606 MANAGEMENT AND ENTREPERNEURSHIP

Marie Marguirete Lourdes G. Yu Dr. Rufino T. Tudlasan Jr.

MPA Professor
 Dear God ,
Father of All,
Thank you for ways in which you provide for us,
For your protection and love,
Help us to focus our hearts and minds on what we are about to
learn.
Inspire us by Your Holy Spirit as we listen and write,
Guide us by your eternal light as we discover more.
We ask all this in the name of Jesus.
Amen.
 “The capacity to learn is a gift;
the ability to learn is a skill;
the willingness to learn is a choice.”

Brian Herbert
Unit 1.5 Structures of Organizations in Business
Unit 1.6 Cycles of Business

Unit 2.1 Definition of Management

Unit 2.2 Nature of Management
Organizational Structure

 An organizational structure is a system that outlines how certain activities are directed in
order to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities.
 There are a number of factors which decide how formal the structure needs to be, how
complex, and which template it should follow — factors such as size and location of the
company, how much management is needed, and the size and divisions of the workforce.
 Organizational structure is important for any growing company to provide guidance and
clarity on specific human resource issues, provides guidance to all employees by laying out
the official reporting relationships that govern the workflow of the company, improves
operational efficiency by providing clarity to employees at all levels of a company.
Types of Organizational Structure

 Hierarchical
 Matrix
 Flat or Horizontal
 Functional
 Divisional
 Team-based
 Network
1. HIERARCHICAL
The most common form or organizational structure. Represented by a pyramid, with a single entity in
authority at the top, with subsequent levels of power beneath them.
PROS 
 Better defines levels of authority and responsibility
 Shows who each person reports to or who to talk to about specific projects
 Motivates employees with clear career paths and chances for promotion     
 Gives each employee a specialty     
 Creates camaraderie between employees within the same department
CONS
 Can slow down innovation or important changes due to increased bureaucracy
 Can cause employees to act in interest of the department instead of the company as a whole
 Can make lower-level employees feel like they have less ownership and can’t express their ideas for
the company
1. HIERARCHICAL
2. MATRIX
A matrix organizational chart looks like a grid, and it shows cross-functional teams that form for special
projects.
PROS
 Allows supervisors to easily choose individuals by the needs of a project
 Gives a more dynamic view of the organization
 Encourages employees to use their skills in various capacities aside from their original roles
CONS
 Presents a conflict between department managers and project managers
 Can change more frequently than other organizational chart types
2. MATRIX
3. FLAT OR HORIZONTAL
A matrix organizational chart looks like a grid, and it shows cross-functional teams that form for special
projects.
PROS
 Allows supervisors to easily choose individuals by the needs of a project
 Gives a more dynamic view of the organization
 Encourages employees to use their skills in various capacities aside from their original roles
CONS
 Presents a conflict between department managers and project managers
 Can change more frequently than other organizational chart types
3. FLAT OR HORIZONTAL
4. FUNCTIONAL
It starts with positions with the highest levels of responsibility at the top and goes down from there.
PROS
 Allows employees to focus on their role
 Encourages specialization
 Help teams and departments feel self-determined
 Is easily scalable in any sized company
CONS
 Can create silos within an organization
 Hampers interdepartmental communication
 Obscures processes and strategies for different markets or products in a company
4. FUNCTIONAL
5. DIVISIONAL
In divisional organizational structures, a company’s divisions have control over their own resources,
essentially operating like their own company within the larger organization.
PROS
 Helps large companies stay flexible 
 Allows for a quicker response to industry changes or customer needs
 Promotes independence, autonomy, and a customized approach
CONS
 Can easily lead to duplicate resources
 Can mean muddled or insufficient communication between the headquarters and its divisions
 Can result in a company competing with itself
MARKET-BASED. Divisions are separated by market, industry, or customer type. A large
consumer goods company, like Target or Walmart, might separate its durable goods
(clothing, electronics, furniture, etc.) from its food or logistics divisions.

PRODUCT. Divisions are separated by product line. For example, a tech company
might have a division dedicated to its cloud offerings, while the rest of the divisions
focus on the different software offerings––e.g., Adobe and its creative suite of
Illustrator, Photoshop, InDesign, etc.

GEOGRAPHICAL. Divisions are separated by region, territories, or districts, offering

more effective localization and logistics. Companies might establish satellite offices
across the country country or the globe in order to stay close to their customers.
Market-Based Divisional Organizational Structure
Product-Based Divisional Organizational Structure
Geographic Divisional Organizational Structure
6. TEAM-BASED
 It groups employees according to teams. A team organizational structure is meant to disrupt the
traditional hierarchy, focusing more on problem solving, cooperation, and giving employees more
control.
PROS
 Increases productivity, performance, and transparency by breaking down silos
 Promotes a growth mindset
 Changes the traditional career models by getting people to move laterally
 Values experience rather than seniority
 Requires minimal management
 Fits well with agile companies with scrum or tiger teams
CONS
 Goes against many companies’ natural inclination of a purely hierarchical structure
 Might make promotional paths less clear for employees
7. NETWORK
 A network organizational structure makes sense of the spread of resources. It can also describe an
internal structure that focuses more on open communication and relationships rather than hierarchy.
PROS
 Visualizes the complex web of onsite and offsite relationships in companies
 Allows companies to be more flexible and agile
 Give more power to all employees to collaborate, take initiative, and make decisions
 Helps employees and stakeholders understand workflows and processes
CONS
 Can quickly become overly complex when dealing with lots of offsite processes
 Can make it more difficult for employees to know who has final say
WHAT IS A BUSINESS CYCLE?

