DIVISION OF NAVOTAS CITY

Organization and
Management
(Quarter 1)
First Semester

S.Y. 2021-2022
NAVOTAS CITY PHILIPPINES
Organization and Management for Senior High School
Alternative Delivery Mode
Quarter 1 and 2
Second Edition, 2021

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the Government of the Philippines. However, prior approval of the government agency or office
wherein the work is created shall be necessary for exploitation of such work for profit. Such
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Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writer: Caroline D. Nepomuceno

Editor: Lisa D. Escoto
Reviewer: Belinda I. Salazar
Illustrator: Eric De Guia, BLR Production Division
Layout Artist: Grace R. Nieves
Management Team: Alejandro G. Ibañez, OIC- Schools Division Superintendent
Isabelle S. Sibayan, OIC- Asst. Schools Division Superintendent
Loida O. Balasa, Chief, Curriculum Implementation Division
Grace R. Nieves, EPS In Charge of LRMS/EPP-TLE-TVL
Lorena J. Mutas, ADM Coordinator
Vergel Junior C. Eusebio, PDO II LRMS

Inilimbag sa Pilipinas ng ________________________

Department of Education – Navotas City

Office Address: BES Compound M. Naval St. Sipac-Almacen Navotas City
____________________________________________
Telefax: 02-8332-77-64
____________________________________________
E-mail Address: ____________________________________________
[email protected]

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 Table of Contents
QUARTER 1

What I Know ................................................................................1

Module 1......................................................................................2
Module 2......................................................................................9
Module 3......................................................................................12
Module 4......................................................................................18
Module 5......................................................................................24
Module 6......................................................................................31
Module 7......................................................................................37
Module 8......................................................................................44
Assessment ..................................................................................48

QUARTER 2

What I Know ................................................................................51

Module 9......................................................................................52
Module 10 ....................................................................................59
Module 11 ....................................................................................65
Module 12 ....................................................................................73
Module 13 ....................................................................................80
Module 14 ....................................................................................87
Assessment ..................................................................................92
Answer Key ..................................................................................93
References ...................................................................................95

iii
PRETEST: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

1. The statements below define management except for:

a. The force that runs an enterprise and is responsible for its success and
failure.
b. The performance of conceiving and achieving desired results by means of
group effort.
c. An art only and not important subject in business.
d. Satisfying the economic and social needs by being productive for the human
being, for the economy and for society.
2. He postulated a management theory make use of the step, scientific methods for
finding the single best way for doing a job.
a. Henry Fayol c. Joseph M.Juran
b. Frederick W. Taylor d. W. Edwards Deming
3. The skills that are helpful in decision-making.
a. Human c. Conceptual
b. Technical d. Physical
4. These persons may be called vice-president, managing director, chief executive
officer or chairman of the board etc. and in charge to the overall objectives of the
organization.
a. Middle-Level Managers c. Tactical Managers
b. Top-Level Managers d. Lower -Level Managers
5. An environment that includes, political, legal, economic, socio cultural and
technological aspects.
a. Opportunities c. Business Firm
b. Internal Environment d. External Environment
6. Is the study of how society produces and distributes its desired goods and
services.
a. Economics c. Marketing
b. Management d. Entrepreneurship
7. The following statements are nature of planning except:
a. Planning is the function of all managers.
b. Planning for efficient organization
c. Assigning of responsibility
d. Contribution to purpose and objective
8. The process of choosing a specific procedure or course of action from among
several possible alternatives.
a. Scenario Planning c. Contingency Planning
b. Forecasting d. Decision-making
9. A management function which involves assigning of tasks, allocating of
resources, and coordinating work activities to achieve a common purpose.
a. Planning c. Staffing
b. Organizing d. Directing
10. Organizational design which is made up of separate business division or units.
a. Division Organizational c. Team Design
b. Functional Organizational d. Matrix Design

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 MODULE 1

This module will provide you the knowledge, skills and understanding of basic
concepts and theories of management.
Learning Competency:
• Explain the meaning, functions, types of theories of management.
In this module, you will understand that business firms are organization
established to achieve certain objectives. Theory and practice indicate that for
modern business to succeed, effective applications of sound organization and
management practice must be made. It follows, then, that knowledge of
organization and management theories must be required.

The module is focused mainly on one lesson, specifically:

• Lesson 1 – Basic Concepts and Theories of Management

At the end of this lesson, you are expected to:

1. discuss the meaning and functions of management;

2. explain the various types of management theories; and

3. understand the basic concepts and theories of management.

Lesson Basic Concepts and Theories of

1 Management

According to Corporate Finance Institute (CFI), Management theories are

concepts surrounding recommended management strategies, which may include
tools such as frameworks and guidelines that can be implemented in modern
organizations. Generally, professionals will not rely solely on one management theory
alone, but instead, introduce several concepts from different management theories
that best suit their workforce and company culture.

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 Definition and Functions of Management
Management exists to some degree in the factory, office, school, bank, store, labor
union, hotel, church, armed forces, hospital or home Management is defined in so
many ways depending upon the viewpoints, beliefs and interpretations of the
manager.
➢ Management is the process of coordinating and overseeing the work
performance of individuals working together in an organization, so that they
can accomplish their chosen aims/goals.
➢ Management functions include planning, organizing, staffing, leading, and
controlling (POSDICON).
➢ Planning is the determining of the organization’s goals, defining strategic
actions to accomplish them, developing coordination/integration activities,
and allocating appropriate organizational resources needed to achieve them.
➢ Organizing is the assigning of tasks, setting a part of funds, and bringing
harmonious relations among the individual s and work groups/teams in the
organization.
➢ Staffing is the filling-up of the different job positions in the organization’s
structure.
➢ Leading is the influencing /motivating of others to do their best so that their
work efforts result in the achievement of organizational goals.
➢ Controlling involves the evaluating and correcting, if necessary, of the work
performance of individuals or work groups /teams in order to make sure
that they all are working towards a common goal.

Figure 1.1 The Five Functions of Management

Management is a distinct process of

planning, organizing, staffing, directing
and controlling (POSDICON), performed
to determine and accomplish stated
objectives by the use of human being
and other business resources

Figure 1.2 The Meaning of Management

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 ➢ Management is both art and science.
• It is an art because it results in the accomplishment of objectives using
human efforts. It requires skill and careful study in the management of
any endeavor.
• It is a science because it is systematic body of knowledge. It gathers and
analyze s facts and formulates general laws of principles from these facts.
• As an art and science, therefore, management seeks to integrate into a
unified, coordinated whole the essential factors that make up an
organization.
Evolution of Management Theories
Evolution of Management Theories involves the improvement of work management
methods from simple to more complex ones which also focus on customer
satisfaction and conduct of people at work. The expansion and development of these
theories are necessary in order to adapt to the changing times.

Management theories include the following:

➢ Scientific Management Theory makes use of the step by step, scientific

methods for finding the single best way for doing a job. Frederick W. Taylor
(1856-1915) is known as the Father of Scientific Management.

Taylor’s Scientific Principles are as follows:

1. develop a science for each element of individual’s work to replace the old
rule of thumb method.
2. scientifically select and then train, teach and develop the workers;
3. heartedly cooperate with the workers so as to ensure that all work is
done in accordance with the principles of the science that has been
developed; and
4. divide the work and responsibility almost equally between management
and workers.

➢ General Administrative Theory concentrate s on the manager’s functions

and what makes up good management exercises or implementation. Henry
Fayol (1841-1925) and Max Weber (1864-1920) are the personalities most
associated with it.
Henry Fayol’s Management Principles:

1. Work division or specialization 8. Centralization

2. Authority 9. Scalar chain of authority
3. Discipline 10. Maintenance of order
4. Unity of command 11. Equity/fairness
5. Unity of direction 12. Stability/security of tenure
6. Subordination of individual of workers
interest to general interest 13. Employee initiative
7. Renumeration/pay 14. Promotion of team spirit de corps
According to Weber, bureaucracy is an organizational form distinguished by the
following components:
• division of labor

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 • hierarchical identification of job positions
• detailed rules and regulations
• impersonal connections with one another
➢ Total Quality Management (TQM) is a philosophy of management that
focuses on the satisfaction of customers, their needs and expectations.

W. Edwards Deming (1900-1993) and Joseph M. Juran(1904-2008) were

behind this philosophy.

Deming’s 14 Points for top Juran’s Fitness of Quality

Management
1.Create constancy of purpose for 1. Quality of design-through market
improvement of products and research, product and concept
services.
2.Adapt the new TQM philosophy 2. Quality of Conformance -through
management, manpower and
technology
3.Cease dependence on mass 3. Availability -through reliability,
inspection by doing things right and maintainability, and logistic support
doing right the first time.
4.End the practice of awarding 4. Full service – through
business on the basis of price tag promptness, competence, and
alone. integrity
5.Constantly improve the system of Juran’s Quality Planning
production and services. Roadmap
6.Institute training. 1. Identify your customer.
7.Adopt and institute leadership. 2. Determine their needs.
8.Drive our fear. 3. Translate them into one’s
language.
9.Breakdown barriers between staff 4. Develop a product responds to
areas. their needs.
10. Eliminate slogans, focus on 5. Develop processes which are able
correction of defects in the system. to produce those product features.
11. Eliminate numerical quota for 6. Prove that process can produce
the work force. the product.
12. Remove barriers that rob people 7.Transfer the resulting plans to the
of “pride of workmanship”. operating forces.
13. Encourage education and self-
improvement for everyone.
14. Take action to accomplish the
transformation.

➢ Organizational Behavior Approach (OB) is the study of the conduct,

demeanor, or action of people at work.

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Directions: A. Read the following statements carefully. Choose the letter that best
describes the statement. Write your answer on separate sheet.
1. What is Management?
a. science c. power
b. art d. science and art
2. A function of management by which subordinates is led to understand and
contribute effectively and efficiently to the attainment of enterprise objectives.
a. Planning c. Directing
b. Controlling d. Organizing
3. He postulated a management theory make use of the step, scientific methods for
finding the single best way for doing a job.
a. Henry Fayol c. Joseph M. Juran
b. Frederick W. Taylor d. W. Edwards Deming
4. A function of management involves process of measuring and correcting the
activities of subordinates and the company itself to assure conformity to plans.
a. Controlling c. Organizing
b. Staffing d. Planning
5. The statements below define management except for:
a. The force that runs an enterprise and is responsible for its success and
failure.
b. The performance of conceiving and achieving desired results by means of
group effort.
c. An art only and not important subject in business.
d. Satisfying the economic and social needs by being productive for the human
being, for the economy and for society.

WORKSHEET 1: Nature and Concept of Management

1.Think of a difficult task which you, as a student must accomplish.

2.What are the steps needed to complete the said task?

3.Will the management theories discussed help you to be more efficient in

completing your tasks? Explain your answer.

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 MODULE 2

In this module, you will discover that all organizations—public or private,

large, medium-size, or small, profit or nonprofit—need good managers in order to
accomplish their goals; that organizational management is, definitely, not an easy
task; and that coordination, efficiency, and effectiveness are required to carry out.

The module contained lesson, namely:

Lesson 2 – Functions, Roles, and Skills of a Manager
Learning Competency:
• Explain the functions, roles, and skills of a manager.
(LC Code: ABM_AOM11-I-a-b-3)

At the end of this lesson, you are expected to:

1. explain the functions, roles, and skills of manager;

2. identify the levels of management and managers; and

3. understand the responsibilities of a manager.

Lesson Functions, Roles, and Skills of a

2 Manager
An individual engaged in management activities is called a manager.
It is safe to assume that organizational success depends upon managers who
practice optimal utilization of their human and material resources, and who
encourage high levels of performance, effectiveness, and efficiency among the
individuals under their care.

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 Functions, Roles and Skills of a Manager

Managers supervise, sustain, uphold, and assumes responsibility for the work of
others, in his or her work group, team, department, or the organization, in general.
Manager is an individual engaged in management activities such as supervising,
sustaining, upholding, and assuring responsibilities for the work of others in
his/her work group, team, department, on the organization in general.
Managerial Levels

Organization typically has three levels of management with their respective

managers- top level managers, middle-level managers, and frontline or lower-level
managers.

• Top- Level managers are the strategic managers who focus on long term
organization concerns: its stability, development, progress, and over-all
efficiency and effectiveness.

• Middle -level managers are tactical managers in-charge of the

organization’s departments. They formulate specific objectives and activities
based on strategic goals set by top-level managers.

• Lower-level managers are front-line operational managers. They are

responsible for supervising the organization’s day to day activities .

Figure 1.3 The Three Levels of Management

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 FUNCTIONS OF A MANAGER
A manager must perform functions like planning, organizing, staffing,
directing, and controlling. All these functions are essential for running an
organization smoothly and achieving enterprise objectives.

Role of Manager in an Organization

The manager’s job isFi
very
gurecrucial in an organization.
1.4 Managerial Functions He is a planner,
coordinator, producer, and a marketer. The success of an organization will depend
upon the caliber of the manager in utilizing the resources for achieving business
goals.
A manager is a pivotal figure in the task of creating wealth. There are rapid
changes in technology, methods of production, marketing techniques, financial set
up and the manager should be competent enough to cope with the changes.

Managerial Roles the various roles played by managers, such as

interpersonal, informational, and decision-making roles.

Categories of Managerial Roles according to Mintzberg

• Leader
Interpersonal • Liaison
• figurehead
• spokesperson
Informational • monitor
• disseminator
• disturbance handler
Decisional or Decision-making • resource allocator
• negotiator
• entrepreneur

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Managerial Skills:
A manager has to perform a number of jobs. It necessitates that a manager
should have proper skills to perform different jobs. Managerial skills are
conceptual, human and technical.

• Conceptual skill is the ability to analyze and solve complex problems.

Conceptual skills are helpful in decision-making. Since all managers have to
take decisions so these skills are essential for all managers, but these
become more important as they make up the organizational hierarchy.

• Human skill is the ability to work well with other people.

Managers with human skills can get best out of the people working with
them. They know how to communicate, motivate, lead and inspire
enthusiasm and trust. These skills are needed by managers at every level
but top managers need them the most.

• Technical skill is the ability to one’s expertise.

A manager must have the necessary technical skills or the ability to work
with the resources, tools, techniques, procedures etc. First line managers as
well as many middle managers have involved in technical aspects of the
organization’s operations.

These skills can be depicted in a diagram:

ACTIVITY: Understanding the foundations for Managerial success.

Directions: Put a check mark in your chosen answer if you Agree or Disagree with
the following statements. Support your answer of brief explanation. Copy and
answer in a separate sheet of paper.

Agree Disagree
1. Look after their self -interests first

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2. Inspire their subordinates to do their best in assigned
tasks
3. Can craft messages that could be understood clearly by
subordinates
4. Have self-discipline

5 Believe in using punishment to make subordinates

follow
6. Work well with others

7. Do not believe in due process

8. Practice logical thinking before decision-making

9. Always consider the “general good”

10. Can listen what other seeks to communicate

11. Respect everyone and can maintain career advancement

12. Generally, maintains teamwork

ACTIVITY: Demonstration of Managerial Success in

an organization
Directions: Use coloring material and short bond paper to demonstrate
how managers get involved with teams and teamwork:
such as team leader/supervisor, facilitator of a team acting a specific
task force, helpful participant in a team project, and external
coach/sponsor of a problem-solving team.

Correct positioning of the manager and the team members indicate your
(student’s) perceptions of the manager’s involvement or role in teamwork

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 MODULE 3

In this module you will understand the role of business in the

environment, and how the environment affects the firm.
In this module you will identify two main factors of environment that will
affect in the performance of a firm or organization. All managers should take into
consideration this forces or element surrounding environment in all aspects before
planning.

The module is focused mainly on one lesson, specifically:

• Lesson 3 – The Firm and Its Environment
Learning Competency:
• Analyze the various forces/elements influencing local and international
business environment using PEST and SWOT strategies.
(LC Code: ABM_AOM11-Ic-d-4 and ABM_AOM11-Ic-d-5)

At the end of this lesson, you are expected to:

1. identify the various forces/elements of the firm’s environment and summarize
these forces using SWOT analysis;

2. describe the local and international business environment of a firm; and

3. realize the effects of various forces/elements in business and our environment.

Lesson
The Firm and Its Environment
3

A manager undertakes several functions from

planning to controlling. He must take decisions for
every type of activity. The decisions of the manager
influence the working of an organization. Intelligence
will help a manager in assessing the present and
future possibilities for the business. He will be able to
foresee the things in advance and take necessary
decisions at appropriate time.

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 THE FIRM AND ITS ENVIRONMENT

Business firm may be visualized as an institution in society surrounded by

environment example are various external forces influencing its functioning. It is
said that business is a product of environment or Business is the creation of its
environment.
Business Environment refers to the factors or elements affecting a business
organization. It may be divided into the External and Internal Business
Environments
Both external (outside) and internal (inside) business environment factors
and elements may affect the business firm’s performance, either positively or
negatively.
The external or environmental factors are beyond the control of the
business firm and the success of the firm will depend to a very large extent on its
adaptability to the environment its ability to properly design and adjust the internal
factors/variables to take advantage of the opportunities and to combat the threats
of the environment.

