MANAGEMENT

STUDY
 NATURE AND CONCEPT
• Management study is a major component of a project
feasibility study that has sequential and procedural
implications to the whole process as highlighted in the
framework below.
• In some proposals, the management study is presented
after conducting the financial study. In this arrangement,
it is possible that the preparation of supporting
schedules are temporarily set aside because the data for
these will have to be provided by the management
study. This process is quite tedious in conducting a
feasibility study.
• It is very important that the financial data from the
management study are forwarded to the financial
section. Thus, it is only reasonable that the management
study is prepared ahead.
• In-this section, management refers to the scientific and
procedural contributions of human resources towards
the accomplishment of a proposed requirements
business endeavor Of the A management study,
therefore, determines the human resource project.
• The raw materials and overhead provisions, including
the infrastructure of the project have been critically
evaluated and determined in the technical study
However, these physical components will remain idle
and unproductive unless there are people who are
technically qualified and competent to handle them and
accomplish the desired objectives. There must be a
group of individuals with different skills, attributé'ther
and specializations but with common objectives,
desires, and intentions working toge for the success of
the proposed project.
 BASIC AIM OF A MANAGEMENT STUDY
• As mentioned earlier, the viability of a market
study is tested by determining if there is an
existing demand for the product. On the other
hand, the feasibility of the technical aspect is
tested by determining if the cash generated from
the proposed project will provide a higher rate of
return on investment against the minimum
required rate of return.
• The important question to be answered is, "How
is the feasibility of a management study tested,
and what is the basic objective of conducting a
management study“.
• A management study aims to determine the most
appropriate type of business organization, in
terms of formation and structure, that will
effectively accomplish the objectives of the
business. At the end of this study, the proponent
should categorically include in the conclusion a
recommendation as to what type of business
organization should be established.
• In preparing a management study, the proponent
should work closely with a human resource
specialist who has varied and in-depth work
experience and exposure in organizational
design, organizational development,
compensation structures, and human behavior.
 PROCEDURAL STEPS IN CONDUCTING A
MANAGEMENT STUDY
• The following are the basic steps in • The different sections Of a management
conducting a management study: study are designed according to these
steps.
• 1. Selecting a business organization
• 2. Designing the internal structure
• 3. Staffing for the internal structure
• 4. Computing total salaries,
compensation, and fringe benefits
• 5. Preparing a time table
 BUSINESS ORGANIZATION

• The first section of a management study • The selection of the type of business
aims to answer the fundamental question, organization must have a logical basis,
"What type of business organization must and it should not be based merely on the
be formed to effectively carry out the whims and caprices of the proponent
objectives of the proposed project?".
• There are three types of business
organizations. These are as follows:
• 1. Sole proprietorship
• 2. Partnership
• 3. Corporation
 FACTORS AFFECTING THE CHOICE OF
BUSINESS ORGANIZATION
• Several factors affect the choosing of the type of business • The capital requirement of a sole proprietorship and
organization that is best fitted to the proposed project. These are partnership is usually less compared to that of a corporation.-In
as follows: other words, a corporate entity should be formed if a huge
• 1. Capital requirement capital base is required.
• 2. Liability of owner or owners • Liability of Owner or Owners. The liability of owners may either
• 3. Managerial skills needed be limited or unlimited. Limited liability means that the owner is
• 4. Ease of informatiom liable only to the extent of his/her capital contributions,
whereas unlimited liability implies that creditors may run -after
• 5. Tax implication
the personal properties of the owners in case the business
• 6. Government Intervention cannot fully settle its financial obligations.
• 7. Nature of business
• Managerial Skills Needed. Since sole proprietorships or
• 8. External financing partnerships need only a small amount of capital, the operation
• Capital Requirement. The capital requirement to start a business is usually simple. In most instances, one person with managerial
may either come directly from fresh cash infusion of the owners skills is employed to handle the daily operating activities of the
or be sourced from creditors, particularly financial institutions. business
The amount of capital should be enough to cover the • Ease of Information. All types of business organizations require
infrastructure requirements and scale of operation. papers to be prepared and submitted to different national and
local government offices at formation• Partnerships in the
Philippines must be registered with the SEC.
• Tax Implication. The tax liability of sole proprietorships is
computed using the scheduler tax rates, and the amount
is usually lower compared to those of partnerships and
corporations. The business owner includes the income
realized from the business in the computation of his/her
gross income.
• Government Intervention. The government usually
imposes greater and wider control on corporations.
Various government agencies closely monitor the
operations of corporations, and it imposes more
stringent measures to be complied with.
• Sole proprietorships usually comply with the local
government reportorial and legal requirements; less
intervention is imposed by the national government.
• Nature of Business. Merchandising and service entities
do not usually have complicated operations; they conduct
routine activities all throughout the year. Sole
proprietorships and partnerships are highly advisable
for these kinds of business.
• External Financing. Financial institutions such as banks
usually favor the granting of credit to corporations rather
than to sole proprietorships and partnerships. In other
words, corporate entities can more easily seek external
funding from outside sources should they need additional
working capital compared to sole proprietorships and
partnerships.
 INTERNAL ORGANIZATION STRUCTURE
• The design of the internal structure of a business usually
follows once the type of business organization has been
chosen, It must be remembered that the internal
organizational structure of a business cannot be defined
unless the type Of business organization has been
selected.
• This section answers the question, "What is the best
internal organization Structure to be adopted to achieve
the goals and objectives of the organization?".
• The internal organizational structure serves- as the
framework that outlines the hierarchy and communication
process between the employees and the departments. It
also defines the responsibilities and functions of each
employee in the organization.
• The primary factor affecting the design of the internal
organizational structure is the size of the business. The
type of the product sold by the business may also
influence the choice.
• The internal organizational structure may be any of the
following:
• 1. Flat structure
• 2. Department-focused structure
• 3. Product-focused structure
• A flat structure is highly advisable for sole proprietorships and partnerships that only have a few
personnel. Usually, there are only two or three levels of reporting in this configuration. The simple
structure is advantageous because it hastens the decision-making process by empowering
employees to formulate decisions.
• A flat organization has a broader pyramid structure designed to make more productive. Since there
are few levels of management, bureaucracy is minimized, productivity is increased, and less
management budget is required.
• A department-focused structure is applicable to corporate entities where the work to produce a
product is broken down into different functions. The prevalent functional areas of a business are
operation, marketing, finance, and human resources. This type of internal structure is highly
advisable to be adopted by a corporation that values teamwork in the attainment of its objectives
and goals.
• A product-focused structure prioritizes the product offered by a business. All efforts are joined
together to deliver quality products or services to customers. The enhancement of product quality is
the primary concern of a product-focused structure.
 ORGANIZATIONAL CHART
• An organizational chart is a diagram of the
structure of an organization which shows
the positions, ranks, and relationships of
employees in the organization. It, likewise,
identifies the positions that execute line or
staff functions. At a glance, an
organizational structure should depict the
formal relationships among employees. It
is considered the best formal
arrangement of employees that would
meet the objectives of the organization
• A simple organizational chart may not
need a brief description, especially if the
flow of reporting can easily be
understood. However, a concise but
complete description is required if the
organizational chart is complicated in
order to avoid confusion and address the
possible queries of readers.
 STAFFING REQUIREMENTS

