CHAPTER 9

ENTREPRENURIAL MIND

O –rganization
D –irecting &
C –ontrolling PRESENTORS:
THE SMALL BUSINESSES
CASTAÑARES, SEAN TIMOTHY
C A S T I L LO , R AW D A H
C ATI M B A N G , F EA
CEREZO, JERICHO
ORGANIZING is the means by which management
blends human and non-human resources through the
design of a formal structure of tasks.

Every enterprise has its own objective, so an Organizing the

appropriate organization structure must be adapted
by each. Small Business

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ENTREPRENURIAL MIND
 Appropriate Organizational Structure
PHASE 1

Owner

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ENTREPRENURIAL MIND
 Appropriate Organizational Structure
PHASE 2

Owner

Production Counter sales

Bookkeepper
laborers person

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ENTREPRENURIAL MIND
 Appropriate Organizational Structure
PHASE 3

Owner

Counter sales
Supervisor Bookkeepper
person

Production
laborers

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ENTREPRENURIAL MIND
 Appropriate Organizational Structure
PHASE 4

Owner

Production Finance Sales

Manager Officer Manager

Counter Field sales

Supervisor Supervisor Supervisor
sales person person

However, it is not necessary for the

Production Production Production entrepreneur to start with phase one.
Laborers Laborers Laborers He may adapt any start-up as he finds
it applicable.
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ENTREPRENURIAL MIND
 In designing the firm’s organizational structure,
the owner needs to consider the following:
Owners Concern
1. Activities necessary to reach the goals must
in the be identified

Organizational 2. An analysis of the jobs to be performed must

be made
Structure 3. The placement of people with the interest
and qualifications in performing the jobs.

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ENTREPRENURIAL MIND
 The following concerns are reflected in the
organizational structure:

Owners Concern 1. Specialization

in the 2. Departmentalization

Organizational 3.
4.
Delegation of authority
Span of management
Structure 5. Hierarchy of objectives; and
6. Degree of centralization

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ENTREPRENURIAL MIND
 Specialization.The first task of the owner is to
determine the total function of the organization.
Its purpose is to make employees more efficient.
A person who performs a specific task
repeatedly, masters it after a certain period of
Owners Concern time has elapsed.

in the Departmentalization. When jobs are grouped

into working units. The units formed are called
Organizational departments, units, groups or divisions.

Structure They may be organized according to function:

finance, marketing, and human resource
development or product such as cabinet, table
and bed … or customers such as consumers,
private institutions and government.
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ENTREPRENURIAL MIND
 Delegation of Authority. When an organization
grows beyond phase one, some of the tasks will
have to be assigned to subordinates who will be
delegated with commensurate authorities.
Proper delegation of authority will simplify the
Owners Concern task of the owner.

in the A. FUNCTIONAL DEPARTMENTALIZATION

Organizational Owner/General

Structure Manager

Marketing Production
Finance Dept.
Dept. Dept.

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ENTREPRENURIAL MIND
 B. PRODUCT DEPARTMENTALIZATION

Owner/General
Manager

Owners Concern Cabinet

Divison
Table Division Bed Division

in the
Organizational
C. TERRITORIAL DEPARTMENTALIZATION

Structure Owner/General
Manager

Northern Central Luzon Southern

Luzon Division Division Luzon Division

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ENTREPRENURIAL MIND
 D. CUSTOMER DEPARTMENTALIZATION

Owner/General
Manager

Owners Concern Consumers

Private
Institutions
Government
Agencies

in the Span of Management. The small business

Organizational operator must consider the number of
subordinates reporting to a supervisor or to
Structure himself. When there are two many subordinates
reporting to a single supervisor, the quality of
directing and controlling the subordinates may
be compromised.

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ENTREPRENURIAL MIND
 Degree of Centralization. Authority is required
to be delegated to lower level units if work is
expected to be accomplished. In any case,
management has to decide whether authority
would be centralized or decentralized.
Owners Concern
Centralized. Characterized by the concentration
in the of authority for decision-making in the hands of
one or few, i.e., sole proprietor, senior partner or
Organizational top-management.

