The Organization And Its Environment

NAME:____________________________________________ STRAND:_________________
GROUP NO:_____________ SCORE:_________________

List the characteristics and attributes of business organization in its

corresponding type or form:
Easy to form
Shared Profit
Owned by a single individual
Decision-making belongs to the owner
Lack of continuity
Separate Legal Personality
Ease of Transfer of Ownership
Perpetual existence
Formed by two or more person

Sole Proprietorship Partnership Corporation

 FORMS OF BUSINESS ORGANIZATION
 Sole proprietorship
 Partnership
 Corporation

SOLE PROPRIETORSHIP. This form of business organization is attractive to small investors because they are
relatively easy to start up. The owner is entitled to all the profits the business collects. On the other hand, sole
proprietorship can be risky because there is no separation between the owner and the business.
Advantages:
1. Less complicated in preparation of documents and cheaper compared to other forms.
2. Tax benefit, no requirements to file a business tax.
3. Decision-making belongs to the owner.
Disadvantages:

1. Unlimited liability. The owner will be personally liable for any loses, debts and violation of the business.
2. Lack of continuity. The business may discontinue if the owner becomes incapacitated or deceased.
3. Difficulty in raising capital. Initial fund for capital is provided by the owner. Sole proprietorship do not
issue stocks.

PARTNERSHIP. A partnership is a single with two or more people sharing its ownership. Each partner contr
ibutes in all aspects of the business, including money, property and industry. Each partner share in the profits and
losses of the business.

Advantages:

1. Easy and inexpensive

2. Shared financial commitment.
3. Complementary skills

Disadvantages:
1. Joints and individual liability. Similar to sole proprietorship, partnerships retain full, shared liability among
them. Personal assets of the partners can be used to satisfy the partnership’s obligations.
2. Disagreement among Partners. With multiple partners in the business, disagreements like management
styles, salary schemes etc will arise.
3. Shared profits. Each partner must share in the success and profits of the business, unequal contribution of
time, effort and resources can dispute among partners.
CORPORATION. Business owners opt to form corporation to protect themselves against financial and legal
liabilities. A CORPORATION is a type of business that keep the dealings, assets and banks accounts separate from the
personal assets of the investor.

The investors are shareholders of the corporation. Investors will elect a set of Board of Directors responsible for the
different policies and vision of the corporation. The Board of directors will appoint corporate officers for the daily
operation of the corporation. A corporation has the following key personnel; a president, a secretary and a treasurer.

Advantages:
1. Separate legal personality. Once registered with Securities and Exchange Commission (SEC) and is issued a
certificate, a corporation has acquired a legal personality separate from the investors.
2. Ease of raising funds. It is easy to raise funds since it has an option to sell shares of the corporation
3. Continuity. It can have a perpetual existence, it means it can outlive its owners.
4. Ease transfer of ownership. The Board of directors can authorize the issue of shares of stocks in exchange
for the investors capital.
Disadvantages:
1. More time and money spent in organizing. It requires more time and money during the formation of the
corporation.
2. More paper works. Documentations and paper works required by the government.
3. Higher taxes. The government imposes taxes in the corporation level and also in the individual level.
4. More costly. It requires the compliance with the complex Corporation Law and the government regulations.

ROLE OF THE FIRM

1. Human Resources Management . Covers the major functions of recruitment, selection, placement,
training, development of employee-employer relations, compensations and benefits administration.

2. Marketing Management. Responsible for the identifying, anticipating and satisfying consumers.

3. Operations Management. Overseeing and controlling the production process.

4. Financial Management. In charge of the support services, lowering cost and effective control of the
business.

5. Material and procurement management. Manage the procurement process of materials needed for
production.

6. Office management. It involves the design, implementation, evaluation and maintenance of the process of
work.

7. Information and communication technology management. It includes related forms of communications to

provide necessary information to all business units.

TYPES OF ORGANIZATIONAL STRUCTURE

CEO

Manager Manager
Production Marketing

Foreman A Foreman B Sales B

Sales A

Workers Workers Salesperson salesperson

 Sample of Line Structure
A line structure organization has only direct, vertical
relationship between different levels in the firm.

PRESIDENT/
CEO

Marketing Sales Production

Department Department Department

Sample of Functional Chart.

It is set up wherein each department is grouped according to its

function or purpose. Functional structure functions very well to
small business in which each department can support itself by
relying on the talents of their workers.
 ABC
Company

Mindanao
Luzon Division Visayas Division
Division

Sample of Divisional Chart.

This structure is typically used in larger companies or
organizations with several branches or outlets operate in wide
areas.
 CEO

Marketing Sales Services

Electronics
Division

Home Good
Division

Yummy Snacks
Division

Sample of Matrix Structure.

