Muntinlupa National High School – Main

Senior High School – Accountancy, Business and Management

ORGANIZATION AND MANAGEMENT

Module 1
BASIC CONCEPTS AND THEORIES OF MANAGEMENT

Introduction
As new businesses emerge and old businesses strive in the competitive business arena, careful
planning and good decision-making are neededby the business owners to thrive in today’s era . Studying
management will help understand how it improves a business owner’s ability to analyze data, improve
financial decisions and make better forecasting of the demand about the future. Management provides the
opportunity to learn how managers improve the competitiveness of their business by providing them with
skills that put them at an advantage.

In this lesson, you will learn the principles and concepts of management and how these help managers and
business owners in dealing with the changing business environment but also help them apply strategies to
create value for their customers.

Learning Objective:
At the end of this lesson, you should be able to:
• Explain the meaning, functions, types and theories of management

Activity 1.A
Read the excerpt from the background story of the famous fast food chain in the Philippines.

From Ice Cream Parlor to Fast Food Empire: Tony Tan Caktiong’s Story
“From modest beginnings to the top of the world” are the words that succinctly sum up Tony Tan Caktiong’s story,
today president and CEO of Jollibee® Foods Corporation, the biggest fast food restaurant chain in the Philippines.

Born in a poor family who migrated from southeastern China to the Philippines in search of a better life, he became
involved in the restaurant business from an early age when his father opened a restaurant. The restaurant became
profitable with the help of all family members and this success enabled Mr. Caktiong to pursue a degree in chemical
engineering in Manila.

At the age of 22, inspired by a visit to an ice cream plant, he set out to gain his own foothold in the restaurant business:
relying on family savings, he seized a franchising opportunity with Magnolia Dairy Ice Cream and opened two ice
cream parlors. In response to customer requests, he added hot meals and sandwiches to the menu, which soon proved
a lot more popular than ice cream. Three years later, in 1978, he decided to capitalize on this development,
discontinued the Magnolia franchise and converted his parlors into fast food outlets.
Today, Jollibee Foods Corporation is the leading fast food chain in the Philippines with hundreds of
restaurants all over the country. It is also present in other countries like Brunei Darussalam, China, Hong
Kong, Indonesia, the United Arab Emirates, the United States and Vietnam. According to the article, the
group plans to double the number of restaurants to 4,000 outlets worldwide by 2020.
Question: From its humble beginning as an ice cream parlor, what do you think Tony Tan Caktiong did
to make his company the leading fast food chain the country?

1 Prepared by: Crizaldy G. Bolaños, LPT, MBA

 Muntinlupa National High School – Main
Senior High School – Accountancy, Business and Management

ORGANIZATION AND MANAGEMENT

MANAGEMENT AND ITS FUNCTIONS

What is Management?

According to Harold Koontz, Management is the art of getting things done through and with people
in formally organized groups. This definition implies that whether the organization is small, medium or
large, it is composed of people and business organization exists for a purporse. It is the people in the
organization that get the work done. These people have to be managed to ensure that their assigned tasks
are done properly and efficiently.
The role of management is to guide the development, maintenance, and allocation of resources to
achieve the goals of the organization. Managers are the people who are responsible for developing and
carrying out this management process. Management must be able to meet needs and constraints in the
organization’s internal and external environment.
To adapt to the rate of change in the global marketplace, flexibility and adaptibility are crucial to the
managerial process. This process is based on the four key functional areas of the organization.
1. Planning
2. Organizing
3. Leading
4. Controlling.
These activities will be discussed separately in the succeeding lessons.

Is Management a Science or as an Art?

Management as an art.
1. It results in the accomplishment of objectives through the use of human effort.
2. It requires skills and careful study in the management of any endeavor.
Management as a science.
1. It is a systematic body of knowledge.
2. It gathers and analyzes facts and formulates general laws and principles from these facts.

Management is both art and science. Like art, it requires personal skill, creativity and practice to apply
knowledge in the best possible way. Like science, it has systematic and well-organized body of knowledge.
Science and art are not in contrast to each other and both exist together in every function of management.

Practice Questions
Read and analyze the situations below. Choose the correct letter and then briefly explain your answer.
A. Planning B. Organizing C. Leading D. Controlling
Situation A: You and your family is going on a vacation. On your way to the airport, you go down a checklist
in your head to know if you’re really prepared. You asked yourself if you have brought your toiletries,
pajamas and airline ticket. What management function does it represent?

Answer: ___________________________________________________________________________

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 Muntinlupa National High School – Main
Senior High School – Accountancy, Business and Management

ORGANIZATION AND MANAGEMENT

Situation 2: Before the trip, you agreed in your vacation plan that each family member will be able to pick
an activity in Boracay. Each family member will be able to choose whether you would go island hopping,
banana boating or snorkeling. What management function does it represent?

