Cbme1 Prelim

CBME1: BUSINESS ORGANIZATION and MANAGEMENT || MODULE 1 || PRELIM ||
CARD-MRI Development Institute, Inc. Modular Learning Page 1 of 31

Course This is an introductory course in management for business and

Description (CD) accountancy students who need to grasp the big picture of management
concepts, processes and techniques as practiced today in business,
industry, and government. The students gain a solid grasp of how
effective managers orchestrate human resources and their own energies
to contribute an organization‘s successful achievement of its mission and
bottom-line goals.
Course Learning At the end of the course, students are expected to:
Outcomes  Integrate fully the management theory with practice;
 Analyze options in achieving sound management decision in
performing entrepreneurial activities;
 Demonstrate higher order thinking skills and CFISHES in the
application and integration of management concepts;
 Practice asking discussion questions to demonstrate capabilities to
deal with more complex issues; and
 Build analytical, diagnostic, team building, investigative, presentation,
communication, writing and technopreneurial skills.
Evidence of To assess the students acquired competencies and/or learning outcomes,

Learning/ the teacher will facilitate the following assessment:
Assessment
Tools Creating a Concept Map, Reaction Paper, Problem-Solving, Active reading,
listening and note taking, Quiz, Activity, Assignment and Reflection
Module This will indicate where the teacher wanted the student‘s output to be
requirements written as well as the submission instruction. *Sample below but not
submission limited to this as the teacher has the freedom to use any digital platforms
instructions (such as Google form, sheets, doc or drawing)
All activities must be written in a separate paper and to be submitted

upon the collection of the modular learning sheets. You may also opt to
submit your output via email mirandalovely1223@gmail.com if you
will have the chance to access the internet (please check your
timeline for guidance).

Topics For this Business Organization and Management subject, the topics
(Coverage) to be discussed are the following:
I. The Meaning of Management
II. Applied Economics
1. Application of Supply and Demand
2. The Concept of Elasticity
3. Market Equilibrium
III. Industry and Environmental Analysis, Business Opportunities
Identification
1. Principles, Tools, and Techniques
2. Market Structure
3. Identification of Business Opportunities
IV. Socioeconomic Impact Study
1. Theory of Consumer Behaviour
2. Theory of Production
3. Socio-economic issues
Target
This subject is offered to the First Year BSEntrep. Students.
Participants
Learning Time:
Academic Year 2021-2022, First Semester
Means for
Ways for students to contact teacher for assistance and guidance.
Learner Support
Email: mirandalovely1223@gmail.com
Messenger: Lovely Miranda
Mobile No.: 0977-7051872
Summative Description of expectation, real-world context, and Rubrics

Assessment requirements for the final authentic performance-based
assessment of the subject. (See Module
Instructions)

Icon Used in this module

To guide you through your offline module, we include icons. Here‘s what they mean:
Activation of your prior knowledge icon.

These include introduction of the topic and preliminary activities and/or exercises
(not graded)
Acquisition of new knowledge icon.
This is the learning part of the module where content about the topic/lesson is being
discussed.
Acquisition of new knowledge icon (for online references transcription)
This is the learning part of the module where other learning tools such as video or e-
books about the topic/lesson is being discussed.
Application of acquired knowledge and/or competency icon.
This learning part of the module where the acquired competency and knowledge will be
practiced (may be graded or not)
Assessment of acquired knowledge and/or competency icon.
This learning part of the module where the acquired competency and knowledge will be
evaluated through different assessment activities (may be graded or not)
Resources icon.
This part of the module provided other additional reading materials and/or references for
the student to use in their self-paced learning.
Timeline icon.
This part of the module indicates the activity timeline as guide for the students
(instructions, submissions dates and other announcements).
Rubrics icon.
This part of the module indicates how the student activities will be graded.

INTRODUCTION:
Good day everyone!
Welcome to your Business Organization and

Management subject, where you will learn the big
picture of management concepts, processes and
techniques as practiced today in business, industry,
and government.
I am Ms. Lovely P. Miranda, and I will be your instructor for this subject.
Together, let‘s see how effective managers orchestrate human resources
and their own energies to contribute an organization‘s successful
achievement of its mission and bottom-line goals.
Before we proceed with our discussion, let’s first have our class rules:
1. We are under new normal of learning in which you chose to have a modular learning; with
this, I am expecting your output as a basis of your grades.
2. Incomplete output can result to lower grades, no output = no grade, no grade will result to
FAILED OR UNOFFICIAL DROPPED.
3. Each output will have its time frame for submission, you can pass your output on or before the
deadline, late submission of output will be accepted but with corresponding deductions.
4. PLAGIARIZED ANSWERS will be marked ZERO. When checking your essay I will be using
a plagiarism checker. All the answers to your activities can be seen in your module.
5. All soft copy outputs must be sending through my E-MAIL NOT MESSENGER ACCOUNT.
6. All questions or clarifications you can message through our GC.

