Lesson 05

MANAGEMENT ASPECT FOR ENTREPRENEURS

Introduction

A business develops in course of time with complexities. With increasing

complexities managing the business has become a difficult task. The need of
existence of management has increased tremendously. Management is essential not
only for business concerns but also for banks, schools, colleges, hospitals, hotels,
religious bodies, charitable trusts etc. Every business unit has some objectives of its
own. These objectives can be achieved with the coordinated efforts of several
personnel. The work of a number of persons are properly coordinated to achieve the
objectives through the process of management is not a matter of pressing a button,
pulling a lever, issuing orders, scanning profit and loss statements, promulgating
rules and regulations. Rather it is the power to determine what shall happen to the
personalities and happiness of entire people, the power to shape the destiny of a
nation and of all the nations which make up the world."

Management is a vital aspect of the economic life of man, which is an

organized group activity. It is considered as the indispensable institution in the
modern social organization marked by scientific thought and technological
innovations.

Management is the integrating force in all organized activity. Whenever two or

more people work together to attain a common objective, they have to coordinate
their activities. They also have to organize and utilize their resources in such a way
as to optimize the results. Not only in business enterprises where costs and
revenues can be ascertained accurately and objectively but also in-service
organizations such as government, hospitals, schools, clubs, etc., scarce resources
including men, machines, materials and money have to be integrated in a productive
relationship, and utilized efficiently towards the achievement of their gals. Thus,
management is not unique to business organizations but common to all kinds of
social organizations.

In this lesson, we will able to learn about the concept of management and its
relationship in entrepreneurship. The concept will give an idea about the focused of
management and what is the help of this in achieving the goal of entrepreneur of
entering the modern business.

Learning Objectives

At the end of the lesson, the learners should able to:

 discuss the concept of management
 describe the nature and scope of management;
 differentiate management and administration;
 express the basic forms of management in entrepreneurship
 identify various levels of management;
 describe the forms of business entities, its advantage and disadvantages
  analyse legal pitfalls in entering the business and how to avoid it

Lesson Proper

Definition of Management

Management is the coordination and administration of tasks to achieve a goal.

Such administration activities include setting the organization’s strategy and coordinating
the efforts of staff to accomplish these objectives through the application of available
resources. Management can also refer to the seniority structure of staff members within an
organization. There are also various definition of management based from the
writers/philosophers such as:

 William Spriegal, "Management is that function of an enterprise which

concerns itself with direction and control of the various activities to attain
business objectives. Management is essentially an executive function; it deals
with the active direction of the human effort."

 According to Mc Farland, "Management is defined for conceptual, theoretical

and analytical purposes as that process by which managers create, direct,
maintain and operate purposive organization through systematic, coordinated
cooperative human effort."

 According to Terry, "Management is not people; it is an activity like walking,

reading, swimming or running. People who perform Management can be
designated as members, members of Management or executive leaders."

To conclude, we can say that various definitions of management do not run

contrary to one another. Management is the sum-total of all those activities that (i)
determine objectives, plans, policies and programmes; (ii) secure men, material,
machinery cheaply (iii) put all these resources into operations through sound
organization (iv) direct and motivate the men at work, (v) supervises and control their
performance and (iv) provide maximum prosperity and happiness for both employer
and employees and public at large.

Characteristics of Management

Management is a distinct activity having the following salient features:

1. Economic Resource: Management is one of the factors of production

together with land, labor and capital. As 10 industrialization increases, the need for
managers also increases. Efficient management is the most critical input in the
success of any organized group activity as it is the force which assembles and
integrates other factors of production, namely, labor, capital and materials. Inputs of
labor, capital and materials do not by themselves ensure production, they require the
catalyst of management to produce goods and services required by the society.
Thus, management is an essential ingredient of an organization.
 2. Goal Oriented: Management is a purposeful activity. 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. It is imperative that the organizational goals must be well-defined and
properly understood by the management at various levels.

3. Distinct Process: Management is a distinct process consisting of such

functions as planning, organizing, staffing, directing and controlling. These functions
are so interwoven that it is not possible to lay down exactly the sequence of various
functions or their relative significance.