Answer: ___________________________________________________________________________

The Management Functions

Have you heard of the famous Benjamin Franklin quote, “if you fail to prepare you are preparing
to fail”? This quote stresses the importance of the management functions. It is relevant to understand the
interrelationship of the four functions of management to achieve the organizational goals.
Effective management involves planning, organizing, leading and controlling. The four basic
functions of management work together in creation, execution and realization of organizational goals. These
functions can be considered as a process since each function builds on the previous function. To be
successful, managers must first need to develop a plan, then organize their resources and delegate the
responsibilities to employees according to the plan, then lead others to efficiently carry out the plan, and
finally evaluate the plan’s effectiveness as it is being executed.
The author John R. Schermerhorn defined the functions of management in his book Introduction to
Management (2010, pp 17 – 18)
1. Planning is the process of setting performance objectives and determining what actions should be
taken to accomplish them. Through planning, a manager identifies desired results and ways to
achieve them.
2. Organizing is the process of assigning tasks, allocating resources and coordinating the activities
of individuals and groups to implement plans. Through organizing, managers turn plans into actions
by defining jobs, assigning personnel and supporting them with technology and other resources.
3. Leading is the process of arousing people’s enthusiasm to work hard and inspiring their efforts to
fulfill plans and accomplish objectives. By leading, managers build commitments to a common
vision, encourage activites that support goals, and influence others to do their best work on the
organization’s behalf.
4. Controlling is the process of measuring work performance, comparing results to objectives and
taking corrective actions as needed. Through controlling, managers maintain active contact with
people in the course of their work, gather and interpret reports on performance, and use this
information to make constructive changes. Things don’t always go as anticipated, and plans must
be modified and redefined for future success.

Activity:
Recall the article From Ice Cream Parlor to Fast Food Empire: Tony Tan Caktiong’s Story. It described
how Jollibee Food Corporation was able to achieve its organizational goals. According to the article,
Jollibee group was the only Philippine company that made it to the top 20 of Asia’s best employers list,
ranking 10th. It ranked third among Asia’s most admired companies in 2000 and was cited as number one
in overall leadership among the top ten Philippine companies
Write your idea on how Jollibee group will achieve their mission “To serve great tasting food, bringing the
joy of eating to everyone.” Write your answers on the space provided.

3 Prepared by: Crizaldy G. Bolaños, LPT, MBA

 Muntinlupa National High School – Main
Senior High School – Accountancy, Business and Management

ORGANIZATION AND MANAGEMENT

Planning Organizing Leading Controlling

THEORIES OF MANAGEMENT

Are you familiar with Lazada or Shopee? Is there any similarities between the company Lazada or
Shopee and managing a large shopping mall like SM? What might surprise you is the answer: Yes!

In this module, you will learn that the principles developed during the Industrial Revolution in the
late 1800s are still in practice in today’s Information Revolution.

Scientific Management
Scientific Management is the systematic study of the relationships between people and tasks for
the purpose of redesigning the work process for higher efficiency. This movement produced revolutionary
ideas for the time to improve productivity.
Frederick Winslow Taylor (1956-1915). Frederick W. Taylor is known as the father of Scientific
Management. In his book Principles of Scientific Management, he described the use of scientific methods
to define the “one best way” for a job to be done. He wanted to replace the “rule of thumb” in which the
application of methods decided by the manager is based on his past experiences. Taylor states that there
must be thinking before doing” and scientific and research methods should be adopted for performing any
activity.
Taylor’s Scientific Management Principles
1. Develop a science for each element of an individual’s work to replace the old-rule-of thumb method
2. Scientifically select and then train, teach, and develop the worker.
3. Heartily 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.
4. Divide work and responsibility almost equally between management and workers.
Henry Gantt (1861-1919). Henry Gantt was an associate of Taylor. He is known for his contributions such
as the Gantt Chart and the task and bonus system. The Gantt chart is a tool that provides a visual or graphic
representation of what occurs during the course of a project. Its focus is the sequential performance of task
that make up a project. It identifies key tasks, assigns an estimated time to complete the task, and determine
a starting date for each element of a task. The task and bonus plan was promoted by Henry Gantt. He
modified Taylor’s “a fair day’s pay for a fair day’s work” premise. He wanted to establish a standard time
for a piece of work or task. For example, he took less time in hiw work, he will be paid for the additional
pieces of work and a bonus.

Frank and Lillian Gilbreth. Frank and his wife Lillian Gilbreth studies work to eliminate inefficient hand-
and-body motions. They also experimented with the design and use of the proper tools and equipment for
optimizing work performance. Frank is known for his bricklaying experiments where he carefully analyzed
the bricklayer’s job. By using Gilbreth’s techniques, a bricklayer was more productive and less fatigued at
the end of the day.

