Management Midterm Reviewerx

5 functions of management = w/out one of them, your goals won’t be complete

1. Planning
2. Organizing
3. Staffing
4. Leading
5. Controlling
*A company needs assets (owns them)
*A company owes liabilities
*Equity is what the owner owns
* Very important to have goals
*You must be EE
 Efficiency = doing things right
 Effectiveness = doing the right thing

Evolution of Management Theories & Definition of Management

 Management
- the process of coordinating and overseeing the work performance
of individuals working together in organizations so that they can
accomplish their goals efficiently and effectively

 Management Theories
- set of general rules that guide managers to manage an organization

1. Scientific Management Theory

- Business should be systematic
- Focused on increasing labor efficiency and productivity primarily by
managing the work of employees in the organization’s technical care
- There must be control to do things efficiently
 Frederick Taylor (1856-1915)
- considered “father of scientific management”
- observed how employees work differently
happy  productive
- believed in the “science of work” – underlying laws/principles that
govern various work activities
- believed in the economically-motivated “mutuality of interest” of
employees and managers
- develop the science of work (“ONE BEST WAY”)
- emphasize an absolute adherence to work standards
scientifically select, place, and train workers
- develop and maintain friendly labor-management relations
2. General Administrative Theory
- concentrates on manager’s functions and what makes up good
manager practice
- organizations were viewed as giant machines created to achieve
goals
 Henri Fayol (1841-1925)
- believed that management is an activity that all organizations must
practice and viewed it as separate from all other organizational
activities (marketing, finance, research & development)
 Max Weber (1864 – 1920)
- envisioned an organization managed on an impersonal and rational
basis
- organizations must have authority structures & coordination with
others
- Goals of bureaucratic model:
 speed
 precision
 order
 unambiguity
 continuity
 predictability
 Structure of Bureaucratic Model
- division of labor (functional specialization)
- well-defined hierarchy of authority (centralization of authority)
- system of rules for employees & work procedures
- impersonal organization relationships
- selection & promotion solely on competence
- career employment and well-defined promotion path to top of
organization
- organizational transactions extensively documented
3. Total Quality Management (customer satisfaction and quality products)
- a management philosophy and way of managing with the goal of
getting everyone committed to quality, continuous improvement, and
the attainment of customer satisfaction by meeting or exceeding
customer expectations
 TQM Pioneers
o Edwards Deming & Joseph Juran
 customer-oriented idea (at first, Americans didn’t immediately
support it; Japanese enthusiastically implemented it & got
recognized for quality products
 TQM assumptions
 quality products are less costly to produce than poor quality
products
 people (employees) care about quality & improving the quality of
their work
 organizations are systems of interdependent parts and quality
problems cut across functional lines
 quality and continuous improvement are vital to the long-term
health and survival of an organization
 4. Organizational Behavior Approach (employee contribution to achieve a
goal)
- an organization was viewed as a social system of people-to-people and
people-to-work networks in which employees have both social needs
and the desire to make meaningful contributions toward the
accomplishment of organizational goals
 Behavioral School Contributors
o Robert Owen (1771- 1858)
 progressive industrialist who recognized need for good overall
management of an organization’s human resources
o Hugo Munsterberg (1863-1916)
 father of industrial psychology and its use to enhance
organizational effectiveness
o Mary Parker Follet (1868-1933)
 asserted that managers’ influence and power that should flow
from their knowledge and skill
o Chester Barnard (1886-1961)
 provided invited into the concept of formal (consciously created)
and informal (spontaneous) organizations within firms

 The Human Relations Model

 a management that views the employee as socially motivated and
operates from the assumption that a social need-satisfied worker
is a productive worker

Enhanced Worker
Worker Satisfaction
Performance

 The Behavioral Science Influence

o Behavioral Science Movement
 a movement that stressed the need to conduct a systematic and
controlled field and laboratory studies of workers and their
motivation, attitudes, and behavior
 introduced the growth model of the employee
 the movement eventually gave rise to organizational behavior as a
discipline