• The staffing of the internal structure is a management function that usually involves
the following:
• I. Determining the appropriate number of employees required by the organization
• 2. Recruiting employees who would qualify for the position based on education,
knowledge, trainings, experience, skills, and abilities Deploying and retaining
employees
• Based on the proposed internal structure of a business, which defines the various
positions, the proponent then determines the required number of employees and
defines the minimum qualification standards for the positions.
• A listing of the positions is usually made with the corresponding qualifications and
functions. The format may appear as follows:
• The staffing process should answer the following questions:
• 1. How many employees are needed for the position?
• 2. How many workers are required in the department or section?
• 3. What is the educational requirement for the position?
• 4. Does the position require previous work experience?
• 5. What are the functions of the position?
• 6. What are the expected outcomes from the position? In case there is a large number
of varied positions, the listing may be shown -in the appendix so as not to obscure
the main points of the study.
 COMPUTATION OF SALARIES,
COMPENSATION, AND FRINGE BENEFITS
• Once the staffing process has been accomplished,
the schedules of salaries, wages' allowances, and
other fringe benefits of employees should follow.
Determining the compensation level of employees
is a very sensitive issue that must be critically
evaluated and studied. An attractive
compensation package may lure highly qualified
workers to the position, whereas low salaries will
discourage them from joining the business.
• In formulating the level of compensation,
allowances, and other fringe benefits, the
proponent should consider the following:
• 1. The amount legally provided in the Labor Code
• 2. The statutory minimum wage in the regions as
stipulated by the Regional Tripartite Wages and
Productivity Board
• 3. The prevalent practice in the industry
• 4. The demand of the position based on expertise,
qualification, and work experience
• 5. The technical requirements of the work to be
performed
• This section should, thus, provide definite answers to the following questions:
• 1. How much is the salary for the position?
• 2. What benefits should be added to the position?
• 3. Is the position entitled to representation and travelling allowance (RATA)?
• 4. Will the compensation package create imbalance or distortion among employees?

• A schedule of compensation and allowances is usually presented in this section

following the format below.
• The grouping of salary schedules may be presented in the following schemes:
• 1. By functional unit (e.g., marketing, operations, finance)
• 2. By rank (e.g., key personnel, rank-and-file)
• 3. By tenure (e.g., permanent, contractual, or casual)
• Data from the management study should be forwarded to the financial study,
particularly those covering the computations of labor costs and salary expenses.
 PROJECT SCHEDULE

• The project schedule is usually the last section of the management study. The proponent is advised
to work closely with a quantitative analyst or operation science specialist.
• A project schedule defines the time frame of the pre-operating phase of a proposed project and the
different activities carried out within that time. It is a planning tool that is used for the following:
• 1. Identifying the activities or tasks during the project implementation
• 2. Determining the required resources (e.g., materials, technology, and personnel) to complete tasks
• 3. Describing the work to be accomplished within a particular time frame
• 4. Determining the date to start the project and the expected date of completion

• The two most common techniques used in scheduling the various interrelated activities in project
implementation are the following:
• 1. Gantt chart
• 2. PERT/CPM model