COMPONENTS OF THE EXTERNAL BUSINESS ENVIRONMENT

A. GENERAL EXTERNAL BUSINESS ENVIRONMENT includes the: economic,
sociocultural, politico legal, demographic, technological, and world and
ecological situations.

❖ Economic situations may affect management practices in an organization.

Inflation, rate of interest, changing options in stock market, people’s spending
habit are some examples of factors elements of economic situations.
❖ Sociocultural situations include the customers’ changing values and
preferences; customs can also affect management practice s in the companies.
❖ Politico-legal situations refers to national or local laws, international laws,
and rules and regulations that influence organizational management.
❖ Demographic situations may also influence some managerial decisions in
organization such as gender, age, education level, income, number of family
members geographic origin, etc.
❖ Technological situations of companies involve the use of varied types of
electronic gadgets and advanced technology such as computers,
microprocessors and others have revolutionized business management.

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❖ World and ecological situations are related number of global competitors and
markets, as well as the nature and conditions of the changing natural
environment.

All of these must be considered as managers plan, organize, staff, lead and control
their respective organizations.
B. GENERAL SPECIFIC BUSINESS ENVIRONMENT includes stakeholders,
customers, suppliers, pressure groups, investors or owners and employees.
➢ Stakeholders are parties likely to be affected by the activities of the
organization.
➢ Customers are those who patronized the organization’s products and
services.
➢ Suppliers are those who ensure the organization’s continuous flow of
needed and reasonably priced inputs or materials required for producing
their goods and rendering their services.
➢ Pressure groups are special-interest groups that try to exert influence on
the organization’s actions and decisions.
➢ Investors or owners provide the company with the financial support it
needs.
➢ Employees are comprised of those who work for another or for an employer
in exchange of salaries/wages or other considerations.

The business firm consists of a set of internal factors and is confronted with
a set of external factors. This is the relation between a firm and its environment.
The internal factors are regarded as controllable factors, as the firm has got
control over these factors.

COMPONENTS OF THE INTERNAL BUSINESS ENVIRONMENT

An organizational Internal business environment is composed of its:
resources, research and development, production, procurement of supplies and
products and services it offers.

The organization’s internal environment is must also be subjected to internal

analyses, internal strengths and weaknesses, opportunities and threats
(SWOT)with regards to its:
▪ Resources (financial. Physical, mechanical, technological, and human
resources
▪ Research and development endeavors
▪ Production of goods
▪ Procurement of supplies (materials, inputs and finance)
▪ Products and services
All of these must be considered prior to organizational planning

ENVIRONMENTAL FORCES AND ENVIRONMENTAL SCANNING

ENVIRONMENTAL SCANNING involves the seeking for and sorting through date
about the organization’s environment. It is the process of conducting research
through surveys, observation, and other methods, and gathering and analyzing
information for the organization.

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COMPONENTS OF ENVIRONMENTAL SCANNINNG
✓ Developing a competitive Mindset -adapting to environmental uncertainties.
✓ Considering Business scenarios- consider both unfavorable and favorable
future conditions.
✓ Business Prediction or business forecasting
✓ SWOT Analysis- SWOT analysis or matrix is one of the most structured and
used planning method to evaluate business ventures.
✓ Benchmarking – the process of measuring and comparing one’s own
products, services, and practices with those of the recognized industry
leaders to identify areas for improvement.

Figure 3.1 The SWOT ANALYSIS or MATRIX

SWOT ANALYSIS- is a basic straight forward model in environmental scanning

which helps the company identifying four key elements:
• Strengths – it is the quality that produces a competitive advantage with the
company. It belongs to internal environment and expects to affect the
company in a positive manner.
• Weaknesses- It is quality that puts the company at a disadvantage. It
belongs to internal environment and expects to affect the company in a
negative manner.
• Opportunities – it is a factor in the external environment that is expected to
work favorably and positive effect towards company operation.
• Threats - it is a factor in the internal environment that is expected to have a
negative effect on the company operation.

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 SAMPLE SWOT
ANALYSIS

The Local and International Business Environment of the Firm

The Worldwide Environment refers to the external

business environment (such us sociocultural, natural,
politico-legal and economic, technological factors) around the
world.
While the Globalization refers to changes in the
dimensions of external environment that result increased
interdependence and integration among people and
integration among people and organizations around the
world.
Understanding the local and international business environment of the firm
requires managers of organizations to sharpen their cultural intelligence.

Cultural Intelligence is an individual’s ability to favorably receive and

adjust to an unfamiliar way of doing things. This will enable them to develop their
ability to accept and adapt to different cultures, both local and international, that
may affect the organization to which they belong.
Anthropologist Edward T. Hall, as cited by Schermerhorn (2008) noted that
the way people approach and deal with the time varies across cultures.

1.MONOCHRONIC CULTURES refer to cultures where people tend to do one thing

at a time. It emphasizes punctuality and sticking to set rules.
2.POLYCHRONIC CULTURES are cultures more flexible on time and it is used to
accomplish many different things at one time.

The culture of different countries is rooted in their history, religion,

traditions, beliefs, and deep- seated values, and because of these, managing
globally can be very complicated.
And beside the cultural environment, the politico-legal and economic
environments must also be considered. Some countries have stable laws and good
political climate while others have an opposite -unstable and risky political climate.

16
Directions: Identify the different external environment factor. Write only the letter
code of your chosen answer.
EF - Economic Factor DF – Demographic Factor
SF - Socio-cultural Factor TF – Technological Factor
PF - Politico-legal Factor WF – World and ecological Factor

_______ 1. People spending habit

_______ 2. Ethnic and racial diversity
_______ 3. Peace and order situation
_______ 4. El Niño and El Niña phenomena
_______ 5. New inventions and discoveries

ACTIVITY 1 SWOT ANALYSIS. Write your answer in separate sheet.

Supposed you are the Marketing Manager of Triple C Food Corporation,
a fast-food chain in the Philippines known for high quality hamburgers.

Examine each the situations below and write S if it is strength, W if a

weakness, O if opportunity, T if it is a threat, and X if it will not affect your
company at all. Write your answer in a separate sheet of paper.
______ 1. The Department of Health has undertaken a very aggressive
campaign against the cholesterol.
______ 2. Your company has excellent management labor relations.
______ 3. The government has announced its plans of lowering prices of beef
by 1.5% next month.
______ 4. There is a growing number of working women in the Philippines
based on the latest statistics.
______ 5. There is very stiff competition among fast-food chains in the
Philippines.
______ 6. As compared to your competitors, your prices are 10% lower.
______ 7. Your competitor bought a new equipment from Germany which can
decrease cholesterol content in food by as much as 20%.
______ 8. Most customers complain of your failure to maintain cleanliness of
your comfort rooms.
______ 9. You have limited parking space.
______ 10. Business taxes will increase by 3% next year.

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 MODULE 4

In this module you can now analyze the problems and challenges facing less-
developed countries and begin to understand why some countries have been able to
go through process of economic and human development.
This module is mainly focused on one lesson specifically:

Lesson 4: Phases of Economic Development

Learning Competency:
• Analyze the forms and economic roles of business organizations
• Differentiate the phase of economic development of its impact to business
environment
(LC Code: ABM_AOM11-Ic-d-8)

At the end of this lessons, you are expected to:

1. explain the role of business in relation to the economy;

2. discuss the different phases of economic development; and

3. understand the impact of economics to business environment.

Lesson
Phases of Economic Development
4

PHASES OF ECONOMIC DEVELOPMENT

Economic development is a total process which includes not only economic
growth or in the increase in the amount of goods and services produced by the
country’s economy but also consider the socio-cultural, political, and spiritual
aspect aspects of the country’s growth.

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 Although material wealth accumulation is among
the concerns of genuine economic development. Its
greater concern is the total improvement of the quality of
people’s lives. This, in turn is related to sustainable
economic development issues in a country which greatly
influences business management.
Sustainable economic development ensures that
the present needs of a particular generations to also fully
met without endangering the ability of future generations
to also meet their own needs fully.
Business managers must be conscious of their
decision s to avoid the abuse of ecological elements- air,
water, and soil -as this will threaten sustainable
economic development.

Economic development phases/stages in a particular country includes

economic growth, improvement of human development index, availability of
benefits provided by science and technology, societal improvement of the
opportunities, and general welfare of its members.
Economic growth means increase in the given amount of goods and
services produced by the country’s earnings.
Human development index is a measure of country’s socio-economic
development based on data regarding life expectancy, at birth, educational
attainment, literacy, and adjusted real income per capita.

PHASES OF ECONOMIC DEVELOPMENT

The transition of economic development from one phase to another is
usually gradual, and a country may find itself under economic phases at different
point s of time.
Economic development is only possible if a country has maximized the used
of its human and natural resources. Since these resources differ greatly in quality
and quantity, some countries, experience drastic development.

CRITERIA IN CLASSIFYING PHASES OF ECONOMIC DEVELOPMENT

A. Means of livelihood B. Extent of Economic C. Medium of Exchange

Activity
1.Hunting and fishing Phase – our 1. Household economy- The 1. Barter Economy – during
ancestors obtained food by needs of the family were primitive era, exchange was done
hunting and fishing taken directly satisfied largely by the efforts through barter with was the
from the mountains, seas and the and contributions of all the direct exchange of goods for
bounties of nature family members. goods, services to services or
services for goods.
2.Pastoral Phase – the creation of 2. Village Economy- When 2. Money Economy- Through
groups and the presence of a large several families organize a time and evolution, money was
number of livestock have made village, economic and social used, as a medium of exchange.
man settle in an area for a longer relations spread among the Consequently, a monetary system
period of time. various families. evolved.

19
3.Handicraft Phase- Items are 3. National Economy- this 3. Money and Credit Economy-
made by skilled and trained phase involves the grouping of When transactions continued to
manual laborers. They made village into bigger and broader increase in volume and
excellence workmanship of social Units. It develops frequency, it became imperative
sculpture, jewelry, furniture economic activities on a to allow others to purchase one’s
porcelain and other wares. nationwide scale. good or engage one’s services
With payments to be paid at
some future date.
4.Agricultural Phase- Man’s need 4. International Economy-
continuous supply of food led to with better and modern
the development of agriculture means of transportation and
and the concept of land communication, a country
ownership. Man begin to work as expands its economic
farmer and fisherman. relationship through
international trade and
diplomatic cooperation.
5.Industrial Phase- the presence of
manufacturing companies in the
certain areas of Metro Manila
It was the period when
machineries were used in factories
and industrial plants.

All countries have economic problems. We have economic problems

because of our resources, money, materials, and machines are limited while
our human needs are unlimited. The unfair distribution of productive
resources and population explosions have created more economic problems.
Some of economic problems to address are income poverty, hunger, disease,
lack of adequate shelter, and exclusion, while promoting gender equality,
education, and environmental stability.
The National Economic and Development Authority (NEDA) has laid out the
Philippine Development Plan (PDP) 2011-2016 which “adopts a framework, which
is high growth that is sustained generates mass employment and reduces poverty.”
The PDP is focused on the following areas:

1. Pursuit of Inclusive Growth

2. Macroeconomic Policy
3. Competitive Industry and Services Sectors
4. Competitive and sustainable Agriculture and Fisheries Sector
5. Accelerating Infrastructure Development
6. Resilient and Inclusive Financial Sector
7. Good Governance and Rule of Law
8. Social Development
9. Peace and Security
10. Conservation, Protection, and Rehabilitation of the Environment and Natural
Resources
It is evidently from the PDP focused areas as they cover not only in economic
and industrial goals of the Philippines but also social, environmental, and peace
and security aspects.

20
 FORMS OF BUSINESS ORGANIZATION
Basically, the role of business is to produce goods and services which
consumer needs, therefore business has relationship with the economy.
The business firm produces goods and services from the factors of
production provided by society. Consumer, in turn buy these goods and services.
Business firm thus contribute to the country’s economic growth.
One measure of economic growth is the Gross National Product (GNP)
defined as the total market value of goods and services produced by a country in
any given period.
A business enterprise is part of larger economic system. Other groups and
individuals affect the way business is managed. They are the owners of the
business, employees working for the enterprise, customers buying the goods and
services selling machinery, equipment, or materials to the enterprise.
The responsibility of a business to the community is a general one. The
business should strive to promote the social, economic, and cultural welfare of the
community.
Kinds of Business

1. INDUSTRIES – involved the conversion of raw materials into finished

products or goods and the application of labor upon raw materials so that
the greater usefulness becomes possible after the process.
Manufacturing industries use materials and supplies turned out by the
extractive industries and changed these raw materials into various articles of
materials for production of goods and new products.
Examples: Nokia, Honda, Sony, San Miguel Corp., Shell, Purefoods, etc.

2. COMMERCE – Involves the process of buying and selling where goods are
moved from point of production to the point of consumption.
Examples: Shoe Mart, National Bookstores, Webster, Robinsons Department
Store
3. SERVICE ENTERPRISE- are primarily concerned with the satisfaction of the
needs and wants of the customers.
a. Public and community services
Examples: MERALCO, transportation companies, news paper publisher

21
 b. Professional and trade services
Examples: repair shops, building contractor, law offices
c. Recreation services
Examples: TV stations, theaters, movie productions
d. Personal services
Examples: restaurants, schools, beauty parlors

Forms of Business Organization – may depend on its purpose, nature of

operations and resources. However, a business organization’s firm may change
with the changing times and the demands they present.

CHANGING FORMS OF BUSINESS ORGANIZATIONS

1. Simple business organizations – is an organization with few departments,
centralized authority with wide span of control, and with few formal rules and
regulations.

2.Functional business organizations – group together people with similar or

related duties, practices delegation of authority to functional managers like the
personnel managers, sales managers or financial managers but allow CEOs to
retain authority for strategic decisions.
3.Divisional business organizations – are made up semi-autonomous, separate
business units, with a division head responsible for his or her unit’s performance.
4.Profit business organization-are organizations designed for the purpose of
achieving their goals and achieving stability through income generation and profit-
making.
5.Non-profit organizations are organizations designed to give service to clients
without expecting monetary gains or financial benefits for their endeavors.
6.Open/Flexible business organizations are formed to meet today’s changing
work environment. They include team structures, matrix business organizations,
project business structures, boundaryless business organizations, and virtual
business organizations.

Other basic forms of business that are legal in the Philippines are:
These are forms of business organizations according to ownership

1.Single Proprietorship- a form of business ownership organized and managed by

only one person.
2.Partnership-a business organization where to or more persons contribute
money, property, or talent, to carry on a business.
3. Corporation- is an artificial being created by the operation of law, having the
rights of succession and the powers, attributes and properties expressly authorized
by law or incident to its existence.
4. Cooperative - is a private business owned and operated by the same people that
use its products and or services. The purpose of a cooperative is to fulfill the needs
of the people running it.

22
 Different organizations have different preference s as to business form that is
appropriate for their needs and the purpose of their existence.
Managers, therefore, must be creative in finding ways to structure or design
and organize work in their respective firms.

Activity: Directions: Modified TRUE Or FALSE. If the statement is TRUE write O.

If the statement is FALSE write X. Write your answer in a separate sheet of paper.
________1. In any business, whether large or small there must be grouping of
activities.
________2. Service enterprise involves the conversion of raw materials into finished
products.
________3. Man is common element in an organization.
________4. Economic development has a greater concern to improve the quality of
peoples live.
________5. Any unlawful activity like gambling, smuggling can be considered
business.
________6. The success of business directly affects the world’s economy.
________7. We have economic problems because human needs are unlimited while
our resources are limited only.
________8. Profit is the main objectives of the business which distinguishes from
charitable institution.
________9. The role of the government is to provide necessary policies and
infrastructures to speed up the growth of the economy.
_______10. The manager should conceptualize the nature of the business and is in
better position to introduce innovations for business success.

Directions: Identify five businesses in your area. Write about their

contributions (at least three) to the economic growth of your area. Do this in a
separate sheet of paper.
Name of Business: ____________________________________________
Contributions:
1.
2.
3
Name of Business: _____________________________________________
Contributions:
1.
2.
3.

23
 Name of Business: _____________________________________________
Contributions:
1.
2.
3.
Name of Business: _____________________________________________
Contributions
1.
2.
3.
Name of Business: ______________________________________________
Contributions
1.
2.
3.

MODULE 5

In this module you will understand the importance of planning concepts in

business success or even in any organization. This module will explain that
managing an organization is to be pursued vigorously, planning will be an important
and necessary activity. Managers who plan are afforded with the opportunity to
carefully analyze situations which directly contribute to decision- making. Plans
provide the manager with the opportunity to concentrate on implementation.
This module will discuss:

• Lesson 5 – Definition and Nature of Planning and Types of Plans

Learning Competency:
• Discuss the nature and levels of planning and types of plans.
(LC Code: ABM_AOM11-Ie-10)
At the end of this lessons, you are expected to:
1. discuss the nature of planning;

2. compare the different types of planning; and

3. realize the importance of planning in business success.

24
 Lesson
Planning
5

Planning is the first management

function and a very essential component of
management. Without his basic function the
other four functions (organizing, staffing,
directing, and controlling) of the manager
cannot be tackled efficiently and effectively.