Hello Everyone!
Welcome to Module 1 of your Business Organization and Management subject. This

module would be your start-up, this will include the basic of organization and management,
international business and Multinational Corporations.
Our objectives for Lesson 1 are the following:

1. Examine what managerial planning is and why it is important.
2. Identify and analyze the various types of plans and show how they relate to one another.
3. Explain the nature and purpose of strategies and policies.
4. Describe the strategic planning process.
5. Compare the TOWS matrix and the business portfolio matrix.
6. Identify some major kinds of strategies and policies and the hierarchy of strategies.
Let’s activate your prior knowledge!
 Stop here for a second and think about how you‘d answer the question ―What is Management?‖ before
studying it deeply. Then, see how your answer changes as you go through the module.
 Define management in your own words, based on what you

understand about it thus far.
(Open-ended discussions)

Let’s Acquire New Knowledge!
Based on the answers you have given, it seems that you have an idea about
management. Let us now start our discussion by defining Management.
What is Management?
Management is defined as getting work done through others. Management (or managing) is the
administration of an organization, whether it is a business, a not-for-profit organization, or
government body. Management includes the activities of setting the strategy of an organization and
coordinating the efforts of its employees (or of volunteers) to accomplish its objectives through the
application of available resources, such as financial, natural, technological, and human resources. The
term "management" may also refer to those people who manage an organization -
individually: managers.
MANAGERIAL PLANNING
Planning Function of Management
Planning means looking ahead and chalking out future courses of action to be followed. It is a
preparatory step. It is a systematic activity which determines when, how and who is going to perform
a specific job. Planning is a detailed programme regarding future courses of action.
It is rightly said ―Well plan is half done‖. Therefore, planning takes into consideration available &
prospective human and physical resources of the organization so as to get effective co-ordination,
contribution & perfect adjustment. It is the basic management function which includes formulation of
one or more detailed plans to achieve optimum balance of needs or demands with the available
resources.
According to Urwick, ―Planning is a mental predisposition to do things in orderly way, to think before
acting and to act in the light of facts rather than guesses‖. Planning is deciding best alternative
among others to perform different managerial functions in order to achieve predetermined goals.
According to Koontz & O‘Donell, ―Planning is deciding in advance what to do, how to do and who is
to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible
things to occur which would not otherwise occur‖.

Steps in Planning Function
Planning function of management involves following steps:

1. Establishment of objectives
 Planning requires a systematic approach.
 Planning starts with the setting of goals and objectives to be achieved.
 Objectives provide a rationale for undertaking various activities as well as indicate direction
of efforts. Moreover, objectives focus the attention of managers on the end results to be
achieved. As a matter of fact, objectives provide nucleus to the planning process.
Therefore, objectives should be stated in a clear, precise and unambiguous language.
Otherwise the activities undertaken are bound to be ineffective.
 As far as possible, objectives should be stated in quantitative terms. For example, Number
of men works, wages given, units produced, etc. But such an objective cannot be stated in
quantitative terms like performance of quality control manager, effectiveness of personnel
manager. Such goals should be specified in qualitative terms. Hence objectives should be
practical, acceptable, workable and achievable.
2. Establishment of Planning Premises

 Planning premises are the assumptions about the lively shape of events in future.
 They serve as a basis of planning.
 Establishment of planning premises is concerned with determining where one tends to
deviate from the actual plans and causes of such deviations. It is to find out what obstacles
are there in the way of business during the course of operations.
 Establishment of planning premises is concerned to take such steps that avoid these
obstacles to a great extent.
 Planning premises may be internal or external. Internal includes capital investment policy,
management labor relations, philosophy of management, etc. Whereas external includes
socioeconomic, political and economic changes. Internal premises are controllable
whereas external are non- controllable.
3. Choice of alternative course of action

 When forecast is available and premises are established, a number of alternative course of
actions have to be considered.
 For this purpose, each and every alternative will be evaluated by weighing its pros and
cons in the light of resources available and requirements of the organization. The merits,
demerits as well as the consequences of each alternative must be examined before the
choice is being made.
 After objective and scientific evaluation, the best alternative is chosen. The planners should
take help of various quantitative techniques to judge the stability of an alternative.