4. Integrative Force: The essence of management is integration of human

and other resources to achieve the desired objectives. All these resources are made
available to those who manage. Managers apply knowledge, experience and
management principles for getting the results from the workers by the use of non-
human resources. Managers also seek to harmonize the individuals' goals with the
organizational goals for the smooth working of the organization.

5. System of Authority: Management as a team of managers represents a

system of authority, a hierarchy of command and control. Managers at different
levels possess varying degree of authority. Generally, as we move down in the
managerial hierarchy, the degree of authority gets gradually reduced. Authority
enables the managers to perform their functions effectively.

6. Multi-disciplinary Subject: Management has grown as a field of study (i.e.

discipline) taking the help of so many other disciplines such as engineering,
anthropology, sociology and psychology. Much of the management literature is the
result of the association of these disciplines. For instance, productivity orientation
drew its inspiration from industrial engineering and human relations orientation from
psychology. Similarly, sociology and operations research have also contributed to
the development of management science.

7. Universal Application: Management is universal in character. The

principles and techniques of management are equally applicable in the fields of
business, education, military, government and hospital. Henri Fayol suggested that
principles of management would apply more or less in every situation. The principles
are working guidelines which are flexible and capable of adaptation to every
organization where the efforts of human beings are to be coordinated

Management Functions or Process of Management

For our purpose, we shall designate the following six as the functions of a
manager: planning, organizing, staffing, directing, coordinating and controlling.

1. PLANNING: Planning is the most fundamental and the most pervasive of all
management functions. If people working in groups have to perform
effectively, they should know in advance what is to be done, what activities
they have to perform in order to do what is to be done, and when it is to be
done. Planning is concerned with 'what', 'how, and 'when' of performance. It is
 deciding in the present about the future objectives and the courses of action
for their achievement. It thus involves:

a. determination of long and short-range objectives;

b. development of strategies and courses of actions to be followed for the
achievement of these objectives; and
c. Formulation of policies, procedures, and rules, etc., for the
implementation of strategies, and plans.

The organizational objectives are set by top management in the context of its
basic purpose and mission, environmental factors, business forecasts, and available
and potential resources. These objectives are both long-range as well as short-
range. They are 13 divided into divisional, departmental, sectional and individual
objectives or goals. This is followed by the development of strategies and courses of
action to be followed at various levels of management and in various segments of
the organization. Policies, procedures and rules provide the framework of decision
making, and the method and order for the making and implementation of these
decisions.

2. ORGANIZING: Organizing involves identification of activities required for the

achievement of enterprise objectives and implementation of plans; grouping of
activities into jobs; assignment of these jobs and activities to departments and
individuals; delegation of responsibility and authority for performance, and
provision for vertical and horizontal coordination of activities. Every manager
has to decide what activities have to be undertaken in his department or
section for the achievement of the goals entrusted to him. Having identified
the activities, he has to group identical or similar activities in order to make
jobs, assign these jobs or groups of activities to his subordinates, delegate
authority to them so as to enable them to make decisions and initiate action
for undertaking these activities, and provide for coordination between himself
and 14 his subordinates, and among his subordinates. Organizing thus
involves the following sub-functions :
a. Identification of activities required for the achievement of objectives
and implementation of plans.
b. Grouping the activities so as to create self-contained jobs.
c. Assignment of jobs to employees.
d. Delegation of authority so as to enable them to perform their jobs and
to command the resources needed for their performance.
e. Establishment of a network of coordinating relationships.

Organizing process results in a structure of the organization. It comprises

organizational positions, accompanying tasks and responsibilities, and a network of
roles and authority-responsibility relationships.

Organizing is thus the basic process of combining and integrating human,

physical and financial resources in productive interrelationships for the achievement
of enterprise objectives. It aims at combining employees and interrelated tasks in an
orderly manner so that organizational work is performed in a coordinated manner,
and all efforts and activities pull together in the direction of organizational goals.
 3. STAFFING: Staffing is a continuous and vital function of management. After
the objectives have been determined, strategies, policies, programmes,
procedures and rules formulated for their achievement, activities for the
implementation of strategies, policies, programmes, etc. identified and
grouped into jobs, the next logical step in the 15 management process is to
procure suitable personnel for manning the jobs. Since the efficiency and
effectiveness of an organization significantly depends on the quality of its
personnel and since it is one of the primary functions of management to
achieve qualified and trained people to fill various positions, staffing has been
recognized as a distinct function of management. It comprises several sub
functions;
a. Manpower planning involving determination of the number and the kind
of personnel required.
b. Recruitment for attracting adequate number of potential employees to
seek jobs in the enterprise.
c. Selection of the most suitable persons for the jobs under consideration.
d. Placement, induction and orientation.
e. Transfers, promotions, termination and layoff.
f. Training and development of employees.