DEFINITION AND NATURE OF PLANNING

Planning is a logical and systematic approach of formulating the objectives,
programs, policies procedures, budgets, rules and regulations, and other types of
plans.
Planning is a process that involves the setting of the organization’s goals,
establishing strategies for accomplishing those goals, and developing plans of
actions or means that managers intend to use organizational goals.
Goal- setting the identification of target of desired ends that management wants to
reach.

Vision a mental image of what the organization will be in the future, as desired by
the company management and employees.
Mission basic purpose of an organization and range of their operations.

Objectives steps needed in order to attain desired end.

Program it is the actual course of action designed to carry out the established
objective.

Policies these are guidelines. They indicated what is permitted and what is not
permitted.
Procedures are series of related steps expressed in chronological order for specific
purposes.

THE NATURE OF PLANNING

1. Contribution to purpose and objectives.
Planning is required to facilitate accomplishment of business purpose and
objectives. Planning is a process that involves the setting of the organization’s

25
 goals, establishing strategies for accomplishing those goals and developing
plans of actions that managers intend to use to achieve said organizational
goals.

2. Planning as the first basic functions.

Since managerial functions of organizing, staffing, directing, and controlling are
designed to support accomplishment of business objectives, planning is logically
performed before the execution of all other managerial functions.

3. Planning is the function of all managers.

Planning is a function of all managers, although the character and scope of
planning will differ from one authority to another.
4. Planning for efficient organization.
Efficiency of plans measured by contribution to its objectives, if it is good, it will
lead to the goal.

The following present the importance of Planning:

• It provides a direction to all the organization’s human resources: managers
and employees and it reduces uncertainty and minimize waste of time, effort
and resources.
• Planning is important because it reduces uncertainty: it compels mangers to
consider future events that may affect their company.
• Minimizing of wastes will result if there is proper coordination of activities
due to planning; negative practices, effectiveness, and inefficiencies could be
easily detected and can be corrected or eliminated.
• Establishing goals and standards during planning may be used for
controlling, another necessary managerial function.

Without planning goals and standards will be absent and controlling will
not be possible.

Difference between Goals and Plans

Goals are the targets that management desires to reach while plans are the means
or actions which management intends to use to achieve the said goals/targets

TYPES OF PLANS
Organizational Plans- a comprehensive plan for the entire organization covering
time frame, specific purpose, frequency of use, and others.

• Comprehensiveness- refers to the completeness of planning coverage.

A plan maybe long-term, or covering more than three years, or short-term,
covering one year or less.
• Specificity -refers to the detailed, clearly defined plans wherein objectives
are clearly stated and could easily be understood.
• Frequency of use refers to the number of times or instances a plan may be
used.

26
Strategic Plan- plans that establish the organization’s overall goals and apply to
the entire firm.
Tactical Plan – plans that is prepared to provide guide to the realization of the goal
and is designed to support the strategic plan.

Operational Plan- plans that apply to a particular unit area only; their scope is
narrow and prepared by lower-level managers.

Long-term plans- plans that go beyond three years. The short-term plans made by
subordinate manager must be with reference to long-term plan.
Short Term Plans- plans that cover one year or less. Must contribute to the
achievement of the long-term plans.

Directional Plans- plans that are flexible or give general guidelines only.
Specific Plans- plans that are clearly stated and which has no room for
interpretation; language use must be very understandable.
Single-use plans – plans used or stated once only as this applies to the entire
organization: refer to the operational plans of the firm.

Standing plans- plan that are ongoing; provide guidance for different activities
done repeatedly; refer to the identified activities of operational plans.

Figure 5.1 In case of

emergencies
organizations should have
alternative plans

https://leavinglaw.wordpress.com/2016/02/15/when-leaving-
law-plans-dont-work-out-moving-to-plan-b/

Schermerhorn (2008) gave five steps in the planning process:

1. Define your goals/objectives by identifying desired outcome/results in very
specific ways.
2. Determine where you stand in relation to set goals/objectives; know your
strength and weaknesses.
3. Develop premises regarding future conditions; anticipate future events, generate
alternative “scenarios” for what may happen. Identify for each scenario things that
may help or hinder progress toward your goals/objectives.
4. Analyze and choose among action alternatives; list and carefully evaluate
possible actions and choose the alternative most likely to accomplish
goals/objectives.
5. Implement the plan and evaluate results; take corrective action and revise plans
as needed.
PLANNING AT DIFFERENT LEVELS IN THE FIRM
Different levels in the firm are all engaged in planning, however all the resulting
plans must be related to one another and directed toward the same goals.

27
Top-level Strategic Planning starts with CEOs, company
Management defining the organization’s goals or presidents, or the
Planning objectives. Maintenance of organization’s senior
organizational stability, culture, executive develop
values and growth improving its and execute the said
productivity, profitability, strategic plan.
effectiveness, and efficiency, among
others.

As earlier mentioned, top -level

managers are responsible for the
organization’s strategic planning
which involves making decisions
about the organization’s long-term
goals and strategies.
Middle-level Tactical Planning refers to a set of The Functional
Management procedures for changing Managers,
Planning transforming broad strategic goals Production Line
and plans into specific goals and Managers,
plans that are applicable and Department Heads
needed in one unit/portion of the are involved in
organization. tactical planning.

It is focused on major actions that

must be done by a unit to
contribute its share for the
achievement of the strategic plan.
Frontline/Lower- Operational Planning involves The Unit Managers,
level Management identifying the specific procedures First Line
Planning and processes required at the lower Supervisors are the
levels of the organization. one executing the
operational planning.
This also involves routine task or
tasks repeatedly done by the
organization’s lower-level units.

Figure 5.3 Management Levels and types of planning

28
 A. Directions: TRUE OR FALSE. Carefully read the statements below. If the
statement is correct write True if the statement is incorrect write False.
Write your answer on the separate sheets.

__________1. Planning in different level of management have the same purposes

and functions.
__________2. Manager organizes, staffs, directs, and controls to attain the
objectives of plans made.
__________3. Planning is done at different levels in the firm, but all these must be
integrated and directed towards the achievement of the organization’s goal.
__________4. Managers failed in planning because of lack of real commitment in
planning.
__________5. Plans can be more effective by recognizing the planning barriers and
making use of planning aids.

ACTIVITY 5.1 CASE STUDY: PLANNING

NATIONAL BOOK COMPANY
Delia delos Reyes was the founder and president of publishing company
specializing in collegiate textbooks. Because of her personal ability, expertise, and
effective marketing promotion, the company grew rapidly and its sales of P10,000
reach P10Million five years later. The publication production and sales force also
increased.
However, the company was faced a serious problem. New and old employees
were making conflicting decision, one of the Delos Reyes partners suggested that the
company needed planning and clear out policies and programs to guide decision
making, but the president was not impressed. She maintains that if she concentrates
in formulating plans and policies today, she might not have a company tomorrow.
She believes it is best to solve the problems as they happen.
QUESTIONS:
1.With whom you align yourself with? Delia delos Reyes or business partner?
_________________________________________________________________
_________________________________________________________________

2.What are the good points in their arguments?

Delia delos Reyes Business partner

29
 3.Can you recommend at least three solutions in this case?
Alternative 1 or Solution 1

Alternative 2 or Solution 2

Alternative 3 or Solution 3

4.Among the three alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.
_________________________________________________________________________
_________________________________________________________________________
CASE STUDY is a study of an organization or individual in a particular situation,
usually based on actual business situations, with a view to learning what factors
were responsible for success or failure.
CASE STUDY GRADING RUBRIC

POINTS
CRITERIA
Outstanding Very Satisfactory Poor
(16-20) Satisfactory (6-10) (0–5)
(11-15)
Explanation A complete Good solid Explanation Misses key
response with a response with is unclear points
detailed clear
explanation explanation
Demonstrated Shows complete Shows Response Response
knowledge understanding of substantial shows some shows a
the problem, understanding understandi complete
ideas and of the problem, ng of the lack of
processes ideas and problem understandi
processes ng of the
problem
Requirements Goes beyond the Meets the Hardly Does not
requirements of requirements of meets the meet the
the problem the problem requirement requirement
s of the s of the
problem problem
Quality of Recommendation Recommendatio Recommend Recommend
recommendati s clearly indicate ns substantially ations not ations not
ons a decision indicate a clearly clearly
Recommendation decision indicate a indicate a
s are actionable Recommendatio decision. decision.
and realistic ns are Recommend Recommend
actionable and ations can ations are
realistic be neither
actionable actionable
but not nor realistic
realistic
Total

30
 MODULE 6

In this module you will learn that planning can be more effective by using
different techniques, and tools and having a good business decision-making.
In this lesson various quantitative and scientific techniques will be discussed
to aid the manager in his planning process. And these techniques can also be used
in in the decision- making process.

This module is mainly focused on one module, specifically:

• Lesson 6 – Planning Techniques and Tools and their applications

and Decision making
Learning Competency:
• Apply appropriate planning techniques and tools and business decision
making
(LC Code: ABM _AOM11-Ie-g-13)

At the end of this lessons, you are expected to:

1. apply appropriate planning techniques and tools;

2. understand the decision-making process; and

3. formulate a decision from several alternatives.

Lesson Planning Techniques, Tools and

6 Business Decision Making

PLANNING TECHNIQUES AND TOOLS AND THEIR APPLICATIONS

There can be different types of goals with varying degrees of importance and
timespans. But one thing that remains common is devising a plan that is efficient
enough to help achieve these goals. Creating an effective planning tool will be
possible to achieve goals.
In your professional and personal lives, you would have certain objectives.
Planning allows you to convert your targets into achievements. It helps you devise a

31
mechanism and chart a course for reaching your set goals. Hence, the importance
of planning is paramount, and it requires an in-depth understanding of the
requirements in terms of resource allocation and time management.

For effective planning in today’s dynamic environments, different techniques

and tools must be used, such as:
1.FORECASTING according to Schermerhorn (2008) forecasting is an attempt to
predict what may happen in the future.

• All planning types without exception, make use of forecasting.

• Under this technique, past and present or current information is used to
predict future events or conditions.
• Forecasts used may either be quantitative or qualitative
Quantitative forecast used mathematical calculations and statistical
analyses of surveys or research.
Qualitative forecast based on opinions of prominent economist.

However, these are just aids for planning, forecasts are predictions and may
be inaccurate, at times due to errors of human judgment.

2.CONTINGENCY PLANNING contingency factors may offer alternative courses of

action when the unexpected happens or when things go wrong.
• Contingency plans must be prepared by managers ready for
implementation when things do not turn out as they should be.
• Contingency factors called “trigger points” indicate when the prepared
alternative plan should be implemented.

3.SCENARIO PLANNING is a planning for future states of affair s is a long-term

version of contingency planning.
• Alternative plans must be prepared in order to meet changes or challenges in
the future.an organization can make necessary adjustments in their
strategies ang challenges in the future.
• Some challenges and changes that may arise in future scenarios like:
environmental pollution, human rights violations, climate and weather
changes, earthquake damages to communities, and others.
4.BENCHMARKING a planning technique that generally involves external
comparisons of a company’s practices and technologies with those of other
companies.
• External benchmarking is to search for best practices used by other
organizations that enabled them to achieve superior performance.
• Internal benchmarking is also a practiced by some organizations when they
encourage all their employees working in their different work units to learn
and improve by sharing one another’s best practices.

5.PARTICIPATORY PLANNING is a planning process that includes the people who

will be affected by the plans and those who will be asked to implement them in all
planning steps.
Other planning techniques and tools that can be used:

32
• MANAGEMENT BY OBJECTIVES (MBO) Peter Ducker used this term in
1954 and applied it is an approach to planning. MBO drawn a great deal of
attention among the academics and practitioners. MBO is an approach to
management initiative and prevent working at cross -purposes, or indeed,
for no purpose at all. It is a way to help managers accomplish their job
within the framework of organization needs and resources.

• BREAK EVEN ANALYSIS -break even charts are used for planning purposes
and almost every manager makes a profit plan and break- even analysis is
useful in developing it.

Using the break-even charts, a break-even point, that is, the point at which
total cost equal total revenue, can be determined. Using this chart, a
manager can say whether the company can sell enough products to break-
even and plan accordingly.

Figure 6.1 Break-even Chart

• Some organizations use Gantt Chart to properly schedule production processes and
allocate resources

Figure 6.2 Gantt Chart

33
 DECISION-MAKING

Decision-making is the process of choosing a specific procedure or course of

action from among several possible alternatives. In the business world, a great
investment in time, economy, effort, personnel, and materials may be involved in
arising at a decision. The extent to which these things are involved, as well as the
total effect of their involvement, depend on the business level at which the decision
is made.

TYPES OF DECISIONS
1.Structured or programmed decision- a decision that is repetitive and can be
handled using a routine approached.
Example: A restaurant customers complains about the dirty utensils the waiter
has given him. This is not an unusual situation, and therefore, standardized
solutions to such problem may be readily available.

2. Unstructured or nonprogrammed decisions- applied to the resolution of

problems that are new and unusual, and for which information is incomplete.
Example: Increase in advertising expenditure, effective salesmanship, upgraded
technology, quality controls, brand image and reasonable prices are expected to
increase sales and profits. If, despite all this, profits are declining, it requires
immediate decision-making and such decisions are non-programmed decisions.

TYPES OF DECISION-MAKING CONDITIONS

1.Certainty conditions- ideal conditions in deciding problems; these are situations
in which a manager can make precise decisions because the results of all
alternatives are known.
2. Risk or uncertainty conditions -compel the decision maker to do estimates
regarding the possible occurrence of certain outcomes that may affect his or her
chosen solution to a problem.
THE DECISION - MAKING PROCESS ACCORDING TO ROBBINS AND COULTER

Step 1: Identify the Problem

The problem may be defined as a puzzling circumstance or a discrepancy between
an existing and a desired condition.

Step 2: Identify the Decision Criteria

These are important or relevant to resolving the identified problem.

Step 3: Allocate Weights to the Criteria

This is done in order to give the decision-maker the correct priority in making the
decision.

Step 4: Develop Alternatives

34
Requires the decision-maker to list down possible alternatives that could help
resolve the identified problem

Step 5: Analyze the Alternatives

Alternatives must be carefully evaluated by the decision-maker using the
criteria identified In step 2.

Step 6: Select an Alternative

The process of choosing the best alternatives or the one which has the highest total
points in Step 5

Step 7: Implement the chosen Alternatives

This step puts the decision in action.

Step 8: Evaluate Decision Effectiveness

The last step and involves in the evaluation of the outcome or result of the decision
if the to see if the problem was resolved.

Directions: Analyze each situation and identify what type of decision to be

used. Write PD if Programmed decision and NPD for Nonprogrammed
decision. Use the given chart as your guide.

Characteristics Programmed Nonprogrammed

Decision Decisions
Type of problem structured unstructured
Managerial level lower level upper level
Frequency repetitive new, unusual
Time frame for solution short Relatively long
Solution relies on procedures, rules and judgment and creativity
policies

______1. Investing in a new unproven technology

______2. Acquiring a company
______3. Reorder office supplies
______4. Employee coming in late habitually
______5. Periodic reorder of inventory
______6. Changing strategies direction
______7. Moving into new market
______8. Monthly preparation of expense reports
______9. Expansion of business
______10. Counting and balancing cash every morning before any cash
transactions.

35
ACTIVITY 6.1 CASE STUDY: DECISION- MAKING
Attorney Lorna Corona was the general manager of their family- owned
publishing company. Subordinates described her as an ideal boss who knew the “ins
and outs’ of their business, who focused on long-term concerns of their company,
emphasizing maintenance of stability, development, progress, and overall efficiency
and effectiveness. She too, exhibited emotional intelligence that enabled her to
maintain interpersonal relationships with everyone, in both internal and external
environments of their organization. Since everyone was happy and satisfied, their
company succeeded in achieving their goals. In1999, Lorna had to give up her
position because of severe injuries she suffered after a vehicular accident. Her
parents gave the task of managing their company to her younger brother, Gerald who
was her assistant general before the said vehicular accident.
Despite being knowledgeable in managing their publishing company, Gerald
did not show emotional intelligence. He often had conflicts with other managers and
subordinates: lacked good relations with customers and other companies’ managers;
and could not calm himself quickly when angry and under pressure during
problematic situations. These circumstances caused dissatisfaction among the
employee of their company, hence affecting their efficiency and productivity. Other
stockholders, too, were negatively affected. In 2009, their company had to close the
shop.

QUESTIONS:
1.Examine your tendencies. Do you have emotional intelligence? Explain your
answer.
_________________________________________________________________
_________________________________________________________________

2.Can you identify problem? State the problem.

______________________________________________________________________
______________________________________________________________________

3.Can you recommend at least three solutions in this case?

Alternative 1 or Solution 1

Alternative 2 or Solution 2

Alternative 3 or Solution 3

36
4.Among the three alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.
_________________________________________________________________________
_________________________________________________________________________

MODULE 7

In this module after planning, organizing follows. The goals and objectives
established during planning will all go to waste without effective organizing.

In this lesson, Organizing is undertaken to facilitate the implementation of

plans. The manager needs to acquire various skills in management including those
for organizing business activities.

This module mainly focused on one lesson, specifically:

• Lesson 7 – Nature of Organization and Types of Organization Structures.

