14 Principles of management (Henry Fayol)
Scalar Chain
1. Division of work
Henri believed that segregating work in the
workforce amongst the workers will enhance
the quality of the product. Similarly, he also
concluded that the division of work improves
the productivity, efficiency, accuracy and
speed of the workers.
2. Authority and Responsibility
-These are the two key aspects of
management. Authority facilitates the
management to work efficiently, makes them
responsible for the work done under their
guidance or leadership.
3. Discipline
Without discipline, nothing can be
accomplished. It is the core value for any
project or any management. Good
performance and sensible interrelation make
the management job easy and
comprehensive. Employees’ good behaviour
also helps them smoothly build and progress
in their professional careers.
4. Unity of Command
This means an employee should have only
one boss and follow his command.
5. Unity of Direction
Whoever is engaged in the same activity
should have a unified goal. This means all the
people working in a company should have one
goal and motive which will make the work
easier and achieve the set goal easily.
6. Subordination of Individual Interest
This indicates a company should work unitedly
towards the interest of a company rather than
personal interest. Be subordinate to the
purposes of an organisation. This refers to the
whole chain of command in a company.
7. Remuneration
This plays an important role in motivating the
workers of a company. Remuneration can be
monetary or non-monetary.
8. Centralization
In any company, the management or any
authority responsible for the decision-making
process should be neutral. However, this
depends on the size of an organisation. Henri
Fayol stressed on the point that there should
be a balance between the hierarchy and
division of power.
9.
The hierarchy steps should be from the top to
the lowest. This is necessary so that every
employee knows their immediate senior also
they should be able to contact any, if needed.
10. Order
A company should maintain a well-defined
work order to have a favourable work culture.
The positive atmosphere in the workplace will
boost more positive productivity.
11. Equity
All employees should be treated equally and
respectfully. It’s the responsibility of a manager
that no employees face discrimination.
12. Stability
An employee delivers the best if they feel
secure in their job. It is the duty of the
management to offer job security to their
employees.
13. Initiative
The management should support and
encourage the employees to take initiatives in
an organisation. It will help them to increase
their motivation and morale.
14. Esprit de Corps
It is the responsibility of the management to
motivate their employees and be supportive of
each other regularly. Developing trust and
mutual understanding will lead to a positive
outcome and work environment.
Principle of Managing Business
There are five basic ways in order to control
and plan productions. These five basic
elements of management:
• Planning. Involves determining the
organization's goals or performance
objectives, defining strategic actions that must
be done to accomplish them, and developing
coordination and integration activities.
• Organizing. Demands assigning tasks,
setting aside funds, and bringing harmonious
relations among the individuals and work
groups or teams in the organization.
• Staffing. Indicates filling in the different job
positions in the organization's structure.
• Leading. Entails influencing or motivating
subordinates to do their best so that they
would be able to help the organization's
endeavor to attain their set goals.
• Controlling. Involves evaluating and, if
necessary, correcting the performance of the
individuals or work groups or teams to ensure
that they are all working toward the previously
set goals and plans of the organization.
Tools and Techniques in Creating a
Business
● Swot Analysis (SWOT)
Acronym for strength, weaknesses,
opportunities, and threats. It evaluates the
internal and external environments of a
business. Swot Analysis is used for the
identification of a firm's competitive advantage
through its strength, to fix its weaknesses,
recognize opportunities for further growth, and
possible threats that the business may face.
● Tows Analysis
this is a tool which applies the same principle
used in SWOT analysis. The only difference is
that threats and opportunities are examined
first before the strength and weaknesses.
● Porter's Five Forces
Porter identifies five forces that determine the
competitiveness and attractiveness of a
market and which seek to locate the power in
a business situation, its current competitive
position, and the strength of a position that an
organization may enter into. These five forces
help identify if new products or services are
potentially profitable.
1. Rivalry among competing firms
The strategies used by a business can only be
successful if it is able to create a competitive
advantage over its rivals.
2. Potential Entry of New Competitors. The
level of competition in the market is
characterized by the number of sellers offering
the same/ alternative products.
3. Development of Substitute Products.
The presence of possible substitutes
increases competitive pressure as these
products offer alternatives to the same target
market.
4. Bargaining Power of Suppliers
This refers to the pressure the suppliers can
bring in the market. When suppliers have
strong position they can threaten to increase
price or reduce the quality of product and ser-
vices.
5. Bargaining Power of Customers
When consumers have strong influence they
can bring pressure to the market which will
demand the suppliers to offer higher quality
products, better consumer services, and lower
price.
