations. punctuations. punctuations. punctuations. .

Submitted
after the
Submitted on or deadline
Timeliness
before the deadline

56
 TOTAL >>>>>>>>>>

Instructions: Analyze the case using this format.

A. Statement of the Problem

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

B. Objectives of the Study

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

C. SWOT Analysis (Provide three for each)

Strengths
___________________________________________________________________________
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___________________________________________________________________________
___________________________________________________________________________

57
 Weaknesses
___________________________________________________________________________
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___________________________________________________________________________
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Opportunities
___________________________________________________________________________
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___________________________________________________________________________
_

Threats
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

D. Alternative Courses of Action(Provide at least 3 ACAs)

1. ________________________________________________________________________
________________________________________________________________________
2. ________________________________________________________________________
________________________________________________________________________
3. ________________________________________________________________________
________________________________________________________________________

E. Discussion of the Alternative Courses of Action (Identify three advantages and disadvantages for
each ACA in letter D)

ACA No. 1
___________________________________________________________________________
___________________________________________________________________________

Advantage/s
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Disadvantage/s
___________________________________________________________________________
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ACA No. 2
___________________________________________________________________________
___________________________________________________________________________

Advantage/s
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Disadvantage/s
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

ACA No. 3
___________________________________________________________________________
___________________________________________________________________________

Advantage/s
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Disadvantage/s
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

F. Recommendation (What ACA would you recommend?)

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

G. Conclusion
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Further Instructions: You are required to

submit your case analysis online in Microsoft
Word thru my email add: HYPERLINK 59
"mailto:ruth.b.balajadia@gmail.com"
ruth.b.balajadia@gmail.com or FB messenger
account: Ruth B. Balajadia, following the
prescribed format above, including this:
 Note: To fully understand the above format, you may visit this
site:

https://papersowl.com/blog/how-to-write-a-case-study-analysis

UNIT VI

Overview

In this lesson, you will learn the need for organizing business activities. You will gain
understanding that planning alone isn’t the only step to achieve success, not only in business but
in life as well. As you go through this lesson, you will acknowledge the fact that the manager
needs to acquire various skills in management, including those for organizing business activities.
In this highly competitive environment, the unskilled manager may not be able to bring his unit,
60
or his company, as the case may be, to success. You will realize that the benefits of superior
organizing skills are too important for the manager to ignore since organizing is the first step
after planning.

Learning Outcomes
At the end of the lesson, you should be able to:
1. define organizing and explain the reasons for organizing business activities;
2. identify organization structures and its determinants; and
3. illustrate different organizational designs including the strengths and weaknesses of

each.

Again, before we proceed to the main topic, first, let me test what you
already know by answering the questions below.
Instructions:
MULTIPLE CHOICE. Encircle the letter of your choice.

1. It is the process of identifying and grouping the work to be performed, defining and delegating
responsibility and authority and establishing relationships for the purpose of enabling people to
work most effectively together in accomplishing objectives.
a. Formal organization c. Organizing
b. Informal groups/organization d. Organizational structure
2. It is an organization design that mixes elements, value systems. This allows a company more
flexibility in distributing work and assigning job roles.
a. Divisional Design c. Hybrid Design
b. Functional Design d. Matrix Design
3. It is formed within a formal organization as a network of interpersonal relationship when people
interact with each other.
a. Formal organization c. Organizing
b. Informal groups/organization d. Organizational structure
4. It is an organization structure in which organization is divided into smaller groups based on
special areas.
a. Divisional Design c. Hybrid Design
b. Functional Design d. Matrix Design
5. It is an organization in which job of each member is clearly defined, whose authority,
responsibility and accountability are fixed.
a. Formal organization c. Organizing
b. Informal groups/organization d. Organizational structure

61
 6. It is a structure in which there is more than one line of reporting managers, which means that the
employees of the organization have more than one boss.
a. Divisional Design c. Hybrid Design
b. Functional Design d. Matrix Design
7. It is the management function which relates to the structuring of resources and activities to
accomplish objectives in an efficient and effective manner.
a. Formal organization c. Organizing
b. Informal groups/organization d. Organizational structure
8. It is a manner of designing an organization so that it is split up into semi-autonomous units called
divisions.
a. Divisional Design c. Hybrid Design
b. Functional Design d. Matrix Design
9. It refers to an organizational structure that is often used in project management because it speaks
to both the product and the project and the function of the management producing it.
a. Divisional Design c. Hybrid Design
b. Functional Design d. Matrix Design
10. This is a diagram of the organization’s official positions and formal lines of authority.
a. Organization chart c. Organizational structure
b. Organizational manual d. Policy Manual

Reasons for Organizing

✔ Organizing is undertaken to facilitate the implementation of plans. In effective organizing,

steps are undertaken to break up the total job into more manageable man-size jobs. Doing
these will make it possible to assign particular tasks to particular persons.

✔ In turn, these will help facilitate the assignment of authority, responsibility, and
accountability for certain functions and tasks.

✔ Efforts expended in organizing may also result to easier coordination among various
activities.

Organizing, Defined

✔ Organizing is the management function which relates to the structuring of resources and
activities to accomplish objectives in an efficient and effective manner.

✔ The term “organizing” came from the word “organism” which means “to create a structure
with fully integrated parts that are related to each other and is governed by their
relationships to the whole. The word “organization” refers to “a structure or a network of
relationships among individuals interacting with one another”.

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✔ The result of organizing activities is the organization which may be defined as a collection of
people or activities formed for a specific purpose

The Organizational Structure and their Determinants

The structure is the means by which the organization will attain its objectives and goals. The
structure must be one that considers, apart from the organization’s goals and objectives, its
resources, and its environment, both internal and external.
The determinants of organization structure are:

● Strategy, or Plans for achieving the Company’s Objectives.

As the structure is the tool used in achieving the organization’s
objectives, it must follow strategy which defines the specific
means of realizing goals. Strategy determines the lines of
authority and channels of communication that will have to be
set up between the managers and their respective units.

● The Technology that will be used in Carrying out the

Strategy. The nature of technology that will be used will
determine to a certain extent the type of structure the organization will have to adapt.

● The People Employed at all levels and their Functions. The structure is also determined
by the people in the organization’s internal and external environment. The structure must be
designed to serve the needs of the managers and their subordinates.

● Size of the Organization. The size of the entire organization and its various units will also
determine the kind of structure that will have to be adapted.

The Formal Organization

✔ The formal organization is the structure that

details lines of responsibility, authority and
position.

✔ What is depicted in the organization chart is the

formal organization. It is the planned structure
and it represents the deliberate attempt to
establish patterned relationships among
components that will meet the objectives effectively.

✔ The formal structure is described by management through:

63
 1. Organizational Chart. This is a diagram of the organization’s official positions and
formal lines of authority.
2. Organizational Manual. This provides written descriptions of authority relationships,
details the functions of major organizational units, and describes job procedures.
3. Policy Manual. This describes personnel activities and company policies.

Informal Groups

✔ Formal organizations require the formation of formal

groups which will be assigned to perform specific
tasks aimed at achieving organizational objectives.
The formal group is a part of the organization’s
structure.

✔ There are instances, however, when members of an

organization spontaneously form a group with
friendship as a principal reason for belonging. This
group is referred to as an informal group. It is not
part of the formal organization and it does not have a
formal performance purpose.