Learning Competency:
• Analyze the nature of organizations and types of organization structures
(LC Code: ABM _AOM11-IH-j-15)

At the end of this lessons, you are expected to:

1. discuss the nature of organizations;

2. distinguish the various types of organization structures; and

3. understand the significance of organization structures for effective

business management.

37
 Lesson
7 Organizing

NATURES OF ORGANIZATIONS AND TYPES OF ORGANIZATION

STRUCTURES
To function well, organization structures an and their specific roles must be
understood by all members of the organization. Rules and regulation principles
must also put into practice. However, the organizing depends on the specific
situation of the firm.
Although there are differences of interpretation as to the exact nature of
organization. It is undeniable fact that the proper organization is the backbone
of the successful enterprise, the solid foundation upon which the entire business
is built.
All business enterprises, irrespective of their forms, require organization for
their economic operation and smooth running of business. The larger the size of a
business, the more complicated and formal becomes the task of organizing.
What is an organization?

• Organization is the structure in which harmonious inter-relationship of

functions and personnel is created through the process of grouping the work
to be performed, allocating duties and responsibilities, and delegating
authority for the purpose of realizing the objectives of the enterprise.
• Organization is the “executive structure of the business”. according
to Webster.
What is Organizing?
• Organizing is a management function which involves assigning of tasks,
allocating of resources, and coordinating work activities in order to achieve a
common purpose.
• Organizing is the process of grouping together men establishing
relationships among them, defining authority and responsibility of personnel
by using the company’s basic resources to attain predetermined goals or
objectives.

38
 NATURE OF ORGANIZATIONS

1.PROCESS
The framework provides the means for assigning activities to various parts and
identifying the relative authorities and responsibilities of those parts. In simple
term, organization is the process by which the chief executive, as a leader, groups
his men to get the work done.

2. STRUCTURE
The function of organizing is the creation of a structural framework of duties and
responsibilities to be performed by a group of people for the attainment of the
objectives of the concern. The organization structure consists of a series of
relationships at all levels of authority.

3. DIVIDING AND GROUPING THE ACTIVITIES

Activities of an enterprise are required to be distributed between the departments,
units or sections as well as between the persons for securing the benefits of
division of labor and specialization and are to be integrated or combined for giving
them a commonness of purpose.

4. ACCOMPLISHMENT OF GOALS OR OBJECTIVES

An organization structure has no meaning or purpose unless it is built around
certain clear-cut goals or objectives. In fact, an organization structure is built-up
precisely because it is the ideal way of making a rational pursuit of objectives.

5. AUTHORITY-RESPONSIBILITY RELATIONSHIP
An organization structure consists of various positions arranged in a hierarchy
with a clear definition of the authority and responsibility associated with each of
these.

6. HUMAN AND MATERIAL ASPECTS

Organization deals with the human and material factors in business. Human
element is the most important element in an organization. To accomplish the task
of building up a sound organization, it is essential to prepare an outline of the
organization which is logical and simple. The manager should then try to fit in
suitable men.

Difference between organizational structure and organizational chart

ORGANIZATION STRUCTURE is a system made up of tasks to be accomplished,
work movements from one work level to other work levels in the system, reporting

39
relationships, and communication passageways that unite the work of individual
persons and groups.
ORGANIZATIONAL CHART shows the different positions in the firm and its
hierarchical arrangement for dividing labor and providing a picture of the reporting
structure.
➢ It is a diagram or drawing showing the important aspects of an
organizational structure.
➢ It shows the relationship among positions as to authority, responsibility and
accountability, and the people who occupy them.

TYPES OF ORGANIZATIONAL STRUCTURES INCLUDE:

a. Vertical structure
b. Horizontal structure
c. Network structure

A. VERTICAL STRUCTURE
• According to Bateman and Snell (2008), a vertical structure clears out issues
related to authority rights, responsibilities, and reporting relationship.
• Authority rights refers to the legitimate rights of individuals, appointed in
positions like president, vice president, manager, and the like to give orders
to their subordinates, who in turn, report to them what they done. Owners of
private business companies have absolute authority, even if other persons
are appointed as managers in their companies.
• Besides chairman of the board, a chief executive officer (CEO) is appointed to
occupy the top post in the organization.
• Below the top -level managers are the middle-level managers in charge of
departments who, as earlier mentioned, report to them.
• Under the middle-level managers are the lower -level managers which
include office managers, sales managers, and supervisors who directly report
to the former.
• Employees under the lower mangers also have reporting relationships with
their respective department managers.

40
 Figure 7.1 Organizational Chart with Vertical Structure

B. HORIZONTAL STRUCTURE refers to the departmentalization of an organization

into smaller work units as tasks become increasingly varied and numerous.

TYPES OF DEPARTMENTS

1. Line departments – deal directly with firm’s primary goods and services;
responsible for manufacturing, selling, and providing services, to the clients.
2. Staff departments- support the activities of the line department by doing
research, attending to legal matters, performing public relations duties, etc.

DEPARTMENTALIZATION results from grouping of work, the desire to obtain

organization units of manageable size, and to utilize managerial ability.
Examples: Accounting Department, Sales Department, Auditing Department

DEPARTMENTALIZATION may be done using three approaches

a. Functional approach -where the subdivisions are formed based on

specialized activities such as marketing, production, financial
management and human resource management.

Figure 7.2 Organizational Chart with Horizontal Structure- Functional approach

b. Divisional approach – where departments are formed based on

management of their products, customers, or geographic areas covered.

41
 Figure 7.3 Organizational Chart with Horizontal Structure -Divisional approach- by Geographic

Figure 7.4 Organizational Chart with Horizontal Structure-Divisional approach by product

c. Matrix approach- is a hybrid form of departmentalization where managers

and staff personnel report to the superiors, the functional managers, and
divisional managers.

Figure 7.5 Organizational Chart with Horizontal Structure- Matrix

Approach

C. NETWORK STRUCTURE - is a collection of independent, usually single function

organizations/companies that work together in order to produce a product or
service. Such network organizations are each capable of doing their own specialized
work activities independently, like producing, distributing, designing, etc. but can
work effectively at the same time with other network members.

Organization structures are needed to keep employees needed, to build learning

organization and to manage global structural problems.

42
Directions: Modified True or False. Read the statement carefully. If the
statement is True write R if the statement is False write W.
______1. After Planning, Organizing is the second function of management
______2. Organization structure and organization chart are only the same.
______3. Organization chart shows the work to be performed, their divisions,
and their interrelationships.
______4. Without the support of organizing the set goals can be achieved
______5. One of the principles of management applied on organizing is
teamwork.

ACTIVITY 7.1 CASE STUDY: ORGANIZING

Organizing the Power Company
“I do not believe in organization charts or position descriptions of any kind
of this company.” Declared Johnny Ramos, president and founder of the Power
Company., manufacturer of men’s ready-to-wear (RTW) suits and jackets.” We are
successful and fast-rising company where I want all managers and labor to work as
a team. Organization charts and descriptions make believe they own position on a
chart and want to keep it. We grew from a small company with P100,000 annual
sales to P5Million enterprise because we pooled our resources, coming up with
competitive products at low costs. We are not San Miguel Corporation with the
complex organization charts.
Mr. Silang, the company comptroller, strongly depended on the president,
emphasizing that teamwork, not organization charts, is the key to success.
Linda Ignacio, head of manufacturing, believed otherwise and declared the
president’s view “unreal and unprogressive.” Ms. Ignacio said “I could not run my
department without organization charts and positions description. As a matter fact,
I have them hidden in my desk where Johnny Ramos never sees them!”

QUESTIONS:
1.With whom you align yourself with? Mr. Johnny Ramos, Mr. Silang or Ms.
Linda Ignacio? Why?
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________

2.Can you identify the problem? State the problem.

43
 ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

3.Can you recommend at least three solutions in this case?

Alternative 1 or Solution 1

Alternative 2 or Solution 2

Alternative 3 or Solution 3

4.Among the three alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.

________________________________________________________________________
_________________________________________________________________________

MODULE 8

In this module, the different organization theories and applications used in

organization structure will be discussed.
In this lesson, it will discuss and identify organization theories that can help
how the organization functions best.

This module will discuss specifically the:

Lesson 8 – Organization Theories and Applications,

Delegation, Formal and Informal Organization
Learning Competency:
• Apply organization theories for effective management
(LC Code: ABM _AOM11-Ih-j-17)
At the end of this lessons, you are expected to:
1. apply organization theories in solving business cases;

2. identify the different elements of delegation; and

3. differentiate formal and informal organization.

44
 Lesson Organization Theories and
8 Applications

Organizational theory attempts to explain the workings of organizations to

produce understanding and appreciation of organizations. Correctly applying
organizational theory can have several benefits for both the organization and society
at large.

Organizational theory studies organizations to identify the patterns and

structures they use to solve problems, maximize efficiency and productivity, and
meet the expectations of stakeholders.

ORGANIZATION THEORIES AND APPLICATIONS

There are two main classifications of theories regarding organizational design
according to Robbins and Coulter (2009):
1. Traditional Theories – are the usual, old-fashioned ways.
2. Modern Theories – are contemporary or new design theories.

Traditional Organizational Design Theories Include:

1. Simple Organizational Design- has few departments, wide span of control, or a
big number of subordinates, directly reporting to a manager has a centralized
authority figure and has a very little formalization of work; usually used by companies
that start out as entrepreneurial ventures.

Strengths Weaknesses
-flexible -risk that over-dependence on a single
-fast decision-making and results person
-clear accountability -no longer appropriate as the company
grows

45
 2.Functional Organizational Design – groups together similar or related specialties.
Generally, functional departmentalization is utilized and put into practice an entire
organization.

Strengths Weaknesses
-cost-saving advantages -managers have little knowledge of other’s
-management is facilitated because unit function
workers with similar tasks are grouped
together.
3.Divisional Organizational Design- is made up of separate business division or
units, where the parent corporation acts as overseer to coordinate and control the
different divisions and provide financial and legal services.
Strengths Weaknesses
-focused on results -possible duplication of activities and
-managers are responsible for what resources.
happens to their products and services -increased cost and reduced efficiency.

Modern Organizational Design Theories include:

1. Team Design -the entire organization is made up of work groups or teams.
advantages: are include empowerment of team members and reduced
barriers among functional areas.
Disadvantages: including a clear chain of command and great pressure on
teams to perform.

2. Matrix -Project Design-

Matrix Design refers to an organization design where the different
specialist from different department works on projects that are supervised by
a project manager. This design results in double chain of command wherein
workers have two managers- their functional area manager and their project
manager- who share authority over them.
Advantage: specialists are involved in the project.
Disadvantage: task and personality conflicts

Project Design refers to an organizational design where employees

continuously work on a project
Advantages: Flexible designs and fast decision-making.
Disadvantages: Complexity of assigning people to project and tasks and
personality conflicts.

3. Boundary-less Design another modern organizational design where the

design is not defined limited by vertical, horizonal, and external boundaries.
There are no departmentalization and no boundaries that separate the
organization from customers, suppliers, and other stakeholders.

Virtual organization designs are often used in this design; small groups of full -
time employees and outside specialist are temporarily hired to work on the projects.
Advantages: being highly flexible and responsive
Disadvantages: are lack of control and problems in communication.

46
 DELEGATION

DELEGATION refers to assigning a new additional task

to a subordinate; or getting the work done through others
by giving the work done through others by giving them
the right to make decisions or act.

The Three Elements of Delegation

1. Authority – the right to act legally or officially

2. Responsibility - the state of being answerable legally and morally for the
discharge of duty
3. Accountability – is to be liable be called to explain

FORMAL AND INFORMAL ORGANIZATIONS

Whether an organization is formal or informal is determined by the kind of

relationship that prevails in each organization type.
FORMAL ORGANIZATIONS – are characterized by hierarchical and reporting
relationships among groups or members.
• Refers to the organizations formed by the company owner or manager to help
firm accomplish its goals; made up of formal groups (work groups/project
teams/committee) similarly formed by company authorities to support their
activities and achieve their objectives.

INFORMAL ORGANIZATIONS – consist of informal groups born out of the need for
social affiliation.
• Refers to the organizations exist because of friendship or common interest;
made up of informal groups which exist for the member’s need for social
affiliation.
Both formal and informal organizations may exist in the same organization
structure.

Directions: Identify the following Organizational design is Traditional (T) or

Modern (M). Write letter only.
________1. Design that groups together similar or related specialties
________2. It is made up of work teams.
________3. Design where employee continuously work on project
________4. Focus on performance improvement of people
________5. Focus on flexibility and problem solving

47
ACTIVITY 8.1 CASE STUDY
Engineer Jose Santos is a supervisor of group of light project engineers. His
unit is burdened with heavy workloads because of increase in orders of their
company’s computer components. Following up customer’s orders and the
availability of these said products by himself is too much work for him. As a
consultant for the company, what would you advise Engineer Santos?

QUESTIONS:
1.Can you identify the problem? State the problem.

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

2.Can you recommend at least two solutions in this case?

Alternative 1 or Solution 1

Alternative 2 or Solution 2

3.Among the two alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.
_________________________________________________________________________
_________________________________________________________________________

POST TEST: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

1. A management function which involves assigning of tasks, allocating of

resources, and coordinating work activities to achieve a common purpose.
a. Planning c. Staffing
b. Organizing d. Directing

48
2. Organizational design which is made up of separate business division or units.
a. Division Organizational c. Team Design
b. Functional Organizational d. Matrix Design
3. The statements below define management except for:
a. The force that runs an enterprise and is responsible for its success and
failure.
b. The performance of conceiving and achieving desired results by means of
group effort.
c. An art only and not important subject in business.
d. Satisfying the economic and social needs by being productive for the
human being, for the economy and for society.
4. He postulated a management theory make use of the step, scientific methods for
finding the single best way for doing a job.
a. Henry Fayol c. Joseph M.Juran
b. Frederick W. Taylor d. W. Edwards Deming
5. The following statements are nature of planning except:
a. Planning is the function of all managers.
b. Planning for efficient organization
c. Assigning of responsibility
d. Contribution to purpose and objective
6. The process of choosing a specific procedure or course of action from among
several possible alternatives.
a. Scenario Planning c. Contingency Planning
b. Forecasting d. Decision-making
7. The skills that are helpful in decision-making.
a. Human c. Conceptual
c. Technical d. Physical
8. These persons may be called vice-president, managing director, chief executive
officer or chairman of the board etc. and in charge to the overall objectives of the
organization.
a. Middle-Level Managers c. Tactical Managers
b. Top-Level Managers d. Lower -Level Managers
9. An environment that includes, political, legal, economic, socio cultural and
technological aspects.
a. Opportunities c. Business Firm
b. Internal Environment d. External Environment
10. Is the study of how society produces and distributes its desired goods and
services.
a. Economics c. Marketing
b. Management d. Entrepreneurship

49
 DIVISION OF NAVOTAS CITY

Organization and
Management
(Quarter 2)
First Semester

S.Y. 2021-2022
NAVOTAS CITY PHILIPPINES
PRETEST: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.
1. The process of acquiring and developing human resources to carry out and
perform various activities of the organization.
a. Scanning c. Organizing
b. Planning d. Staffing
2. Is the procedure for determining the duties and skill requirements for a job or
position, as well as other qualifications sought for in an employee or applicant.
a. Job Specification c. Job Analysis
b. Job Description d. Job Position
3. Theory of motivation which predicts that employees are motivated to work well
because of the attractiveness of the rewards or benefits that they may possibly
receive from a job assignment.
a. Scientific Management Theory c. Equity Theory
b. Expectant Theory d. General Administrative Theory
4. Gift, prize, or recompose for merit, service or achievement which may have a
motivating effect on the employee.
a. Rewards c. Promotion
b. Salary d. Compensation/wage
5. Refers to process of social influence that enables a person to encourage others
and enlist their aid and support.
a. Motivation c. Communication
b. Leadership d. Controlling
6. Is important in organizing jobs, it can take several forms: verbal, written and
expressed or body language.
a. Directing c. Motivation
b. Controlling d. Communication
7. A management function involves ensuring the work performance of the
organization’s members are aligned with the organization’s values and standards
through monitoring, comparing and correcting their actions.
a. Planning c. Controlling
b. Staffing d. Organizing
8. Are used for measuring an organizations financial stability, efficiency
effectiveness, production output, and organizations member’s attitude and morale.
a. Control Methods c. Feedback Control
b. Financial Control d. Feedforward Control
9. A functional area of management responsible in financial management and
control.
a. Office Management c. Financial Management
b. Marketing Management d. Operation Management
10. A road map which the business must follow utilizing the resources at hand
while keeping the environment in mind.
a. Business Plan c. Tactical Plan
b. Marketing Plan d. Strategic Plan

51
 MODULE 9

In this module, we will learn that Staffing or Human Resource Management

involves acquiring and developing human resources that will carry out and perform
various activities in an organization. Staffing the organization is another major
responsibility of managers.
These lessons will define the concept of staffing and discuss the various processes
involved in systematic staffing.