Levels, Skills & Functions of Management

 A manager
- an individual who’s in charge of a group
 Levels
1. Top – CEO, President
2. Middle – Admin manager, department head, school Principal
3. Supervisory – supervisor, lead secretary, department chair
 Skills
1. Conceptual – can find the cause-and-effect of a situation
2. Human – can understand, alter, lead, and control people’s
behavior
3. Technical – proficiency in performing an activity in the correct
manner with the right technique
- the job-specific knowledge required to perform a task
 Functions
1. Planning
- Basic function of management
 Plotting & jotting down of action plans, decisions in advance
- Planning is deciding in advance what it is to be done in the future
- Advantages of planning
o It focuses attention on desired objectives
o It helps minimize risk
o It improves efficiency
o It avoids confusion
o It encourages innovation and creativity
o It enables co-operation and group work
2. Organizing
- to organize a business means to provide it with everything useful to its
functioning - raw materials, tools, capital & personnel
- the process of bringing together physical, financial, & human
resources and developing productive relationship amongst them
for the achievement of the organization’s goals
- Importance of Organizing
o Sound organization facilitate growth and diversification
o Optimum use of human resources by matching work with
talent
o Maintain good harmonious structure in the office
 o Group activity is equivalent to social structure of organization
o It’s a mechanism of management to direct, controls &
coordinates the activities of the enterprise
3. Staffing
- it is concerned with the human resources of the enterprise
- it is concerned with acquiring, developing, utilizing, and maintaining
human resources
- it is a process of matching jobs with individuals to ensure right man
for the right job
- definition = the managerial functions of staffing involves manning the
organizational structure through paper & effective selection, appraisal
and development of personnel to fill the roles designed in to the
structure
- Importance of Staffing
o It helps in discovering and obtaining competent employees for
various jobs
o It improves the quantity & quality of output by putting the right
man for the right job
o It improves job satisfaction of employees
o It reduces cost of personnel by avoiding wastage of human
resources
o It facilitates the growth & diversification
4. Leading
- managers must supervise, lead, motivate, coach, train, guide, and
direct his/her team to efficiently & effectively
o key words: Supervision, Motivation, Leadership & Communication
- it reinforces positive influences that increase desired outcome
- it’s concerned with the execution of plans through organized action
- it’s also known as actuating or giving direction
- What is Direction?
o Direction = consist of the process & techniques utilized in using
instruction and making certain operations are carried out as planned
5. Controlling
- the measurement & correction of performance activities of
subordinates to make sure that the enterprise objectives and plans
desired to obtain them are being accomplished (Koontz & O’Donell)
- according to O’Donell, “Just as a navigator continually takes reading to
ensure whether he is relative to a planned action, so should a business
manager continually takes reading to ensure himself that his
enterprise is on the right course
- Steps:
1) Establishment of standard performance
2) Measurement of actual performance
3) Comparison of actual performance with the standards
4) Corrective action
The Firm and its Environment
 Environmental Forces & Environmental Scanning
o Environmental Scanning
- seeking for & sorting through data about the environment
o External Business Environment
- refers to the factors/elements outside the organization which may
affect, either positively or negatively, the performance of the
organization
o Internal Business Environment
- refers to the factors/elements within the organization which may
affect, either positively or negatively, the performance of the
organization
 Components of External Business Environment: (1) General & (2) Specific
1. General Business Environment
A. Economic Environment
- this refers to economic growth, interest rates, inflation, foreign
exchange rates, globalization of the economy and people’s purchasing
powers & habits
B. Sociocultural Environment
- this refers to the structure & dynamics of the individuals & groups and
their behaviors, beliefs, thought patterns and lifestyles, interpersonal
relationship, poverty, life expectancy, literacy, etc.
- this includes the customers’ changing values and preferences; customs
could also affect management practices in companies
- ex. Christmas season in the Philippines, increase in population of
Millenials and demand for real estate, Health conscious society gives
rise to fitness companies
C. Political & Legal Environment
- this refers to national and local laws, international laws and rules and
regulations that influence organizational management
- the government attracts investors and therefore would open a
significant opportunity for growth and expansion of an organization
D. Technological Environment
“You can’t stop the advancement in technology, but you can learn
to adapt to its changes”
- this involves the use of varies types of electronic gadgets & advanced
technology such as computers, robotics, microprocessors, and others
that have revolutionized business management
E. Competition/World & Ecological Environment
- this refers to the increasing number of global competitors and market
as well as the nature and conditions of the changing natural
environment
- products produced by companies must cater to the changing needs of
the people in the global community
- “Know the competitors” is the rule of thumb in the industry
 2. Specific Business Environments
 Stakeholders
- anyone likely to be affected by the activities of the organization
 Suppliers
- people who ensure the organization’s continuous flow of needed and
reasonably priced inputs or materials required for producing the
goods or rendering their services
 Pressure Groups
- special-interest groups that try to exert influence on the organization’s
decisions and actions
- ex. Food & Drug Administration, BIR, etc.
 Investors/Owners
- these people provide the organization with financial support, the
organization can’t exist without them
- they have a say on major decisions such as expansion, branching out
or developing new products
 Employees
- they execute all of the companies strategies and goals
 SWOT Analysis
- SWOT Analysis helps companies evaluate and assess issues inside and
outside the organization
*Strengths, Weaknesses, Opportunities, and Threats
- this analysis will help the organization determine what may assist the
firm in accomplishing its objectives, and what obstacles it must
overcome or minimize to achieve desired results
- A business analysis technique that your organization can perform for
each of its products, services, and markets when deciding on the best
way to achieve future growth
- Internal Analysis
Strengths
Weakness
- External Analysis
Opportunities
Threats
o Strengths
 Something that has a positive implication
 It adds value, or offers your organization a competitive advantage
 Includes tangible assets like capital, equipment, credit, established and
loyal customers, patents and other valuable resources
 What do you do well?
 What qualities or aspects persuaded our customers to choose our
product or service?
 What resources do we have at our disposal?
 What do others see as our strengths?
 What area are we seen as being experts in?
 What advantages do we have over our competition?
 o Weaknesses
 These are the characteristics of your product or service that are
detrimental to growth
 These are the things that detract from the value of your offering or place
you at a disadvantage when compared with your competitors
 What can be improved or altered?
 What do we do badly?
 How do we compare with others?
 How does our performance compare with our competitors?
 What have customers told us?
 What should we avoid?