✔ Informal groups are oftentimes very useful in the

accomplishment of major tasks conform with the expectations of the members of the
informal group.

Basic Organizational Design

There are four basic organizational designs. These are the following:

64
1. Functional Design. An organization
may be designed basically according to
function. In organizations with
functional design, employees are
grouped together in separate departments
on the basis of common tasks, skills or
activities. A typical organization with
functional design is illustrated on the
right.

Strengths Weaknesses
1. Efficient use of resources 1. Slow decision-making
2. In-depth skill development 2. Less innovation
3. Clear career paths 3. Unclear performance responsibility
4. Unity of direction 4. Limited management training
5. Enhanced coordination within function 5. Poor coordination across functions

2. Divisional Design. The organization with

divisional design is that type where all activities
needed to produce a good or service are grouped
together into an independent unit. An
organization with divisional design is shown on
the right.

Strengths Weaknesses
1. Adaptation to unstable design 1. Inefficient use of resources
2. High customer satisfaction 2. Low in-depth training for personnel
3. High task coordination 3. Focus is on division objectives
4. Clear performance responsibility 4. Loss of control
5. General management training

65
3. Hybrid Design. The hybrid design is a
combination of divisional units and Hybrid Organization Structure
functional departments located at corporate
headquarters. It is an organizational model
that combines two or more reporting
structures. It is best suited for work
environments that are dynamic, as hybrid
structures can shift from project to project.

Strengths Weaknesses

1. Simultaneous coordination 1. Slow response to exceptional situations

2. Integration of goals with objectives 2. Conflict between headquarters and divisions

3. Efficient and highly adaptable 3. Administrative overhead

4. Matrix Design. An organization with matrix

design is one that implements functional and
divisional structures simultaneously in each
department. The employee is supervised by the
functional manager in his work as a specialist. The
following conditions favor the use of matrix
design.
1. Environmental pressures exist for a dual
focus, such as innovation and quality.
2. Large quantities of information must be
processed.
3. Efficiency is needed in the use of resources.

Strengths Weaknesses

1. It allows demands from the environment to be met 1. It creates dual authority confusion.
simultaneously.

2. It provides flexibility. 2. It spawns power struggle.

3. It encourages resource efficiency. 3. It is time-consuming.

4. It enhances skill development. 4. It requires interpersonal skills training.

66
5. It increases motivation and commitment among 5. It generates high implementation cost.
employees

6. It aids top management in planning 6. It creates dual authority confusion.

More of this discussion at:

https://businessjargons.com/organization.html
https://bizfluent.com/facts-7241372-hybrid-
organization-structure.html

To test your comprehension about the topics discussed in this 1. In not less
lesson, answer the questions provided below. Refer to page 46 for than 7 but not
the rubric. more than 10
sentences,
explain the concept of organizing and the importance of organizing business activities. (20pts)
______________________________________________________________________________
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______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

2. In not less than 7 but not more than 10 sentences, compare the different organizational
designs/structures. (20 pts)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

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 ______________________________________________________________________________
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UNIT VII

Overview

In this lesson, you will learn that

after deciding on the type of organization
structure that will best serve the interest of
the business firm, the next move that will
have to be made is to fill up the identified
positions with the most qualified persons
available. I will discuss to you a variety of
managerial activities essential to keep
those positions staffed with personnel who
have the knowledge, the skills, and the
motivation to perform the roles
effectively. You will get the
understanding on why people are vital
components for the effective operation of
the organization; including the importance
of staffing as a tool of management to
determine the success or failure of the
organization.

Learning Outcomes
68
 At the end of this lesson, you should be able to:
1. explain staffing and its role in business;
2. enumerate the staffing procedures and explain the manner they are practiced; and
3. determine the importance of employee health and safety and their relationships in
business organizations.

Like the previous lessons, before we proceed to the main topic, let
me test what you already know by answering the questions below.
Instructions: MATCHING TYPE. Select the answer for column A from the choices in column
B. Write your answer on the space after each statement.

A B
1. It is the process of introducing new hires to their jobs, co-
workers, responsibilities and workplace. _____

a. Compensation
2. It is a regular review of an employee’s job performance and
overall contribution to a company. _____ b. Demotion

3. It is the process of hiring eligible candidates in the organization c. Development

or company for specific positions. _____
d. Human Resource
4. What do you call the process of increasing the knowledge and Planning
skills of workforce to enable them to perform their jobs
effectively? _____ e. Orientation

5. It is the process of finding and hiring the best qualified candidate f. Performance
for a job opening, in a timely and cost effective manner. _____ Appraisal

6. It is defined as the process of choosing the right candidates for g. Promotion

the vacant positions. _____
h. Recruitment

69
7. It is the continuous process of systematic planning ahead to
achieve optimum use of an organization’s most valuable asset- i. Selection
quality employees. _____
j. Separation
8. It occurs when the employment contract or at-will agreement
between an employee and the company comes to an end like k. Staffing
retirement or resignation. _____
l. Training
9. It involves a more expansive employee growth plan, fir future
performance rather than immediate career role improvement.
_____
10. This refers to the movement by person into a position of higher
pay and greater responsibilities and which is given as a reward
for competence and ambition. _____

Staffing defined

✔ Staffing may be defined as the management function that determines human resource needs,
recruits, selects, trains, and develops human resource for jobs created by an organization.

✔ “Staffing refers to the task of filling position in the organization with the most qualified
people available”. This managerial function looks into the positions in the organizational
structure to be done by identifying work force requirements.

The Staffing Procedures

The staffing process consists of the following series of steps:

1. Human Resource Planning
2. Recruitment
3. Selection
4. Induction and Orientation
5. Training and Development
6. Performance Appraisal
7. Employment Decisions (monetary rewards, transfers, promotions, and demotions)
8. Separation

1. Human Resource Planning

✔ The planned output of any organization will require a

systematic deployment of human resources at various
70
 levels. To be able to do it, the manager will have to involve himself with human resource
planning. This will be done in conjunction with the efforts of the human resource officer,
i.e., if the company has one.

2. Recruitment

✔ Recruitment refers to attracting qualified persons to

apply for vacant positions in the company so that
those who are best suited to serve the company may
be selected.

✔ Recruitment is a human resource management

practice designed to locate and attract job applicants
for particular positions.

● Sources of Applicants. When management wants to fill up certain vacancies, the

following sources may be tapped:
o The organization’s current employees
o Newspaper advertising
o Schools
o Referrals from employees
o Recruitment firms
o Competitors

❖ For entry-level personnel, the manager will likely rely on newspaper and advertising,
schools and referrals. When recruiting managers, the reliable sources are current
employees, recruitment firms and competitors.

3. Selection

✔ Selection refers to the act of choosing from

those that are available individuals most likely
to succeed on the job.

✔ Selection is a human resource management

practice in which companies assess and choose
from among job candidates.

71
✔ The purpose of selection is to evaluate each candidate and to pick the most suited for the
position available.