This module is focused on one lesson, mainly:

Lesson 9 – Staffing-Part 1
• Definition and Nature of Staffing
• The process of recruitment, selection, and training and
development of an employee
Learning Competencies:
• Discuss the concept and nature of staffing.
(LC Code: ABM_AOM11-IIa-b-20)
• Analyze the process of recruiting, selecting and training employees
(LC Code: ABM_AOM11-IIa-b-21)
(LC Code: ABM _AOAM111a-b-22)

At the end of this module, you are expected to:

1. discuss the nature of staffing;
2. explain the steps in the recruitment and selection process; and
3. recognize the different training programs.

Staffing – Part 1
Lesson Concept and Nature of Staffing, The
9 Process of Recruitment, Selection and
Training of Employees.

Managers often considers human resources as their organization’s most

important resource. Very few administrators would argue with the fact that human
resources are very important for the efficient and effective operation of a company.
To emphasize their importance human resources are also human capital, intellectual

52
assets, or management or company talents. These terms imply that human resources
are the drivers of the organization’s performance; hence, staffing is a crucial
function of managers.

1.The Concept and Nature of Staffing

STAFFING
Definition of Staffing
• STAFFING is the process of recruiting,
selecting, and training of men. It means
putting the right men on the right jobs.
• STAFFING according to Dyck and Neubert
(2012), is the Human Resource function of
identifying, attracting, hiring, and retaining
people with the necessary qualifications to fill
the responsibilities of current and future jobs
in the organization.
• STAFFING involves appointing qualified
people into positions in the organization,
ensuring that they are efficient and effective
employees, and promoting their growths as Retrieved from:
they continue to work in the company. https://medium.com/@hlinesoft053/staffing-
process-540f078d63da
CONCEPT OF PEOPLE MANAGEMENT Accessed October 10, 2020.

Human Resource Management (HRM) is concerned with how employees are

employed and managed in organizations. It is defined as “the comprehensive set of
managerial activities and tasks concerned with developing and maintaining a
qualified workforce and human resource, in ways that contribute to organizational
effectiveness.”

NATURE OF STAFFING

Staffing or Human Resource Management involves acquiring ang

developing human resources that will carry out and perform the various activities of
the organization. Aside from hiring people into the organization, the company also
engages in human resource management and utilizes various tools and techniques
to promote employee loyalty, satisfaction, and personal growth within the company.

THE HUMAN RESOURCE DEPARTMENT

The Human Resource Department (HRD) is tasked to implementing human
resource management in the company. The activities of HRD include the primary
function of human resource management such as human resource planning, job
analysis, recruitment and hiring, training and development, performance appraisal
and management, compensation, and employee relations.
The HRD is also responsible for ensuring that the company complies with
workplace safety standards and labor and employment laws.
This department is staffed by human resource professionals and headed by a
Human Resource Director. Some companies appoint a Vice President for Human
Resources to oversee HR management.

53
 THE STAFFING PROCESS

Retrieved from:
https://www.businessmanagementide
as.com/staffing/staffing-meaning-
features-and- importance/3508

October 10, 2020

The staffing process is crucial for the achievement of organizational goals.

1. The first step in the process is human resource planning where in the
manager identifies the right number of people and the required skills for the
different job
2. Job analysis is employed to determine the task, activities, skills required in
the identified positions. After identifying the job specifications, qualified
people scouted to fill in the positions in the organization.
3. The process of finding people to hire for a job is called recruitment.
4. The selection of job candidates is done through interviews, psychological test
and background check.
5. Upon hiring, new employees are oriented on company rules and policies,
compensation and benefit packages, and training programs.

JOB ANALYSIS is the procedure for determining the duties and skill requirements
for a job or position, as well as other qualifications sought for in an employee or
applicant.

JOB ANALYSIS is the procedure used for determining /collecting information

relating to the operations and responsibility of a specific job. The end results are job
description and job specifications.

Retrieved from
http://learnersdestination.com/job-
analysis/
Accessed October 12, 2020

Figure 2. Job Analysis Process

• Job description -organized, factual statement of duties and responsibilities

of a specific job. It tells what to be done, how it is done, and why.

• Job specifications – a written explanation of the minimum acceptable human

qualities necessary for effective performance of a given job. It designates the
qualities required for acceptable performance, which are requisite education,
skills, personality.

54
 Figure 3. Job analysis
Retrieved from:

http://learnersdestination.com
/job-analysis/ accessed
October 12, 2020

This is an example of
Job Analysis. It contains the Job
Position, Job Description and Job
Specification.
2. The Process of Recruitment, Selection, and Training and
Development of Employees
RECRUITMENT
RECRUITMENT – A set of activities designed to attract qualified applicants for job
position vacancies in an organization.
RECRUITMENT is the process of encouraging, inducing, or influencing applicants
to apply fo a certain vacant position.

TYPES OF RECRUITMENT
1. INTERNAL RECRUITMENT - Filling job vacancies can be done through
promotions or transfer of employees who are already part of the part of the
organization
2. EXTERNAL RECRUITMENT - Outside sources are considered in the process of
locating potential individuals.
Methods of Recruitment

Advertisment Through website, newspaper, radio, televisions, posters

e-mails
Unsolicited application Received by an employer, from an individual who may or
may not qualified for the job opening
Internet recruiting Independed job boards on the Web
Employee referrals Recommendations
Executive search firms Also known as “headhunters “ help employers find the
person for a job.
Educational institution Good source of young applicants or new graduates
Professional associations May offer placement services to their members who seek
employments
Labor unions Possible source of applicants for blue-collar and
professional job
Public and private May also good sources for different types of job
agencies vacancies.

55
 SELECTION
SELECTION – the process of choosing individuals who have the required
qualifications to fill present and expected job openings.

SELECTION -the process of getting the most qualified applicant from among
different seekers.
STEPS IN SELECTION

1. Reception of applicants
2. Preliminary Interview
• Interviews are important in determining the qualifications of an
applicant and gauging his or her ability to perform a job.
Types of Job Interviews
a. Structured Interview – the interviewer asks the applicants to answer a
set of prepared questions.
b. Unstructured Interview- the interviewer has no interview guide and may
ask the questions freely.
c. One-on-one interview – one interviewer is assigned to interview the
applicant.
d. Panel Interview – several interviewers or a panel interviewer may conduct
the interview of applicants: three to five interviewers take turn in asking
questions.
3. Complete application form
4. Employment Test
• Intelligence Test- designed to measure the applicant’s mental capacity
test his or her cognitive capacity
• Proficiency and aptitude Tests- test his or her present skills and
potential for learning skills.
• Personality Tests- designed to reveal the applicant’s personal
characteristics and ability to relate with others.
• Vocational tests- test that show the occupation best suited to an
applicant.
5. Final selection by immediate supervisor or department head
6. Physical and medical examination
7. Hiring
8. Orientation/ Induction/Indoctrination

NEW EMPLOYEE ORIENTATION PROGRAM

The initial training of newly hire hired employee includes an orientation. The
new employee orientation program aims to provide new employees with relevant
information about the company such as the company’s history, vision and mission,
culture, products, and services provided, work hours, dress code, and company
policies.
The program also introduces new employees to their superior and co-
employees within the department and the top management are introduced.

56
3.Training and Development of an Employee
TRAINING AND DEVELOPMENT refer to two
distinct processes in employee development.

TRAINING is an organized activity that

increases and enhances employees’ knowledge
and skills on their job to improve their current
performance.
Retrieved from:https://nbsl.org.uk/business-bullets/people/70-3-

DEVELOPMENT is the enhancement of the things-to-consider-when-planning-your-training-and-development-

strategy Accessed October 13,2020

competencies of employees by giving them opportunities for greater responsibilities

as well as challenging tasks that will help them achieve their total growth.
Some of the common techniques used by companies in training programs:

1. Lecture is the oldest and most popular method of teaching where the trainer
or speaker gives a speech explaining a topic or concept.
2. Demonstration method-is utilized to show how something works or how to
perform task.
3. Computer-based training program utilizes computer programs to teach
knowledge and skills and does not require face-to-face interaction with the
trainer.
4. Programmed Instruction is a form of computer -based training that the
participants go through the content of the material and answer tests. Once
they pass a test, they are able to proceed to the next level of the program.
5. Case study method presents a particular situation and trainee discuss and
decide on a solution to an organizational problem highlighted in the case.
6. Role Playing method presents actual work situations for analysis and
participants are asked to act out of specific roles.
7. Teambuilding is a training program that utilizes activities that encourage
employee to work in groups.
8. On-the-job Training and Job Rotation the trainee is shown how to perform
the job and allowed to do it under the trainer’s supervision.
9. Vestibule Training procedure and equipment similar to those used in the
actual job are set up in a special working area are called a vestibule.
10. Management Development Program is a systematic process of training and
growth by which individuals gain and apply knowledge, skills, insights, and
attitudes to manage work organizations effectively.

Directions: Read the group of words or statement written below. Match it with the
words inside the box which are the staffing process. Write only the letter of your
answer in a separate sheet.

A. JOB ANALYSIS C. SELECTION E. STAFFING

B. RECRUITMENT D. TRAINING

57
________1. Intelligence test, aptitude test, personality test
________2. Job position, Job description, Job specification
________3. External applicant, internal applicant
________4. Demonstration, lecture, role playing
________5. Preliminary interview, employment test

ACTIVITY 9.1 CASE STUDY: STAFFING

Directions: Read and understand the case study. Write your answer in a separate
sheet.

The department manager holds a regular meeting with the four section
Heads confining each meeting to one chief problem. On this day, the subject was
the “poor” quality of the twenty supervisors reporting to the section heads.
“We have a rather poor record in selecting good supervisor” she began. “We
may have five or six who are outstanding, but there are too many who are not.
What do you people consider when you recommend candidates to me?”
“I think my best technical people make the best supervisors, “said one
section head. “They have the respect of their associates and subordinates who rate
their technical competence highly. They can train new staff members effectively,
and pitch in to do the most demanding jobs themselves.”
“Maybe that is just the trouble”, said the department manager. “People like
them because everyone never learn to manage because they spend their time in
technical work.” Another section head said, I made my recommendation based on
seniority. It has popular appeal because everyone expects to be a long this line.”
“Do you think “the manager said “that age is the only or most important
criterion for supervision? “. Such a practice conveniently ignores everything learned
about managing, or it assumes that the candidate has the capability to become
proficient in management after getting the job. Is this realistic?”
During the meeting, other factor such a s getting along with people, making
impression, having the capability for further promotion, and being able to exact
responsibility were all considered. The department manager was clearly frustrated
and, as she ended the meeting she remarked “No wonder we have 40% failure rate
in selecting supervisor.

QUESTIONS:
1.Can you identify the problem? State the problem.
_____________________________________________________________________
______________________________________________________________________
2.Base from the case, can you enumerate the reasons why the company has 40%
failure state in selecting supervisors?

______________________________________________________________________
______________________________________________________________________

58
3.Can you recommend at least three solutions in this case?

Alternative 1 or Solution 1

Alternative 2 or Solution 2

Alternative 3 or Solution 3

4.Among the three alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.

_________________________________________________________________________
_________________________________________________________________________

MODULE 10

In this module, we will learn that Staffing or Human Resource Management

also involves the objective of compensation, employee relations, employee movements
and the reward systems that is equitable to the employer and employee alike.
Learning Competencies:
• Examine the functions and importance of compensation, wages and
performance evaluation, appraisal, reward system, employee relations and
movement
(LC Code: ABM_AOM11-IIa-b-23 to ABM_AOM11-IIa-b-26)

These lessons will explain the policy or guidelines in compensation and

performance, importance of employee relations, various employees’ movements and
adopt effective reward systems.

This module will discuss specifically the:

Lesson 10 – Staffing Part 2
• Compensation/Wages and Performance Evaluation
Employee Relations
• Employee Movements and Reward System

At the end of this lessons, you are expected to:

1. Identify the policy guidelines on compensation and wages and performance

evaluation or appraisal;
2. discuss the importance of employee relations;
3. differentiate various employee movement; and
4. realize the importance of adopting an effective reward system.

59
 Lesson Staffing - Part 2 Compensation/Wages
and Performance Evaluation
10 Employee Relations

Compensation/wages and performance evaluation are related to each

other because the employee’s excellent or poor performance also determines the
compensation given to them, after considering other internal or external factors like
the actual worth of the job, compensation strategy of the organization, conditions of
the labor market, cost of living, and area wage rates, among others.
Compensation/Wages – all forms of pay given by employers to their employees for
the performance of their jobs. Any tangible equivalent or reward for services
rendered or for the performance of a task performed in the organization.

TYPES OF COMPENSATION

1. Direct compensation – includes worker’s salaries, incentive pays, bonuses

and commissions.
2. Indirect compensation- includes benefits given by the employers other
than the financial remuneration: example: travel, educational and health
benefits, sportsfest and others.
3. Nonfinancial compensation- includes recognition programs, being
assigned to do rewarding jobs, or enjoying management support, ideal work
environment, and convenient work hours.
COMPENSATION: A Motivational Factor for Employee

Compensation pay represents a reward that an employee receives for good

performance that contributes to the company’s success. In relation to this the
following must be considered:

Pay Equity – related to fairness: the Equity Theory is a motivation theory

focusing on employee’s response to the pay that they receive and the feeling that
they receive less or more than they deserve. In other words, pay equity is achieved
when the pay given to them by their employers is equal to the value of the job
performed.

Expectant Theory another theory of motivation which predicts that employees are
motivated to work well because of the attractiveness of the rewards or benefits
that they may possibly receive from a job assignment.

BASES FOR COMPENSATION

Employee may be compensated based on the following:
1. Piecework basis – when pay is computed according to the number of units
produced.

60
 2. Hourly basis- when pay is computed according to the number of work hours
rendered.
3. Daily basis – when pay is computed according to the numbers of work days
rendered.
4. Weekly basis – when pay is computed according to work weeks rendered.
5. Monthly basis – when pay is computed according to the number of work
months rendered.

SALARY – refers to compensation given to professionals on a monthly or semi-

monthly basis.

WAGE- refers to compensation given on a weekly or daily basis and usually applies
to manual workers.
ADVANTAGES OF GOOD COMPENSATION AND BENEFITS.

1. Job satisfaction 3. Low absenteeism

2. Motivation 4. Low Turn-over
PERFORMANCE EVALUATION

Performance Evaluation- a process undertaken by the organization, usually done

once a year, designed to measure employees’ work performance.
Purpose of Performance Evaluation
1. Administrative Purposes -These are fulfilled through appraisal evaluation
programs that provide information that may be used as a basis for
compensation decisions, promotions, transfers, and terminations.
2. Developmental Purposes – these are fulfilled through appraisal evaluation
programs that provide information about employees’ performance and their
strengths and weaknesses that may be used as basis for identifying their
training and developmental needs.

Performance appraisal methods includes trait methods, graphic rating

scales, forced choice method, behaviorally anchored rating scale (BARS), and
behavioral observation scale (BOS).

EMPLOYEE RELATIONS
Employee relations are the connection created among employees/workers as they
do their assigned tasks for the organization to which they belong.
Employee relations applies to all phases of work activities in organizations, and
managers to be effective must be able to encourage good employee relationship
among all human resources under his or her care.

Employees/workers are social beings who need connections or relations with

other human beings-other employees/workers-who can give them social support
as they carry out their tasks in an organization where all of them belong.

Three Types of Employees

Engaged -Employees who work with passion and feel a deep
connection with their company
-They drive innovation and move the organization
forward.
Not engaged -employees who essentially “checked out “

61
 - they put time, but not energy or passion, into
their work
Actively Disengaged -employees who are not only unhappy at work, but
also act out their unhappiness
-they undermine what their engaged coworkers
accomplish
Source: www.gullup.com

Here are some ways to overcome barriers to good employee relations:

• Develop a healthy personality to overcome negative attitudes and behaviors

• Find time to socialize with coworkers
• Overcome tendencies of being too dependent on electric gadgets
• Develop good communication skills and open to other’s opinion
• Minimize cultural/subcultural tension.

EMPLOYEE MOVEMENTS
Employee movements are inevitable and are often the result of evaluation or
structural changes within an organization. An organization can move its employee
either vertically or horizontally.
Vertical Movement – entails the movement of an employee from a lower position
to a higher one.
Horizontal Movement- involves in the transfer of an employee to another
department or position with similar responsibilities or status.

• PROMOTION - is a movement to a higher level or position.

-refers to the shifting of an employee to a new position to
which both his status and responsibilities are increased.
• DEMOTION – is a movement to a lower position.
A common reason for an employee’s demotion is inefficiency of
poor performance.
• TRANSFER- is a movement to another position but with the same level or
scope of responsibility. It can also mean a transfer to another branch or
location, but employee still occupies the same tasks.
• SEPARATION- an employee’s departure from the organization.
1. Resignation- this is an employee’s voluntary decision to leave the
organization.
2. Separation with authorized cause – more commonly known as layoff,
this is the company’s decision to terminate the employee s due to
business reasons.
3. Separation with just cause – This occurs when an employee is
terminated due to theft, fraud, and other serious offenses.
4. Retirement – this refers to the end of a worker’s employment with the
company due to illness, or infirmity. Some companies set their retirement
age for employees 60 or 65 years old.
LABOR UNION is a formal union of employees/workers that deals with employers,
representing workers in their pursuit of justice and fairness and in their fight for
their collective or common interest.
Employee or workers unionize because of financial needs, unfair management
practices and social leadership.
CBA stands for Collective Bargaining Agreement and Labor Union.