o Opportunities
 Can occur for a variety of reasons and may result from changes within the
market, customer lifestyle changes, advances in technology, new
production methods, etc
 All of the opportunities you identify in the SWOT analysis will be external
to your organization and some may be time limited
 What trends or conditions may positively impact your organization?
 What opportunities are available to your organization?

o Threats
 These are the external risks an organization faces.
 External factors that are beyond your company’s control
 Allows the organization to make contingency plans and will ensure that
the company is not taken completely by surprise
 What trends and conditions may negatively impact your organization?
 What are your competitors doing that may impact you?

 Local & International Business Environment of the Firm

o Definition of terms:
 Cultural Intelligence – is an individual’s ability to favorably receive and
adjust to an unfamiliar way of doing things
 Monochronic cultures refers to cultures wherein people tend to do one
thing at a time; also; these cultures emphasize punctuality and sticking to
set rules
 Polychronic cultures are more flexible as regards to time; accomplishing
many different things at once is also common for these cultures

o Geert Hofstede’s Cultural Dimension Scorecard

 Is a framework developed for cross-cultural communication developed to
describe the effects of society’s culture on the values of the its members
and how these values relate to behavior
 Can help aid a business when it comes to analyzing and scanning the
environment
I. Power Distance
- The degree to which a society accepts or rejects the equal distribution
of power among people in the organizations and the institutions of
society
- Ex: US and Australia have lower power distance vs. Philippines &
India
 The use of “sir” and “ma’am” to refer to bosses and superiors by
subordinates in the Philippines shows respect for authority
figures
 In the US, they just refer to everyone including their bosses by
their nicknames and. or first names

II. Uncertainty Avoidance

- The degree to which a society is uncomfortable with risk, change
and situational uncertainty
- Ex: Managers in the US are risk takes versus those in Japan
III. Individualism-Collectivism
- The degree to which a society emphasizes individual
accomplishments versus collective accomplishments
- Team effort vs. Individual achievements

IV. Masculinity-Femininity
- The degree to which a society values assertiveness and feelings of
material success versus concerns for relationships
- Aggressive and Straightforwardness vs. Keeping Quiet and Accept
Defeat
V. Time-Orientation
- The degree to which a society emphasizes short-term thinking
versus greater concern for the future or long-term thinking

 Phases of Economic Development

o Definition of terms
 Economic Development:
 Is a total process which includes not only economic growth or the
increase in the given amount of goods and services produced by the
country’s economy but also considers the social, political, cultural and
spiritual aspects of the country’s growth
 Economic Development Phases:
 Are the distinct stages involved in the total process of economic
development in a particular country; these includes economic growth,
improvement of Human Development Index, availability of benefits
provided by science and technology, and the societal improvement of
the opportunities and general welfare of its members
 o United Nation’s Millennium Development Goals (sept 2000)

o Human Development Index

o Philippine Development Plan (2011-2016)

- “inclusive growth means, first of all, frowth that is rapid enough to matter,
given the country’s large population, geographical differences, and social
complexity. It is sustained growth that creates jobs, draws the majority
into the economic and social mainstream, and continuously reduces mass
poverty.” (NEDA)
- The PDP is focused on the following areas:
 Inclusive Growth
 Macroeconomic Policy
 Competitive Industry & Services Sectors
  Competitive and Sustainable Agriculture & Fisheries Sector
 Accelerating Infrastructure Development
 Towards a Resilient and Inclusive Financial Sector
 Good Governance and the Rule of Law
 Social Development
 Peace and Security
 Conservation, Protection, and Rehabilitation of the Environment and
Natural Resources
o Economic Development
- The MDGs, according to the UN are “the world’s time-bound and
quantified targets for addressing extreme poverty in its many
dimensions- income poverty, hunger, disease, lack of adequate shelter
and exclusion – while promoting gender equality, education and
environmental stability.”
- The MDGs and PDP can help guide the management of businesses in the
Philippine setting
- The PDP must be taken into consideration in order to deem management
as appropriate or country-specific