4. Formulation of derivative plans

 Derivative plans are the sub plans or secondary plans which help in the achievement of
main plan.
 Secondary plans will flow from the basic plan. These are meant to support and expedite
the achievement of basic plans. These detail plans include policies, procedures, rules,
programs, budgets, schedules, etc. For example, if profit maximization is the main aim of
the enterprise, derivative plans will include sales maximization, production maximization,
and cost minimization.
 Derivative plans indicate time schedule and sequence of accomplishing various tasks.
5. Securing Co-operation
 After the plans have been determined, it is necessary rather advisable to take subordinates
or those who have to implement these plans into confidence.
 The purposes behind taking them into confidence are:
 Subordinates may feel motivated since they are involved in decision making process.
 The organization may be able to get valuable suggestions and improvement in
formulation as well as implementation of plans.
 Also the employees will be more interested in the execution of these plans.
6. Follow up/Appraisal of plans

 After choosing a particular course of action, it is put into action.
 After the selected plan is implemented, it is important to appraise its effectiveness. This is
done on the basis of feedback or information received from departments or persons
concerned. This enables the management to correct deviations or modify the plan.
 This step establishes a link between planning and controlling function.
 The follow up must go side by side the implementation of plans so that in the light of
observations made, future plans can be made more realistic.
The Evolution of Management Thought and the Evolution of Management Theories
Knowing the story behind the evolution of management thought and the evolution of theories is
essential. If you are familiar with them, including the development that brought about the current
practices in business, then you will have a better understanding of management principles that can
help you to manage people more effectively.
The point is that a lot has changed about management. Emphasis on structure and authority is no
longer as strong as it used to be in the past. Now the focus is on employees. However, there are
theories on the factors that motivate employees, but understand that knowing how these theories
came about can give you the needed knowledge to manage your employees appropriately. Read to
understand the evolution of management thought and management theories.
Management Theories
Management theories are a collection of ideas that recommend general rules for how to
manage an organization or business. Management theories address how supervisors
implement strategies to accomplish organizational goals and how they motivate employees to
perform at their highest ability. Typically, leaders apply concepts from different management theories
that best suit their employees and company culture. Although many management theories were
created centuries ago, they still provide many beneficial frameworks for leading teams in the
workplace and running businesses today.
After performing the various functions of management, it is also important to take into consideration
how management have evolved throughout the years and have changed from simple to more
complex and diverse, depending on the needs of the people and suitability on the organizations
nowadays. It is necessary for us to know and understand how the various theories of management
influence and bring huge impacts on how present management practices are being done also which
among those are no longer use or needs to be improved in order to adapt with the fast changing
times.
Here are the management theories:

SCIENTIFIC MANAGEMENT THEORY

This theory is introduced by Frederick W. Taylor, who is also known as ―The
Father of Scientific Management‖.
❖ apply scientific approach in doing a task. It follows a step-by-step procedure in performing a

specialized task in order to expedite the process that will increase worker‘s productivity and
establish the ―best way‖ of doing the task.
❖ introduce the concept of a ―Fair Day‘s Pay for Fair Day‘s Work‖. This means that workers
must be paid according to the amount produced. Taylor wants to encourage improved productivity
through monetary compensation. (piece rate system)
❖ introduce the Principles of Scientific Management
1. ―Time and Motion‖ study- it is a systematic approach performed in order to determine how
jobs are being done and identify which way will only take a little time and a little motion to finish a
task. This replace the rule of thumb method (Hit or Miss Approach).
This principle says that we should not get stuck in a set routine with the old techniques of doing work, rather
we should be constantly experimenting to develop new techniques which make the work much simpler,
easier and quicker.
2. Scientifically select and then train, teach and develop the workers. Workers are being
chosen and train based on their abilities and skills to perform a specialized task that will eventually
makes them to become experts of the job.
3. Heartily cooperate with the workers so as to ensure that all work is done in accordance with
principles of science that has been developed. The managers work closely with the workers to
supervise their performance and to ensure increase in productivity by following the required
process.
According to this principle, all the activities done by different people must be carried on with a spirit of
mutual cooperation. Taylor has suggested that the manager and the workers should jointly determine
standards. This increases involvement and thus, in turn, increases responsibility. In this way we can expect
miraculous results.
4. Divide work and responsibility almost equally between the management and the workers.
This only means that both manager and the workers shares equal amount of responsibility wherein
the managers handles the planning functions as the workers will be performing the tasks.
According to this principle, the efficiency of each and every person should be taken care of right from his
selection. A proper arrangement of everybody’s training should be made.