62
UNIONISM – the principle of combination for unity of purpose and action.
GRIEVANCE PROCEDURE – is a formal procedure that authorizes the union to
represent their members in processing a grievance or complaint.

REWARDS SYSTEM

Organizations offer competitive rewards systems to attract

knowledgeable and skilled people and to keep them
motivated and satisfied once they are employed in their firm.
Further, rewards promote personal growth and
development and present fast employee turnover.
Retrieved from: https://www.get- REWARD- gift, prize, or recompose for merit, service or
benefits.com/miscellaneous/reward-employees-
bonus-plan-makes-sense/ Accessed October 8,
2020
achievement which may have a motivating effect on the
employee

TWO TYPES OF REWARDS

1. MONETARY REWARDS – rewards which pertain to money, finance , or currency
A. Pay/salary - weekly, monthly, or hourly pay, piecework compensation.
B. Benefits - health care benefits, retirement benefits, educational
benefits
C. Incentives - bonuses, merit pays, sales incentives
D. Executive pay - basic salary, bonuses, stock plans, benefits, gratuity
E. Stock options – are lanes that grant employees the right to buy a
specific number of shares of the organization stocks.

The Philippine government has implemented law that requires business

establishments to give 13th month pay to all employees that have worked for
them for at least a month.
2.NON-MONETARY REWARDS- rewards which do not pertain to money, finance or
currency .

A. Award – trophies, medal, certificates of recognition

B. Praise – superior to their subordinates when they express oral or verbal
appreciation for excellent job performance.

Directions: Modified TRUE or FALSE.

Read and understand the following statement. If the statement is TRUE write T
and If the statement is FALSE write F. Write your answer in separate sheet.

______1. Family and personal problems and reasons why workers joined from a
labor union.
______2. Employees feel that their salary must be commensurate to the efforts they
exerted in the performance of their job.

63
______3. A labor union is an informal grouping of employees that negotiates with an
Employer.
______4. Performance evaluation done by companies never fails.
______5. Compensation/wages are all forms of pay given by employer to their
employees for the performance of their jobs.

Directions: Read and understand the case study. Write your answer in a separate
sheet.
CASE STUDY STAFFING
ACTIVITY 10.1 WHY WE NEED TO CHANGE
Artemio was appointed CEO of Rafol’s Enterprise s upon the death of his
father.
The company went public under the leadership of Artemio and must adapt to
being open and transparent to outside investors. There were pressures from the
shareholders to reduce costs and increase profits. In response, Artemio implemented
cost-cutting measures including downsizing by means of enforcing early retirement
of employees who he felt could not move to digitize the operation of the business.
As expected, most of the employees were not happy and this affected the
morale of their employees. Artemio sought the assistance of Ely Buenaobra, the VP
of HR. Ely suggested a comprehensive program wherein it is not just the managers
who would be evaluated based on achieving results but even the employees by means
of demonstrating to their employees that their performance affects company results.
This in turn will show to the shareholders that the company’s primary
objective in to increase performance.

Inspired by the case entitled “A Time for Change” from the book Human Resource Management by Wendell
French, Houghton Mifflin Company,2007.

QUESTIONS:
1.Can you identify the problem? State the problem.
_____________________________________________________________________
2.Do you agree with the proposal of Ely? Explain your answer.
______________________________________________________________________
3.Can you recommend at least three solutions in this case?
Alternative 1 or Solution 1

Alternative 2 or Solution 2

Alternative 3 or Solution 3

4.Among the three alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.

64
 MODULE 11

This module highlights another function of management – Leading. It

is important because it involves the organization’s people who possess different
attitudes, behaviors, personalities, and motivations among them to achieve a
common goal is quite challenging because of their many diverse characteristics.
Learning Competencies:
Analyze motivation, leadership, and communication work in an organization
LC Code: ABM_AOM11-IIc-e-27, ABM_AOM11-IIc-e-28,
ABM_AOM11-IIc-e-29, ABM_AOM11-IIc-e-30,
ABM_AOM11-IIc-e-31
These lessons will explain understanding leading or directing begins with how
people behave, what their motivation s and how to communicate with them.
This module will discuss specifically the:
Lesson 11 - Leading and Motivation
Leadership Styles and Theories
Communication

At the end of this lessons, you are expected to:

1. Discuss the nature of leading or directing;
2. Differentiate leading from managing;
3. Identify the different theories of motivation;
4. Differentiate the various styles of leadership; and
5. appreciate the role of communication in directing people within the organization.

Lesson Leading – Motivation, Leadership

11 and Communication

1. Leading and Motivation

LEADING
Successful leading must begin with focusing on
the psychological capital of both the
employer/leader and the employee subordinate.
Looking for what is right with people rather than
what is wrong is suggested to prevent mental and
behavioral problem which are barriers to
achieving both organizational and individual
Retrieved from: goals.
LEADING is a management function combine
https://crossroadscareer.org/what- two significant concepts – the DIRECTING and
leadership-is-not/ Accessed October 9,
LEADERSHIP.
2020
65
Directing is the fourth universal function of management and it refers to the
process of motivation, communication, and leadership. It deals with the
relationship of managers and non-managers. Planning, organizing, staffing and
controlling could be done effectively, but it must be supported by an understanding
of people’s behavior by good communication and ability to lead.
Leadership is an essential skill that manager must possess to guide their
organization towards achieving their goal. Effective leadership requires an
understanding of human motivation.
Managers as leaders should understand the motive of people, and they should
maintain or improve the interpersonal relationship in an organization so that
people can be satisfied from contributing to the achievement and development of
objectives of the enterprise.
Leading and Managing
Leading - a management function that involves inspiring and influencing people in
the organization to achieve common goal.
Managing – the process of working with and through others to achieve
organizational objectives efficiently and ethically amid constant change. It also
deals with planning, organizing, staffing, leading, and controlling.

2.MOTIVATION
Motivation refers to psychological processes that arouse and direct goal- directed
behavior. Motivation encourages individuals to work enthusiastically, often
performing more work than what is required.
• What could mangers to do ensure such motivated and enthusiastic
performance among their subordinates?
• What could be done to inspire employee whose work performance is
limited to the minimum need?
Motive is something that arouse or induces an individual to behave or induces an
individual to behave or certain thing. It is also known as need or desire.
Internal Motives are based on an individual’s own personal drive to achieve
certain goal.
External Motives are based on forces or influences that are outside of the person
such as environment, peer group, family members, and society.
THEORIES OR MOTIVATION
Several theories have outlined principles and ideas that explain the nature of
motivation and its effects on a person’s behavior.

A. McClelland’s Learned Need Theory also known as Achievement

Motivation Theory
According to David McClleland, an American Psychologist, human behavior
is defined by three motivators which are learned and shaped by a person’s
life experiences.
The learned needs:
1.Need for achievement have a strong desire to accomplish challenging
goals and gain advancement in their profession.
2. Need for Affiliation prefer to be in the company of others.
3. Need for power want to control and influence others.

B. Herzberg’s Two-Factor Theory – The American psychologist Frederick

Herzberg proposed the Two-Factor Theory of Motivation.

66
 Two important factors:
1.Hygiene factors – include rules and policies, salaries and benefits,
relationships with coworkers and superiors, work conditions, quality and
supervision.
2. Motivators factors – include the nature of job itself, recognition, personal
growth, opportunity for advancement, responsibility, and employment
status.

C. Abraham Maslow’s Hierarchy of Needs the most widely recognized theory of

motivation that specifies the fundamental needs of individual.

Retrieved from: https://mrjoe.uk/maslows-

hierarchy-needs-psychology-myth-busting-1
Accessed on October 12,2020

Maslow’s theory assumes that lower-level needs should be satisfied first to

enable a person to address his or her higher-level needs such as self-esteem and
self-actualization.
The Five Human Needs according to Maslow’s Hierarchy of Needs Theory:
1. Physiological Needs refer the human need for food, water, shelter, and other
physical necessities.
2. Safety Needs refer to human needs for security and protection from physical
and psychological harm.
3. Social Needs pertain to the human desire to be loved and to love as well as
need for the affection and belongingness.
4. Esteem Needs include the human need for self-respect, self -fulfillment, and
become the best according to one’s capability.
5. Self -actualization Needs are the final needs.

D. Alderfer’s ERG Theory - the ERG (Existence, Relatedness, Growth)

Theory of Motivation
Was developed in 1969 by Clayton Alderfer, An American Psychologist.
1. Existence needs are comprised of physiological and security needs.
2. Relatedness needs combine love and belongingness
3. Growth needs include self-esteem and self-actualization.
Let us see and analyze the diagram of some Motivation theories.

67
 Retrieved from: https://www.damak.tk/33238/learning-theories-summary-chart.htm
Accessed October 12, 2020

LEADERSHIP

Leadership refers to process of social influence that

enables a person to encourage others and enlist their aid
and support in the performance of task and in achieving a particular goal.
It is not primarily based on power or authority, but it is a product of social interaction
and defined social characteristics such as charisma intelligence and other traits.

Leadership is the process of inspiring and influencing a group of people to achieve

a common goal.
Leading is a complex process. It involves influencing others to accomplish a
mission, task, or goal.

Management experts identify four primary traits that leaders should possess. These
are as follows:

1. Emotional Stability – A leader is calm and confident during stressful

time.
2. Ability to admit error -A leader does not cover up his or her mistakes and
takes responsibility for them.
3. Good interpersonal skills- A leader can communicate and persuade others.
4. Intellectual breadth – A leader is broad-minded and is knowledgeable about
a wide range of areas.

LEADERSHIP THEORIES and LEADERSHIP STYLES

The Hershey- Blanchard Leadership Theory is a leadership model developed by
leadership mentors Paul Hersey and Ken Blanchard. This focuses on the direction
and emotional support a leader provides his or her followers as they undertake a
task.
THERE ARE FOUR LEADERSHIP STYLES ARISING FROM THIS MODEL:
1. Directing – the leader directs and gives clear instructions. This is good for
followers who have low competence.

68
 2. Coaching- The leader is always open to two-way communication. He or she
continually motivates employees. This is good for followers who are
moderately competent.
3. Supporting- The Leader and members of the group support each other.
There is an active participation among workers who are moderately
competent.
4. Delegating- The leader has followers who are highly competent. The
followers are highly motivated and take responsibility for accomplishing
assigned task.

THE PATH-GOAL THEORY OF LEADERSHIP – describes the way leaders support

their followers in achieving their goals.

Its proponent, leadership theorist Robert House, identified four leadership style:
1. Supportive leadership-The leader supports a friendly environment by
looking their subordinate’s welfare. This approach is best when the job is
stressful or tedious.
2. Directive Leadership- The leader communicates to the members of the
group the goals expectation and assign clear tasks.
3. Participative leadership- The leader consult with his or her followers and
consider their ideas in decision-making.
4. Achievement- oriented leadership – the leader trusts the capabilities and
set challenging goals to motivate them to perform at their optimal levels.
PARTICIPATIVE LEADERSHIP
Kurt Lewin, a German American psychologist identifies three leadership styles
based on their decision-making practices

a. Autocratic leaders – These leaders take sole charge in decision making and
do not consult with other members.
b. Democratic leaders – These leaders allow team members to provide inputs
before deciding.
c. Laissez-faire leaders – These leaders do not interfere in the decision making
and they allow members to make most of the decisions.

Action-Centered Leadership Model - a theory of John Adair, that teamwork is

essential in the accomplishment of tasks, and leader puts emphasis on the
following elements depending on the situation.

1. Task – includes defining the task, plans, allocating resources, and

assigning specific tasks.
2. Team – entails maintaining discipline, building team spirit, and
motivating members.
3. Individual – includes attending to personal problems, recognizing and
using individual abilities, and developing group members.

3. COMMUNICATION

Communication applies to all management functions and its general

purpose for the organizations to bring positive changes that influence activities
leading to the firm’s welfare.

69
 Communication is important in organizing jobs and making sure that all
tasks are jobs are accomplished to achieve goals. Communication can take several
forms: verbal, written, and expressed or body language.

Communication – the exchange of information and understanding

Verbal communication – refers to the oral and written communication

Non-verbal communication – refers to communication through body movements,
gestures, facial expressions, eye contact, or body contact

The Communication Process

Retrieved from: https://sites.google.com/a/jasonpurton.com.au/jason-purton/blog/elementsofmarketing-

backtobasicspart5 Accessed October 13,2020

The following are the elements involved in the communication process:

1. Input- the content of the message
2. Sender – the one who encodes or sends the message
3. Code – a symbol system, known to both the sender and the receiver, that
construct the meaning.
4. Channel- the means by which the sender relays the message to the receiver.
5. Noise- any distortion or interference during the communication process
6. Receiver- the one who decodes or receives the message
7. Output- the content of the message is decoded by the receiver.
8. Response – the reaction of the receiver to the message.
9. Feedback- the part of the receiver’s response that is transmitted back to the
sender.

Barriers to Communication in the Overcoming Communication

workplace Barriers
Physical barriers – Proximity aids in Using feedback – Asking them to give
communication and encourages comment or suggestion
closeness among co-workers. Using simple language – Avoiding
Perceptual barriers- Perception uncommon term or flowery words
refers to how people look at things. that may cause misinterpretation.
Emotional barriers-These barriers Active listening – listening well in
consist of fear, mistrust and order to grasp the full meaning of the
suspicious. communication.

70
 Cultural barriers- Cultural Controlling emotions- it is
differences among groups make important to practice emotional
communication difficult. restraint
Language barriers- People in Observing body language- Non
different countries do not speak the verbal cues must always be watched
same language. because , as the saying goes, action
Gender barriers-There are distinction speak louder than words.
on the speech patterns of men of
women that may cause
misinterpretations.
Interpersonal barriers-Interpersonal
relationships and personal attitudes
can be barriers to communication.

Directions: Modified True or False. Two statements are given.

If only the first statement is true, Answer is A
If only the second statement is true, Answer is B
If both statements are true, Answer is C
If both statements are false, Answer is D

_____1. Leadership is a process of inspiring and influencing a group of people to

achieve common goals. Motivation encourages individuals to work enthusiastically.
_____2. The Two Factor Theory of Motivation was proposed by McClelland. The ERG
Theory was developed by Alderfer.
_____3. Managers are advised to set goals for their subordinates. Target goals
should not be achieved at the end of the plans.
_____4. Change is considered by many organization members as threat. Fear of
change may be due to uncertainty, pessimism, and concern about personal loss.
_____5. Autocratic leaders are allowed team members to provide inputs before
making decision. Democratic leaders take sole charge in decision making and do
not consult other members.

Directions: Read and understand the case study. Write your answer in a
separate sheet.
CASE STUDY DIRECTING
Activity 11.1 EDSA RADIO AND TV COMPANY
Bong Tadiwan founded a small radio manufacturing plant in EDSA in 1991.
The business grew to become one of the nation’s largest radio, TV, and appliance
production companies. By 1999, its sales approached P300 Million with 15,000
employees and ten manufacturing plants. Throughout the company’s growth, the
founder was its active, imaginative, and driving force. In earlier days, he knew every

71
manager and worker are called by their first names. When the company grew fairly
larger, people still felt that they knew the founder and president, and this strong
feeling of personal loyalty helped make for the absence of a company union.
However, the company prospered, Bong Tadiwan worried that it was losing
its “small company” spirit. He also worried that his philosophies and objectives
were not understood by the employees and that duplications take place because of
poor communication of company policies among workers, thus affecting the
development and marketing of new products.
To solve the communication problem, he hires a director of communication
who reported to him, and together, they utilized all communication device other
companies use: bulletin boards in all company’s offices and plants; a revitalized
house newsletter carrying news items from all company plants; a company manual
for every employee giving significant information about the firm; profit-sharing
Scheme; company-sponsored courses on communication; monthly meeting at the
main office for the top executives; annual three-day meetings of 1,200 level-
managers and special committees to discuss.
After much time, effort, and expense. Mr. Tadiwan was disappointed to find
that his problems of lack of communication and the loss of “small company” feeling
still exist. In short, his measure failed significantly.

QUESTIONS:
1.Can you identify the problem? State the problem.
__________________________________________________________________
______________________________________________________________________
2.What do you think the reasons, that even there are several solutions made to
solve communication problem, still it does not work out? Explain your answer.
______________________________________________________________________
______________________________________________________________________
3.Can you recommend at least three solutions in this case?

Alternative 1 or Solution 1

Alternative 2 or Solution 2

Alternative 3 or Solution 3

4.Among the three alternatives or solutions which one will you recommend? Why?
Explain your answer briefly.
_________________________________________________________________________
_________________________________________________________________________

72
 MODULE 12

This module covers another function of management – Controlling. For the

successful management of an organization Controlling involves the establishment of
performance standards based on the company’s objectives, measurement and
assessment of actual performance based on the prescribed standards, and
implementation of necessary corrective and preventive actions.
Learning Competencies:
Apply the concept and nature of different control methods and techniques in
accounting and marketing
LC Code: ABM_AOM11-IIf-h-34 to ABM_AOM11-IIf-h-37

These lessons will explain understanding that controlling is essential in the

acquisition of money and its useful disbursement. It requires identification and
reinforcement of the firm’s priorities and understanding how its operations are
going to ascertain where improvement is needed.
Lesson 12 -Definition and Nature of Management Control
Control Methods and System
Application of Management Control in Accounting
And Marketing Concepts and Techniques

At the end of this module, you are expected to:

1. discuss the nature of controlling;
2. describe the link between planning and controlling;
3. identify and discuss control methods and system; and
4. relate management control to accounting and marketing concepts and
techniques.

