UNIT 1: COOPERATIVE CONCEPTS &
PRINCIPLES
LESSON 1: THE COOPERATIVE IDENTITY
Cooperatives Defined under RA 6938
● An association composed by voluntary individuals
that meet a common bond of interest by achieving
their needs and making an equitable contribution to
the required capital.
○ Accepting fair share of the risk and
benefits.
What is a Cooperative?
(ICA or International Cooperative Alliance)
● Autonomous association of individuals that
voluntarily joined together to meet their needs
through jointly-owned and
democratically-controlled enterprises.
○ Common economic,
○ Social and cultural needs,
○ And aspiration.
Republic Act 9520, Cooperative code of 2008 under
Article 3,
● Duly registered association of individuals that meet
the common bond of interest and voluntarily
joined together.
● Achieving:
○ Lawful common social,
○ Economic,
○ Cultural needs, and
○ Aspirations, through making an equitable
contributions to the capital
● They patronize their products and services, and
accept a fair share of the risks and benefits.
LESSON 2: NATURE AND CHARACTER OF
COOPERATIVES: is distinguished from other
organizations by their nature and character.
1. are SERVICE ORIENTED
● The cooperatives organized to serve their
members
○ Primary goal of serving the needs and
interest of their members.
● Providing goods and services at a reasonable cost.
○ (buying price + margin) the members of
the cooperatives pay this combined
amount to cover up the cost.
■ Margin = rent + staff + electricity,
etc
■ Buying price = the Goods
● Members join the cooperative and contribute in
capital as a way to receive the needed services.
○ Mutual desire to HELP: Coop - Members
● Do not act as a Charitable organization.
● Slogan: “Cooperative are not for profit, nor for
charity, but for SERVICE”
2. are COMMUNITY ORIENTED
● Works for the Welfare of their members and
community or in nation in general.
○ The welfare that cooperatives provide is
not merely on members only but as a
whole nation.
● Enhance the people welfare
○ Increasing the productivity of their
members.
● Strengthen the economic & social base of the
communities which they operate and from their
nature of activities.
● Article 86 (3).
○ “An amount for the community
development fund, which shall not be less
than three per centum (3%) of the Net
Surplus.
3. are PEOPLE ORIENTED
● is not merely an instrument for economics but an
instrument for human development in all aspects
of life.
○ Economic,
○ Social,
○ Cultural,
○ Political [governance], and
○ Spiritual
● The goal of cooperatives written by G. Fauquet,
“is to make men – men with a sense of both
individual and joint responsibility – so that they
may rise individually to a full personal life and
collectively to a full social life.”
4. are OWNED, MANAGED, and PATRONIZED by their
MEMBERS.
● “Cooperatives are:
○ Member-owned,
○ Member-controlled, and
○ Members used.”
● The members have a sense of ownership,
meaning that they have the full authority to
manage and control their cooperative.
● Cooperative should not operate or organize from a
borrowed capital.
○ Violating self-help and losing its
autonomous character.
 ● Dependance on the patronage of their members
and should not be from the non-members.
● A limited patronage can only be given to the
non-members
○ Because of the main reason for business
viability and service to the community.
5. are BUSINESS ENTERPRISES
● Cooperative business is a real business.
○ Cooperative plays a meaningful role in
both welfare and community,
■ Therefore it must serve and
perform efficiently and
effectively.
○ Must provide a sizable amount of revenues
and earn savings to sustain and maintain
the services.
● Patronage of the members is maintained by good
governance and better business performance.
6. develop Best through SELF-HELP and MUTUAL HELP.
● The father of cooperativism, Robert Owen stated
that, “If you want something done, do it
yourself.”
○ A collective action that doesn’t merely
focus on individualistic concepts but as a
whole in Cooperativism.
○ The philosophy stated by Robert Owen has
a great impact on the success of many
Cooperatives.
■ It is also a best alternative to help
the poor and to help and unite
themselves in their depressed
condition.
● PRINCIPLE OF SUBSIDIARITY: Before soliciting
or asking for help or aid from outside, consider
self-determination and self-capability.
● Government and Non-government organizations
should play a role in assisting, not dominance.
○ Therefore, they should not interfere in the
purely internal affairs of the cooperative.
● Cooperatives grow stronger rather than
becoming overly dependent upon such help.
7. serve best when they ANSWER THE REAL and FELT
NEEDS OF THE MEMBERS
● The organization should not expect patronage from
the members if the goods or services do not
answer their needs.
● Before any cooperative is organized the proper
approaches and techniques must be identified to
ensure what the real needs of members are:
○ What are the members’ needs?
○ How do we know the needs of
members?
○ How do we serve these needs?
8. develop best from BOTTOM to TOP
● Cooperatives is a mass-based organization.
● The development shall be from the primary level -
secondary level - tertiary and up to the apex.