Forms of Business Organizations

 Sole Proprietorship
- A form of business with only one owner who operates the entire business
all by himself or employ employees
- Is owned and managed by one who assumes all risks of loss and receives
profits
- Simplest & most numerous form of business organization

Advantages Disadvantages

Easy to start Owner pays for everything in the

business
Low start-up costs *Unlimited Liability (total wealth can be
taken to satisfy debts)
Owner keeps all the profit Different to raise capital
Owner makes all the decisions Limited Size & Efficiency
Easy to close down Difficult to attract qualified employees

 Partnership
- A business being managed by 2 or more individuals (usually a maximum
of 20)
- Ideal to use if the business will have several owners
- Partners share liabilities and operate the business together
o General Partnership
- Partners share personal liability for business debts and can make a
decision that affects the whole business. P&L are divided according to an
agreement
 o Limited Partnership
- A partner is responsible for decision-making and can be held personally
liable for business debts & to the extent of each partner’s investment
o Limited Liability Partnership
- All partners have limited liability for the business debts has no considered
general partners. This type protects each partner’s personal assets and
each partner from debts incurred by other partners

Advantages Disadvantages

Capital is easy to raise More people to share in the profit

Profit & Losses are shared Conflict may arise from different personalities

Partners can combine expertise Unlimited liability for general partners

Spread workload Difficult to transfer ownership

 Corporation
- A business owned by multiple shareholders and is overseen by a board of
directors who were elected by the shareholders
- An entity with limited liability and is distinct from its owners because it
can borrow money, enter into contracts, pay taxes and be sued
- Shareholders gain profit through dividends or appreciation of stocks but
are not responsible of the company’s debts
- Can raise additional funds through sale of stocks, and can easily transfer
ownership by selling their shares of stocks
- Corporations are strictly regulated by government agencies and are more
costly to incorporate than other forms of business
- Subject to corporate tax

Advantages Disadvantages

Limited liability Double Taxation

Ease in Transfer of Ownership Extensive Paperwork

Potential for Expansion Termination is difficult

Exists even after owner dies/Unlimited life Initial cost to put-up is high
Stability Government regulations and reports
Skilled Managers
Business Plan
 What is a Business Plan?
- it’s a written document that describes in detail how a new business is
going to achieve its goals
 used by the Firm internally & externally
- Who reads the business plan? What are they looking for?
 Firm’s Potential Investors and Banks
 Will help convince potential investor if the business is worth
his/her investment and time
 Firm’s Company Management and Employees
 Will help move and operate in a purposeful manner
- it provides the reader everything he/she needs to know about the new
business venture

 Why write a Business Plan?

- a well-written Business Plan forces firms and entrepreneurs to think
through every aspect of the business
- help them identify possible opportunities that may help the firm grow and
succeed
- it helps the firm and entrepreneurs to focus on what they want to do, how
they will do it, and what they expect to accomplish
- a sound business plan will help entrepreneurs and firms to attract
potential investors and lenders
- serves as a record to monitor and compare results
- to obtain bank financing, investment funds, initial contracts
- to attract key employees
- to motivate and focus the firm’s management team

 Components of a Business Plan

I. Executive Summary
- a brief overview of the entire business plan
 a compact version of the big plan
- one of the most important parts of a plan as it’s sometimes the only
component that potential lenders and investors look at (due to time
constraints and busy schedules)
- ideally not more than 2 pages long
- key questions that should be answered by the Executive Summary:
 What will your product be?
 Who will your customers be?
 Who are the owners?
 What do you think the future hold for your business and your
industry?
- the summary should contain the following:
 Description of the business concept and the business
 The opportunity
 The target market
 The competitive advantage
 The team
 II. The Company and the Industry
- this section should provide a brief history and background of the
company
- it should also help potential and/or lenders have an idea on the size, scale,
scope and type of business
- The Company
 this part should contain and discuss the following information:
 Name of the Company
 Company Logo
 Vision & Mission of the Company
 Vision
- it outlines what the company wants to be
- it’s a long-term view and concentrates to the future