As the importance of human factor in organizational effectiveness is being

increasingly recognized, staffing is gaining acceptance as a distinct function of
management. It need hardly any emphasize that no organization can ever be better
than its people, and managers must perform the staffing function with as much
concern as any other function.

4. DIRECTING; Directing is the function of leading the employees to perform

efficiently, and contribute their optimum to the achievement of organizational
objectives. Jobs assigned to subordinates have to be explained and clarified,
they have to be provided guidance in job performance and they are to be
motivated to contribute their 16-optimum performance with zeal and
enthusiasm. The function of directing thus involves the following sub-
functions:
a) Communication
b) Motivation
c) Leadership

5. COORDINATION: Coordinating is the function of establishing such

relationships among various parts of the organization that they all together
pull in the direction of organizational objectives. It is thus the process of tying
together all the organizational decisions, operations, activities and efforts so
as to achieve unity of action for the accomplishment of organizational
objectives. The significance of the coordinating process has been aptly
highlighted by Mary Parker Follet. The manager, in her view, should ensure
that he has an organization "with all its parts coordinated, so moving together
in their closely knit and adjusting activities, so linking, interlocking and
 interrelation, that they make a working unit, which is not a congeries of
separate pieces, but what I have called a functional whole or integrative
unity". Coordination, as a management function, involves the following sub-
functions:
a. Clear definition of authority-responsibility relationships
b. Unity of direction
c. Unity of command
d. Effective communication
e. Effective leadership

6. CONTROLLING: Controlling is the function of ensuring that the divisional,

departmental, sectional and individual performances are consistent with the
predetermined objectives and goals. Deviations from objectives and plans
have to be identified and investigated, and correction action taken. Deviations
from plans and objectives provide feedback to managers, and all other
management processes including planning, organizing, staffing, directing and
coordinating are continuously reviewed and modified, where necessary.
Controlling implies that objectives, goals and standards of performance exist
and are known to employees and their superiors. It also implies a flexible and
dynamic organization which will permit changes in objectives, plans,
programmes, strategies, policies, organizational design, staffing policies and
practices, leadership style, communication system, etc., for it is not
uncommon that employees failure to achieve predetermined standards is due
to defects or shortcomings in any one or more of the above dimensions of
management. Thus, controlling involves the following process :
a. Measurement of performance against predetermined goals.
b. Identification of deviations from these goals.
c. Corrective action to rectify deviations.

It may be pointed out that although management functions have been

discussed in a particular sequence-planning, organizing, staffing, directing,
coordinating and controlling – they are not performed in a sequential order.
Management is an integral process and it is difficult to put its functions neatly in
separate boxes. Management functions 18 tend to coalesce, and it sometimes
becomes difficult to separate one from the other. For example, when a production
manager is discussing work problems with one of his subordinates, it is difficult to
say whether he is guiding, developing or communicating, or doing all these things
simultaneously. Moreover, managers often perform more than one function
simultaneously.

Levels of Management

An enterprise may have different levels of management. Levels of

management refer to a line of demarcation between various managerial positions in
an enterprise. The levels of management depend upon its size, technical facilities,
and the range of production. We generally come across two broad levels of
management, viz. (i) administrative management (i.e., the upper level of
management) and (ii) operating management (i.e., the lower level of management).
Administrative management is concerned with "thinking" functions such as laying
down policy, planning and setting up of standards. Operative management is
concerned with the "doing" function such as implementation of policies, and directing
the operations to attain the objectives of the enterprise.