○ BARANGAY LEVEL > MUNICIPAL/CITY
LEVEL > PROVINCIAL LEVEL >
REGIONAL LEVEL >
9. development of cooperatives is enhanced through a
MULTI-SECTORAL approach.
● Ensure that all aspects of the development
process are considered. (GOs, NGOs, COOP.)
LESSON 3: THE COOPERATIVE VALUES, PRINCIPLES
and PRACTICES
I. COOPERATIVE VALUES:
● The International Cooperative Alliance (ICA)
statement of cooperative identify declared the
following cooperative values:
Organizational Values: Ethical Values:
SEEDS CHOS
S - Self Help C - Caring for Others
E - Equality H - Honesty
E - Equity O - Openness
D - Democracy S - Social Responsibility
S - Solidarity
● Adhere to the values and principles and practices
of cooperation.
● Cooperatives aim to provide an equality of life
that upholds human dignity, and inclusiveness.
● The SEEDS (Self-Help, Equality, Equity,
Democracy, and Solidarity) the values that should
govern the Cooperatives social-responsible and
people-oriented and economic enterprises.
○ The members is expected to embody the
ethical values of CHOS (Caring for others,
Honesty, Openness, and Social
responsibility)
II. PRINCIPLES of COOPERATIVES
● Meant to serve as guide in decision making, long
term, and short-term planning, business
operations, and internal and external affairs of
cooperatives.
1. Voluntary and Open Membership
● A voluntary organization.
● No compulsory membership
● Open to all people (to use their services) that are
willing to accept the responsibilities of
membership.
○ No discrimination against any person,
gender, social, racial, or political, or
religious.
● No Artificial limitation.
2. Member Democratic Control
● A democratic organization controlled by their
members, who participates in policies and making
decisions.
○ Direct and Indirect participation of
members in the control of the cooperative.
● Decision making by majority vote.
○ One member, one vote. No Proxy voting.
● The General Assembly is a supreme authority.
● “Men and women serving as elected
representatives are accountable to the
membership.”
● Equal status of members
3. Member Economic Participation
● Members contribute equitably, democratically
control of the cooperative.
● Part of the capital is the common property of the
cooperative.
● Limitation of Share Capital Holdings
○ No member other than the cooperative
shall own more than ten per centum (10%)
of the share capital, RA 9520, ARTICLE
73.
● Order of Distribution of Net Surplus, ARTICLE
86, RA 9520
○ Reserve Fund – “at least ten per centum
(10%) of the Net Surplus (First 5 years - at
least 50% of NS)
○ Education and Training Fund – “not more
than ten per centum (10%) of the Net
Surplus”
○ Community Development Fund – “not
less than three per centum (3%)”
○ Optional Fund – “not to exceed seven per
centum (7%) of the Net Surplus”
○ “The remaining NS shall be made
available to the members in the form of
interest or share capital not to exceed
the normal rate of returns on”
4. Autonomy and Independence
● General Assembly as the supreme authority
● Leadership is confined to the coop members.
5. Education, Training and Information
● Providing education and training in order to
contribute effectively to the development of
cooperatives.
○ Members,
○ Elected representatives,
○ Managers, and
○ Employees
● Appointment of Education Committee
● Supplying of reserves for education and training.
● Required to attend PMES before admitting as a
member.
● Ownership and membership meetings
● Continuous training of officers and staff
○ Informing the general public involves
young people and opinion leaders
regarding the nature and benefits of
cooperation.
● Involving youth
6. Cooperation among Cooperatives
● Effectively and strengthen the cooperatives
movement by working together.
○ Through, Local, national, regional, and
international linkages.
● Membership in secondary and tertiary
cooperative organization
● Participation in economic integration projects
7. Concern for Community
● Working for the sustainable development of the
communities through policies that are approved
by the members.
○ Members ensure policies they will make
will benefit the whole cooperative
community
○ Work towards improving their living
standards based on their social values
without compromising the resources
available for future generations.
○ Supply of fund for community
development
III. COOPERATIVE BUSINESS PRACTICES
● Follows the certain operational guidelines.
○ Practices the practical response to local
needs.
○ Standard international practices, local
innovations, aiming to perfecting.

1. Capital Formation
● Highly influences the success and failure of
cooperatives.
● Cooperatives have savings programs which
cannot be withdrawn.
● Capital should be provided by the members.
● The source of Capital, (Art 72. - RA 9520)
○ Members’ Share Capital
○ Loans and Borrowings including
deposits
○ Revolving Capital - deferred payment of
PR or loC
■ PR = Patronage Fund
■ IoC = Investment or Contribution
○ Subsidies, donations, legacies, grants,
aids, and other assistance from any local
or foreign institution whether public or
private.
2. Cash Trading
● Most of the business enterprises failed as they
allowed purchase of goods on credits.
○ Funds – the revenue is limited, then cash
is a necessary option in purchasing a
good.
● Advantages of Cash Trading:
○ Minimizes insignificant purchases, can buy
goods at one time in bulk.