Ways of Determining the Qualifications of a Job Candidate. The available means for
determining the qualifications of candidates are the following:

⮚ Application blanks. This provides information about a person’s characteristics such as

age, marital status, address, educational background, experience, and special interests.
After reading the application blank, the evaluator will have some basis on whether or not
to proceed further in evaluating the applicant.
⮚ References. These written by previous employers, co-workers, teachers, club officers,
and the like about the person. Such statements may provide some vital information on
the character of the applicant.
⮚ Interviews. Information may be gathered in an interview by asking a series of relevant
questions to the job candidate.
⮚ Testing. This involves an evaluation of the future behavior or performance of an
individual.
● Types of tests:

1. Psychological test 2. Physical Examination

a. Aptitude test
b. Performance test
c. Personality test
d. Interest tes

4. Induction and Orientation

✔ In induction, the new employee is provided with the

necessary information about the company. His duties,
responsibilities, and benefits are relayed to him.
Personnel and health forms are filled up, and passes are
issued. The company history, its products and services,
and the organization structure are explained to the new
employee.

✔ In orientation, the new employee is introduced to the

immediate working environment and co-workers. The
following are discussed: location, rules, equipment, procedures, and training plans.

72
✔ Orientation refers to “the assistance given to the newly hired employee in adjusting to the
new work environment which encompasses the people around him, the facilities of the
organization, the programs and services, and technology used in the production of goods
and delivery of services.”

✔ For a large organization, a formal orientation program is held. This explains the features of
the organization – its philosophy, vision and mission, history, products and services, general
policies, institutional culture, organization and other regulations. Although these may be
described in detail in a brochure form, the orientation meeting gives new employees an
opportunity to ask questions.

5.Training and Development

✔ If the newly-hired (or newly-promoted)

employee is assessed to be lacking the
necessary skills required by the job, training
becomes a necessity.

✔ Employee training and development refers to

the continued efforts of a company to boost the
performance of its employees. Companies aim
to train and develop employees by using an
array of educational methods and programs

✔ In the past few years, training and development have emerged as a crucial element of strategy.
More company owners have realized that investing in employee training and development not
only serves as a motivation, but it also enables the organization to create a highly skilled
workforce

6. Performance Appraisal

✔ Performance appraisal is the measurement

of employee performance.

✔ Performance appraisal is “the assessment of

employees’ job performance levels”.
Performance appraisals should accurately
assess the quality of employee job
73
 performance. It is the systematic evaluation of individuals with respect to their performance
on the job and their potential for development.

❖ Ways of Appraising Performance:

1. Rating Scale Method. This is the method where each trait or characteristics to be
rated is represented by a line on which the rater indicates the degree to which the
individual possesses the trait or characteristics.

2. Essay method. The evaluator in this method composes statements that best describes
the person evaluated.

3. Management by objectives method. This method is one where specific goals are set
collaboratively for the organization as a whole, for various sub-units, and for each
individual member. Individuals are then evaluated on the basis of how well they have
achieved the results specified by the goals.

4. Assessment center method. This is the method where one is evaluated by persons
other than the immediate superior. This method is used for evaluating managers.

5. Checklist method. This method is one where the evaluator checks statement on a list
that are deemed to characterize an employee’s behavior or performance.

6. Work standards method. Under this method, standards are set for a realistic worker
output and later on used in evaluating the performance of non-managerial employees.

7. Ranking method. This is the method where each evaluator arranges employee’s
names in rank order from the best to the poorest.

8. Critical-incident method. This method is one where the evaluator recalls and writes
down specific (but critical) incidents that indicate the employee’s performance. A
critical incident occurs when employee behavior results in an unusual success or
failure on some parts of the job.

7. Employment Decisions

After evaluating the performance of employees (managerial or otherwise), the management will
now be ready to make employment decisions. These may consist of the following:

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 1. Monetary rewards. These are given to employees whose performance is at par or above
standard requirements.

2. Promotion. This refers to the movement by

person into a position of higher pay and
greater responsibilities and which is given as
a reward for competence and ambition.
3. Transfer. This is the movement of a person
to a different job at the same or similar level
of responsibility in the organization.
Transfers are made to provide growth
opportunities for the persons involved or to
get rid of poor performing employees.
4. Demotion. This is a movement from one
position to another which has less pay or responsibility attached to it. Demotion is used
as a form of punishment or as a temporary measure to keep an employee until he is
offered a higher position.

8. Separation

✔ Separation is either a voluntary or involuntary termination of an employee’s services. When

made voluntarily, the organization’s management must find out the real reason. If the
presence of a defect in the organization is determined, corrective action is necessary.

✔ Involuntary separation (or termination) is the last option that the management exercises when
an employee’s performance is poor. This is usually made after training efforts fail to produce
positive results.

Compensating Employees

✔ One of the important aspects of staffing is employee compensation. Certain factors

determine the salary or wages paid to employees. These are the following:
1. Performance – when an individual’s output is better than the others, this should be
recognized and he should be provided a higher pay rate

2. The relative worth of each job within the firm – to determine a job’s relative worth,
job evaluation is undertaken. This activity allows the organization to rank jobs and
determine their hierarchy of importance across all jobs in the organization.

3. Labor market conditions and prevailing wage rates – some jobs may be similar with
other jobs in terms of difficulty, responsibility and other factors. Some of them, however,
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 will be paid higher rates because of bigger demand for them. Companies in dire need of
certain skills will pay premium rates if these skills are not readily available.
4. Type of pay system. Differences in pay among similar jobs in and out of the company
depend on the type of pay system adapted. Wages may vary because of seniority,
company productivity, and profit-sharing considerations.

Employee Health and Safety

✔ A requisite to organizational productivity is the
maintenance of employee health and safety.
Employees who are healthy and who feel safe in their
places of work can contribute immensely in the
achievement of the organization’s objectives.

✔ This is made possible when management is concerned with the following:

1. Organizational work environment, including air, water, and noise pollution
2. Other health hazards like poor diet, alcohol, and drugs
3. The safety of the work area
4. The safety of the equipment used
⮚ To address such concerns, the following are usually undertaken:
1. Installation of accident prevention programs; and
2. Elimination of health hazards in the work areas

Employee Relation

✔ Peace and harmony in the workplace is a requisite for

efficiency in production. This happens when employees
consider relationship with the organization as worthwhile.
As such, employee or labor relations constitute an
important aspect of management’s concerns.

✔ The organization must be able to manage employee

relations, which is, sometimes made in cooperation with
unions. This is not to downgrade the importance of managing employee relations in a non-
unionized situation.

More of these topics at:

https://youtu.be/dzj9De7_xDo
https://www.youtube.com/watch?v=MjY3WPUjQrw
https://corporatefinanceinstitute.com/resources/
careers/soft-skills/employee-training-and-development/
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 To assess your comprehension about this
lesson, answer the test below. Refer to page 46
1. for the rubric.