● PESTLE Analysis
It is an acronym for Political, Economic, Social,
Technological, Legal, and Environmental- key
external forces that may influence a business.
It is a framework of macro-environmental
factors that is used when doing environmental
scanning is the screening of large amounts of
information to anticipate and interpret changes
in the environment.

Industry analysis, for an entrepreneur or a
company, is a method that helps to understand
a company's position relative to other
participants in the industry. It helps them to
identify both the opportunities and threats
coming their way and gives them a strong idea
of the present and future scenario of the
industry.
Types of Industry
Industry is defined as any large-scale business
activity or a type of productive manufacture or
trade. It also refers to a field or an organization
involved in the production of goods or
extraction of natural resources.
1.) Primary Industries
• Extract raw materials from the land or sea
e.g. oil, iron ore, timber, fish. Mining,
quarrying, fishing, forestry, and farming are all
example of primary industries.
• The term " Agribusiness" was coined in the
1950s by John Herbert Davis and Ray A.
Goldberg to reflect the two way
interdependence between business people
and farmers in the dual roles of suppliers and
purchasers. Business firms that serve
agriculture rely on farmers for their markets
and for some of their supplies.
 2.) Secondary Industries (sometimes
referred to as Manufacturing
industry)
• Involve the manufacture of raw materials,
into another product by manual labor or
machines. Secondary industries often use
assembly lines. This refers to the processing
of raw materials into finished products and into
something more useful through the use of
tools and processes.
3.) Tertiary Industries (sometime
referred to as Services industry)
• Neither produce a raw material nor make a
product. Instead, they provide services to
other people and industries. Tertiary industries
can include doctors, dentists, refuse collection
and banks.
• Retail and Services Establishment is a
business principally engaged in the sale of
goods and services to end-users for personal
or household us and is generally recognized
as such.
Store
The components of the industry structure.
Each component is vital in determining the
intensity of competition and explains why
some businesses are historically more
profitable than the others.
1.) Competition- who are the major business
in the industry. It is very important that you
know your competitors and be ready for them.
Your aim is to win their customer, convince
them to buy from you instead, and remain as
loyal customers.
2.) Customers - The target market must be
identified who exactly will buy your products,
The type of people will you cater to, based on
their preferences, lifestyle and buying habits.
3.) Suppliers- Every retail need supplier from
whom one can source raw materials,
intermediates products, or even the finished
goods one intends to resell.
4.) Substitutes- are goods that can be used in
place of another. These are goods that may,
even if partly, satisfy the same needs of a
consumers such that the consumer may use
one instead of another.
VIABILITY
Viability is defined as the ability to survive.
A business is viable when
1. It is returning a profit that is sufficient to
provide a return to the business owner while
also meeting its commitments to business
creditors.
2. It has sufficient cash resources to sustain
itself through a period when it is not returning
a profit.
How a business can impact the consumer.
The supplier and the investors, the
government, and households.
● Impact on the Consumers
• A new business, especially one that is
innovative and focused on bringing some new
product or services to the market, is always
welcome to the consumer who is looking value
for his money.
• As long as a new business can provide new
goods and services, better quality of goods
and more options, the consumer can benefits
from it.
● Impact on Suppliers and Investors
• A new business will also provide
opportunities for supplier and investors, if a
new construction company is set up. Then this
opens up opportunities for the other
businesses that will supply them their needs.
Many suppliers will now get a chance to sell to
the newly established business. Which means
more income for them.
• Demand for goods provided by the suppliers
will increase. Investors get to earn returns on
their investments, which capital plowed back
into more investments and generated more
income for the economy, thus, leading to
economic growth.
● Impact on the Governments
• The government will also benefits from the
establishment of new businesses, through
revenues earned on fees collected from them
and on taxes imposed on the incomes of the
business. Before a business can be set up, it
has to meet the requirements to start
operating first
1. Licenses to be obtained.
2. Organizational fees have to be paid
 ● Impact on Households
• New business mean employment
opportunities for the filipinos, those who have
jobs but are earning low wages may find better
paying jobs with the new companies. The pool
of unemployed workers will decrease. This
means that their quality of life and their
standard of living will improve.
● Impact on the Community
• As a result of this, corporations and even
small businesses have increased their focus
on projects that provide scholarships to poor
but deserving students, allocating budgets for
housing for low income families such as
participation in programs like the Gawad
Kalinga, environment related programs,
communities benefits from business
sponsored activities that include sports fest
and wellness programs, livelihood projects,
micro-financing and even medical and dental
missions.