○ Reduce paperworks
○ Eliminates favoritism and discrimination
○ Promotes stability and growth
○ Avoid problems in credit collection.
○ Obtain goods at lower destructive
competition.
3. Sell Quality Goods at Market Price
● Must strive and provide the members with
goods of highest quality.
○ Unadulterated, correct weight and
measures, and price and price must be
sold with the updated market price.
4. Promote of Constant Expansion of Membership,
Capital and Services
● Ensuring that the number of customer-members
are sufficient enough to be able to absorb the cost
of operations.
● Economy of scales
○ contributes in the decrease of the cost of
running the business,
■ Therefore, savings can be realized
and which are more beneficial to
its members.
● Expanding the capital base brings stability and
success.
○ Having the necessary financial resources
and a huge amount of acquisition.
■ means that we will be able to
purchase goods at a discount to
suppliers. (by buying bulks)
● Good business sense - management
○ Member-customers always look for the
availability of the goods.
○ Robust capital base allows to expand
and maintain sufficient inventories or
stock.
■
therefore, it develops trust and
confidence of member-customers.
LESSON 4: THE DIFFERENT TYPES OF
COOPERATIVES
1. Credit Cooperative
● Saving and lending services to its members.
● Generate fund
● Providing financial assistance or services to its
members for productive and provident
purposes.
2. Consumers Cooperative
● The primary purpose is to acquire and
distribute commodities to non-members and
members.
3. Producers Cooperative
● Undertakes join production — agricultural or
industrial.
● Formed and operated by members that
undertake the production and processing of raw
materials.
● The processed or finished product is sold to
members and non-members.
○ Raw Materials to Finished product.
4. Marketing Cooperative
● Accountability of supply in productions at the
same time, market their products.
5. Service Cooperative
● Engages in providing different services such as:
Medical, dental, hospitalization, transportation,
 insurance, housing, labor, electric light and power,
communication, professional and other services.
6. Multi-Purpose Cooperative
● Combined two (2) or more of the business
activities.
7. Advocacy Cooperative
● Promotes and advocates through socially
oriented projects.
○ Education and training, research and
communication, etc activities that are
similar and intended beneficiaries.
8. Agrarian Reform Cooperative
● Organized by marginal farmers for the purpose
of developing an appropriate agrarian system.
○ Land development,
○ Land tenure,
○ Land consolidation
○ Or land management.
9. Cooperative Bank
● Primary purpose is providing a wide range of
financial services to cooperatives and their
members.
10. Dairy Cooperative
● Engage in production of fresh milk
○ may be processed and/or marketed as
dairy products.
11. Education Cooperative
● “Organized for the primary purpose of owning
and operating licensed educational
institutions.”
○ Republic Act 9155, known as the
Governance Basic Education Act of 2001
12. Electric Cooperative
● Undertakes the power generation, utilizing
renewable energy sources, hybrid system, and
acquisition and operation of sub transmission or
distribution to its household members.
13. Financial Service Cooperative
● Primary purpose is to engage in savings and
credit services and other financial services.
14. Fishermen Cooperative
● Organized by marginalized fishermen in
localities.
15. Health Services Cooperative
● Providing medical, dental, and other health
services.
16. Housing Cooperative
● Engage provides access to housing to those
members that actively participate in the savings
program for housing.
○ co-owned and controlled by members.
17. Insurance Cooperative
● Engaged in the business of insuring life and
property of cooperatives and their members.
18. Transport Cooperative
● Involves in different transportation in land and
sea transportation.
○ Organized under the provision of this code.
19. Water Service Cooperative
● Organized to own, operate and manage water
systems.
○ and distribution of portable water to its
members and their households.
20. Working Cooperative
● Organized by workers, self-employed, etc, the
primary purpose is to provide employment and
business opportunities to its members.
21. Other types of cooperatives may be determined by the
Cooperative Development Authority (CDA).
LESSON 5: THE MODEL COOPERATIVE
ORGANIZATION AND MANAGEMENT STRUCTURE
● Primary Cooperative issued by the Cooperative
Development Authority as a MEMORANDUM
CIRCULAR NO. 2011-07 Series of 2011, dated
February 22, 2011.
● Structure of the Primary cooperative that engages
in Savings and Lending business activities.
○ Primary Level:
○ Board Directors Level:
○ Committee Level:
○ Management Level:
Primary Level:
1. General Assembly: The highest decision-making
body of the cooperative.
Board of Directors Level:
2. Board Of Directors: Elected by the Gen. Assembly,
responsible for overall management and
strategic decisions.
3. Chairman of the Board: The head of the Board of
Directors.
4. Vice-Chairman of the Board: The right hand or
support of the Chairman.
Committee Level:
5. Audit Committee: Accountable on reviewing and
accuracy of financial records.
6. Election Committee: Responsible for overseeing
the election process, ensuring fair and
democratic election.
7. Education Committee: Responsible for providing
educational programs and training.