ADMINISTRATIVE MANAGEMENT THEORY

This theory is developed by Henri Fayol, who is known as ―The Father of Modern
Management‖.
❖ focus on the efficient implementation of organizational management practices
It emphasizes on how managers perform his managerial functions that will both benefit the organization
and the employees.
❖ promotes top-down approach

This means that the command will come from the top management downwards to the last level of the
organizational structure.
❖ develops the 14 Principles of Management:
1. Division of labor
Dividing the full work of the organization among individuals and creating departments is called the division
of work. Division of work leads to specialization, and specialization helps to increases efficiency and
efficiency which results in improvements in the productivity and profitability of the organization.
2. Authority and Responsibility

Authority must be equal to Responsibility. According to Henri Fayol, there should be a balance between
Authority (Power) and Responsibility (Duties). The right to give orders should not be considered without
reference to responsibility. If the authority is more than responsibility, then chances are that a manager may
misuse it. If responsibility is more than authority, then he may feel frustrated.
3. Discipline
Outward mark of respect in accordance with formal or informal agreements between a firm and its
employees. Discipline means respect for the rules and regulations of the organization. Discipline may be Self-
discipline, or it may be Enforced discipline. No slacking or bending of rules, not allowed in any organization.
The works must respect the rules that run the organization. To establish discipline, good supervision and
impartial judgment are needed.
4. Unity of Command
According to this principle, a subordinate (employee) must have and receive orders from only one superior
(boss or manager). To put it another way, a subordinate must report to only one superior. It helps in
preventing dual subordination. This decreases the possibilities of “Dual subordination” which creates a
problem is a function of managers.

5. Unity of Direction
One head and one plan for a group of activities with the same objective. All activities which have the same
objective must be directed by one manager, and he must use one plan. This is called the Unity of Direction.
For example, all marketing activities such as advertising, sales promotion, pricing policy, etc., must be
directed by only one manager. He must use only one plan for all the marketing activities. Unity of direction
means activities aimed at the same objective should be organized so that there are one plan and one person
in charge.
6. Subordination of Individual Interest

The interest of one individual or one group should not prevail over the general good. The individual interest
should be given less importance, while the general interest should be given the most importance. If not, the
organization will collapse. The interest of the organizational goal should not be sabotaged by the interest of
an individual or on the group.
7. Remuneration
Remuneration is the price for services received. Pay should be fair to both the employee and the firm. If an
organization wants efficient employees and best performance, then it should have a good remuneration
policy. This policy should give maximum satisfaction to both employers and employees. It should include
both financial and non-financial incentives. Compensation should be based on a systematic attempt to
reward good performance.
8. Centralization
It is always present to a greater or lesser extent, depending on the size of the company and the quality of its
managers. In centralization, the authority is concentrated only in a few hands. However, in decentralization,
the authority is distributed to all the levels of management. No organization can be completely centralized
or decentralized. If there is complete centralization, then the subordinates will have no authority (power) to
carry out their responsibility (duties). Similarly, if there is complete decentralization, then the superior will
have no authority to control the organization. Therefore, there should be a balance between centralization
and decentralization. The degree to which centralization or decentralization should be adopted depends on
the specific organization, but managers should retain final responsibility but should give subordinates
enough authority to do the tasks successfully.
9. Scalar Chain of Authority

The chain of command, sometimes called the scalar chain, is the formal line of authority, communication,
and responsibility within an organization. The chain of command is usually depicted on an organizational
chart, which identifies the superior and subordinate relationships in the organizational structure. Or it is the
line of authority from top to bottom of the organization. This chain implements the unity-of-command
principle and allows the orderly flow of information. Under the unity of command principle, the instructions
flow downward along the chain of command and accountability flows upward. More clear-cut the chain of
command, the more effective the decision-making process and the greater the efficiency.

10. Maintenance of Order

A place for everything and everything in its place’ the right man in the right place. There should be an Order
for material/things and people in the organization. Order for things is called Material Order and order for
people is called ‘Social Order’. Material Order refers to “a place for everything and everything in its place.”
Social Order refers to the selection of the “right man in the right place”. There must be an orderly placement
of the resources such as Men and Women, Money, Materials, etc. Human and material resources must be in
the right place at the right time. Misplacement will lead to misuse and disorder.
11. Equity/fairness
While dealing with the employees a manager should use kindliness and justice towards employees equally.
Equity is a combination of kindness and justice. It creates loyalty and devotion in the employees toward the
organization. The equity principle suggests that the managers must be kind as well as equally fair to the
subordinates.
12. Stability/Security of Tenure

Although it could take a lot of time, Employees need to be given fair enough time to settle into their jobs. An
employee needs time to learn his job and to become efficient. The employees should have job security
because instability leads to inefficiency. Successful firms usually had a stable group of employees.
13. Employee Initiative to General Interest

Without limits of authority and discipline, all levels of staff should be encouraged to show initiative.
Management should encourage initiative. That is, they should encourage the employees to make their own
plans and to execute these plans. This is because an initiative gives satisfaction to the employees and brings
success to the organization. It allows the subordinates to think out a plan and do what it takes to make it
happen.
14. Promotion of team spirit or Esprit de Corps

Esprit de Corps means “Team Spirit”. Therefore, the management should create unity, co-operation, and
team-spirit among the employees. They should avoid dividing and rule policy. Harmony, cohesion among
personnel. It’s a great source of strength in the organization. It is a quality in every successful business.
These principles are guidelines for every management function. The manager must act according to the
14 principles of management in order to reach the goal and create a surplus. These 14 management
principles of Henri Fayol are universally accepted. They work as a guideline for managers to do their job
according to their responsibility.