 Mission
- the reason to be
- why the company exists?
- why do we exist other than to make money?
 Mission & Vision
 Mission
Why we exist?
Defines what an organization is, why exists, its reason for being
Should answer the following questions:
 Why the company exists?
 Why do we exist other than to make money?
 Vision
what do we want to become and achieve?
It outlines what the company wants to be
It’s a long-term view and concentrates to the future
- The Industry
 This section describes the current landscape of the industry the
company belongs in
 Example:
 Serenitea
Milk Tea
Beverage Industry
 Scanning the Firm’s Environment
 Who are your competitors?
 What are the key success factors in the industry?
 What are the trends in the industry?
 Products and/or services
 This section describes in depth and in detail the products and
services of the company
 Describe your product/service
 List down the benefits of your product/service
 How your products and services are competitive?
Advantages over competition
  Menu/Product list
 This section provides an overview of each of the products and
services
Key features & Benefits
How they are developed
How much they will cost
Value they provide
Customer Target Market (Who’s your primary target
market)
III. SWOT Analysis
- Evaluate the internal strengths and weaknesses of the company
- Assess and analyze the different external factors that can affect the
company (Opportunities and Threats)

IV. Marketing Plan

- focuses on how the business will market and sell its products & services
- in this section, an organization needs to determine its USP or Unique
Selling Proposition
- identify your target customers (in detail)
- who are your customers?
 Age, Location, Gender
 Profile of target customers
 Income level
 Occupation
- Unique Selling Proposition
 It tells your target market exactly why you’re different, what you bring
to the table and why they should choose you, over the competition
 Without a USP, your product sinks into the shadows, barely able to
compete in the marketplace
 A strategy of differentiating a product or service by concentrating on
unique features that aren’t offered by competition
 What can your product or service do for me that others can’t?
- What is Marketing Mix?
 It’s the combination of marketing activities an organization engages in
so as to best meet the needs of its targeted market
 Getting these elements right enables the organization to meet its
marketing objectives and to satisfy the requirements of the customers
 This mix traditionally is made up of 4P’s
Product
Price
Place
Promotion
- Product
 What’s the product/service that is being marketed? What are we
trying to sell to customers?
 How and where will the customers use it?
  This segment should have the following information:
 Brand Name
 Product Variety
 Design
 Features
 Packaging
 Services
- Prices
 refers to how much you are going to charge your customers for your
product or service
 this is the quickest element of the mix to change for marketers, but
probably one of the first elements customers are going to notice
 when determining your product or service’s price, these items need to
be considered:
Material Cost
Manufacturing Cost
Competitor Pricing
Product value
Market conditions
- Place
 refers to the distribution channels used to get to your customers
 Where will your products/services be made available for your target
customers?
 Where is the ideal location for you to have your products and services
available?
 This section should include the following details:
 Location of your business
 Distribution
 Logistics
 Is it available online?
- Promotion
 this refers to the advertising & selling part of marketing
 is it about letting people know what you got for selling
 Purpose of Promotion is to get people to understand what your
product is, what they can use it for, and what they should want it
 The following methods are commonly used for promotions:
Advertising
Public Relations
Personal Selling
Sales Promotions

V. Management & Operations Plan

 Management Plan
- the Organization/Company and Key Personnel
 Who are the Top, Middle & Operational employees?
 What are their specific jobs description and responsibilities?
 Number of employees
 What specific skill does each one need?
  Structure of Company/Organization
- this section should answer the following questions:
 Who will manage the business on a day-to-day basis?
 What experience does that person bring to the business?
 What special or distinctive competencies?
 Is there a plan for continuation of the business if this person is lost
or incapacitated?
 Operational Plan
- the nuts and bolts of the business
- What’s involved in running the company?
- process flow for products/services
- Who are the different suppliers or third party companies that will affect
the company’s business? Raw materials?
- What are the different equipment and materials needed for the business?
- Location?
- Number of employees required? Manpower requirements?
- Salaries & Wages of manpower

VI. Financial Plan

- projected or “future” financial statements
 the idea is to write down a sequence of financial statements that
represent expectations of what the result of actions and policies
will be on the future financial status of the firm
- pro forma income statements, balance sheets, and the resulting
statements of cash flow are the building blocks of financial planning
 Pro Forma Financial Statements
- these are vital for any valuation exercises one might do in investment
analysis and planning. Remember, it’s future cash flow that determines
value
- financial modeling skills such as these are also one of the most important
skills (for those of you interested in finance of marketing) to develop
 The Income Statement
 Dated for a period of time
 For the year ended
 Multiple-step Format
Gross Profit
Operating Income
Income before taxes
Net Income
 Single-step Format
Total of all revenues and gains
Less the total of all expenses and losses
o Basic Elements of the Income Statements
a. Net Sales (Revenue)
b. Cost of goods sold (COGS)
c. Other operating revenue
d. Research and Development
e. Restructuring Charges
 f. Impairment Charges
g. Operating Expenses
h. Other income or expense (Gains or Losses)
 Net Sales
- Revenue from the sole principal goods or services sole to customers
- Shown net of discounts, returns, allowances
 COGS
- the cost of goods that were sold to produce revenue (cost of services in a
service company)
= UNITS SOLD + COST PER UNIT
 Other Operating Revenue
- reflects the nature of the business
- ex. Lease revenue; royalty revenue; finance charges; commission revenue
 Operating Expenses
 Selling Expenses
- result from the company’s effort to create sales
- ex. Advertising; Sales Commissions: Sales supplies used
 Administrative Expenses
- relate to the general administration of the company’s operation
- ex. Salaries; Insurance; Bad debt expense
 Other Income or Expense
- secondary activities not directly related to operations
- ex. Dividend Income; Interest Income; Gains (losses) from the sale of
assets; Interest Expenses