8. Ethics Committee: Ensures that the cooperative
operates ethically, values and principles.
a. Principle of the Cooperatives
b. Nature and Values
9. Credit Committee: Credit and lending activities.
10. Mediation & Conciliation Committee: Resolving
any conflicts or problems within the cooperative.
Management Level:
11. Manager: Oversees day-to-day operations of the
Coop, implementing policies and decisions made
by BOD.
12. Board Secretary: Responsible for documenting and
maintaining accurate records of meetings.
13. Treasurer: Oversees financial matters, managing
funds, and financial stability.
14. Loan Officer: Involved in facilitating and
managing the cooperative’s lending activities.
15. Cashier: Financial transactions, manages cash
flow.
16. Bookkeeper: Responsible for maintaining
accurate financial records.
17. Office Collector: Responsible for collecting
payments.
18. Collector: Collecting payments or contributions
from members.
NINE (9) STEPS IN ORGANIZING A COOPERATIVE
Step 1. Get Organized
a. Fifteen (15) members
b. Common problems to be solved, basic needs
you want to provide
c. Formation of core group - organizational and paper
works.
Step 2. Reserve your Proposed Cooperative Name
Step 3. Prepare an Economic Survey (General
Statement)
a. Describe the structure and purpose of the
application in cooperative.
b. Staffing Pattern
c. Area of Operation, Size of Membership, and other
pertinent data.
Step 4. Prepare the Cooperative by-laws
Step 5. Prepare the Article of Cooperation
1. Name
2. Purpose and scope of business
3. Term of existence
4. Area of Operation
5. Names, Nationality, and Postal addresses of the
registrants.
6. Common bond of membership
7. List of names of the directors
8. The amount of its share capital, names and
residences.
Step 6. Secure Bond of Accountable Officers
Step 7. Execute Treasurer's Affidavit
a. Sworn statement of the Treasurer that is elected by
the subscriber.
Step 8. Complete the Pre-Membership Education
Seminar (PMES)
Step 9. Register the Cooperative to the CDA
(Cooperative Development Authority)
a. Submit four copies of the following
requirements:
1. Economic Survey
2. Articles of Cooperation and By-laws
3. Surety Bond of Accountable Officers
4. Treasurer’s Affidavit
5. Approved Cooperative Name Reservation
Slip.
6. and, Certificate of PMES
SELECTED PROVISIONS OF RA 9520
Chapter I. General Concepts and Principles
● Article 1: Title — Philippine Cooperative Code
2008
● Article 3: General Concepts
● Article 4: Cooperative Principles
Chapter II. Purposes
● Article 6: Purposes of Cooperatives
○ Generate funds
■ For productive and provident
purposes.
○ Thrift and savings mobilization
○ Provide goods and services
● Article 7: Objectives and Goals of Cooperatives
○ Goods and services resulting in good
social life.
○ Social and economic benefits
○ Providing teaching and education.
○ Cooperation among governments,
cooperative to provide further innovation.
● Article 18: Amendment of Articles of
Cooperation and by-laws
● Article 23: Types and Categories of
Cooperatives
○ Type of Cooperatives (what kind of
business enterprise, check LESSON 4)
○ Categories of Cooperatives (Primary,
Secondary, and Tertiary)
Chapter III. Membership
● Article 26: Kinds of Membership
○ Regular Member and;
■ compiled with all the member
requirements and rights and
privileges of membership
○ Associate Member
■ no rights to vote, “meets the
minimum requirement of regular
membership”
● Article 27: Government Officers and Employees
● Article 29: Liability of Members
● Article 30: Termination of Membership
○ Automatic Termination
○ Voluntary Termination
○ Involuntary Termination
1. Not patronizing
2. Continuously failed to comply
3. Violation of the by-laws
4. Act or omission injurious, affecting
the welfare of the cooperative.
Chapter IV. Administration
● Article 32: Composition of the General
Assembly
● Article 33: Powers of the Gen. Assembly
○ shall be the highest policy-making body.
1. Determine and approve.
2. Elect or appoint.
3. Approve developmental plans.
● Article 34: Meetings
○ Regular and Special
● Article 35: Quorum
○ minimum amount of members that is
present in said meeting entitled to vote
■ (twenty-five per centum (25%))
● Article 37: Composition and Term of the Board
of Directors
○ Not less than five (5) or more than (15)
members
■ and should be in an odd number
(because of the voting system.)
● Article 38: Power of the Board Directors
● Article 43: Committees of Cooperatives
● Article 46: Compensation
Chapter VIII. Capital, Property, and Funds
● Article 72: Capital Sources
● Article 75: Capital Build-Up
Chapter X. Allocation and Distribution of Net Surplus
● Article 86: Order of Distribution
Important Provisions of Articles of Cooperation and
By-laws
Section 6: Minimum Share Capital Requirement
● Minimum Share and Subscription
Section 10: Liability of Members
● Liable for the debts
Refund of Share Capital Contribution
● Membership whose has been terminated shall
be entitled to refund of his/her share capital
contribution.