BUREAUCRATIC THEORY
This theory is introduced by Max Weber.
❖ management is defined by clear set of rules
This theory believes that good performance can be derived when there are detailed rules that govern all
employees how they should.
❖ division of labor
It means that tasks are being divided among employees and the organization and take accountable for their
individual or group performance.
❖ promotes formal and impersonal relations
In this way, everyone is treated fairly and in accordance with the defined rules, this will also to avoid
favoritism.
❖ develops a clear hierarchical structure of authority
It means that each level in the hierarchy have authority that comes with the position and not with the
person, for example a subordinate cannot give orders to the manager even if he/she is the son of the owner
of the company because the position of the subordinates does not hold such authority.
❖ follows a legal-rational approach
This means that managers make objective decisions in accordance with the defined rules and regulations
and without bias. For example: the manager will have to promote an employee, he/she will perform the
process based on the qualifications, expertise and performance of the personnel and not because of personal
reasons.
ORGANIZATIONAL BEHAVIOR (OB) APPROACH

This theory is supported by Robert Owen, Mary Parker Follett, Hugo
Munsterberg, and Chester Barnard.
❖ focus on analyzing and understanding the behavior of people within

their groups and at work

This is a very important task for the managers to consider in order to create an organizational culture that
encourage continuous growth and development among their people and influences and shapes their
behaviours in a manner that will contribute in the realization of the organizational objectives.
❖ recognize the psycho-social aspects of every employees
This theory also give emphasis on the various needs of every individual and how their behavior affects their
way in dealing with other people so that manager can initiate actions and make crucial decisions that will help
satisfying those needs and enables them to perform well on their jobs and be more productive to support the
company’s goals.
❖ promotes human relations that helps people to learn how to get along well with
others
If every individual understand each other it will be easy for them to cooperate and to work harmoniously with
one another towards the attainment of organizational goals. Also if the employee feels the sense of
belongingness and importance within the group as well as with the organization they worked in, it boosts their
morale and they are likely to become more productive.
TOTAL QUALITY MANAGEMENT (TQM)

This theory is proposed by quality experts, W. Edwards Deming and Joseph M.
Juran
❖ focus on customer satisfaction both external and internal
This theory give emphasis on how to meet the needs and demands of the external customers in terms of
providing quality products and services and at the same time the internal which are the employees through
providing continuous development and rewards system.
❖ promotes the continuous improvement in the quality of both the products and
services as well as the people
This means that constant improvement of the products through continuous market research are being
considered to be able to meet the increasing demand of the customers and for the employees, by providing
them with various seminars and trainings that will further develop their skills and abilities as well their
performance that will contribute to the company’s competitive edge in terms of its profitability and
sustainability.
Total quality management is a much broader concept than just controlling the quality of the
product itself. Total quality management is the coordination of efforts directed at improving customer

satisfaction, increasing employee participation, strengthening supplier partnerships, and facilitating

an organizational atmosphere of continuous quality improvement. TQM is a way of thinking about
organizations and how people should relate and work in them. TQM is not merely a technique, but a
philosophy anchored in the belief that long‐term success depends on a uniform commitment to
quality in all sectors of an organization.
The concept of quality started in Japan when the country began to rebuild after World War II. Amidst
the bomb rubble, Japan embraced the ideas of W. Edwards Deming, an American whose methods
and theories are credited for Japan's postwar recovery. Ironically enough, Deming's ideas were
initially scoffed at in the U.S. As a result, TQM took root in Japan 30 years earlier than in the United
States. American companies took interest in Deming's ideas only when they began having trouble
competing with the Japanese in the 1980s.
Deming's management system was philosophical, based on continuous improvement toward the
perfect ideal. He believed that a commitment to quality requires transforming the entire organization.
His philosophy is based on a system known as the Fourteen Points. These points express the actions
an organization must take in order to achieve TQM:
1. Create constancy of purpose for improvement of product and service. Dr. Deming
suggests a radical new definition of a company's role: A better way to make money is to stay
in business and provide jobs through innovation, research, constant improvement, and
maintenance.
2. Adopt a new philosophy. For the new economic age, companies need to change into
―learning organizations.‖ Furthermore, we need a new belief in which mistakes and negativism
are unacceptable.
3. Cease dependence on mass inspection. Eliminate the need for mass inspection by
building quality into the product.
4. End awarding business on price. Instead, aim at minimum total cost, and move towards
single suppliers.
5. Improve the system of production and service constantly. Improvement is not a one‐
time effort. Management is obligated to continually look for ways to reduce waste and improve
quality.
6. Institute training. Too often, workers learn their jobs from other workers who have never
been trained properly.
7. Institute leadership. Leading consists of helping people to do a better job and to learn by
objective methods.
8. Drive out fear. Many employees are afraid to ask questions or to take a position—even when
they do not understand what their job is or what is right or wrong. The economic losses from
fear are appalling. To assure better quality and productivity, it is necessary that people feel
secure.