In not less than 7 but not

more than 10 sentences, explain staffing and its role in business. (20 pts)
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2. Enumerate the staffing procedures and explain how they are practiced. (20 pts)
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COURSE OUTLINE FOR FINAL TERM (Module 3)

UNIT VIII: Communication

Topic1 - What is communication?
Topic 2 - Functions of Communication
Topic 3 - The Communication Process
Topic 4 - Forms of Communication
Topic 5 - Barriers to Communication

UNIT IX: Motivating

Topic 1 –What is motivating?
Topic2 - Factors Contributing to Motivation
Topic 3 – Theories of Motivation
Topic 4 – Techniques of Motivation

UNIT X: Leading
Topic 1 – What is leading?
Topic 2 –How leaders influence others?
Topic 3 –Bases of Power
Topic 4 – Traits of Effective Leaders
Topic 5 – Behavioral Approaches to Leadership Style

UNIT XI: Controlling

Topic 1 – Controlling, defined
Topic 2 – Importance of Controlling
Topic 3 – Steps in the Control Process

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 UNIT VIII
Overview

In this lesson, I will

help you understand the
importance of communication
in business, its functions,
forms, the barriers and how to
overcome them. This lesson
will enlighten you on the steps
of the communication process
as it applies in business and in
life as well.

Learning Outcomes

At the end of the lesson, you will be able to:

1. explain the functions and forms of communication;
2. enumerate the steps in the communication process; and
3. identify the barriers to communication and how to overcome them.

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 As practiced, before we proceed to the main topic, let me test what you
already know by answering the questions below.

MULTIPLE CHOICE. Encircle the letter of the correct answer.

1. This refers to interference to effective communication occurring in the environment

where the communication is undertaken.
a. Personal Barriers b. Physical Barriers c. Semantic Barriers
2. It is mostly involves hearing the words of the sender, although sometimes, opportunities
are provided for seeing the sender’s body movements, facial expression, gestures, and
eye contact.
a. Communication b. Oral communication c. Written Communication
3. It is the act of transferring information from one place, person or group to another.
a. Communication b. Oral communication c. Written Communication
4. It is the means of conveying message through body language, as well as the use of time,
space, touch, clothing, appearance, and aesthetic elements.
a. Communication c. Verbal Communication
b. Non-verbal Communication
5. These are hindrances to effective communication arising from the communicator’s
characteristics as a person, including emotions, values, poor listening habits, sex, age,
race, socio-economic status, religion, education and others.
a. Personal Barriers b. Physical Barriers c. Semantic Barriers
6. It is considered as the last step in the communication process where the receiver provides
feedback to the sender.
a. Encode b. Decode c. Provide Feedback
7. This means translating the message from the sender into a form that will have meaning
to the recipient.
a. Encode b. Decode c. Provide Feedback
8. When the wrong meaning has been chosen by the receiver, misunderstanding occurs.
Such error constitutes a barrier to communication. What kind of barrier is this?
a. Personal Barriers b. Physical Barriers c. Semantic Barriers
9. It is considered as hindrance to communication.
a. Barrier b. Connection c. Distance
10. It is the actual receiving of the message by the intended receiver.
a. Encode b. Decode c. Receive

What is Communication?

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✔ Communication is the process of sharing information through verbal and non-verbal
means, including words, messages, and body movements.

✔ Communication may happen between superior and subordinate, between the manager and the
customer, between an employee and a government representative, and the like. It may be
done face-to-face, or through printed materials like newspapers and books, or through
electronic devices like the telephone and the computer.

✔ Good management dictates that communication must be made for a purpose, and because it
has cost attached to it, it must be used effectively.

✔ Communication happens regardless of the time and the distance involved in the actual
delivery of message. For instance, a message may be recorded by a person to be played to an
audience many light years away and thousands of years later.

Functions of Communication

1. Information Function. Information provided through communication may be used in

decision-making at various work levels in the organization. A construction worker, for
instance, may be given instructions on the proper use of certain equipment. This will
later provide him with a guide in deciding which equipment to use in particular
circumstances.

2. Motivation Function. Communication is also oftentimes used as a means to motivate

employees to commit themselves to the organization’s objectives. When objectives are
clearly stated, direction is provided, and achieving them becomes a matter of course.

3. Control Function. When properly communicated, reports, policies, and plans, define
roles, clarify duties authorities and responsibilities. When it happens, effective control is
facilitated.

4. Emotive function. When feelings are expressed in the organization, employees are
affected by anxiety, which in turn, affects performance. Whatever types of emotions are
involved, whether satisfaction, dissatisfaction, happiness, or bitterness, communication
provides a means to decrease the internal pressure affecting the individual.

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The Communication Process

The communication process consists of eight steps which are as follows:

1. Develop an idea. This is the most important step in effective communication. It is important that the
idea to be conveyed must be useful or of some value.
2. Encode. The next step is to encode the idea into words, illustrations, figures, or other symbols
suitable for transmission. The method of transmission should be determined in advance so that the
idea may be encoded to conform to the specific requirements of the identified method.
3. Transmit. After encoding, the message is now
ready for transmission through the use of an
appropriate communication channel. Among Sender
(source)
the various channels available for transmission
are the following: the spoken word, body
movements, the written word, television, Feedback Encode
telephone, cellphone, computer, radio, artist’s
painting, the movies, sound recording, and
some others. Proper transmission is very
important so the message sent will reach and
hold attention of the receiver. To achieve this,
Receiver Channel
the communication channel must be free of
barriers, or interference (sometimes referred to
as noise). Decode
4. Receive. The next step in the communication
process is the actual receiving of the message
by the intended receiver. The requirement is for the receiver to be ready to receive at the precise
moment the message relayed by the sender.
5. Decode. This means translating the message from the sender into a form that will have meaning to
the recipient. If the receiver knows the language and terminology used in the message, successful
decoding may be achieved. If the receiver understands the purpose and the background situation of
the sender, decoding will be a lot easier.
6. Accept. The next step is for the receiver to accept or reject the message. Sometimes, acceptance (or
rejection) is partial.
7. Use. If the message provides something of importance to a relevant activity, then the receiver could
store it and retrieve it when required. If the message requires a certain action to be made, then he
may do so, otherwise, he discards it as soon as it is received. All of the above-mentioned options will
depend on how the message is perceived by the receiver.
8. Provide feedback. This is the last step in the communication process where the receiver provides
feedback to the sender. Depending on the perception of the receiver, however, this important step
may not be made. Even if the feedback is relayed, it may not reach the original sender of the
message. This may be attributed to the effects of any of the communication barriers.

Forms of Communication
1. Verbal
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 2. Non-verbal

Verbal Communication

✔ Verbal communications are those transmitted through hearing or sight. Those modes of
transmission categorize verbal communication into two classes: oral and written.

✔ Oral communication mostly involves hearing the words of the sender, although sometimes,
opportunities are provided for seeing the sender’s body movements, facial expression, gestures, and
eye contact. Sometimes, feeling, smelling, tasting, and touching are involved.

✔ An alternate to oral communication is the written communication where the sender seeks to
communicate through the written word. The written communication is, sometimes, preferred over the
oral communication because of time and cost restraints. When a sender, for instance, cannot
personally meet or call the receiver due to some reason a written letter or memo is prepared and sent
to the receiver.

Non-verbal Communication

✔ Non-verbal communication is the means of conveying message through body language, as well
as the use of time, space, touch, clothing, appearance, and aesthetic elements. Body language
consists of gestures, bodily movement, posture, facial expression, and mannerism of all kinds.

The Barriers to Communication

✔ Various factors may impede the efficient flow of communication. Any or all of these factors may, at
any stage, derail the process. Even if the channel transmits the message, the timing and the meaning
of the message may be affected by the factors.

✔ Barriers to communication may be classified generally as:

⮚ Personal barriers. These are hindrances to effective communication arising from the
communicator’s characteristics as a person, including emotions, values, poor listening habits,
sex, age, race, socio-economic status, religion, education and others.