4 Prepared by: Crizaldy G. Bolaños, LPT, MBA

 Muntinlupa National High School – Main
Senior High School – Accountancy, Business and Management

ORGANIZATION AND MANAGEMENT

They believed that reducing the amount of motions associated to a particular task, they could also
increase the worker’s well being.
Bureaucratic Management
While scientific management was concerned with individual tasks and how workers could do the
tasks more efficiently, theorists Max Weber and Henri Fayol defined the characteristics of organizations
and the functions of managers that we still accept today.
Max Weber. Max Weber (pronounced as VAY-ber) developed a theory of authority structures and relations
based on an ideal type of organization called bureacracy – a form of organization characterized by division
of labor, a clearly defined hierachy, detailed rules and regulations and impersonal relationships.
Henri Fayol. Henri Fayol first identified the five functions that managers perform: planning, organizing,
commanding, coordinating and controlling. He also wrote during the same time as Taylor. Fayol’s attention
was focused on the activities of all manages. He wrote form his personal experience as the managing
director of of a large French coal-mining firm.
14 Principles of Management
1. Division of Labor 9. Initiative
2. Authority and Responsibility 10. Discipline
3. Unity of Command 11. Remuneration of Personnel
4. Line of Authority 12. Stability of Tenure of Personnel
5. Centralization 13. Subordination of Individual Interest to
6. Unity of Direction the Common Interest
7. Equity 14. Esprit de corps
8. Order

Humanistic Management
The behavioral approach to management puts a great emphasis on interpersonal relationships. It
focuses on human relationships and employee well-being. The behavioral-style manager helps create
conditions that keeps workers satisfied and motivated. This approach believes that productivity follow if
the workers want to work and that managers provides the right environment.

Mary Parker Follet. Mary Parker Follet is now considered the “Mother of Modern Management”. She
developed many concepts that she applied to business and management. She emphasized on the importance
of informal processes within organizations. For example, an informal group may socialize during or outside
the official work hours.
Hawthorne Studies. The Hawthorne experiments were a series of studies in Western Electric plant near
Chicago during the late 1920s and early 1930s. In the original experiment, they identified factors in the
workplace that affected productivity. The researchers alternatively offered and took away benefits but
regardless of whether the change was positive or negative, the test subjects’ productivity increased. Elton
Mayo visited the Hawthorne facility and advised the researchers to adjust how to interact with the workers.
They started another experiment but instead of asking simple “yes” or “no” questions, Mayo advised to
employ the non-directive interview method. Mayo discovered that there were several reasons why
productivity increased despite the withdrawal of benefits. It was discovered that the reason productivity
increased was because the subjects were simply having more fun. Mayo realized that workers were
motivated more by social dynamics than by economic or environmental factors.

5 Prepared by: Crizaldy G. Bolaños, LPT, MBA

 Muntinlupa National High School – Main
Senior High School – Accountancy, Business and Management

ORGANIZATION AND MANAGEMENT

Theory X and Theory Y. Douglas McGregor developed two contrasting theories labelled as Theory X and
Theory Y about workers. In his book “The Human Side of Enterprise”, he referred the two styles of
management – authoritarian (Theory X) and participative (Theory Y). Theory X assumes the average
worker is lazy and dislikes work and will do as little as possible. Managers must closely supervise and
control through reward and punishment. Theory Y assumes workers are not lazy and they want to do a
good job and the job itself will determine if the workers likes the work. Managers should allow workers
greater latitude and create an organization to stimulate the workers.

Current Developments in the Management Practices

Organizations face many new challenges in the twenty-first century. Some people say that the last
century’s management practices and theories are no longer relevant because of the changes in our society
and economy. The pace of change, technology, globalization, diversity and social expectations significantly
shaped management practices today.
Operations Management. Operations management is concerned with all of the physical processes
involved in producing and delivering goods and services to customers. It is concerned with all aspects of
converting materials and labor into goods and services as efficiently as possible like managing supply chain
and flow of inventory.
Systems Approach to Management. A systems approach to management recognizes that organizations
are open systems that interact with and are dependent on their environment. It focuses on performance of
the whole production process, includingd the customers’ process.

Information Management. Information management is concerned with the collection, preservation,

storage, processing, and delivery of information. Its purpose is to make sure information is avaialbe to the
right people at the right time in a form that they can apply.

Contingency Management. Contingency Management is a general approach to management practice. In

contingency management, managers must adapt theory and practice to match the situation by identifying
the key contingencies, or factors, in the situation.

Activity 1.C
Read and analyze the scenario below:
Jean and Milo were struggling to identify a management style that would best fit for their business Apple
and Pie. They asked you to help them by proposing the best management approach appropriate for their
business. The key challenge for Jean and Milo is how to balance the need for control in the manufacturing
process to maintain the high level of product performance that the company is known for and that supports
it’s premium price.

1. Which management philosophy/philosophies best to use in their business?

2. Given that Jean and Milo’s management style is different, outline your proposed management style.

6 Prepared by: Crizaldy G. Bolaños, LPT, MBA