A matrix structure is a hybrid of two structure, namely;

functional and divisional structure. Typically used by large multi-
national companies.
 STARTING A BUSINESS
These are the steps to be taken by anyone who wants to start a business:
Step 1.
 For single proprietorship, register with the Department of Trade and Industry (DTI) for business
name;
 For partnership and Corporation, register with the Securities and Exchange Commission (SEC) for
Certificate of Partnership or Certificate of Corporation;
 For Cooperatives, register with the Cooperative Development Authority (CDA).

Step 2.
Apply for business permit and license from the city/municipality where the business is to be located.

Get sector specific clearances:

 Travel Agency - - - - - Department of Tourism

 Food and Cosmetics - -
 Pawnshop - - -
 Learning Centers - - -
 Woodcraft /Furniture - -
Food and Drug Administration (FDA)
Bangko Sentral ng Pilipinas (BSP)
Department of Education (DepED)
Department of Environment and Natural
Resources (DENR)

Step 3.
Register with the Bureau of Internal Revenue (BIR) district Office where the business is to be located for Authority to
Print Invoice and Book of Journal.

Step 4.
Other registration requirements:

Register your business with the following offices for compliance to good employer-employee relationship, incentives
and benefits and social, community and environmental responsibilities.

 Social Security System (SSS)

 Department of Labor and Employment (DOLE)
 PhilHealth
 Pag-Ibig
 Department of Environment and Natural Resources (DENR)
Step 5.
START THE BUSINESS

R.A. 9178 otherwise known as the Barangay Micro Business Enterprise (BMBE) Law
encourages everyone to put up a business.
 Supply what the ACRONYM stands for:
BMBE

LGU

DTI

DENR

SSS

DOLE

SEC

CDA

FDA

BSP

BIR

 DepEd

DT

GSIS

DBP

LBP

ADB

WB
 The Business Environment/Goal Setting.

“If the rate of change from within the organization is not as fast as the rate of change outside, then the end
is near.”
Jack Welch
CEO, General Electric

The “outside” of course is the business environment where the organizations have to thrive in order to
be successful. No matter how strong and agile organizations are, if the business environment is unstable, it
would be extremely difficult for most organization to cope and prosper. The business environment today,
unlike in the past has become more complex and unpredictable. It is, therefore, essential for organizations
to study the business environment very well so that they can cope with all the changes that are happening.

Learning objectives:
1. To identify various force/elements of the organization’s environment;
2. To be able to summarize the forces using the PESTEL analysis;
3. To describe the local and international business environment;
4. To explain the role of the business in relation to the economy

THE LOCAL BUSINESS ENVIRONMENT

Local business is driven by specific local conditions and market characteristics. Yet, it also operates
in a larger economic context. The business must compete for employees, resources from suppliers at a
competitive price, local advertising and marketing. Business intelligence and local community buyer
values are critical for management pricing, inventory and marketing strategies.

PESTEL ANALYSIS
Using PESTEL Analysis , organization will have a more organized and exhaustive manner of analyzing
the external factors that affect their businesses, including the determination of their impact as well as
the inherent risks involved.
PESTEL Factors:
 Political
 Economic
 Social
 Technological
 Environment
 Legal

Political factors:
  Wage order increases
 Government policies
 Shareholder Needs and Demand
 Lobbying Pressure Groups (labor union)

Economic Factors:
 Domestic economy
 Global economy
 Taxation issues
 Exchange rate
 Inflation

Social Factors:
 Media views
 Company image
 Education
 War for talent
 Generation of learners

Technological factors:
 Technology development
 Competing technology
 Maturity of technology
 Waste removal/Recycling

Environmental factors:
 Environmental issues
 Environmental regulations
 Ecological issues

Legal Factors:
 Current and Future Legislation
 Regulatory Body Processes
 Employment Law
 Labor Cases filed

THE ROLE OF BUSINESS IN RELATION TO ECONOMY

The critical role that business plays in the economy cannot be overemphasized. Image a world where
we have to produce everything that we consume – food, clothes, vehicle, furniture etc.It not only takes
time and effort but oftentimes huge resources in order to produce or build what we need.

Business obtains such resources as materials, labor and equipment to be able to produce goods and
services. As a result of business, commerce, markets, consumers are able to live more comfortably and
improve their standard of living.

Consumers are able to enjoy the variety of goods and services because producers and suppliers compete
for the market and regularly attempt to improve their products and services so that the same will be
patronized.
GOAL SETTING PROCESS
 Goal-setting is the first stage of management cycle, it involves four steps directed toward the
establishment of the goals and objectives for the company. Goals are derived from a sound and clear
understanding of the vision and mission or purpose of the organization.