But in actual practice, it is difficult to draw any clear-cut demarcation between

thinking function and doing function. Because the basic/fundamental managerial
functions are performed by all managers irrespective of their levels or, ranks. For
instance, wage and salary director of a company may assist in fixing wages and
salary structure as a member of the Board of Directors, but as head of wages and
salary department, his job is to see that the decisions are implemented. The real
significance of levels is that they explain authority relationships in an organization.
Considering the hierarchy of authority and responsibility, one can identify three levels
of management namely:

1. TOP MANAGEMENT of a company consists of owners/shareholders, Board

of Directors, its Chairman, Managing Director, or the Chief Executive, or the
General Manager or Executive Committee having key officers.

 Top management is the ultimate source of authority and it lays down

goals, policies and plans for the enterprise. It devotes more time on
planning and coordinating functions. It is accountable to the owners of
the business of the overall management. It is also described as the
policy making group responsible for the overall direction and success
of all company activities. The important functions of top management
include :
 To establish the objectives or goals of the enterprise.
 To make policies and frame plans to attain the objectives laid.
 To set up an organizational frame work to conduct the
operations as per plans.
 To assemble the resources of money, men, materials, machines
and methods to put the plans into action.
 To exercise effective control of the operations.
 To provide overall leadership to the enterprise.

2. MIDDLE MANAGEMENT of a company consists of heads of functional

departments viz. Purchase Manager, Production Manager, Marketing
Manager, Financial controller, etc. and Divisional and Sectional Officers
working under these Functional Heads.
 The job of middle management is to implement the policies and plans
framed by the top management. It serves as an essential link between
the top management and the lower level or operative management.
They are responsible to the top management for the functioning of their
departments. They devote more time on the organization and
motivation functions of management. They provide the guidance and
the structure for a purposeful enterprise. Without them the top
management's plans and ambitious expectations will not be fruitfully
realized. The following are the main functions of middle management :

 To interpret the policies chalked out by top management.

  To prepare the organizational set up in their own departments
for fulfilling the objectives implied in various business policies.

 To recruit and select suitable operative and supervisory staff.

 To assign activities, duties and responsibilities for timely

implementation of the plans.

 To compile all the instructions and issue them to supervisor

under their control.

 To motivate personnel to attain higher productivity and to reward

them properly.

 To cooperate with the other departments for ensuring a smooth

functioning of the entire organization.

 To collect reports and information on performance in their

departments.

 To report to top management

 To make suitable recommendations to the top management for

the better execution of plans and policies.

3. LOWER LEVEL OR OPERATIVE MANAGEMENT of a company consists of

Superintendents, Foremen, Supervisors

 Lower or operative management: It is placed at the bottom of the

hierarchy of management, and actual operations are the responsibility
of this level of management. It consists of foreman, supervisors, sales
officers, accounts officers and so on. They are in direct touch with the
rank and file or workers. Their authority and responsibility is limited.
They pass on the instructions of the middle management to workers.
They interpret and divide the plans of the management into short-range
operating plans. They are also involved in the process of decisions-
making. They have to get the work done through the workers. They
allot various jobs to the workers, evaluate their performance and report
to the middle level management. They are more concerned with
direction and control functions of management. They devote more time
in the supervision of the workers.

Types of Business Entities

 The type of business entity you choose will depend on three primary factors:
liability, taxation and record-keeping. Here's a quick look at the differences between
the most common forms of business entities:
1. Sole Proprietorship
2. Partnership
3. Corporation

Sole Proprietorship

By definition, a single/sole proprietorship is a business owned and operated

by one person. The owner and the business are synonymous in the eyes of the law.

 All assets in the firm are owned by the proprietor subject only to the liabilities
he has incurred in its establishment and operation.

 Solely responsible for its debts, incurs any loses, assumes all its risks,
provides all its capital, and provides its total management.

 Is the most common form of business organization. It's easy to form and
offers complete managerial control to the owner. However, the owner is also
personally liable for all financial obligations of the business.

Advantages Disadvantages
1. Simplicity of Organization 1. Owner’s possible lack of ability and
experience
2. Owner’s freedom to make all 2. Limited Opportunity for employees
decisions and owner’s enjoyment of all
profits.
3. Minimum legal restrictions 3. Difficulty in raising capital
4. Ease of Discontinuance 4. Limited life of the firm
5. Tax Advantages 5. Unlimited liability of proprietor

Partnership

A partnership involves two or more people who agree to share in the profits
or losses of a business. A primary advantage is that the partnership does not bear
the tax burden of profits or the benefit of losses-profits or losses are "passed
through" to partners to report on their individual income tax returns. A primary
disadvantage is liability-each partner is personally liable for the financial obligations
of the business.