 A business cycle is a cycle of fluctuations in the Gross Domestic Product (GDP) around its long-term
natural growth rate. It explains the expansion and contraction in economic activity that an economy
experiences over time.

 A business cycle is completed when it goes through a single boom and a single contraction in
sequence. The time period to complete this sequence is called the length of the business cycle. A
boom is characterized by a period of rapid economic growth whereas a period of relatively stagnated
economic growth is a recession. These are measured in terms of the growth of the real GDP, which is
inflation-adjusted.
Stages of the Business Cycle
1. Expansion
The first stage in the business cycle is expansion. In this stage, there is an increase in positive economic indicators
such as employment, income, output, wages, profits, demand, and supply of goods and services. Debtors are
generally paying their debts on time, the velocity of the money supply is high, and investment is high. This process
continues as long as economic conditions are favorable for expansion.
2. Peak
The economy then reaches a saturation point, or peak, which is the second stage of the business cycle. The
maximum limit of growth is attained. The economic indicators do not grow further and are at their highest. Prices
are at their peak. This stage marks the reversal point in the trend of economic growth. Consumers tend to
restructure their budgets at this point.
3. Recession
The recession is the stage that follows the peak phase. The demand for goods and services starts declining rapidly
and steadily in this phase. Producers do not notice the decrease in demand instantly and go on producing, which
creates a situation of excess supply in the market. Prices tend to fall. All positive economic indicators such as
income, output, wages, etc., consequently start to fall.
4. Depression
There is a commensurate rise in unemployment. The growth in the economy continues to decline, and as this falls
below the steady growth line, the stage is called a depression.
5. Trough
In the depression stage, the economy’s growth rate becomes negative. There is further decline until the prices of
factors, as well as the demand and supply of goods and services, contract to reach their lowest point. The
economy eventually reaches the trough. It is the negative saturation point for an economy. There is extensive
depletion of national income and expenditure.
6. Recovery
After the trough, the economy moves to the stage of recovery. In this phase, there is a turnaround in the economy,
and it begins to recover from the negative growth rate. Demand starts to pick up due to low prices and,
consequently, supply begins to increase. The population develops a positive attitude towards investment and
employment and production starts increasing.
6. Recovery
After the trough, the economy moves to the stage of recovery. In this phase, there is a turnaround in the economy,
and it begins to recover from the negative growth rate. Demand starts to pick up due to low prices and,
consequently, supply begins to increase. The population develops a positive attitude towards investment and
employment and production starts increasing.
6. Recovery
After the trough, the economy moves to the stage of recovery. In this phase, there is a turnaround in the economy,
and it begins to recover from the negative growth rate. Demand starts to pick up due to low prices and,
consequently, supply begins to increase. The population develops a positive attitude towards investment and
employment and production starts increasing.
WHAT IS
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 reach
its goals efficiently and effectively.

FIVE BASICS OF MANAGEMENT:

1. Planning: Is the process of thinking about the actions required to gain the required target.

2. Organizing: Arranging human, physical and financial resources are put into places.

3. Coordinating: Is the combination, union, integrations of a group of people provide unity of action to reach common goals.

4. Commanding: Deciding what should be done in the situation and telling people to do it.

5. Controlling: Supervising improvement against plans.

ECONOMIC FACTOR:
Management is one of the factors of production together with land, labor, and capital.
SYSTEM OF AUTHORITY:
Management first developed an authoritarian philosophy turned into paternalistic. Later changed to
constitutional management but further developed into democratic and participatory
CLASS AND STATUS SYSTEM:
Managers become elite of brain and education. Entry into this class of executives is being more and
more dependent on excellence in education and knowledge rather than family or political connections.
 Nature of
Management

Multi-
disciplinary
Goal
Subject Oriented

Integrativ Economic
e Force Resources

Distinct
Process
NATURE OF MANAGEMENT

 Goal Oriented: It coordinates the efforts of workers to achieve the goals of the organization.
The success of management is measured by the extent to which the organizational goals are
achieved.
 Economic Resources: Management is one of the factors of production together with land,
labor and capital. It is the most critical input in the success of any group activity. These
factors do not themselves ensures production, they require the catalyst of management to
produce goods and services required by the society.
 Distinct Process: It is a distinct function process consisting of such functions as planning,
organizing, staffing, directing and controlling.
 Integrative Force: The essence of management is integration of human and other resources to
achieve the desired objectives.
 Multi-Disciplinary Subject: Management has grown as a field of study taking the help of so
many other disciplines such as engineering, anthropology, sociology and psychology.