⮚ Physical barriers. This refers to interference to effective communication occurring in the

environment where the communication is undertaken. The very loud sound produced by a
passing jet temporarily drowns out the voice of a guest delivering a speech. Such distraction
does not allow full understanding of the meaning of the entire message and is an example of a
physical barrier. Physical barriers include distances between people, walls, a noisy sound
system near a telephone, and the like.

⮚ Semantic barriers. This is the study of meaning as expressed in symbols. Words, pictures, or
actions, are symbols that suggest certain meanings. When the wrong meaning has been chosen
by the receiver, misunderstanding occurs. Such error constitutes a barrier to communication.
A semantic barrier may be defined as an interference with the reception of a message that
occurs when the message is misunderstood even though it is received exactly as transmitted.

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Overcoming Barriers to Communication

✔ When communication barriers threaten effective performance, certain measures must be instituted to
eliminate them. To reduce or totally eliminate problems due to noise, selective perception, and
distraction, the following are recommended:
1. Use feedback to facilitate understanding and increase the potential for appropriate action.
2. Repeat messages in order to provide assurance that they are properly received.
3. Use multiple channels so that the accuracy of the information may be enhanced.

4. Use simplified language that is easily understandable and which eliminates the possibility of
people getting mixed-up meanings.

It is now the time to test your comprehension by answering these

questions. The rubric is also provided on page 46 to guide you.

Essay.

1. Explain the concept of communication and its forms. (20pts)

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2. Illustrate and describe the communication process. (20 pts)

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 ________________________________________________________________________
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3. How communication barriers affect communication and how to overcome them? (10 pts.)
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UNIT IX

Overview

In this lesson, you will acknowledge how motivation influence performance of employees
and how it contributes to the productivity of the business. It also includes different theories and

85
techniques for you to become familiar with some philosophers who contributed to management
practices.

Learning Outcomes

At the end of the lesson, you should be able to:

1. define motivating and the factors contributing to motivation;
2. name different theories of motivation and compare them;
3. identify techniques of motivation; and
4. relate to how motivation contributes employees’ productivity in performing their
tasks and towards the achievement of the company’s goals.

As practiced, before we start with this lesson, please answer this pre-
test.

MATCHING TYPE. Provided the answer for column A from column B.

A B
1. It is one of Maslow’s Hierarchy of Needs Theory take
priority over other needs.
a. Goal setting theory
2. It refers to the process of improving performance with
objectives, deadlines, or quality standards. b. Expectancy theory

3. This theory identified two classes of factors associated with c. Extrinsic Rewards
employee satisfaction and dissatisfaction.
d. Flexible work
4. This involves the realization of the individual’s potential as schedules
a human being and becoming someone that he could be.
e. Herzberg’s Two-
5. It is a motivation model based on the assumption that an Factor Theory

86
 individual will work depending on his perception of the
probability of his expectations to happen. f. Intrinsic rewards
6. These needs include freedom from bodily harm and
financial security which may be affected by the loss of job, g. Maslow’s Hierarcy
or death of the family’s breadwinner, and others. of Needs Theory
7. It is influenced by the satisfaction of needs that are
necessary for sustaining life or essential for well being and h. Motivation
growth.
i. Physiological
8. This theory explains that human beings have five basic needs
needs which relate to the following: physiological, security,
social, esteem, and self-actualization. These needs would j. Sabbaticals
have to be satisfied in hierarchical fashion, meaning one
need will have to be satisfied first before satisfying the other k. Security needs
needs
9. Those which are internally experienced payoffs and which l. Self-actualization
are self-granted. Examples are a sense of accomplishment, needs
self-esteem, and self-actualization.
10. There is an arrangement called flextime, which allows m. Social needs
employees to determine their own arrival and departure times
within specified limits

What is Motivating?

✔ Motivating refers to the act of giving employees reasons or incentives … to work to achieve
organizational objectives.

✔ Motivation, on the other hand, refers to the process of activating behavior, sustaining it,
and directing it toward a particular goal. This definition is useful because it specifies
three stages: activating, sustaining, and directing actions towards the achievements of
objectives.

Factors Contributing to Motivation

The following factors influence a person to do his job well.
1. Willingness to do the job. People who like what they are doing are highly motivated to
produce the expected output
2. Self-confidence in carrying out the task. When employees feel that they have the
required skill and training to perform the task, the more motivated they become.
3. Needs Satisfaction. People will do their job well if they feel that by doing so, their needs
will be satisfied.

Theories of Motivation
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 There are various theories of motivation, but only the four most influential ones will be
presented. They consist of the following:
1. Maslow’s Hierarchy of Needs Theory. Abraham Maslow, an eminent psychologist,
theorized that human beings have five basic needs which relate to the following:
physiological, security, social, esteem, and self-actualization. These needs would have to be
satisfied in hierarchical fashion, meaning one need will have to be satisfied first before
satisfying the other needs.

● Physiological Needs. Those that are

concerned with biological needs like
food, drink, rest, and sex fall under the
category of physiological needs. These
needs take priority over the other needs.

● Security Needs. After satisfying the

physiological needs, people will seek to
satisfy their safety needs. These needs
include freedom from bodily harm and
financial security which may be
affected by the loss of job, or death of
the family’s breadwinner, and others.

● Social Needs. After satisfying his

physiological and security needs, the
employee will now strive to secure love, affection, and the need to be accepted by peers.

● Esteem Needs. The fourth level of needs refer to esteem needs and they include the need
for a positive self-image and self-respect and the need to be respected by others.

● Self-actualization needs. This involves the realization of the individual’s potential as a

human being and becoming someone that he could be.

2. Herzberg’s Two-Factor Theory. This was

developed by Frederick Herzberg which
indicate that a satisfied employee is
motivated from within to work harder and
that a dissatisfied employee is not self-
motivated.

✔ Herzberg identified two classes of

factors associated with employee
satisfaction and dissatisfaction.

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 ✔ In his research, Herzberg found out that satisfied employees considered the following
factors (called satisfiers or motivation factors) responsible for job satisfaction:
achievement, recognition, the work itself, responsibility achievement and growth

✔ Dissatisfied employees consider the following factors (called dissatisfiers or hygiene) as

responsible for job job dissatisfaction: company policy and administration, supervision,
relationship with supervisor, work conditions, salary, relationship with peers, personal
life, relationship with subordinates, status and security.

● If Herzberg’s theory will be considered by the manager in motivating employees,

he must do something to eliminate the dissatisfiers and install satisfiers.

3. Expectancy Theory. Expectancy theory is a

motivation model based on the assumption that
an individual will work depending on his
perception of the probability of his expectations
to happen.

✔ The theory poses the idea that motivation is

determined by expectancies and valences.
An expectancy is a belief about the
likelihood or probability that a particular
behavioral act (like attending training
sessions) will lead to a particular outcome
(like a promotion). Valence is the value an
individual places on the expected outcomes
or rewards.

4. Goal Setting Theory. Goal setting refers to the process of improving performance with
objectives, deadlines, or quality standard. When individuals or groups are assigned specific
goals, a clear direction is provided and which later motivates them to achieve those goals.