 Association of two or more persons to carry on as co-owners of a business for

profit.
 Partnership are based upon a partnership agreement, also known as articles
of co-partnership. It should cover all areas of possible disagreement among
the partners. It should define the authority and the rights and duties of each
partner, and limits to such authority.

 According to W. Thurston Debnam Jr., a partner with Smith, Debnam, Narron,

Wyche, Story & Myers LLP, a law firm in Raleigh, North Carolina, a
partnership agreement should answer the following questions:

o What is each partner's investment? Is one investing cash and the other
energy? Do any of the partners own equipment that you'll use in the
business, and does that fact deserve consideration as part of the start-
up investment?

o What are the responsibilities and duties of each partner? Be specific

about each partner's role in the day-to-day operations of the company.

o If a partner becomes disabled, how long will he or she get a share of

the profits? If a partner dies, what happens to that share? A good way
to deal with this issue: life insurance on all partners.

o Can the partners have other outside partnership interests? In

particular, can interest be in similar or competitive businesses?

o What will you do if one partner wants to withdraw? Typically, you'll set

up a buyout agreement, but it's a very good idea to decide on the terms
before the situation arises. You'll also want to include a noncompete
covenant.

o How will you restrict partnership-interest transfers? Can a partner

transfer his or her ownership to anyone, or can you limit that transfer?
This means the remaining partners won't find themselves in partnership
with someone they object to. This is frequently used to protect the
business in the event that one of the partners gets a divorce and his
interest becomes a part of the divorce settlement.

o Can a partner pledge his or her interest as collateral for a loan?

o Are additional contributions mandatory? If the business needs capital in

the future, are partners required to make capital contributions?

o How will conflicts be resolved? Most often, an arbitrator is used.

 There are various types of partnership such as General Partnership,

Limited Partnership, Limited Liability Partnership, and LLC Partnership.
o GENERAL PARTNERSHIP is a company owned by two or more
individuals who agree to run the business as partners or co-partners. It
characterize as follows:

 Each Partners has an EQUAL SHARE of profits and losses. It

doesn’t split duties and shares.

 Partners manage business and assume responsibility for the

partnership’s debts.

 Because the business is not a separate entity from its partners,

profits in general partnerships are only taxed at the personal
income level. Profits are not taxed at the company level.

 General partnerships are easy to establish, low-cost, and

flexible. On the downside, your personal assets are at risk in a
general partnership. Not to mention, partners are liable for each
other’s actions.

o LIMITED PARTNERSHIP are more structured than general

partnerships and have both general and limited partners. To start a
limited partnership, you need at least one general and one limited
partner. It characterize as follows:

 Limited partnership does not have equal shares in profits and

losses. It will only depend on how much shares do you have in
the company.

 Limited partners only serve as investors for the partnership.

 Limited partners can lose their status if they become too

involved in managing the company (e.g., signing legal
documents or contracts). If you’re a limited partner, be careful
about the activities you do and the decisions you make in the
partnership.

 Limited partnerships are generally very attractive to investors

due to the different responsibilities of the general and limited
partners.

o LIMITED LIABILITY PARTNERSHIP A limited liability partnership, or

LLP, is a type of partnership where owners aren’t held personally
responsible for the business’s debts or other partners’ actions. It
characterize as follows:

 With an LLP, you typically can’t lose your personal assets if

someone takes legal action against your business. But partners
can be held liable if they personally do something wrong.
  The protection an LLP partner receives varies from state to
state. Check your state’s rules before you form a limited liability
partnership. In some states, only certain professions can form
an LLP, such as lawyers, doctors, or accountants.

 LLPs make it easy to add or remove partners. And unlike some

other types of partnership, you can have liability protection from
other members’ actions (depending on your state).

o LLC PARTNERSHIP An LLC partnership can have two or more owners,

called members. Limited liability companies with multiple members are
referred to as multi-member LLCs or LLC partnerships. It characterize
as follows:
 Under an LLC partnership, members’ personal assets are
protected. In most cases, members can’t be sued for the
business’s actions or debts. Members can be held liable for
other members’ actions, though.