○ However, refund shall not be made if
upon payment the value of the assets of
Cooperative would be less than the
aggregate amount of its debt and
liabilities.
Functions and Responsibilities of the Board of
Directors
● Providing general policy.
● Strategy.
● Prescribe and determine the organizational and
operational structure.
● Reviewing Financial status and plan
● Evaluating the capability and qualification
● Appointing.
● Declare the members entitled to vote
● Decide election related
● Act on the recommendation of Ethics Committee
Qualification of the Board Directors
● Paid the minimum capital req.
● No delinquent account with coop.
● Continuously patronized the coop. services
● Good standing for the last two years.
● Participated in required education and training
● Implementation rules of regulations (IRR) of R.A.
9520
Functions and Responsibilities of the Audit Committee
● Accountable to any financial data
● Monitor the adequacy and effectiveness of the
cooperative’s management and control system.
● Submit reports on the result of the internal audit
Functions and Responsibilities of the Election
Committee
● Formulation of rules and guidelines to Election,
and implementation
● Supervise, canvas and clarify, proclaim the winning
candidates, decide the election.
Functions and Responsibilities of the Education and Tertiary: Credit Committee, Education Committee, Ethics
Training Committee Committee, and Mediation and Conciliation Committee
● Making everyone well-informed
● Plan and implement program for education to
all cooperatives
Functions and Responsibilities of the Mediation and
Conciliation Committee
● Formulation and development of
Conciliation-Mediation program
● Accept and file evaluation reports and
semi-annual reports in every (15) days after the
end of the semester.
Functions and Responsibilities of Ethics Committee
Duties and Responsibilities of a Member
● Pay his/her subscription’s installment
● Patronize the Cooperative business.
Guide to Fill-up the Cooperative Model of Articles of
● Participate in education program
Cooperation and By-laws
● Attend and participate in G.A
● Observe and obey all lawful orders.
A. ARTICLES OF COOPERATION
1. Writes the complete name of the cooperative
Rights and Privileges of Member
● After the phrase of “Articles of Cooperation of” ,and
● Attend during general membership meetings;
on the space in Article I “Name of Cooperative”
● etc.
1.1 Article II. Type and Purpose/s
● Indicate the type of cooperative, enumerate the
Cooperative Organizational Structure: Primary,
specific business/service.
Secondary, and Tertiary.
● Indicate the type according to Article 23
(1) of R.A 9520
Primary: General Assembly
2. Article V. Term of Existence
● Management staff (below the committees)
Secondary: Audit Committee, Board of Directors, and
3. Article VI. Common Bond of Membership
Election Committee
4. Article VII. Area of Operation 8. Article XI. Subscribed and Paid-up Share Capital 5. Four (4) copies of documents must be submitted in
● Indicating the place where the cooperative shall separate folders; and
recruit a member. 6. etc (check the IM for further instructions regarding
5. Article VIII. Names and Addresses of Cooperators this topic)
● The names, address, etc of the
cooperators/members. B. TREASURER’S AFFIDAVIT
6. Article IX. Board of Directors 1. Indicate the complete name of the treasurer, name of
● Fill-up the number of Board of Directors cooperative, capitalization.
○ minimum five (5) 2. —-
○ but no more than fifteen (15) 3. —-
○ recommended and prescribed an odd
number. C. BYLAWS
● Enumerate the names of the elected. 1. Title
7. Article X. Capitalization 2. Article II, Section 1: Regular or Associate member.
3. Article II, Section 2: Field of membership.
9. Certification Clause –
4. Article II, Section 3.d: Indicating the other
● Name of the elected treasurer shall be indicated
requirements.
in the first blank.
5. Article II, Section 4: Indicating the days to reject and
○ Specification of date, month, year, and
approve the membership of cooperative under the BOD’s
place of execution of articles.
decision-making.
10. Witnesses –
6. Article II, Section 6: indicate number of shares.
● Two (2) credible witnesses —
7. Article II, Section 7: duties and responsibilities of a
○ indicating their printed name and
member.
signature to attest in the execution of
8. Article II, Section 8: In any case the cooperative
articles.
provides for associate members, there will be
11. Acknowledgement
● First blank is the total authorized capital as implementation of 8.1 Regular members and 8.2 for
prescribed by the cooperative Associate members.