Structure Decentralized. Where authority is widely

delegated to subordinates. It reduces the load of
top management and more time will be available
for them to attend to some other important
matters.
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ENTREPRENURIAL MIND
Adopting a Small Business
Organizational (SBO)
Structure
The organization is vehicle by which the SBO
or the entrepreneur will achieve his business
objectives. In the day-to-day operations of the
business, he is confronted with the formal and
informal organizations.
 The Formal Organization

HOLLOW BLOCKS MANUFACTURING

Owner Owner/Manager
Depending on the size and nature of the business,

INDPENDENT RETAIL STORE

an organizational structure will be adapted by the 0r
the entrepreneur. The one adapted will be the firm’s
formal organization structure which clearly defines Manager Assistant
relationships, channels of communication and
responsibilities resulting from the delegation of
authority from one level to another. It is called the
organization chart. Asst. Manager Supervisor

Formal organizations are of various types. They are

as follows: Daily Wage
Laborers
» Line type; Employees

» Functional type;
» Line and staff type; and Line type. This structure is based on direct flow of
authority from the chief executive to the subordinates.
» Committee type. The manager of each unit can make decisions quickly
based on the clear chain of command.
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ENTREPRENURIAL MIND
Line and Staff Type. This type of organization is
characterized by line functions directly responsible for the The Formal Organization
achievement of organizational objectives and which are
indirectly influenced by staff functions through advice, Functional Type. The functional organization structure is
recommendations, research, and technical expertise. one in which there are a number of functional specialists
supervising the activities of a single subordinate. The
General disadvantage of it is that sometimes departmental
Managerconcerns tend to override basic business concerns.

Committee Type. A committee is a formal organization

group created to carry-out a specific organizational task.
Research Owner/Manager
It consists of group ofand
individuals vested us with authority Legal
Dev’t
and responsibility and performs a specific task which hthe
individual manager cannot complete. It is not a separate
structure for the entire organization but a part ofProduction
Production regularFinance
Unit Marketing
Production Unit Production Unit
line and staff structure. Supervisor Supervisor Supervisor

Laborers
Product A Product B Product A
Salespersons Product B Product A Product B
Clerks

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ENTREPRENURIAL MIND
 The Informal Organization

» The performance of individual employees

depends on how successful management is
in motivating work groups that are formally
vested with authority. In many ways,
however, employee performance is affected
either positively or negatively by the
influence of groups not formally sanctioned An example of an informal organization is a
by the firm. group of nine individuals working in the same
company who meet every Sunday and play
» These types of informal groups are useful to
tennis.
the organization if the members accept the
organizational goals. This is one concern
where the small business owner can use his
management skill to motivate employees to
work for the firm.

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ENTREPRENURIAL MIND
 In adapting an organizational structure, economic
plays an important part. One must be used if it will
provide more benefits than other structures. Many
small business ventures will adapt the line structure
due to the following reasons:

Importance of 1. Its simplicity is conducive to an immediate start-

up in operations.

Organizational 2. It is a good launching mechanism for more

sophisticated organizational structures.

Structure in Small 3. It is adaptable to small-scale operations as all

employees will be fully-occupied with work.

Business When the organization grows, the need for specialist

is felt, and as affordability is increased, they are hired.
Small business may adapt the line and staff structure
as the firm becomes bigger and more stable.
Committees may also be created to address specific
concerns.

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ENTREPRENURIAL MIND
Directing. It refers to guiding and motivating employees to
accomplish organizational objectives. It involves explaining
procedures, issuing orders, and seeing that mistakes are
corrected. Directing the
The small business operator needs to use the following
skills that are required for effective directing: Small Business
1. Communicating with subordinates;
2. Providing counseling services;
3.
4.
Motivating;
Maintaining discipline.
______________

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ENTREPRENURIAL MIND
 1. Communicating with Subordinates
Communication plays an important role in the
achievement of company objectives. If subordinates are
expected to perform, the small business operator must
provide information that is accurate and adequate. 2. Motivational Function. Communication is used to
motivate subordinates to contribute to the achievement
It may be defined as a meaningful exchange of of company goals.
information through messages.

3. Control Function. The clarifications provided through

_________________________________________________ communication of terms of duties, authority, and
Functions of Communication. The small business can use responsibilities lay the ground for effective control.
communication tool to performing the following
functions:
4. Emotive Function. Communication provides
subordinates with an outlet for self-expression.
1. Information function. The SBO uses communication as
means to gather information he needs in making
decisions.