 Most businesses can form an LLC partnership. LLC partnerships

offer personal liability protection and tax flexibility for members.

Advantages Disadvantages
 1. Ease of Organization 1. Unlimited liability
2. Combined talents, judgment, and 2. Limited Life
skills
3. Larger capital available to the firm 3. Divided Authority
4. Maximization of personal interest 4. Danger of disagreement
5. Definite legal status of the firm
6. Tax advantages

Corporation

A corporation is a legal entity that is created to conduct business. The

corporation becomes an entity-separate from those who founded it-that handles the
responsibilities of the organization. Like a person, the corporation can be taxed and
can be held legally liable for its actions. The corporation can also make a profit. 

 It is defined as “an artificial being, invisible, intangible and existing only in

contemplation of law. Its ownership is divided into shares of stock.

 The key benefit of corporate status is the avoidance of personal liability. The
primary disadvantage is the cost to form a corporation and the extensive
record-keeping that's required. While double taxation is sometimes mentioned
as a drawback to incorporation, the S corporation (or Subchapter corporation,
a popular variation of the regular C corporation) avoids this situation by
allowing income or losses to be passed through on individual tax returns,
similar to a partnership.

 The biggest benefit for a small-business owner who decides to incorporate is

the liability protection he or she receives. A corporation's debt is not
considered that of its owners, so if you organize your business as a
corporation, you're not putting your personal assets at risk. A corporation also
can retain some of its profits, without the owner paying tax on them. Another
plus is the ability of a corporation to raise money. A corporation can sell stock,
either common or preferred, to raise funds. Corporations also continue
indefinitely, even if one of the shareholders dies, sells the shares or becomes
disabled.

 The corporate structure, however, comes with a number of downsides. A

major one is higher costs. Corporations are formed under the laws of each
state with their own set of regulations. You'll probably need the assistance of
an attorney to guide you through the maze. In addition, because a corporation
must follow more complex rules and regulations than a partnership or sole
proprietorship, it requires more accounting and tax preparation services.
Corporation VS. Incorporation

Incorporation is the process of bringing a new legal entity into existence which
is separate from its owners/shareholders safeguarding them from and personal
liabilities whereas Corporation is the end product of that process therefore after you
get the certificate of incorporation a corporation can be said to have come into
existence.

 A corporation is an entity that has been formed to carry out business and
governing of any kind. There can be multiple types of corporations like
business corporations that would carry out the business activities, charity
corporations that would look after the functioning of a charitable organization,
Sports Corporation which would supervise governing of a sports club, etc.

 In simple terms corporations are referred to when we talk of business

establishments, large organizations, and governing groups. For example,
Alphabet under whose name Google operates, General Motors, Future
lifestyle, Toyota are the same major business corporations across the world.

 Incorporation, on the other hand, is the process of incorporating a

business and hence the name incorporation. It refers to the series of legal
steps carried out to register a business establishment as a corporation.

 It separates the business entity from its owners and hence safeguarding them
from the liabilities of business establishments. The business unit thus formed
can hire employees, raise funds and can also acquire another entity using its
assets and cash reserves.

 However, in case there is a setback in the business because of which the

creditors must be paid back, then the assets of the legal entity and its
subsidiaries (if any) will be liquidated. In such a scenario no claim can be
made on the assets of the owners and shareholders. This is the reason why
many industries, once they become large, try to turn their businesses into
corporations.

CATEGORY CORPORATION INCORPORATION

Significance It is the final legal product that Legal process or the
an entity transforms into after transition by which an
going through the process of entity becomes a
incorporation. corporation.
Status A body formed carry out a A series of steps that help
specific operation like business, an entity becomes a
charity, sports club etc. corporation.
Life Cycle It continue to exist as long as it Being a process,
is able to pay back its liabilities incorporation starts when
and build on its assets failing certificate of incorporation
which it is liquidated and cease is issued till incorporation
to exist. is finally continued.
Operations It is mainly responsible for Incorporation takes care
 carrying out the day to day of legal steps that are
activities related to the business aimed at safeguarding the
or functioning of the legal entity. interest and the personal
assets of owners and
shareholders.
Rights and It is personified as legal persons Incorporation is a
Responsibilities having rights like owning a structured process with
property which can help owners limited responsibilities and
in saving taxes or raising funds limited rights.
and responsibilities like in case
of payment failures to creditors,
they can be sued and dragged
to court.
Sovereign Task Corporation in different The process of
countries will have almost same incorporation differs from
functioning, features, and goals. country to country based
on the local laws.