General Instruction: The general requirement and the
● Second blank is the total number of shares ● 8.1 Regular Members
articles of cooperation being a contract between the
● In the next, indicate the par value of each share ● 8.2 Associate Members
cooperative and the authority, —-
and the par value of a share capital should not be 9. Article IV, Section 1: Indicating the number of Board
1. Organizers (cooperators), all must affix their
more than One Thousand Pesos (Php 1,000.00), of Directors
signatures.
and must be divisible by one peso (Php 1.00) 10. Article IV, Section 4 and Section 5: Indicating the
2. All four (4) copies of the articles of cooperation
term limit
3. No photocopy of document
11. Article V, Section 1: No. of Audit Committee should at
4. Paper size must be in 8.5 x 13 or 8.5 x 14, font
least be three (3)
type and size is Bookman Old style 12;
12. Article V, Section 3: No. of Election Committee
should at least be three (3)
13. Article V, Section 5: No. of Training and Education
Committee should at least be three (3)
14. Article V, Section 7: No. of Mediation and
Conciliation Committee should at least be three (3)
15. Article V, Section 9: No. of Ethics Committee should
at least be three (3)
16. Article VII, Section 2: Indicating the monthly income.
17. Article VIII, Section 1,a: Indicate the primary
business.
18. Article IX, Section 1(a-d): Fix the allocated
percentage accordance to the Article 86 (Order of
Distribution), RA 9520
19. Article XII: Indicating the date that the bylaws were
executed and adopted.
INDUSTRIAL REVOLUTION, CAPITALISM AND
COOPERATIVES
THE RISE OF CAPITALISM AND THE INDUSTRIAL
REVOLUTION
Capitalism
● Started in the 14th Century
Industrial Revolution
● Significant inventions and technological
advances, 1700s and 1800s
● It started in England
Rise of Capitalism
● Rapid spread of the factory system led to the full
development of the capitalism
● Owners of capital, raw materials, machines,
tools for producing goods, industrial lands and
buildings.
● Occupied the dominant social position
● Laboring class – lowest class position
The Plight of the Working Class
● Laborers – Proletariat Class
○ Proletariat – French term, property-less
● Sells their labor power to owners of capital and
factories
● Peasants — farms
● Factory owners kept wages as low as possible
and work days as long as 20 hours.
● Child and women labor was a common practice
○ High incidence of poverty, accidents and
illiteracy.
● According to E.J Hobsbown in his book History of
Great Britain, “And what cities! It was not merely
that smoke hung over them and filth impregnated
them, that the elementary public services – water
supply, sanitation, street cleaning, open spaces,
etc. – could not keep pace with the mass migration
of men into the cities, thus producing, especially
after 1830, epidemics of cholera, typhoid and an
appalling constant toll of the two great groups of
nineteenth century when killers –”
THE PEOPLE RESPONSES:
● Social thinkers and theories as well as varied forms
of collective actions were aimed at to change the
problematic situation
● Luddite Revolts, inspired by Ned Lud –
destroyed the machines and burned factories
because they thought that those things caused
their troubles.
THE IDEALS OF EARLY ADVOCATES OF
COOPERATIVES
COOPERATIVE ADVOCATE IDEALS:
● Owen, King, and Fourier proposed
Co-operation as an alternative to the
individualistic.
○ Generating income for whole
● In Germany, Raiffeisen and Schulze evolved the
concept of a self-reliant credit cooperative.
● Robert Owen is the leading reformist and
contributed to the development of humanistic
management theories.
○ He came from poor family in Scotland
○ Worked as a child laborer and later
become an industrialist
○ Opposed the oppression.
○ First to pinpoint the root of exploitation
○ “A society can never be a good one if one
class was elevated to a position of power
and as such, this power is used to exploit
the lower classes.”
○ Industrialists and Manager
UNIT 2: ORGANIZING THE OFFICE OPERATIONS
LESSON 1: CLASSIFICATIONS, TYPES OR FORMS OF
BUSINESS ORGANIZATION
● Terms of ownership means title and possession
of the assets.
● POV of ownership fall into three broad
classifications;
1. Private Ownership - Organized that
private individuals exercise and enjoy
the rights and privileges of an owner in
their own interest.
a. Forms; Individual or Single
Proprietorship
b. Partnership; and
c. Corporation
2. Public Ownership - Affected and
managed by political bodies as
municipal, provincial, or national
government, public ownership.
3. Mixed Ownership - Mixed ownership,
private persons and public bodies share
in the operation of the same enterprise.
● Business enterprise mentioned in Private
Ownership may have a careful consideration
among the number of factors,
○ Nature and size of the business
○ Capital required
○ Length of time to operate
○ Technical conditions
○ Type of products to be manufactured.
○ Method and volume of production
○ Kind of market to be supplied
○ Competitive and the chosen industry.
1. Individual or Single proprietorship
● It is a small, required but little amount of capital,
established and controlled by one man.
● Oldest known form of ownership and is usually
referred as the sole proprietorship.
2. Partnership
● Article 1967 defines the partnership as an
organization.
● Partnership may be classified as to object or as to
liability.
○ As to Object it is either “universal” or
“particular”.
■ Universal partnership, one where
the partners contribute all their
property into a common fund. With
the intention of dividing it.
○ As to Liability the Philippines laws
recognize two forms of partnership,
general partnership and the limited or
special partnership.
■ The general partnership is a
contractual relationship, oldest
form business ownership.
■ It’s like a single proprietorship
which both of the men have its
own responsibility unlike
corporation.