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ENTREPRENURIAL MIND
 COMMUNICATION PROCESS
Large Image

Sender. The one who speaks or dictates the message

Encoder. Transcribes what is spoken/dictated and prepares it for sending.

Insert or Drag & Drop your Photo

Medium. Conveys the message through written, oral, nonverbal, or electronic means.

Decoder. It interprets the message.

Receiver. Receives the message.

Lorem ipsum dolor sit amet, consectetur adipiscing elit.

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ENTREPRENURIAL MIND
Example. The employee who complains of difficulty in
preparing the documents required in application for a
building permit. He wants to construct a house in his
newly acquired lot. He mentioned the problem to his boss
who immediately directed the company’s admin office to
assist him.
The effect of the gesture is that the employees now believe
that the management is aware and is concerned with their
welfare and that they provided with some assistance in
solving their problems.
CHAPTER 9
ENTREPRENURIAL MIND
2. Provide Counseling Services
There are certain instances when the actuations of some
employees do not jibe with the required activities
designed to accomplish the company’s objectives. When
these happen, there is a need to redirect the efforts of the
concerned employees.
The small business operator must perform the additional
role of counselor so that hindrances in the attainment of
company objectives could be effectively cast aside.
This additional task involves listening, giving advice and
preventing and solving employees’ problems.
22
 3. Motivating
It is widely accepted that motivated employees Popular Methods and Programs adapted to
are crucial to the achievement of enterprise Motivate Employees:
objectives. These employees do not happen by
accident. They will be so depending on how
their personal needs are satisfied. 1. Improving the organization of the elements
It is the job of the entrepreneur to determine 2. Modifying organizational behavior
these needs, find ways to satisfy them, and 3. Harnessing recognition and pride
once these are satisfied, to channel these
motivation to the accomplishment of the 4. Financial incentives
enterprise goals.

The entrepreneur who desires to motivate his

subordinates could benefit from the various
theories and practices expounded by well-
known writers and researchers, such as Peter
Drucker, Richard Daft, et al. CHAPTER 9 23
ENTREPRENURIAL MIND

Progressive Discipline. It is when the SBO
applies corrective measures in increasing
degrees to get an employee to voluntarily
correct inappropriate behavior.
A typical progressive discipline procedure
consists of the following:
1. Verbal Warning
2. Written Warning
3. One-day suspension
4. Three-day suspension
5. Termination
CHAPTER 9
ENTREPRENURIAL MIND
4. Maintaining Discipline
Much as the small business owner likes to avoid
negative actions, there are instances where
punishment and disciplinary measures are used
to eliminate undesired behavior and poor
performance.
Any action directed towards an employee for
failing to follow company rules, standards, or
policies is called discipline. Among the reasons
for disciplining employees are the following:
1. Loafing
2. Absenteeism
3. Fighting’
4. Falsifying records
5. Insubordination
24
Controlling is very important management function.
If the small business is to succeed, this function must
be exercised very well. It refers to the process of
efficient performance to attain the objectives of the
firm.
______________
Controlling the
It involves the following:
Organization
1. Establishing the goals
2. Measuring performance against the established
______________
goals and standards
3. Reinforcing successes and correcting
shortcomings

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ENTREPRENURIAL MIND
Kinds of Control

Control assists of various types and those appropriate for small business will depend on the stage of growth of the
firm. They are as follows:

Stage Appropriate Control Tools

1. Start-up Simple accounting records and personal supervision
2. Early growth Operational budgets, management by objectives
3. Late growth Greater use of budgets, standard cost systems, use of
computer
4. Resource Maturity More sophisticated use of control measures indicated in the late
growth stage

As the small business grows, the need for computers becomes more pronounced, as computers can provide
answers to more complex control problems. It is very encouraging to note, though, that recent developments in
computer technology provide solutions to control problems of small businesses at reduced costs.

CHAPTER 9 26
ENTREPRENURIAL MIND
 SUMMARY:

» Small business must be properly organized,

directed, and controlled.
» The types of formal organizational structures
are the line type, functional type, the line
and staff-type and the committee type.
» For effective directing, the following
activities are required:
CHAPTER
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ENTREPRENURIAL MIND
ENTREPRENURIAL MIND
1. Communicating with subordinates;
2. counseling;
Thank You 3. motivating;
4. discipline.

Controlling is a management function that

makes sure resources are efficiently used.