Planning Function Management

 Meaning of Planning
- planning is deciding in advance what to do, how to do it, when to do it,
and who to do it. It involves anticipating the future and consciously
choosing the future course of action
- according to Haimann, “Planning is the function that determines in
advance what should be done”

 Nature of Planning
- planning is goal-oriented; a primary function; all-pervasive; a continuous
process; forward-looking; involves choice; directed toward efficiency

 Importance of Planning
- focuses attention on objectives and result
- reduces uncertainty and risk
- provides sense of direction
- encourages innovation and creativity
- helps in co-ordination
- guides decision-making
- provide efficiency in operation
 Management Pyramid

s
Manager
Top

Managers
Middle

Managers
First-line

o Top (President, CEO, VP)

- Make long-range plans
- Establish policies
- Represent the company
o Middle (Controller, Marketing Manager & Sales Manager)
- Implement goals
- Make decisions
- Direct First-line managers
o First-line (Office Manager, Supervisor, Foreman)
- Implement Plans
- Oversee workers
- Assist Middle managers

 Planning Function
a. develop strategies for success (TOP)
b. set goals and objectives (MIDDLE)
c. develop action plans (FIRST-LINE)
 Hierarchy of Goals & Plans

 Strategic Planning
- a pattern of actions and resource allocations designed to achieve the
organization’s goals
- questions to ask:
1) Where will we be active?
2) How will we get there?
3) How will we win in the marketplace?
4) How fast will we move and in what sequence will we make changes?
5) How will we obtain financial returns?

 Tactical Planning
- a set of procedures for translating broad strategic goals and plans into
specific goals and plans that are relevant to a distinct portion of the
organization, such as a functional area like marketing

 Operational Planning
- the process of identifying the specific procedures and processes required
at lower levels of the organization

 Strategic Planning Process

1) Develop a Vision
2) Write Mission Statement
3) Perform SWOT Analysis
4) Develop Forecasts
 5) Analyze Competition
6) Set Goals & Objectives
7) Develop Action Plans

 Clarity of Vision
- Development
- Communication
- Execution
- Modification

 Managerial Forecasts
o Qualitative Forecasting
- Intuitive Judgments
- Consumer Research
o Quantitative Forecasting
- Historical Data
- Statistical Computations

 Competitive Analysis
- Differentiation
- Cost Leadership
- Focus

Goals Objectives

 Company Goals and Objectives

Boosts Motivation

Guid Sets
 Crisis Management
es Stand
o Minimize Damage
Acti ards
- Contingency Plans
vity
o Maintain Operations
- Open Communication
Clarifies Expectations
 Brainstorming
- powerful tool for design teams
- used to generate ideas in a group
- can be used on any sub-problem
- it’s best after knowing the main design requirements
 Broad, Long-range target/aim Specific, Short-range target/aim

 Planning Techniques and Tools

o Different Planning Techniques and Tools
A. Forecasting
- an attempt to predict what may happen in the future
- all planning types, without exception, make use of forecasting
- Qualitative vs. Quantitative
B. Contingency Plans
- plans that must be prepared by managers, ready for implementation
when things don’t turn out as they should be
- Contingency Factors called “trigger points” indicate when the prepared
alternative plan should be implemented
C. Scenario Planning
- Planning for the future states of affairs
- Long-term version of contingency planning
- Future state of affairs must be identified and alternative plans must be in
place to be able to meet the charges or challenges that may arise from
future scenarios
D. Benchmarking
- a planning technique that generally involves external comparisons of a
company’s practices and technologies with other companies
- main purpose is to find out what other people and organizations do well
and then plan how to incorporate these practices into the company’s
operations
o Internal Benchmarking & External Benchmarking
E. Participatory Planning
- 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
- creativity, increased acceptance and understanding of plans, and
commitment to the success of plans are the positive results of this
planning technique

Organizing
- all the objectives and goals established will all go to waste if effective
organizing, through development of a designed structure of roles, does
not follow
- to function well, organizations and firms need organizational structures
together with identified specific roles