3. Corporations
● Kinds of Private Corporation
○ Stock corporation: A capital stock that is
divided into shares.
○ Non-stock corporation: A capital stock
that is not divided.
○ Classes of Capital Stock:
■ Common Stock: The right of
ownership and active control in the
owners’ common stock. Common
stock is the ordinary stock
representing the basic ownership.
■ Preferred Stock: Carries
preference as to priority in the
payment of dividends over the
common stock.
Comparison of Cooperatives with other Business
Enterprises: Single Proprietorship, Partnership,
Corporation, and Cooperatives
1. Number of Persons Required for Formation
● Single Proprietorship
○ ONE (1) person only
● Partnership
○ At least TWO (2) or MORE
● Corporation
○ Two (2) persons, not more than fifteen
(15).
■ Natural and Juridical Persons
can be stockholders at the
sametime.
● Cooperatives
○ At least FIFTEEN (15) persons
■ Natural person
2. Grant Juridical Personality
● Single Proprietorship
○ No separate juridical personality from the
owner.
 ■ Department of trade and ● Cooperatives ● Partnership
industry (DTI) ○ Members contribution that is limited to ○ Share tax
● Partnership 10% of subscribed capital ● Corporation
○ Agreement between partners. 5. Management Structure ○ Stockholders pay tax on dividends
■ Registered with securities and ● Single Proprietorship ● Cooperatives
exchange commission (SEC) ○ Only one person decides ○ Shareholders pay tax on interest
● Corporation ● Partnership 9. Effect of Death of Owner / Partner / Stockholder /
○ SEC ○ Partners make a collective decision Member
● Cooperatives ● Corporation ● Single Proprietorship
○ Cooperative Development Authority ○ BOD makes the final decision. ○ End of business operation
(CDA) ● Cooperatives ● Partnership
3. Registration Requirements ○ Gen. The Assembly has the final decision. ○ Upon agreement of between partners
● Single Proprietorship 6. Voting Rights ● Corporation
○ Application Form ● Single Proprietorship ○ Corporation continues, the heir inherits
● Partnership ○ No voting rights need shares.
○ Contract of Partnership ● Partnership ● Cooperatives
● Corporation ○ Vote according to interest ○ Cooperative continues, the heirs become
○ Articles of Incorporation ● Corporation members if they are qualified.
○ By-laws ○ Interest, proxy voting allowed. 10. Motive of Existence
○ Bank statement ● Cooperatives ● Single Proprietorship
● Cooperatives ○ One member, one vote ○ Profit
○ Economic survey articles of ○ No proxy voting for primary. ● Partnership
cooperation 7. Liability ○ Profit or services
○ By-laws ● Single Proprietorship ● Corporation
○ Bond of Accountable officers ○ Unlimited ○ Profit
○ Treasurer’s Affidavit ● Partnership ● Cooperatives
○ Certificate of PMES ○ Unlimited as to partner but not limited to ○ Profit and services
4. Capitalization Contributions limited partnerships
● Single Proprietorship ● Corporation LESSON 2: OFFICE MANAGEMENT
○ Only Owner contributes to the capital. ○ Limited until authorized capital ● OFFICE
● Partnership ● Cooperatives ○ Records of activities are kept and
○ Partners contributes in both cash or ○ Limited until subscribed share capital clerical operations are carried on
services 8. Taxability ■ Essential and Integral part of the
● Corporation ● Single Proprietorship business.
○ Stockholders pay the amount of shares. ○ Income tax of owner
 ○ Gathering, classification, and
presentation of data
○ Making, using, and preserving all kinds
of records.
■ Utilization of these data in
planning, executing, and
determining.
○ Operates as a beehive of activities.
○ Comes from the Latin word, Officium,
■ Opus = Work or Service
■ Facere meaning do or make
● Office Management
○ Art of guiding the personnel.
○ Information
■ Very important resource
■ Indispensable in every
management
■ Meaningful data – words, figures,
or symbols that are basic to
decision-making.
○ Information Management
■ The use of correct and vital
information that is available when
needed.
LESSON 3: OFFICE ORGANIZATIONAL STRUCTURE
I. Elements of Office Management
1. Purpose
● Must be aware of the purpose.
● Would be able to teach the personnel the
purpose.
2. Means
● The means to carry out activities, methods and
techniques.