Lesson
Controlling the Organization
12

Controlling is one of the important functions of a manager. In, order to seek

planned results from the subordinates, a manager needs to exercise effective
control over the activities of the subordinates. In other words, the meaning of
controlling function can be defined as ensuring that activities in an organization
are performed as per the plans
In earlier times, controlling was associated with the concept of just being a
corrective action. Present-day management, however, applies it as a foreseeing
activity that sets standards in determining actual performance to correct previous
decisions or actions. Therefore, management must focus on management control
and the control process.

73
1.Definition and Nature of Management Control
CONTROLLING - a management function involves ensuring the work performance
of the organization’s members are aligned with the organization’s values and
standards through monitoring, comparing, and correcting their actions.

CONTROLLING - is the process of measuring and correcting activities (plans,

organization, personnel, etc.) in an organization.

STANDARDS – any established measure of extent quantity, quality, or value.

NATURE OF CONTROLLING
Controlling is an ongoing process that involves members at all levels of the
organization. The control function is the responsibility of everyone to, thus
employees are expected to address problems s even if these are not within his or
her responsibility.
Controlling is also considered an end function because this is performed after all
other functions are done. It is also dynamic process because any deviations from
standards should be immediately corrected. Constant monitoring is a vital
component of the control process.
THE CONTROL PROCESS

1. Establishment of standard
2. Measure of performance
3. Comparison of actual performance with the standard
4. Taking corrective actions and realigning processes.

THE LINK BETWEEN PLANNING AND CONTROLLING

Planning and Controlling are closely related management functions.

PLANNING identifies the goals and standards that an organization should aim for
while CONTROLLING ensures that the performance of the whole organization
conforms to the outlined plans. CONTROLLING also provides management with vital
information that can be used in the formulation of new plans for the company.
PLANNING provides the baseline of the company’s future while
CONTROLLING becomes the tool that ensures the company’s success.

The failure of controlling would mean failure of planning, and success

of planning means success of controlling.

All forms of management controls are designed to give manager information

regarding progress, the manager use this information to:
1. Prevent crises
2. Standardization outputs.
3. Appraise employee performance
4. Update plans
5. Protect an organization’s asset

2.Control Methods and Systems

Control methods are used for measuring an organizations financial stability,
efficiency effectiveness, production output, and organizations member’s attitude

74
and morale. From the general point view, managerial effectiveness must be
concerned with the maximizing of the abovementioned factors that are measured
by the control methods.
Therefore, the challenge for present-day managers is to devise control
methods and system that are aligned and consistent and will help attain these
concerns.
METHODS OF CONTROL

A firm may apply control technique or methods which either quantitative

or nonquantitative.

A. QUANTITATIVE METHODS
Quantitative methods which make use data and different tools expressed in
members for monitoring and controlling production output.

Budgets and audits are among the most common quantitative tools.

Budgets remains the best-known control device. An organization’s budget is an

expression in financial terms of a plan for meeting the organization’s goals for a
specific period. A budget is an instrument of planning, management, and control.

Audits. Internal auditing involves the independent review and evaluation of the
organizations, nontactical, such as accounting and finances. As a management
tool, the audit measures and evaluates the effectiveness of management control.

Charts used as control tools

normally contrast time and
performance. A difference in
numbers is much more
noticeable when displayed
graphically.

B. NONQUANTITATIVE METHODS
Nonquantitative Methods refer to the overall control of performance instead of
only those of specific organizational processes.
These methods use tools such as inspections, reports, direct supervision,
and on-the-spot checking and performance evaluation or counseling to
accomplish goals.

OTHER CONTROL METHODS:

1. Feedforward control prevents problems because managerial action before

the actual problem occurs.
2. Concurrent control takes place while work activity is happening. The best
example of this type of control is direct supervision or management by
walking around.
3. Feedback control is control that takes place after the occurrence of the
activity. It is advantageous because the time the manager receives the
information, the problem had already occurred.

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 4. Employee discipline is a control challenge for managers. Enforcing
discipline in the workplace is not easy. Concerns regarding this include
workplace privacy, employee theft, and workplace violence, among other.
5. Project management control ensures that the task of getting a project’s
activities done on time, within the budget, and according to specifications, is
successfully carried out.

Various Control Methods and System in Monitoring and Controlling The

General Conduct Of Company Operations.

1. Administrative Control- This technique entails establishing procedures

and policies that ensure efficiency in the activities of the company.
2. Performance appraisal – This provides general impression of employee
performance.
3. Quality Control- This control method relies on the quality of products and
services as a basis for establishing performance standards, monitoring
results, and comparing results with standard.

3.Application of Management Control in Accounting and

Marketing Concepts and Techniques
Control is applied to many functional areas in the business organization,
particularly in Accounting and Marketing. These two departments generate
important information regarding the overall performance of the company.
The Accounting Department provides financial information that can help
determine the financial stability of the organization.

The Marketing Department, meanwhile, provides data on the company’s

sales performance.

Management control in accounting and finance is the control that make use of the
balance sheet, income statement, cash flow statement to analyze and examine
financial statements to determine the company’s stability.

On the other hand, management control in marketing is the control that

make use of projected sales or forecast, statistical models, econometric modeling,
surveys, historical demand data, and actual consumption of their products.

SALES is the ‘Lifeblood of the business”. No matter how good the product is,
if it is not sold in the market, there is no way that a business can survive.
ACCOUNTING OR FINANCIAL CONTROLS

Financial controls are important tools that determine whether the company is on
track toward achieving its financial goals.
Financial ratios are one of the control methods utilized in financial control.

These rely on information gained from financial statements, which are

formal records of the financial activities of the organization. The main types of
financial statements are the balance sheet and the income statement.

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BALANCE SHEET – Is a financial statement which is defined by most accounting
book as “snapshot” of any entity’ financial condition because it present the
financial balances of a particular period.
Contains the company’s assets, liabilities, and capital account.

Illustration of a Balance Sheet

Wendy Santos Company

Balance Sheet
December 31, 2019

Assets Liabilities

Cash P 80,000 Accounts Payable P 70,000

Accounts Receivable 10,000 Notes Payable 90,000
Land 140,000 Total Liabilities 160,000
Building 400,000 Owner’s Equity
Equipment 70,000 Santos, Capital 640,000
Vehicle 100,000 Total Liabilities and _________
Total Assets P 800,000 Owner’s Equity P 800,000

• ASSETS – are things or resources that the company owns. These include
things that the company has purchased or acquired.

• LIABILITIES-are the obligations of the company to creditors for past

transactions such as acquisition of raw materials and other debts.

• OWNER’S EQUITY OR STOCKHLDER’S EQUITY -shows the amount of the

capital the owners of the business have invested.
• Owner’s Equity is applicable for sole proprietorship
• Stockholder’s Equity is applicable for corporation

The standard formula for determining the financial status of the company using a
balance sheet is Asset = Liabilities + Owner’s Equity

INCOME STATEMENT – reports profit earned, or losses incurred by the company

over a given period.
contains information about the company’s gross income, expenses and profits.

Illustration of an Income Statement

WENDY SANTOS
Income Statement
For the Month Ended May 31, 2019

Revenues
Consulting Revenues P 67,700
Referral Revenues 4,000

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 Total P 71,700
Expenses
Salaries Expense P 15,600
Utilities Expense 4,400
Rent Expense 4,000
Depreciation Expense-Service Vehicle 4,000
Interest Expense 3,500
Supplies Expense 3,000
Insurance Expense 1,200
Depreciation Expense-Office Equipment 1,000
Total 36,700
Profit P 35,000

• REVENUE – This is the income from primary activities such as production

and selling of goods on the part of the manufacturer.
Sales Revenue refers to revenue gained from the sale of goods, by retailers,
distributors, manufacturers, and wholesaler.
Other revenue – comes from the secondary activities unrelated to the main
business-like rent from an idle warehouse or garage.
• EXPENSES- These are costs incurred in the operation of the business.
• NET INCOME – the income statement lists the revenues and expenses
incurred by the company, and the total expenses is subtracted from the
total revenues.
Profit – indicates the expenses are less than the income or total revenue.
Loss – If the expenses are greater than the revenue.

ACCOUNTING /FINANCIAL CONTROL RATIOS

Liquidity ratio- test the organization’s ability to meet short term obligations, it
may also refer to acid test done when inventories turnover slowly or are difficult to
sell.

Current ratio = current assets ÷ current liabilities

Leverage ratio – determine if the organization is technically insolvent, meaning

that organization’s financing is mainly coming from borrowed money or from the
owner’s investment.

Debt-to-assets ratio = total debt ÷ total assets

Activity ratio – determines if the organization is carrying more inventory than what
it needs; the higher the ratio, the more efficiently inventory assets are being used.

Inventory turnover = cost of goods sold ÷ average inventory

Profitability ratio- determines the profits that are being generated.

Net profit = after taxes ÷ total sales

78
 MARKETING CONTROLS

Control is also applicable in the marketing function since setting

performance standards is an important part of developing marketing objectives.

There are five types of marketing control:

1. Strategic control – This refers to processes implemented to control the
formulation and execution of strategic plans.
2. Annual plan control – This involves analyzing a company’s sales date to
determine trends and changes in sales figures and identify any discrepancy or
variance in performance.
3. Customer tracking – These are methods that determine customer behavior
and their reactions to marketing activities.
4. Profit control -This determines the profitability of company activities and
identifies where the company is making or losing money.
5. Efficiency control – This keeps track of the efficiency of marketing
expenditures such as sales force, advertising, sales promotion, and
distribution.

Directions: Identify whether the item is an element or type of accounting or

marketing control. Write A if related in accounting control, and M if it is related to
marketing control. Write your answers in a separate sheet.
_____1. Strategic control _____6. Market share analysis

_____2. Income Statement _____7. Balance Sheet

_____3. Net Income _____8. Long-term liabilities

_____4. Customer tracking _____9. Sales analysis
_____5. Current Assets _____10. Annual plan control

ACTIVITY 12.1 CONTROLLING

Directions: Describe briefly the possible errors and their remedial actions
affecting the four managerial functions. Write your answer in a separate
sheet.

FUNCTIONS and POSSIBLE

ERRORS/DEVIATIONS REMEDIAL ACTIONS
PLANNING
1.
2.

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 3.
ORGANIZING
1.
2.
3.
STAFFING
1.
2.
3.
LEADING/DIRECTING
1.
2.
3.

MODULE 13

This module discusses the different functional areas of management. This will
be beneficial to all persons who will one day join organizations-not just business
companies but also nonbusiness organizations such as government, educational and
health care institutions, and other non-profit organizations.

Learning Competencies:
Explain the nature and role in the firm of the following functional areas of
management:
a. Human Resource Management
b. Marketing Management
c. Operations Management
d. Financial Management
e. Material and Procurement Management
f. Office Management
g. Information and Communication Technology Management
LC Code: ABM_AOM11-IIi-39

This module specifically discuss:

Lesson 13 - Introduction to the Different Functional Areas of Management

At the end of this module, you are expected to:

Explain the nature and role in the firm of the following functional areas of
management:

80
 a. Human Resource Management
b. Marketing Management
c. Operations Management
d. Financial Management
e. Material and Procurement Management
f. Office Management
g. Information and Communication Technology Management

Lesson Introduction to the Different

13 Functional Areas of Management

Different Functional Areas of Management

To prepare you to become a
future leaders and managers, you
must become familiar with the
functional areas of management. -
In doing so, you will be
ready for the local and global
challenges That you will inevitably
meet tomorrow’s workplace.
Managerial and leadership
functions are essentially the same
because all these aims to establish
an environment for the effective and
Retrieved from :https://www.slideshare.net/christinejoyjubacpilapil/chapter- efficient performance of an
8-introduction-to-the-different-functional-areas-of-management. Accessed individual s and cooperate with one
November 12, 2020
another in teams/groups of different
organizations.
The different functional areas of Management with basic functions of
management:

Human Resource Financial

Management MANAGEMENT Management
(POSDICON)

Marketing Planning Material & Procurement

Management Organizing Management
Staffing
Directing
Operation Controlling Office
Management Management

Information and Communication Technology

Management

Management

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 HUMAN RESOURCE FUNCTIONS OR ROLES OF HUMAN
MANAGEMENT MANAGEMENT
HUMAN RESOURCE MANAGEMENT 1. Conducting Job Analysis
is the process of attracting, training, 2. Planning Labor and recruiting
developing, and maintaining an 3. Selecting candidates for the job
excellent workforce. 4. Orienting and training new
HUMAN RESOURCE MANAGEMENT employees
Is the process of planning, organizing, 5. Managing compensation or pay.
staffing, directing, controlling the 6. Providing incentives and benefits
human/personnel activities. 7. Evaluating employee’s performance
HUMAN RESOURCE also known as 8. Communicating
human capital, drive the performance 9. Developing employees
of organization s along with other 10. Building employee commitment
resources. 11. Providing good working conditions
HUMAN RESOURCE MANAGERS – 12. Handling grievances and industrial
recruits, conducts interviews, and manage relations
benefits based on company policies.

MARKETING MANAGEMENT FUNCTIONS OF MARKETING

MANAGEMENT
MARKETING MANAGEMENT is the 1.Analyzing, planning, implementing,
process of managerial planning and and controlling of goods, services and
carrying out of the conception, pricing, ideas to create exchanges that satisfy
promotion, and distribution of ideas, customer needs and company goals.
goods, and services in order to bring 2.Management of marketing resources.
about exchanges to satisfy individual Such as salespeople, advertising,
and organizational goals. marketing research.
(As defined by the American Marketing Advertising is any system of
Association) attracting public notice to an event the
MARKETING MANAGEMENT is the desirability of commercial products for
process of planning, organizing, sale.
staffing, directing, and controlling the 3.Analyze plan and implement
marketing activities. marketing programs that aim to bring
MARKETING MANAGERS- are tasked about an expected level and mix of
of developing strategies for the brand business dals with target markets.
analyzing the demand for the product 4.Stimulate demands for the products
or services. of the company.
They also identify potential 5.Make crucial decisions that will
markets, distributors, and ensure the company’s competitiveness.
competitors. 6.Make sure that marketing
MARKETING MANAGERS are also techniques employed are efficient,
called product managers or brand effective, and socially responsible and
managers. ethical.

OPERATIONS MANAGEMENT FUNCTIONS OF PRODUCTIONS

MANAGEMENT
OPERATIONS MANAGEMENT 1.Overseeing the transformation
The study of how goods and services are processes that change resources into
produced in an organization. finished goods and services.

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OPERATIONS MANAGEMENT is the 2.Improvement of productivity and
process of planning, organizing, directing, and competitive advantage.
controlling the production activities.
PRODUCTION is the creation of anything Productivity measures the efficiency
of value such as goods, services, or ideas by which inputs are turned into
that people want are willing to pay for. outputs.
PRODUCTION in reference to
manufacture, is the processing of 3.Managing the sequence of activities
materials into a new expected form. and information along the whole
PRODUCTION MANAGERS – deal with course of the value chain.
the resource and service requirement s of
manufacturing of production.
Their managerial tasks are
production scheduling, procurement,
maintenance, equipment, and facilities
repair.

Retrieved
from:https://masterstart.co
m/blog/financial-
management/financial-
management-overview/
Accessed November 17,2020

FINANCIAL MANAGEMENT FUNCTIONS OF FINANCIAL

MANAGEMENT
FINANCIAL MANAGEMENT - is 1.Taking charge of the company’s
the management and custody of the financial policies and strategies,
organization’s funds, seeing to it that investments, capital structures, and
funds are effectively and efficiently dividend policies.
utilized in order to provide for all the 2.Financial Management and control.
needs of the organization’s various 3.Financial Planning.
operating units.
FINANCIAL MANAGEMENT is the Financial Planning is the process of
process of planning, organizing, setting financial objectives and
directing, and controlling the financial determining what should be done to
activities. accomplish them. This includes:
FINANCE – is defined as the art and • financial forecasting
science of managing money. It can also • financial analysis
be defined as the effective acquisition • financial performance
and management of the assets of an evaluation
organization.
FINANCE MANAGERS- supervise all
finance operations. They raise funds,
invest assets, and manage them
effectively in economically unstable
environment.

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 MATERIAL AND PROCUREMENT FUNCTIONS OF MATERIAL AND
MANAGEMENT PROCUREMENT MANAGEMENT
PROCUREMENT MANAGEMENT is the 1.The proper utilization of money
process of planning, organizing, staffing, is extremely important to the
directing, and controlling the procurement survival of every individual and
activities. company.
PROCUREMENT is the act of purchasing or
acquiring goods and services for company 2.Purchased materials and
use. Companies usually have a separate services include the biggest part of
department for procurement which is called expenditures in most companies.
the Purchasing Department.
Purchasing department is in charge in 3.The investment in raw materials,
acquisition of materials and resources for parts, and supplies inventory in
the different departments in the some companies is essential, and
organization. the efficient management of such
PROCUREMENT MANAGERS OR inventory can contribute to profit.
PURCHASING MANAGERS – supervise the
procurement process of the company. They
evaluate and approve for acquisition and
ensure that materials purchased are of
good quality and purchases at competitive
price.