SHARED VISION, MISSION AND VALUES

In order to be an effective manager, one should ensure that his personal vision, mission and values are
aligned to those in the organization. If they are not aligned, there will be inconsistencies in company
policies, people will be confused and organization will not move in the same direction. It is the
responsibility of the manager to define the company vision, mission and values and to share these to
everyone in the organization.

What is a Vision?
It is a commonly shared picture of what the organization wants and is committed to become
sometime in the future. It is the guiding and motivating compass of the organization. A vision can be
expressed as the state in the future of what the organization’s services, customers, stakeholders,
processes and structure may be.
Example of vision statement: “We are committed to being conscious of our values both individually
and as a team. To be healthy and promote health. To be honest to with everyone and to enjoy our
freedom” - Dental Office

What is a Mission Statement?

It is an enduring statement of purpose of an organization’s existence that distinguishes itself from
others. It answers the questions: Who are we? Why do we exist?
Example of a mission statement: “We are a professional group providing services and solutions to
help our clients achieve their goals and objectives.”

What are values?

Values are fundamental and shared beliefs that will provide the organization’s behavior in meeting
the its objectives and in dealing with others.

STRATEGIC MANAGEMENT
The “S W O T” analysis is a powerful planning tool, it stands for:
 Strength refers to internal competencies possessed by an organization that will enable it to
achieve its objectives.
 Weakness are areas that limit or inhibit an organization’s overall success.
 Opportunities refers to the economic, sociocultural, political, technological, demographical and
industrial needs and events that could significantly benefit an organization in the future.
 Threats are economic, cultural, political, technological, demographic and industrial trends and
events that are potentially harmful in an organization’s present and future competitive position.

A SWOT should be prepared for each of your company business activities. The result of the
SWOT analysis will guide the manager in making the action plan:
“ Capitalize on Strength”
“ Reduce Weaknesses “
“ Use Opportunities “
“ Neutralize, Convert Threats into Opportunities”

STEPS OR ACTIVITIES IN GOAL-SETTING:

1. DATA GATHERING AND SYNTHESIZING INFORMATION
In this primary stage, you will initially be doing data gathering. If you are thinking of putting up a
business, it would be necessary for you to gather information that will help you find out, if the business is
feasible and beneficial to the company.
2. FORMULATING ALTERNATIVES
Through effective data gathering and synthesis, you can arrive at a decision on whether to pursue the
business.
3. DECIDING ON COURSES OF ACTION
The planning stage is the most difficult stage in the management process. Deciding on the courses of
action also involves self analysis. You have to know who you are , what you have and what you are capable
of. Then you have to look into where you are, what resources you can use and the situation you are faced
with – favourable or unfavourable.
4. ESTABLISHING YOUR GOALS
Defining your goals is the final step in planning process. You will not find it difficult to set your goals if
you have tools and techniques to use.

SMART
Goals should be:
Specific,
Measurable,
Attainable,
Result-oriented and
Time-bound
  SPECIFIC. Goals should reflect accomplishments that are desired. Goals should
generate specific actions and detailed enough to be understandable.

 MEASURABLE. Goals should be measurable to determine when they have to be

accomplished.

 ATTAINABLE. The real art of setting goals is to create a challenging, achievable

target. A goal is a standard of achievement. It should be challenging but should not
demand the impossible.

 RESULT ORIENTED. Goals should specify an end result or outcome.

 TIME-BOUND. Specify a relatively short time for meeting the goal.

NAME:____________________________________________ STRAND:_________________
GROUP NO:_____________ SCORE:_________________
FILL IN THE BLANKS:
1. “If the rate of ___________ from within the organization is not as fast as the rate of change
outside, then the end is ___________.”
2. PESTEL stands for: ______________, _______________, ________________, _____________,
________________ and ______________.
3. Government policies is one of the _______________ factors that should be analyzed before starting
a business.
4. Labor cases filed is one of the ____________ factors that should be evaluated before embarking a
business.
5. Inflation is an ____________ factor.

ESSAY:
#1. Why the environmental issues should be evaluated and analyzed before starting a business? Reason
out.

# 2. Is there a need to upgrade and introduce new methods in technology?

NAME:____________________________________________ STRAND:_________________
GROUP NO:_____________ SCORE:_________________

IDENTIFICATION:

P - - - Political factors
E - - - Economic factors
S - - - Social factors
T - - - Technological factors
E - - - Environmental factors
L - - - Legal factors

Identify the following factors:

_______________ 1. Global Economy.
_______________ 2. Wage Order increase
_______________ 3. Ecological Issues
_______________ 4. Employment Law
_______________ 5. Technology Development
_______________ 6. Inflation
_______________ 7. Pressure from Labor Union
_______________ 8. Image of the Company
_______________ 9. Current and Future Legislators
_______________ 10. Safety Issue of the Community