Techniques of Motivation

✔ Individuals or groups of individuals may be motivated to perform through the use of various
techniques. These techniques may be classified as follows:

1. Motivation through Job Design. A person will be highly motivated to perform if he is

assigned a job he likes. The first requisite, however, is to design jobs that will meet the
requirements of the organization and the persons who will occupy them.

Job design is concerned with specifying the tasks that constitute a job for an individual or
a group. In motivating through a job design, two approaches may be used:

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 a. Fitting People to Jobs. Routine and repetitive tasks make workers suffer from
chronic dissatisfaction. To avoid this, the following remedies may be adapted:
o Realistic job previews– where management provides honest explanations of what
the job actually entails
o Job rotation – where people are moved periodically from one specialized job to
another.
o Limited exposure – where a worker’s exposure to a highly fragmented and
tedious job is limited.

b. Fitting Jobs to People. Instead of changing the person, management could consider
changing the job. This may be achieved with the use of the following:
o Job enlargement – where two or more specialized tasks in a work flow sequence
is combined into a single job
o Job enrichment – where efforts are made to make jobs more interesting,
challenging, and rewarding

2. Motivating through Rewards. Rewards consist of material and psychological benefits to

employees for performing tasks in the workplace. Properly administered rewards
systems can improve job performance and satisfaction. Rewards may be classified into
two categories:
a. Extrinsic rewards. Those which refer to payoffs granted to the individual by another
party. Examples are money, employee benefits, promotions, recognition, status
symbols, praise and others.
b. Intrinsic rewards. Those which are internally experienced payoffs and which are
self-granted. Examples are a sense of accomplishment, self-esteem, and self-
actualization.

3. Motivation through Employee Participation. When employees participate in deciding

various aspects of their jobs, their personal involvement, oftentimes, is carried up to the
point where the tasks are completed.

4. Other Motivation Techniques. The advent of theories of individual differences and the
biological clock of human beings has challenged managers to adapt other motivation
techniques such as:

a. Flexible work schedules. There is an arrangement called flextime, which allows

employees to determine their own arrival and departure times within specified limits.
For example, a business firm may allow one group of employees to take the 8:00A
AM to 5:00 PM schedule, another group takes the 9:00 AM to 6:00 PM schedule, and
another takes the 10:00AM to 7:00PM schedule.

b. Family support services. Employees are oftentimes burdened by family obligations

like caring for children. Progressive companies provide day care facilities for

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 children of employees. For instance, a multinational company in faraway Davao
province has even opened an elementary and high school within the plantation site.

c. Sabbaticals. A sabbatical leave is one given to an employee after a certain number of

years of service. The employee is allowed to go on leave for two months to one year
with pay to give him tome for family, recreation and travel.

More discussion about motivation on these video links:

https://www.youtube.com/watch?v=akUdyh8ERvQ
https://www.youtube.com/watch?v=L0PKWTta7lU
https://www.youtube.com/watch?v=azs9Wv7sorU

To test your understanding about the topics in

this lesson, kindly answer these questions. You
refer to the same rubric we used in the previous ESSAY.
tests as your guide.
1. In two paragraphs
with at least 3 but not
more than 5 sentences for each paragraph, explain motivation and the factors contributing
to motivation. (20 pts)
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2. Name and differentiate the theories of motivation. (20 pts)

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UNIT X: LEADING

Overview

After the various requirements for

maintaining a business organization are put in
place, the firm will still need a sort of an
engine that will propel it to become a
successful venture. Somebody must show the
92
employees the right direction from time to time. Somebody must console the employees who are
distracted by minor setbacks. Somebody must uplift their spirits when they feel demoralized.
This lesson now will let you understand how leading can make the above concerns possible.

Learning Outcomes

At the end of this lesson, you should be able to:

identify the different traits of an effective leader and
how leaders influence others;
describe the behavioral approaches to leadership
style;
name the bases of power and how they influence
leaders.
assess yourself, in terms of your traits and leadership
potentials to hone as future leaders

93
 Again, before you go through the topics for this lesson, kindly answer
this pre-test.

MATCHING TYPE. Provide the answer for column A from column B.

A B
1. When a leader openly invites his subordinates to participate
or share in decision-making, policy-making, and operation
methods, he is said to be a _____
a. autocratic leader
2. It is the process of influencing and supporting others to work
enthusiastically toward achieving objectives. b. charisma

3. A leader is said to be _____ when he considers employees as c. coercive power

human beings of intrinsic importance and with individual and
personal needs to satisfy. d. Employee-Oriented

4. When a person has the ability to give rewards to anybody e. Free-rein leader
who follows orders or request, he is said to have _____
f. Leadership
5. When a person has sufficient personal magnetism that
motivates people to follow his directives, this person is said g. Leading
to have ______. It is one of the traits of a good leader.
h. Legitimate Power
6. A leader who makes decisions without consulting
subordinates. i. Participative Leader

j. Referent Power
7. It is a management function which involves influencing
others to engage in the work behaviors necessary to reach
k. Reward Power
organizational goals.
l. Task-oriented
8. When a person compels another to comply with other
through threats or punishment, he is said to possess_____

9. A person who occupies a higher position has legitimate

power over persons in lower positions within the
organization.
10..Leaders who set objectives and allow employees or
subordinates relative freedom to do whatever it takes to
accomplish those objectives are called ______

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What is Leading?

✔ Leading is that management function which involves influencing others to engage in the
work behaviors necessary to reach organizational goals.

⮚ The definition indicates that a person or group of persons tasked with managing a group
must assume the role performed by leaders.

✔ Leadership may be referred to as the process of influencing and supporting others to work
enthusiastically toward achieving objectives.

⮚ While leading refers to the function, leadership refers to the process.

How Leaders Influence Others

✔ Managers are expected to maintain effective workforce. To be able to do so, they are
required to perform leadership roles. Leaders are said to be able to influence others because
of the power they possess. Power refers to the ability of a leader to exert force on another.

Bases of Power
The power possessed by leaders may be classified according to various bases. These are follows:
1. Legitimate Power. A person who occupies a higher position has legitimate power over
persons in lower positions within the organization. A supervisor, for instance, can issue
orders to the workers in his unit. Compliance can be expected.
2. Reward Power. When a person has the ability to give rewards to anybody who follows
orders or request, he is said to have reward power. Rewards may be classified into two
forms: material and psychic.
● Material rewards refer to money or other tangible benefits like cars, house and lot.
Psychic rewards consist of recognition, praises and the like.
3. Coercive Power. When a person compels another to comply with other through threats
or punishment, he is said to possess coercive power. Punishment may the form of
demotion, dismissal, or withholding of promotion.
4. Referent Power. When a person can get compliance from another because the latter
would want to be identified with the former, that person is said to have referent power.
5. Expert Power. Experts provide specialized information regarding their specific lines of
expertise. This influence, called expert power, is possessed by people with great skills.

Traits of Effective Leaders

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✔ There are certain leadership traits identified by researchers and which may be useful in
developing effective leaders. These traits are as follows:
1. A high level of personal drive
2. The desire to lead
3. Personal integrity
4. Self-confidence
5. Analytical ability or judgment
6. Knowledge of the company, industry, or technology
7. Charisma
8. Creativity
9. Flexibility

❖ Personal Drive. Persons with drive are those identified as willing to accept
responsibility, possess vigor, initiative, persistence, and health. Drive is a very important
leadership trait because of the possibility of failure in every attempt to achieve certain
goals. If the chosen way to reach a goal is not successful, a leader finds another way to
reach it, even of it precedes a succession of failed attempts. This will, of course, require
a high level of personal drive from the leader.