9. Break down barriers between departments. Often, company departments or units

compete with each other or have goals that conflict. They do not work as a team; therefore
they cannot solve or foresee problems. Even worse, one department's goal may cause trouble
for another.
10. Eliminate slogans, exhortations, and numerical targets for the workforce. These
never help anybody do a good job. Let workers formulate their own slogans; then they will be
committed to the contents.
11. Eliminate numerical quotas or work standards. Quotas take into account only numbers,
not quality or methods. They are usually a guarantee of inefficiency and high cost.
12. Remove barriers that prevent workers from taking pride in their workmanship. Too
often, misguided supervisors, faulty equipment, and defective materials stand in the way of
good performance. These barriers must be removed.
13. Institute a vigorous program of education. Both management and the work force will
have to be informed of new knowledge and techniques.
14. Take action to accomplish the transformation. It will require a special top management
team with a plan of action to carry out the quality mission. Workers cannot do it on their own,
nor can managers. A critical mass of people in the company must understand the Fourteen
Points.
Deming emphasized surveying customers, consulting production‐line workers to help solve quality
problems, and teamwork. His system was readily accepted in Japan, where workers and
management were used to uniformity and allegiance to institutions. Japanese companies learned to
collect data for the statistical monitoring and measuring of customer satisfaction. The goals of these
companies were to produce many of the same consumer goods—better and cheaper—that were
produced in the U.S. These Japanese companies succeeded, much to the chagrin of companies in the
U.S. Deming saw businesses as bedrock institutions in a society—much like churches and schools.
Companies attain long‐term success only if business leaders make their employees' contributions
matter. If organizations use their employees' ideas, they will improve efficiency and productivity.
Most of the applications of Deming's ideas occurred in the 1950s and 1960s in Japan. In the United
States, the desperation needed for executives to finally try a ―radical‖ plan such as Deming's came
from economic rather than wartime defeats. Most notably, in the 1980s, Japanese car manufacturers
pushed their market share toward 25 percent, sending fear throughout Detroit. The Ford Motor Co.
called on Deming after NBC featured his successes in a documentary, ―If Japan Can, Why Can't We?‖
Deming took Ford's invitation as notice that his home country was finally ready for his program. He
continued teaching seminars until his death, at age 93, in 1993. Deming's system made such an
impression that he is known at the Father of TQM.

THEORY Z OF OUCHI IS DR. WILLIAM OUCHI'S SO CALLED "JAPANESE

MANAGEMENT" STYLE POPULARIZED DURING THE ASIAN ECONOMIC
BOOM OF THE 1980S.
For Ouchi, 'Theory Z' focused on increasing employee loyalty to the company by providing a job for
life with a strong focus on the well-being of the employee, both on and off the job. According to
Ouchi, Theory Z management tends to promote stable employment, high productivity, and high
employee morale and satisfaction. "Japanese Management" and Theory Z itself were based on Dr.
W. Edwards Deming's famous "14 points". Deming, an American scholar whose management and
motivation theories were more popular outside the United States, helped lay the foundation of
Japanese organizational development during their expansion in the world economy in the 1980s.
Deming's theories are summarized in his two books, Out of the Crisis and The New Economics, in
which he spells out his "System of Profound Knowledge". He was a frequent advisor to Japanese
business and government leaders, and eventually became a revered counselor. Deming was
awarded the Second Order of the Sacred Treasures by the former Emperor Hirohito, and American
businesses tried to use his "Japanese" approach to improve their competitive position.
LIVING IN A PLURALISTIC SOCIETY
E Pluribus Unum
Do you belong to any clubs or groups? Have you ever
joined a local soccer team, participated in a Model UN
program, or helped fundraise for your child's school?
These are all ways that we are a part of a pluralistic
society.
In the United States, our motto is e pluribus unum, which

is Latin for ''out of many, one.'' We are a nation built on
many different groups, people, and interests. We
fundamentally disagree on the role government should play in our personal lives, whether it involves
regulating businesses, our bodies, our children, or our deaths. We organize ourselves into groups
that help us make sense of our political beliefs. As an outsider, French historian Alexis de Tocqueville
observed American democracy and remarked that ''Americans of all ages, all stations of life, and all
types of disposition are forever forming associations.'' This preference for group activity is uniquely
central to American culture. We like to organize ourselves into social groups, sports teams, book
clubs, and churches and so on.