Advantages and Disadvantages of Corporation

Advantages Disadvantages
1. Limited liability of stockholders 1. Expenses of the Organization
2. Perpetual Life 2. Capital Stock Tax
3. Ease of Transferring Ownership
4. Ease of Expansion of the Company

Legal Pitfalls in starting a Business and How to avoid them

Care and Caution are very important in starting one’s business especially
when we talk legal. For this reason, it may be a good idea to take note of the
following tips that would protect entrepreneurs from committing serious legal pitfalls.

1. Protect Your Intellectual Property

2. Execute a Shareholder’s Agreement
3. Read Contracts
4. Be cautious in leaving a former employee
5. Remember to provide for stocks or option investing
6. Watch out for Undercapitalization
7. Keep good records
8. Keep it simple

Other Legal Aspects

1. Patent Protection
2. Trademark or Trade Secrets
3. Copyright Protection

Self-Progress Test/Activity
  Guide Questions – 30 POINTS
 Individual/Group Activity – 70 POINTS
TOTAL 100 POINTS

A. Guide Questions (Short Essay) 30 POINTS

Direction:
Choose 3 Questions Only
Answer each questions through short essay (for 3 sentences only)
Answer in the 1 sheet of paper or through MS Word
Each question is equivalent to 10 POINTS. Check the Rubrics below
Guide Question Rubrics

Rubrics for Short Essay

FEATURES 10 POINTS 7 POINTS 5 POINTS 3 POINTS
1. Outstanding 1. Satisfactory 1. Good construction 1. Poor construction of
construction of ideas construction of ideas. of ideas ideas.
2. The Piece was 2. The piece w written 2. The piece has little 2. Piece had no style
Concept
written in an in an extraordinary style. 3. Gives no new
Quality of
extraordinary style style. 3. Give some new information and very
Writing
3. Very informative 3. Somewhat information but poorly poorly organize.
and well organize. informative and well organized.
organize.
1. Virtually no spelling, 1. Few spelling and 1. A number of 1. So many spelling,
Grammar, punctuation or punctuation errors, spelling, punctuation punctutation, and
Usage& grammatical errors minor grammatical or grammatical errors grammatical errors
Mechanics errors that it interferes with
the meaning.

Questions

1. What is Management? How can you relate management to entrepreneurship?

2. What are the characteristics of Management?
3. Explain the process or function of a Management?
4. What are the advantages and Disadvantages of sole proprietorship?
5. Evaluate the “ease of discontinuance” as an advantage of proprietorship form
of organization?
6. What are the legal requirements in starting a business partnership?

Summary of the Lesson

Management is the coordination and administration of tasks to achieve a goal.

Such administration activities include setting the organization’s strategy and
coordinating the efforts of staff to accomplish these objectives through the
application of available resources.

There are various characteristics of management such as economic resources,

goal oriented, and distinct process, and integrative force, system of authority, multi-
disciplinary subject, and universal application.
 Management Process or Function such as Planning, Organizing, Staffing,
Directing, Controlling, and Coordination.

There are three (3) levels of management such as Top Management, Middle
Management, and the Low Management.

There are three business entities in being an entrepreneur, these are the Sole
Proprietorship, Partnership, and Corporations.

Supplementary Readings/Materials

https://www.youtube.com/watch?v=M-XU7TkzEe8
https://www.toppr.com/guides/business-management-and-entrepreneurship/
http://mek.oszk.hu/11400/11406/11406.pdf

References

Books

Bajao, Grayfield D.; Osorno, Rene D 2020 Entrepreneurship in Tourism and

Hospitality Wiseman’s Books Trading, Inc.
Bansal, Harbhajah; Management Concepts and Organizational Behaviour
Camposano, Jorge A. 2008 Entrepreneurship for Modern Business National
Bookstore

Internet Sources

https://www.entrepreneur.com/article/38822
https://www.wallstreetmojo.com/corporation-vs-incorporation/