3. Personnel ● Recording Information
● Human resources, ensuring the implementation of ● Arranging Information
plan and policies were pertained to be effective. ● Giving Information
4. Environment ○ Orders, statistical, and financial
● Important bearing in the efficiency of statements, given by the office
employees/personnel. managers
VI. Important of Office Works
II. The main objective of the office are to; 1. Narrow perspectives;
a. Planning – ensure their execution a. Sorting papers
b. Coordinate the activities in different departments. b. Posting information
c. Preserve all the records of the business; c. Calculating
d. Maintaining data of all sorts. d. Dictating
e. Typing
III. Office Management Objectives f. Duplicating
1. Improvement g. Filing
● Ensure better performance with a minimum
waste of time, effort, money, and materials. ● The brain and nerve center of business
2. Facilitation organization.
● Facilitates the business operation
● Maintenance of the equipment VII. Office Manager
3. Control ● responsible for getting the work done
● Deals with all sorts of activities in accordance ● Plans, organize, directs, controls and coordinates
with plans various departments
● Establishment of proper operating standards, ● Quality of a Good Office Manager
maintenance, report of cost, etc. ○ Leadership
○ Personal Qualities
IV. Functions of Business: ○ Professional Interest
● Preparation of original records ● Qualifications
● Entry and filing of such records ○ Ability to understand the varied
● Retrieving information requirements of organizational
● Handling of business communications elements
■ Communication, clerical equipment
V. Office Functions and supplies, data, and
● Receiving Information relationship with peers.
○ Internal and external sources ○ Must be Personnel-Minded
 ● Function of Office Manager ○ Each department works as a ● Advantages
○ Recruitment of Staff self-supporting unit. ○ Separation of Work
○ Training ○ Advantages: ○ Ease of Selection and training
○ Devising methods of work ■ Simplicity ○ Expertise in the field
○ Coordination ■ Strong discipline ● Disadvantages
○ Discipline ■ Unity of Command ○ Indiscipline
○ Controlling the stationery and supplies ○ Disadvantages ○ Shifting of responsibilities
● Effective Management ■ Undue reliance ○ Increase in cost
○ Communicate the big picture ■ Personal Limitations
○ Delegate works and responsibilities ■ Overload of work 3. Line and Staff Organization Structure
○ Help members set goals ● Line head assisted by special staffs
○ Recognize every problem ● Maintains discipline and stability
○ Reward employees ● Provides expert information and improve overall
○ Mentor staff efficiency
○ Give a review, have a heart, and take time. ● Staff are Thinkers
● Managing Changes ● Line are Doers
○ Be unfront;
○ Involve key communicators
○ Effective messages
○ Listen to your members
2. Functional Organization Structure
VII. Organization ● Divided into smaller groups or departments
● A matter of relationship of man to man, job to based on specialized functions
job, and department to department. ○ One expert in each department (not only
● Process of dividing up the activities which are a counselor but also an administrator) ● Advantages
necessary to any purposes and arranging them in ● Bear responsibility of all departments ○ Planned
groups. ○ Availability of Specialist
○ Adaptability of Progressive Business
1. Line Organizational Structure ○ Less wastages and Improve Quality
○ Has complete control over his/her ● Disadvantages
section. ○ Chances of misinterpretation
○ Selection of labor staff ○ Expensive
○ Purchase of raw materials, stores, and to ○ Loss of initiative of line executives
set standards. ● Synergy
○ Whole is greater than the sum of its parts
 ○ Seek the welfare of the individual ○ Purchasing for resale REVIEWER COVERAGE:
○ Valuing the differences ● Process of Purchasing 1. UNIT 1
1. Needs analysis 2. UNIT 2
LESSON 4: DEPARTMENTALIZATION 2. Purchase requisition to purchase order 3. GUIDE MODEL
3. Purchase order review and approval 4. BY-LAWS
I. DEPARTMENTALIZATION 4. Request for proposal 5. ECONOMIC SURVEY, ETC
● Process of breaking down an enterprise into 5. Contract negotiation and approval
various department/divisions 6. Shipping and receiving
II. FINANCE DEPARTMENT 7. Three-way matching
● Oversees financial planning and management 8. Invoice approval and payment
activities. 9. Accounting records update
○ Budgeting, forecasting, reporting,
compliance, and creation of value. IV. ACCOUNTING DEPARTMENT
● Plays a vital role in advising on business ● Responsible in financial statements
investment activities. ○ Recording accounts
● Determine where and how to spend money. ○ Paying bills
● Prepares common financial statements ○ Billing clients and customer
○ Income Statement or Statement of ○ Tracking assets
Operations ● Full transparency in financial transactions
○ Balance Sheet or Statement of Financial
Position V. HUMAN RESOURCES DEPARTMENT
○ Cash Flow Statement ● Retention policies
● Internal Financial Reports ○ Training program
○ Risk Analysis ○ Competitive benefit package
○ Cost-Benefit Analysis ○ Provide adequate compensation
● Responsibilities ● Track of changes in state and federal
○ Accepting payment from customers employment laws, applying them appropriately.
○ Allocating assets ○ Tax regulations
○ Reducing Liabilities ○ Health Insurance requirements,
III. PURCHASING DEPARTMENT also referred as ○ Etc
procurement department
● Purchasing, obtaining the appropriate materials, VI. OPERATIONS DEPARTMENT
services, and technology. ● Responsible for smooth and profitable
○ Purchasing for consumption or production, ensuring efficiency.
transformation ● Ensure overall quality of product