A pluralistic society is defined as a place where different religious, ethnic and cultural groups live
together. But this kind of definition is not correct. The fact is that pluralism is a law of nature. Every
society is a plural society; even every family is a plural family.
Studies show that every man is Mr Different and every woman is Ms Different. Therefore, any
accumulation of humans is it of the same culture or of different culture is bound to exhibit differences
in tastes, habits, ideas, likes, dislikes, and so on.
Pluralism refers to a basic quality of modern societies, where a wide (but not all-encompassing)
range of religious and political beliefs – diversity – is accepted and where the ideal societies
envisaged by different political parties may be incompatible with each other. For example, citizens
who belong to radical socialist parties strive to achieve a society which would be completely alien to
citizens of a right-wing, capitalist persuasion. In pluralist societies, the general influence of many
traditions and values, including religious belief, has waned. Individuals can, and must, work out for
themselves which values they adhere to and how they wish to live their lives. Pluralist societies
therefore pose a challenge: individuals may enjoy a greater degree of personal liberty than ever
before but, on the other hand, they need to work harder to bargain for agreement and compromise,
without which no community can survive. This raises the question as to which political system can
provide the best framework for the organization of decision making in an open, pluralist society.
What should be done in such a situation? How to establish normal relationships and live in peace with
those who are different from you? How should one establish harmony in society or family?
Political Parties
In the earliest days of the United States, Federalists and Anti-Federalists were the first major political
groups to arise. Federalists supported the newly-written Constitution and tried to get it ratified,
writing about it in a well-known series of essays coined The Federalist Papers. Anti-Federalists
opposed it, because it did not protect individuals against the abuse of power by the government.
They wanted to add a Bill of Rights. This disagreement led to the creation of the first ten
Amendments to the Constitution. Even in this disagreement, the most famous Federalist, James
Madison, cautioned against creating factions, or divisions between groups of Americans. He worried
that by fighting against each other, these groups would hurt the new nation's success and security.
Cultural pluralism is a term used when smaller groups within a larger society maintain their unique
cultural identities, and their values and practices are accepted by the wider dominant culture
provided they are consistent with the laws and values of the wider society. As a sociological term, the
definition and description of cultural pluralism has evolved over time. It has been described as not
only a fact but a societal goal.
In a pluralist culture, groups not only co-exist side by side, but also consider qualities of other groups
as traits worth having in the dominant culture. Pluralistic societies place strong expectations of

integration on members, rather than expectations of assimilation. The existence of such institutions
and practices is possible if the cultural communities are accepted by the larger society in a pluralist
culture and sometimes require the protection of the law. Often the acceptance of a culture may
require that the new or minority culture remove some aspects of their culture which is incompatible
with the laws or values of the dominant culture.
Cultural pluralism is distinct from (though often confused with) multiculturalism. Multiculturalism lacks
the requirement of a dominant culture. If the dominant culture is weakened, societies can easily pass
from cultural pluralism into multiculturalism without any intentional steps being taken by that society.
If communities function separately from each other, or compete with one another, they are not
considered culturally pluralistic.
In 1971, the Canadian government referred to cultural pluralism, as opposed to multiculturalism, as

the "very essence" of their nation's identity. Cultural pluralism can be practiced at varying degrees by
a group or an individual. A prominent example of pluralism is 20th Century United States, in which a
dominant culture with strong elements of nationalism, a sporting culture, and an artistic culture
contained also smaller groups with their own ethnic, religious, and cultural norms.
The idea of cultural pluralism in the United States has its roots in the transcendentalist movement
and was developed by pragmatist philosophers such as Horace Kallen, William James and John
Dewey, and later thinkers such as Randolph Bourne. One of the most famous articulations of cultural
pluralism can be found in Bourne's 1916 essay "Trans-National America".
Philosopher Horace Kallen is widely credited as being the originator of the concept of cultural
pluralism. Kallen's 1915 essay in The Nation, Democracy versus the Melting Pot, was written as an
argument against the concept of the "Americanization" of European immigrants. He later coined the
term cultural pluralism in 1924 when he published Culture and Democracy in the United States. In
1976, the concept was further explored in Crawford Young's book The Politics of Cultural Pluralism.
Young's work, in African studies, emphasizes the flexibility of the definition of cultural pluralism within
a society.
More recent advocates include moral and cultural anthropologist Richard Shweder. In 1976, an article
in the Journal of Sociology and Social Welfare offered a redefinition of cultural pluralism in which it is
described as a social condition in which communities of different cultures live together and function in
an open system.
Weaknesses of Pluralistic Society

