HAND-OUTS

Objectives

At the end of the discussion, the students should be able to:

1. Define Business and Management

2. Know the different concepts and aspects of Business and Management
3. Understand the essence of Business and Management in our economy
4. Identify the relationship of Business and Management as a whole

First Topic: Business in General

Questions:

 What is Business?
Business is any legal activity involved in the production and distribution of goods
and services, aimed to meet the economic needs of consumers with an objective of
eventually earning profit.

 What is the relationship between Business and the Economy?

pays for the goods and services

produces goods and services

ECONOMY BUSINESS

provides the factors of production

pays for the factors of production

 What are the elements of a business system?

LAND
(Materials)

CAPITAL BUSINESS LABOR

(Money) ENTERPRISE (Manpower)

ENTREPRENEUR
(Management Skill)

Terms to be defined:
1. Land- pertains to all natural resources, including timber, minerals, petroleum, and
the land itself.
2. Labor- refers to the mental and physical input of the people who produce the goods
and services.
3. Capital- refers to the financial resources used for the operation of the business.
4. Entrepreneur- the businessman who buys and organizes the three factors of
production.

 What is Profit?
Profit is the difference between the income of the entrepreneur receives from
the sale of his goods and services and the expense he incurs to produce them.
(income-expenses)
It is the prime motivator in a capital system.

 Why people engage in business?

Businessmen want to earn profit, serve the community, and achieve prestige
because of a certain stimuli. These factors can be clearly explained and directly linked
with Abraham W. Maslow’s Hierarchy of Needs theory.

1. Physiological or Biological need- The essentials for survival, such as the need
for food, clothing, shelter, air, water, and sex.
 2. Safety need- The desire for security, stability, or protection against danger.
3. Social need- the need for group belongingness, affection, love, and
friendship.
4. Ego or self-esteem need- the need for self-recognition or group satisfaction.
5. Self-fulfilment need- the need for realization of personal goal and ambition.

 What are the kinds of business?

1. Industry- involves the conversion of raw materials into finished products or

goods and the application of labor upon raw materials so that greater usefulness
becomes possible after the process.

Two kinds of industries:

1. Extractive Industries- ex. Farming, fishing, mining.
2. Manufacturing industries- ex. Honda, Sony, San Miguel Brewery, etc.

2. Commerce- involves the process of buying and selling where the goods are
moved from the point of production to the point of consumption. Examples are SM,
Rustan’s, Robinsons, National Bookstore, etc.

3. Service enterprises- primarily concerned with the satisfaction of the needs

and wants of the consumers. Ex. Transportation companies, MERALCO, law offices,
repair shops, building contractors, etc.

 Phases of Economic Development

A. Means of Livelihood
1. Hunting and Fishing Phase
2. Pastoral Phase
3. Handicraft Phase
4. Agricultural Phase
5. Industrial Phase
B. Extent of Economic Activity
1. Household Economy
2. Village Economy
3. National Economy
4. International Economy
C. Medium of Exchange
1. Barter Economy
 2. Money Economy
3. Money and Credit Economy

 What are the legal forms of business ownership?

1. Sole Proprietorship- a form of business ownership organized and managed by
only one person.
2. Partnership- a business organization where two or more persons contribute
money, property or talent, to carry on a business. A partnership acquires a
juridical personality upon the agreement of the partners. Such agreement is
required to be in writing.
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.

 Advantages and disadvantages of the forms of business ownership

ADVANTAGES
1. Sole 1. Easy to set up/start
Proprietorship 2. Decision Making is left
(One Proprietor) entirely to owner
DISADVANTAGES
1. Demanding on owner’s
personal time.
2. Growth limited by
owner’s financial means

2. Partnership 1. Relatively easy to set up 1. Dissolution of

(Two or more 2. Checks and balances partnership by any personal
Partners) maintained with two rifts between partners.
parties around 2. Equal profit sharing
despite unequal attention
and time given by partners
to business

3. Corporation 1. Maximum Flexibility 1. Complicated setting up

(At least five 2. Limited liability of
Stockholders) individual share
3. Greater room for
professionalism
4. Dissolution is least
slightly to occur
5. Reduced tax burden to
the owners
process
2. Limited influence on
management by individual.
3. Tendency to
institutionalize bureaucracy
  What are the social and economic contributions of entrepreneurship?
1. Entrepreneurship creates employment
2. Entrepreneurship improves the quality of life
3. Entrepreneurship utilizes and mobilizes resources for greater national
productivity.
4. Entrepreneurship bring social benefits through the government

Second Topic: Nature and Concepts in Management

 What is 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 beings and other business resources.

The Meaning of Management

 Functions of Management
1. Planning- refers to the formulation of objectives, programs, policies, procedures,
rules and regulations, in order to achieve the goals of the business.
2. Organizing- is the grouping together of people, establishing relationships among
them, and defining the authority and responsibility that the personnel have in
the use of company’s material resources to attain predetermined goals and
objectives.
3. Staffing- involves filling and keeping filled the positions provided in the
organizations structure. It includes the recruitment, selection, compensation,
and training of employees.
4. Directing- this area of management involves motivation, leadership styles, and
approaches, and communication.
5. Controlling- is the process of measuring and correcting the activities of
subordinates and the company itself to assure conformity to plans.