OFFICE MANAGEMENT FUNCTIONS OF

OFFICE MANAGEMENT
OFFICE MANAGEMENT - Involves the 1.Determining the complete course
proper handling maintenance of the action to accomplish the work.
clerical aspects of all the functional
departments of the organization, as well as 2.Providing an effective office
facilitation of proper communication, organization
coordination, and storage of data.
OFFICE MANAGEMENT is the process of 3.Inspring the office personnel to
planning, organizing, staffing, directing, do their best.
and controlling office activities and those
performing them in order to achieve
determined objectives
MIDDLE MANAGERS OR SUPERVISORS
perform a number of roles related to office
management, such as coordinating with
support services, and ensuring that
deadlines are met, and efficiency is
maintained in their respective
departments by formulating appropriate
strategies.

84
 INFORMATION AND FUNCTIONS OF INFORMATION
COMMUNICATION TECHNOLOGY AND COMMUNICATION
MANAGEMENT (ICTM) TECHNOLOGY MANAGEMENT
(ICTM)
THE MANAGEMENT OF INFORMATION
AND COMMUNICATION TECHNOLOGY 1.Developing the organization’s
that collects, organizes and distributes hardware, hardware, software, and
data to be used in the organization’s other computing and communicating
decision- making function. technology.
Information Systems are now
indispensable tool in conducting 2.Developing the organization’s
business. Mangers can utilize these in management information system
accessing and managing the crucial (MIS) tailored to the needs of the
information that they need to perform firm’s units.
their management functions.
Information technology is extensively 3.Encouraging e-commerce through
used in business operations, with many Internet use.
of the information regarding processes,
personnel, clients, suppliers, and market
statistics now provided in electronic
formats for easy access and exchange.
INFORMATION SYSTEM MANAGERS
take charge of establishing an
information system, managing its
components and programs, and
rendering technical support to the
various departments in the organization.
Their tasks include software and
hardware management, networking, and
internet maintenance.

Directions: Matching. Match the items in Column 1 with the items in Column 2.
Write only the letter of the correct answers in a separate sheet.

COLUMN 1 COLUMN 2
1.Information Communication a. Their tasks include software and
and Technology Management hardware management, networking, and
(ICTM) internet maintenance.
2.Marketing Managers b. They raise funds, invest assets, and
manage them effectively in economically
unstable environment.
3.Human Resource Management c. Is the process of planning, organizing,
staffing, directing and controlling the
procurement activities.
4.Financial Management d. Is the process of planning, organizing,
staffing, directing, controlling the
human/personnel activities.
5.Information System Managers e. Providing an effective office organization.

85
6.Office Management f. Is the process of planning, organizing,
directing, and controlling the financial
activities.
7.Material and Procurement g. They are also called product managers or
Management brand managers.
8.Finance Managers h. Oversee transformation of resources into
finished product.
9.Marketing Management i. Stimulation of demands for company’s
product
10. Operations Management j. Collect, organize, and distribute date
needed for the firm’s decision-making
function.

ACTIVITY 13.1 Different functional areas of Management

Directions: Think of a business proposal. Give some activities affecting the

various areas of management. Write your answer in a separate sheet.

BUSINESS PROPOSAL:______________________________________________________

AREAS OF
MANAGEMENT ACTIVITIES

Production
Management

Marketing
Management

Financial
Management

Human
Resource
Management

86
 MODULE 14

This module highlights the discussion on the significant role of the small
businesses in the Philippine Economy and encourage the students to apply their
skills and engage in business through the formulation of business plan.

These lessons will explain understanding of starting small business in the country:

Lesson 14 Special Topics in Management

Small business Management and Entrepreneurship
Family Business Enterprise
Starting a Business Legal Forms and Requirements

Learning Competencies:
Explain the steps and importance of starting a family business
Learning Code: ABM_AOM11-IIj-40
ABM_AOM11-IIj-41
ABM_AOM11-IIj-42

At the end of this Modules, you are expected to:

1. explain how to start family business;
2. appreciate the role of small/family business operation in the improvement of
one’s economic status; and
3.identify legal business forms and requirements.

Lesson
14 Special Topics in Management

1.Small Business Management and Entrepreneurship

ENTREPRENEURSIP AND MANAGEMENT

Innovative, creative, and intuitive thinking in business management helps
entrepreneurs come up with great ideas or new strategies that may lead to the
successful achievement of their goals-service, growth, and profitability.

87
ENTRPRENEURSHIP innovative, creative, risk-taking, growth-oriented behavior
that brings new opportunities for individuals or organizations to start new
businesses and to produce new products or services that are beneficial to society.

ENTREPRENEURSHIP also has socio-economic contributions. It provides

employment, not only to the entrepreneur, but to fellow Filipinos. Thus, helping
ease unemployment. Entrepreneurship provides additional sources of taxes for the
government, hence contributing to Philippine economic progress.

ENTREPRENEUR is an individual who establishes a business for the purpose of

achieving profit. He or she identifies opportunities and acquire s and organize the
resources. Needed for such business. Most entrepreneurs start small. Successful
entrepreneurs can easily spot a business opportunity and capitalize on that
opportunity to gain maximum profit. Entrepreneurs, now adays come up with
innovative ideas and approaches in business, often redefining traditional ways of
doing business.
ENTREPRENEURIAL PROCEDURE INCLUDES THE FOLLOWING:

1. Formulate the business Vision-Mission Statements

2. Segment the market into:
a. Geographical – market segmentation may be used on location (city,
province, region, or country: north, south, east and west)
b. Demographical – bases consider population and further be extended to
include age, income, education, marital status, and other related
information.
c. Psychographical – psychographics looks into people’s behavior toward
purchasing or spending, or toward a product or service.
d. Behavioral – segmentation may be based on people’s behavior toward
purchasing or spending, or toward a product or service.
3. Find the Target Market
4. Understand the environment – internal and external environment
5. Develop the business plan
Business plan is a road map which the business must follow utilizing the
resources at hand while keeping the environment in mind.
6. Implement and monitor the business venture
7. Maximum the utilization of human resources.

2.Family Business Enterprise

Nowadays, there are many successful family businesses run by entrepreneurs
who have different stories to tell and different strategies for their business success.
However, they have possessed some common characteristics such as creativity,
innovativeness, service orientation, and the ability to take risks and do hard work,
among others There are stories wherein ordinary family members despite of starting
with meager capital, have persevered to produce competitive products or render of
good services that brought them success in their chosen business endeavor.

• SMALL BUSINESS a business that has fewer r than 100 to 500 workers
(depending on the prevailing commercial law in a particular country ) ,
independently owned operated , and financed; not always entrepreneurial in
orientation and does not dominate its industry; capital is low but capable of

88
 producing goods or rendering services designed to satisfy particular needs of
customers.
• FAMILY BUSINESS a business owned and financially controlled by
members of the family.
• ENTERPRISE any projected task or work, an undertaking
THE FAMILY BUSINESS ENTERPRISE
Families owning businesses are common around the world. It is estimated
that about 65% of registered business worldwide are owned by families. The
Philippine business sector is dominated by well-known family-owned businesses,
and about 80% of business enterprise in the country are run by families.
Among the most famous of Filipino business families are the Sy family,
owners of SM Investments and SM Prime Holdings; the Lopez’s, who owns Lopez
Holdings and ABS-CBN; the Gokongwei’s of Universal Robina, Robinson’s, and
Cebu Pacific; and the Ayala Family of Ayala corporation and Globe Telecom.
.
CHARACTERISTIC OF FAMILY-OWNED BUSINESS

• The primary characteristics of a family business is that its owners consider

the business as a legacy that will be passed on to the next generation.
• Family- owned business consider the long-term perspective with regards to
the performance of the business.
• Family owners aim to maintain and improve the performance of the business
and allow the next generation to reap and re-sow the fruits of the company’s
success.
• The family- owned business is also viewed not merely as an organization,
but an extension of the family where each member is given great importance.

3.Starting a Business: Legal Forms and Requirements

The legal form of business is determined by its ownership or proprietorship. A
business may be a single proprietorship, a partnership, a corporation or a
cooperative.
WHY AND WHERE WE SHOULD A BUSINESS BE REGISTERED?
BUSINESS REGISTRATION is a government requirement that orders new
business owners to furnish government agencies with necessary information prior
to the legal operation of their business organization.
Businesses or entrepreneurial ventures must be registered in compliance to
Philippine Laws. Without proper registration in authorized government agencies, the
business cannot operate legally. Registering also give credibility to business, hence
helping earn the trust of customers, suppliers, partners, and other stockholders.

REGISTRATION DOCUMENTS SHOULD BE SUBMITTED TO THE:

• Department of Trade and Industry (DTI) and the Securities and Exchange
Commission (SEC) for commercial registry;
• Barangay office for clearance and securing community tax certificate;
• City mayor’s office for the mayor’s permit and license to operate;
• City or national government agencies for sector- specific licenses/permits;
• Bureau of Fire Protection (BFP) for safety clearance
• Bureau of Internal Revenue (BIR) for taxation purposes;

89
 • Pag-IBIG Fund (Home Development Mutual Fund)office for employee’s
housing needs/security; and
• The Department of Labor and Employment (DOLE) for labor statistics
REGISTRATION OF THE LEGAL FORMS OF BUSINESS
Future entrepreneurs must contact the government agencies concerned
regarding their updated or revised rules and regulations as well as latest legislations
that may have to be complied with.

SINGLE PROPRIETORSHIP Single Proprietorship Registration

Single Proprietorship – a business 1.Business name registration with the
owned by one person only. DTI
In single proprietorship the owner 2.Submission of two recent 2x2 ID
and the business are considered one, pictures
meaning the owner’s income and the 3.Submission of Filipino citizenship
business income are one and the same proofs examples of needed evidence are
and the same and the business income birth certificates, passport and voter’s
is taxed as personal income. ID among others
Decision-making is the sole 4. Payment of application fee for
responsibility of the owner and if it processing fee plus documentary stamp
succeeds, he gets all the profits. If it amount
fails, he suffers the losses and has to
pay all debts incurred.
PARTNERSHIP Partnership Registration
PARNERSHIP is business formed when 1.Filing of the previously prepared
two or more persons formally agree to partnership agreement by two or more
be joint owner of a business. applicants with the SEC.

Their resources (money and other 2.Payment for the filing fee
assets and talents (skills, experience,
management expertise) maybe pooled 3.Valuation of the application by the
together. lawyer and staff of the Corporate and
Legal Department of SEC.
All partners share the profits equally,
unless otherwise specified in their 4.Release of the approved application
partnership agreement. (within 15 to 30 days)
CORPORATION Corporation Registration
CORPORATION is a business company 1.Filing of the previously prepared
involving five or more persons owning articles of incorporation and by-laws
it. and bank certification regarding
The corporation is registered and stockholder’s share of stock s with SEC
recognized by law as a “legal person”
that has legal rights and 2.Payment of the registration fee
responsibilities, can be sue or be sued
in court, can own and sell properties, 3.Valuation of the application by the
and can transact/enter into contracts. lawyer and staff of the Corporate and
Ownership is divided into units known Legal Department of SEC
as “shares of stocks” and owners are
called stockholders. 4.Release of the approved application
A board of directors, elected by the (within 15 to 30 days)
stockholders on a regular basis,
manage the corporation which is run

90
 according to term specified by their by-
laws and articles of incorporation.

COOPERATIVE Cooperative Registration

Cooperative is group enterprise made 1.Submission of four copies of previously
up of several traders, consumers, and prepared economic survey with a general
producers who interested to produce or statement that describes the cooperatives’
trade as a group. structure, purpose, economic feasibility,
operation area, and membership size, among
The cooperative original purpose was others to the Cooperative Development
to supply those involved with good and Authority (CDA)
services at lower cost as compared to 2.Submission of four copies of
those bought from retailers. previously prepared articles of
cooperative agreement together with
A group of officers, called board of the bonds paid for accountable officers.
directors and committee, headed by 3.Submission of four copies of the
chairman, manage the cooperative cooperative’s by-laws
activities. 4.Payment of registration fee prescribed
by CDA
5.Release of approved registration on
specified dates.

Directions: Arrange the steps involved in the Entrepreneurial Procedure or

Process according to its chronological order. Number the first step 1 and the last
step 7.
______ a. Find the target market
______ b. Develop the business plan
______ c. Understand the environment
______ d. Implement and monitor the business venture
______ e. Segment the market
______ f. Formulate the business vision and mission statements
______ g. Maximize the utilization of business resources

ACTIVITY NO. 14.1 SPECIAL TOPICS IN MANAGEMENT

Directions: Analyze the situation and write an essay discussing the questions
that follow. Write your answer in a separate sheet.

91
 IF YOU WERE THE MANAGER
A high-level manager in an information technology firm was invited by his friend
to join a start-up business that will produce an application software to help
Filipinos manage their everyday finances. The manager was told that his
experience in overseeing a IT-based company will be immense or enormous
value to start-up. The manager was hesitant since it would mean leaving the
company where he worked in for two decades.

7Discussion Questions
1. If you were the manager, will you take the chance and join the start-up?
Why or why not?
2. What information would you need from the start-up business to further
clarify your choice whether to join the company or not?
3. What advice would you give the entrepreneurs to guide them in their
start-up business?

POST TEST: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.
1. A functional area of management responsible in financial management and
control.
a. Office Management c. Financial Management
b. Marketing Management d. Operation Management
2. A road map which the business must follow utilizing the resources at hand
while keeping the environment in mind.
a. Business Plan c. Tactical Plan
b. Marketing Plan d. Strategic Plan
3. The process of acquiring and developing human resources to carry out and
perform various activities of the organization.
a. Scanning c. Organizing
b. Planning d. Staffing
4. Is the procedure for determining the duties and skill requirements for a job or
position, as well as other qualifications sought for in an employee or applicant.
a. Job Specification c. Job Analysis
b. Job Description d. Job Position
5. A management function involves ensuring the work performance of the
organization’s members are aligned with the organization’s values and standards
through monitoring, comparing and correcting their actions.
a. Planning c. Controlling
b. Staffing d. Organizing

92
6. Are used for measuring an organizations financial stability, efficiency
effectiveness, production output, and organizations member’s attitude and morale.
a. Control Methods c. Feedback Control
b. Financial Control d. Feedforward Control
7. Theory of motivation which predicts that employees are motivated to work well
because of the attractiveness of the rewards or benefits that they may possibly
receive from a job assignment.
a. Scientific Management Theory c. Equity Theory
b. Expectant Theory d. General Administrative Theory
8. Gift, prize, or recompose for merit, service or achievement which may have a
motivating effect on the employee.
a. Rewards c. Promotion
b. Salary d. Compensation/wage
9. Refers to process of social influence that enables a person to encourage others
and enlist their aid and support.
a. Motivation c. Communication
b. Leadership d. Controlling
10. Is important in organizing jobs, it can take several forms: verbal, written and
expressed or body language.
a. Directing c. Motivation
b. Controlling d. Communication

Module 1-8
10. A C 5. C 5. 6. Agree
10. A D 5. 9. D B 4. A 4. 5. Disagree
9. B B 4. 8. B C 3. B 3. 4. Agree
8. D C 3. 7. C A 2. C 2. 3. Agree
7. C B 2. 6. D B 1. D 1. 2. Agree
6. A C 1. 1.Disagree
POST TEST What’s More What’s More
PRE-TEST Module 1 Module 2
Assessment
What I Know
X 5.
O 4.
O 3. 5. True 5. PD
5. TF 10. T
9. W X 2. 4. True 4. PD
4. WF 8. W O 1. 3. True 3. PD
7. T 2. True 2. NPD
3. PF 6. S 1. NPD
What’s More 1. False
5. T What’s More
2. SF What’s More
4. X Module 4
3. O Module 5 Module 6
1. EF
2. S
What’s More 1. T
What I Can Do 5. R
Module 3 Module 3 4. W
3. R 5. M
2. W 4. T
1. R 3. M
What’s More 2. M
1. T
Module 7
What’s More
Module 8

93
 94
What’s More What’s More
3 A 1. J
5 B 2. G
Assessment 4 C 3. D
6 D 4. F
POS TEST 5. A
2 E
1 F 6. E
1. C 6. A 7. C
7 G
2. A 7. B 8. B
3. D 8. A 9. I
4. C 9. B 10. H
5. C 10. D
Module 14 Module 13
What’s More What’s More What’s More What’s More
1. M 1. C 1. F 1. C
2. A 2. B 2. T 2. A
3. A 3. A 3. F 3. B
4. M 4. C 4. F 4. D
5. A 5. D 5. T 5. C
6. M
7. A
8. A
9. M
10. M
Module 12 Module 11 Module 10 Module 9
What I Know
PRE-TEST
1. D 6. D
2. C 7. C
3. B 8. A
4. A 9. C
5. B 10. A Module 9-14
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96
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