 Definition of Terms
- Organization = a collection of people or groups of people working
together to achieve a common goal
- Organizing = a management function which involves assigning tasks,
allocating resources, and coordinating work activities in order to achieve
a common purpose
- Organization Chart = a visual representation of the organization’s
structure showing the different job positions in the firm and their
hierarchical arrangement for the purpose of dividing labor and providing
a picture of the reporting structures

 Differentiation of Organizations
o Division of Labor
- involves assigning different people in the organization’s different work
units
o Specialization
- the process in which different individuals and units perform different
tasks
 An organization’s overall work is complex and would be too much for
any individual, therefore, the bigger the organization, the more work
units or work divisions and specializations are to be expected

 Integration of Work Units

- Integration is another process in the organization’s internal environment
which involves the collaboration and coordination of its different work
units or work divisions
- Coordination refers to the procedures that connect the work activities of
the different work divisions/units of the firm in order to achieve its
overall goal
- the more highly differentiated one’s organization is, the greater the need
for integration among the different units

 Organization Structures
o Org Structure
- a system made up of tasks to be accomplished, work movements from one
work level to other work levels in the system, reporting relationships, and
communication passageways that unite the work of different individual
persons and groups
o Authority
- refers to the legitimate rights of individuals, appointed in positions like
president, VP, manager and the like, to give orders to their subordinates,
who in turn, report to them what they have done

 Types of Organization Structures

1. Vertical Structure
a. clears out issues related to authority rights, responsibilities, and
reporting relationships
b. owners of private business companies are said to have absolute
authority, even if other persons are appointed as managers in their
companies
 c. in corporations, the owners are the stockholders and they elect a
board of directors to manage the organization’s activities
- the most common business model in organization for much of the mid to
late 20th century-lines of authority branch outward from the top down
like a tree’s roots
- individual vice presidents direct the activities of the staff below them
according to specific lines of business
o Advantages
a) Defined chains of command and areas of responsibility
b) Employees advance through ability and performance on familiar,
known tasks
c) The career path of someone looking to advance “through the
ranks” is clearly understood
d) The longer one stays in a vertical organization the more in-depth
knowledge and expertise they gain over the course of time
o Disadvantages
a) They take longer to make decisions and information does not
always filter upward to management or down to front-line
personnel
b) Bureaucracy can become rampant as individual lines of business
become isolated from each other, develop separate cultures &
procedures and sometimes seek to justify unprofitable lines of
business
c) One level of organization can be in contract with another however
the levels below or above that contact are unaware of those
conversations that result in lost of communications or duplication
d) Communications with other departments can sometimes be
actively discouraged or seen as disloyalty below a “certain level”
 2. Horizontal Structure
- refers to the departmentalization of an organization into smaller work
units as tasks become increasingly varied and numerous
- started popping up more often – especially in the Dot-com companies of
the 1990’s – companies were too small to afford a large “vertical”
organization
- has relatively few layers of management between the CEO and the front-
line personnel
- it is thought that with fewer individuals in the chain of command,
decisions can be made more quickly
o 2 types of Departments
A. Line Departments
- deal directly with the firm’s primary goods and services’, responsible for
manufacturing, selling, and providing services to clients
B. Staff Departments
- support the activities of the line departments by doing research, attending
to legal matters, performing public relations duties, etc.
o 3 Approaches to Departmentalization
1) Functional Approach
- where subdivisions are formed based on specialized activities such as
marketing, production, financial management, and human resources
management
2) Divisional Approach
- departments are formed based on management of their productions,
customers, or geographic areas covered
3) Matrix Approach
- a hybrid form of the departmentalization where managers and staff
personnel report to the superiors, the functional manager and the
divisional manager
o Advantages
- speeds up decision making
- allows for more management flexibility and cross-training as individuals
work more closely with other areas
- eliminates bureaucracy because more people are talking to each other
across vertical lines of business
- increases a company’s flexibility when it comes to creating new products
or reacting to new market conditions
o Disadvantages
- workforce reductions that create loss of experienced managers
- the breaking up of specialized lines of business, thus reducing the
company’s ability to innovate
- uncertain career paths for aspiring managers
- perception that an individual who works in a small, flat organization lacks
necessary expertise in his or her particular specialty to truly excel
because effort is diluted
 3. Network Structure
- a collection of independent, usually single-function
organizations/companies that work together in order to produce a
product/service
- a newer type of organizational structure viewed as less hierarchical, more
decentralized, and more flexible that other structures
- managers coordinate and control relationships that are both internal &
external to the firm
- the concept underlying the network structure is the social network – a
social structure of interactions
- this structure relies on other organizations to perform critical functions
on a contractual basis
o Advantages
- Highly flexible without much managerial levels
- High individual participation and distinction
- Do more with less resources
- Crosses departmental and geographical boundaries
o Disadvantages
- Tough to manage numerous lateral relationships across many members
- Fragmentation makes it difficult to develop control systems
- Hard to maintain commitment of members over time – difficult to develop
employee loyalty
  Delegation
o What is Delegation?
- it refers to the assigning a new or additional task to a subordinate
- it may also refer to getting work done through others by giving them the
right to make decisions and take action
o What are the steps in Delegation?
1) Defining the goal clearly
2) Selecting the person who will be given the task
3) Assigning of responsibility
4) Asking the person assigned about his/her planned approaches to
accomplish the task objectives
5) Granting the assigned person the authority to act
6) Giving the assigned person enough time and resources to do the
task, while at the same time emphasizing his/her accountability
7) Check the task accomplishment progress
8) Making sure that the task objective has been achieved
o Pros and cons of Delegation