❖ The Desire to Lead. There are persons who appears to have all the qualifications of a
leader, yet they cannot become leaders because they lack one special requirement: the
desire to lead. Persons who do not have the desire to lead but are forced to act as leaders
will not be effective because their efforts will be half-hearted. Leaders with the desire to
lead will always have a reservoir of extra efforts which can be useful especially during
critical moments.

❖ Personal Integrity. A person who is well-regarded by others as one who has integrity
possess one important leadership trait. One who does not have personal integrity will
have a hard time convincing his subordinates about the necessity of completing various
tasks. If this is the case, the nominal leader, will, then, resort to using his authority and
getting things done entirely by the use of the coercive powers vested in him by virtue of
the rank and position he occupies in the hierarchy.
Integrity includes honesty, honor, incorruptibility, rectitude, righteousness, and
similar virtues.

❖ Self-Confidence. The activities of leaders require moves that will produce the needed
outputs. The steps of conceptualizing, organizing, and implementing will be completed if
sustained efforts are made. For the moves to be continuous and precise, self-confidence
is necessary.
Subordinates and even peers are known to follow someone who displays an air of self-
confidence. The benefits derived from this leadership trait become evident during crisis
situations.

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 ❖ Analytical Ability. Leaders are, oftentimes, faced with difficulties that prevent the
completion of assigned tasks. A subordinate, for instance, may have a record of
continuously failing to produce the needed outputs. A leader with sufficient skill to
determine the root cause of the problem may be able to help the subordinate to improve
his production. The ability to analyze is one desirable trait that a leader can use to tide
him over many challenging aspects of leadership.

❖ Knowledge of the Company, Industry, and Technology. A leader who is well-

informed about his company, the industry where the company belongs, and the
technology utilized by the industry, will be in a better position to provide directions to his
unit.

❖ Charisma. When a person has sufficient personal magnetism that motivates people to
follow his directives, this person is said to have charisma. Great personalities in history
like Napoleon Bonaparte, Julius Caesar, Adolf Hitler, George Washington, Elvis Presley,
and others are believed to have possessed charisma. This trait was said to be greatly
responsible for whatever accomplishments they achieved.

When used properly, charisma will help the leader in achieving his goals. With some
adjustments, subordinates may be expected to do their tasks willingly.

❖ Creativity. This term refers to the ability of the manager to find new and better ways of
accomplishing his work. The trait allows him to see relationships between existing data
which leads him to devise new solutions to problems. As problems are becoming more
complex and challenging, the leader will need all the creative abilities he has.

❖ Flexibility. People differ in the way they do their work. One will adapt a different
method from another person’s method. A leader who allows this situation as long as the
required outputs are produced, is said to be flexible.

Behavioral Approaches to Leadership Style

Those in positions of leadership exhibit a pattern of behavior that is unique and different
from the other patterns. This total pattern of behavior is referred to as leadership style.

There are several approaches used in classifying leadership styles. These are the
following:
1. According to the ways leaders approach people to motivate them;
2. According to the way the leader uses power; and
3. According to the leader’s orientation towards task and people.

1. Ways Leaders Approach People. In motivating people, leaders use one of the two
approaches consisting of (1) positive leadership, and (2) negative leadership.
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 When leader’s approach emphasizes rewards, the style used is positive leadership.
The reward may be economic, like an increase in monthly salary, or it may be non-
economic like membership in an advisory committee.
When punishment is emphasized by the leader, the style is said to be negative
leadership. The punishment may take the form of reprimand, suspension, or dismissal.

2. Ways Leaders Use Power.Leadership styles also vary according to how power is used.
They consist of (1) autocratic, (2) participative, and (3) free-rein.

⮚ Autocratic Leaders. Leaders who make decisions without consulting subordinates are
called autocratic leaders. Motivation takes the form of threats, punishment, and
intimidation of all kinds. Autocratic style is effective in emergencies and when
absolute followership is needed.

An appropriate situation is when a fire marshal is leading his subordinates in putting

out fire on a certain row of residential buildings. The disadvantage of autocratic
leadership is that the leader receives little, if any, information, ideas, and suggestions
from his subordinates as inputs into hos decision-making.

⮚ Participative Leaders. When a leader openly invites his subordinates to participate or

share in decision-making, policy-making, and operation methods, he is said to be a
participative leader.
The advantage of participative leadership is that it generates a lot of ideas. Another
advantage is the increased support for decisions made and the reduction of the chance
that they will be unexpectedly undermined.
The disadvantage of participative leadership is that it is time-consuming and
frustrating to people who prefer to see a quick decision made.

⮚ Free-rein Leaders. Leaders who set

objectives and allow employees or
subordinates relative freedom to do
whatever it takes to accomplish those
objectives are called free-rein leaders.
They are also referred to as laissez-faire
leaders. An example of such organization
is the engineering department of a
university which is headed by the dean.
The weakness of free-rein leadership is
that there is very little managerial control
and a high degree of risk. If the leader
does not know well the competence and

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 integrity of his people, as well as their ability to handle this kind of freedom, the
result could be disastrous.

3. Leader’s Orientation toward Tasks and People. Leadership may be classified according to
how leaders view tasks and people. A leader may either be: (1) employee-oriented, or (2) task-
oriented.

● Employee Orientation – A leader is said to be employee-oriented when he considers

employees as human beings of intrinsic importance and with individual and personal
needs to satisfy.

● Task Orientation – A leader is said to task-oriented if he places stress on production

and the technical aspects of the job and the employee are viewed as the means of

getting the work done.

To test your understanding about the topics in

this lesson, kindly answer these questions.
Kindly refer to the same rubric we used in
the previous tests as your guide.
ESSAY.

1. In not less than 8 but not more than 10 sentences, discuss the traits of a good leader. (20
pts)
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 ________________________________________________________________________
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2. Explain the different leadership styles and how they influence leaders. Answer must be
in 2 paragraphs with not less than 5 sentences for each paragraph. (20 pts)
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UNIT XI

Overview

In this lesson, it is important for you to note that the previous management functions will
not be effective unless effective control is made. It is said that planning and controlling must go

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hand in hand. As you go through the topics, you will learn the concept of controlling and the
steps in the control process.

Learning Outcomes
At the end of this unit, you should be able to:
explain the concept of controlling and its importance in business;
and
apply the necessary control for every situation they might
encounter.

Before we start the discussion, you need to answer this pretest.

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ESSAY.

1. What is your concept of control? Explain your answer.

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2. What is the importance of controlling in business?

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WHAT DO YOU NEED TO KNOW?

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 The long-term existence of many companies are placed in jeopardy because of difficulties
caused by problems which could have been avoided in the first place. Examples of such
problems are as follows:
1. The transmission of confidential information to competitors. For instance, if the
introduction of a new product by the company is known in advance by the competitor, the
advantage of such introduction is negated.
2. The hiring of personnel way above the required number. Unnecessary additions to the
existing workforce mean waste of manpower and scarce resources.
3. Unethical conduct of an employee. For instance, the loan officer of a bank, for
consideration, connives with a borrower for loan approval inspite of defective collaterals.
The bank suffers in the end when it forecloses on the mortgage.