Advantages Disadvantages

It prevents work overload among It may cause laziness among organization

organization managers managers

It provides opportunities for employee or

It may encourage too much dependence
subordinates assigned to do the task to
on others
fully utilize their talents on the job

It leads to empowerment of employees or It may cause lack of control over priority

subordinates assigned to do the task management problems

It increases job satisfaction among the

It may cause low self-confidence among
assigned employees or subordinates, that
managers
may lead to better job performance
 Formal & Informal Organizations
o Formal Organizations
- organizations formed by the company owner or manager to help the firm
accomplish its goals; made up of formal groups (work groups/project
team/committee) similarly formed by company authorities to support
their activities and achieve their objectives
o Informal Organizations
- organizations that exist because of friendship or common interest; made
up of informal groups which exist for the members’ need for social
affliction
 o Pros & Cons
Formal Informal
Advantages
Fast communication due to the absence
Working systematically of standard operating procedures and
protocols
Established on and for the Gives importance to the psychological
organization’s objectives and social needs of employees
Top managers can solicit feedback
No duplication or overlapping of work directly from the employees on new
policies and plans
Efficient coordination among
departments

Implementation of chain of command

and professional relationship
Disadvantages

Delay in feedback and action due to the

More suspectible to rumor mongering
established chain of command

Ignores the psychological and social There is no systematic workflow in

needs of employees place
Emphasis on work only and overlooks
Difficulty in implementing new rules
the human relations, talents, and
and policies
creativity of employees
More emphasis on the individual
interest of each employee rather than
overall goal of the company

 Organization Theories & Applications

o Organizational Design
- the manner in which a management achieves the right combination and
differentiation and integration of the organization’s operations, in
response to the level of uncertainty in its external environment
o 2 types of Organizational Design
1. Traditional
- simple, functional, and divisional
2. Modern
- Team Design, Matrix-Project Design, and Boundary-less Design

o Types of Organizational Design: pertains to the usual or old-fashioned

ways
A. Traditional
1) Simple
- has a few departments, wide spans of control or a big number of
subordinates directly reporting to a manager
- Strengths
 Flexible
 Fast decision-making and results
 Clear accountability
- Weaknesses
 Risk that overdependence with over-dependence on a single
person
 No longer appropriate as the company grows

2) Functional
- groups together similar or related specialties
- functional departmentalization utilized and put into practice in an entire
organization
- Strengths
 Cost-saving advantages
 Management is facilitated because workers with similar tasks are
grouped together
- Weaknesses
 Managers have little knowledge of others units’ functions
 No longer appropriate as the company grows

3) Divisional
- made up of separate business divisions or units, where the parent
corporation acts as overseer to coordinate and control the different
divisions and provide financial and legal support services
- Strengths
 Focused on results
 Managers are responsible for what happens to their products and
services
- Weaknesses
 Possible duplication of activities and resources
 Increases cost and reduced efficiency

B. Modern: contemporary or new design theories

1) Team Design
- the entire organization is made up of work groups or teams
- its advantages include empowerment of team members and reduced
barriers among functional areas
- its disadvantages, including a clear chain of command and great pressure
on teams to perform
2) Matrix-Project Design
- a design where specialists from different departments work on projects
that are supervised by a project manager
- this design results in a double chain of command wherein workers have 2
managers – who share authority over them
- its advantage is that specialists are involved in the project
- its disadvantage is that task and personality conflicts
- Product Design = refers to an organization design where employees
continuously work on a project
3) Boundary-less Design
- a design where the design is not defined or limited by vertical, horizontal,
and external boundaries
- no hierarchical levels that employees, no departmentalization, and no
boundaries that separate customers, suppliers, and alter stakeholders
- its advantage is being flexible and responsive
- its disadvantage is both the lack of control and problems in
communication