The above-cited examples are typical errors which happen every now and then. If left
unchecked, they may be enough to get some firms bankrupt. When this happens, unemployment
occurs and there will be some disruptions in the provision of products and services to the public.
These will not happen, however, if adequate controls are instituted.

Controlling, defined.

✔ Controlling is the managerial function of measuring and correcting performance in order to

make sure that organizational objectives and plans that were deliberately devised to be
attained are being accomplished.

✔ Controlling refers to the process of ascertaining whether organizational objectives have been
achieved; if not, to determine why not; and determining what activities should be taken to
achieve objectives better in the future.

✔ Planning and controlling are so closely related that some writers and management
practitioners think that their functions are so closely related. Planning and controlling is
viewed as the blade of a pair scissors; the scissors cannot function unless there are two
blades.

✔ Controlling completes the cycle of management functions. Objectives and goals that are set
at the planning stage are verified as to achievement or completion at any given point in the
organizing and implementing stages. When expectations are not met at scheduled dates,
corrective measures are usually undertaken.

Importance of Controlling

When controlling is properly implemented, it will help the organization achieve its goal in
the most efficient and effective manner possible.

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 In any organization, deviations, mistakes, and shortcomings happen once in a while. When
they occur, they contribute unnecessary expenditures which a add up to the cost of producing
goods and services. The introduction of effective control measures minimize the ill effects of
such negative occurrences. An effective inventory control system, for instance, minimizes if not
totally eliminate losses in inventory.

The importance of controlling may be illustrated as it is applied in a typical factory. If the

requires standard daily output for individual workers is 100 pieces, all workers who do not
produce the requirement are given sufficient time to improve; if no improvements are
forthcoming, they are asked to resign. This action will help the company keep its overhead and
other costs at expected levels. If no such control measure is applied, the company will be
saddled with escalating production costs, which will place the viability of the firm in jeopardy.

Steps in the Control Process

❖ The control process consists of four steps, namely:

1. Establishing Performance Objectives and Standards. For effective controlling, what has to
be achieved must first be determined. Typical examples of objectives and standards are as
follows:
● Sales targets – which are expressed in quantity or monetary terms;

● Production targets – which are expresses in quantity and quality;

● Worker attendance – which are expressed in terms of rate of absences;

● Safety record – which is expressed in number of accidents for given periods;

● Supplies used – which are expressed in quantity or monetary terms for given periods.
o Once objectives and standards are established, the measurement of performance will
be facilitated. Standards differ among various organizations. In construction firms,
project completion dates are useful standards. In chemical manufacturing firms,
certain pollution measures form the basis for standard requirements.
o After the performance objectives and standards are established, the methods for
measuring performance must be designed. Every standard established must be
provided with its own method of measurement.
2. Measuring Actual Performance. There is a need to measure actual performance so that when
shortcomings occur, adjustments could be made. The adjustments will depend on the actual
findings.
o The measuring tools will differ from organization to organization, as each have their
own unique objectives. Some firms, for instance, will use annual growth rate as
standard basis, while other firms will use some other tools like the market share
approach and position in the industry.

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3. Comparing Actual Performance to Objectives and Standards. Once actual performance
has been determined, this will be compared with what the organization seeks to achieve.
Actual production output, for instance, will be compared with the target output. This
may be illustrated follows:
o A construction firm entered into a contract with the government to construct a 100
kilometer road within 10 months. It would be then reasonable for management to
expect at least 10 kilometers to be constructed every month. As such, this must be
verified every month, or if possible, every week.
4. Taking Necessary Action Based on the Results of the Comparison. The purpose of
comparing actual performance with the desired result is to provide management with the
opportunity to take corrective action when necessary.
o If in the example provided in number 3 above, the management of the construction
firm found out that only 15 kilometers were constructed after two months, then, any
of the following actions may be undertaken:
a. Hire additional personnel
b. Use more equipment
c. Require overtime work

Establish
Performance
Objectives and
Standards

Measure Actual
Performance

Actual
Performance
Match the Do Nothing
Standards
Yes

No

Take
Corrective 105
Action
 Steps in the Control Process

To test your understanding about the topics in this

lesson, kindly answer these questions. Refer to the
same rubric we used in the previous tests as your
guide.
ESSAY.

1. Explain the concept of controlling and its importance in business in 2 paragraphs with at
least 3 but not more than 5 sentences for each paragraph (20 pts)
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2. Illustrate and describe the control process. (20 pts)

106
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ANSWER KEY FOR PRE-TESTS

UNIT 1 UNIT 2 UNIT 3 UNIT 4

(Page 7) (Page 19) (Page 28 (Page 42)
1. M 1. D 1. E 1. Diagnosing the problem
2. J 2. A 2. C 2. Analyzing the environment
3. A 3. C 3. H 3. Articulating the problem or opportunity
4. L 4. A 4. G 4. Developing viable alternatives
5. O 5. B 5. F 5. Evaluating the alternatives
6. F 6. A 6. C 6. Making a choice
7. E 7. C 7. B 7. Implementing the decision
8. K 8. B 8. F 8. Evaluating and adapting the decision results
9. I 9. A 9. D 9. A
10. P 10. B 10. C 10. C
11. C
12. D
13. H UNIT 5- Essay
14. B UNIT 11 – Essay
15. N

UNIT 6 UNIT 7 UNIT 8 UNIT 9 UNIT 10

1. C 1. E 1. B 1. I 1. I
2. C 2. F 2. A 2. A 2. F
3. B 3. K 3. A 3. E 3. D
4. B 4. L 4. B 4. L 4. K
5. A 5. H 5. A 5. B 5. B

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 6. D 6. I 6. C 6. K 6. A
7. C 7. D 7. B 7. H 7. G
8. A 8. J 8. C 8. G 8. C
9. D 9. C 9. A 9. F 9. H
10. A 10G 10. C 10. D 10. C

REFERENCES
Textbooks:

Enriquez, E.G. (2016). Organization and management. Pasay City: JFS Publishing Services
Medina, Roberto G. (2015). Business Organization and Management
Mutya, R.F. (2019). Fundamentals of Management Functions, practices and cases. Manila:
Unlimited Books Library Services & Publishing, Inc. c2019
Panganiban, Hermogenes, B. (2018) Organization and Management: concepts and application
Payos, R., Espinosa, E. G., & Zorilla, R. S. (2016). Organization and management. Manila:
Rex Book Store.

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of-business.html
https://www.youtube.com/watch?v=P14KeNmqqpE

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https://www.youtube.com/watch?v=DsYcnapehvA
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responsibility/
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responsibility.html
https://www.investopedia.com/terms/s/socialresponsibility
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introduction/32333
https://papersowl.com/blog/how-to-write-a-case-study-analysishttps://businessjargons.com/
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https://www.youtube.com/watch?v=MjY3WPUjQrw
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development/

Vidoe links:

https://www.youtube.com/watch?v=akUdyh8ERvQ
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https://www.youtube.com/watch?v=L0PKWTta7lU
https://www.youtube.com/watch?v=azs9Wv7sorU

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