There is a risk of alienation among two factions owing to overexposure to each other‘s belief
systems. This can lead to hostilities which can easily escalate even by a slightest trigger. This also

can be due to favoritism from the authorities towards any particular group over the other. It may be
difficult for those who have lived in such a society for all of their lives, to live and adjust in a
homogeneous society in a short span of time.
Nations like India and the United States are examples of pluralistic society. The citizens of India
follow various religions like Hinduism, Christianity, Islam, Sikhism, Jainism, Buddhism, etc., and yet
they stay together. On the other hand in the United States, there are people from varied ethnicity
and belonging to various cultures living together. Another example of a pluralistic society would be of
Turkey which serves as a melting pot for cultures from two continents. When the formation of a
pluralistic society is encouraged, then it is known as active pluralism. The essence of pluralism lies in
forging and building social bonds.
Diversity and pluralism

How can people live together peacefully?
In an authoritarian system – one-party rule, theocracy,

or even dictatorship – this problem is solved by giving one
player (for example, a party or leader) the power to
decide on everyone‘s behalf what lies in the common
interest. This solution meets the challenge of pluralism by
evading it – by sacrificing the liberty of the individuals.
The potential of conflict in pluralist societies is
suppressed, but the price to be paid is a high one: many
problems are not solved properly and fairly, as they may
no longer be articulated clearly.
In a democracy, citizens basically agree on a set of principles, on rules of procedure and rights that
allow them to disagree on many issues, but which also offer the tools to enable them to reach
agreement by non-violent means. Viewed in this way, democracy supports peace in pluralist societies
by civilising conflict rather than suppressing it. The common interest is something to be worked out
together, and bargained for, rather than to be defined in advance by any single party. Disagreement
and conflict are normal and by no means harmful as long as their destructive potential is kept under
control. In democracy as a form of government, therefore, citizens are accorded such basic rights as
freedom of conscience, belief and expression. When citizens use these rights, they will create
disagreement and conflict, and they will have to bargain for a solution. To ensure that they agree on
the rules of how to handle the conflicts and finally solve them, citizens of pluralist democracies are
deemed to enter into a social contract with all other citizens to abide within the social and political
conventions of that society.

Such a social contract includes the principle of rule by the majority. For some minority groups, the
disadvantage of this is that their own radical vision may never be achieved through the ballot box. On
the other hand, such societies guarantee the rights of political minorities to pursue legitimate political
ends unhindered by the state. Thus, pluralist democracies always live with the possibility of the
election of radical governments, whose members might be inclined to restrict the activities of political
opponents. This is why it is important to have legislation for human rights and freedoms built into the
constitutions of democratic countries.
Every generation must understand this complex set of challenges in pluralist

societies and how they may be met in a democratic community.
This includes an appreciation for the unwritten social contract without which no democratic
community can survive. Education for Democratic Citizenship and Human Rights Education can
support students to develop the understanding, attitudes and skills that they need in order to
participate as citizens.
ETHICAL AND SOCIAL RESPONSIBILITY
What is ethical behavior?

Are you the type of person who usually ‗does the right thing‘? How do
you know what the ‗right thing‘ is?
The branch of philosophical study that focuses on ‗ethics‘ is concerned with studying and/or building
up a coherent set of ‗rules‘ or principles by which people ought to live. The theoretical study of ethics
is not normally something that many people would regard as being necessary in order for them to
conduct their everyday activities.
In place of systematically examined ethical frameworks, most people instead carry around a useful
set of day-to-day ‗rules of thumb‘ that influence and govern their behavior; commonly, these include
rules such as ‗it is wrong to steal‘, ‗it is right to help people in need‘, and so on. But sometimes the
vicissitudes and complexities of life mean that these simple rules are sometimes put to the test.
Consider the idea that it is wrong to kill. Does this mean that capital punishment is wrong? Is it
wrong to kill animals? Is killing in self-defense wrong? Is the termination of pregnancy wrong? Is
euthanasia wrong? If we try to apply our everyday notions of right and wrong to these questions,
straightforward answers are not always forthcoming. We need to examine these questions in more
detail; and we need theoretical frameworks that can help us to analyze complex problems and to find
rational, coherent solutions to those problems. Whilst some people attempt to do this work
individually, for themselves, philosophers attempt to find general answers that can be used by
everyone in society.

There are three broad areas of ethical study:

1. Meta-ethics, which focuses on the meaning of ethical terms themselves (for instance, ‗what
is goodness?‘), and on questions of how ethical knowledge is obtained (for instance, ‗how can
I distinguish what is good from what is bad?‘), rather than on the more applied question of
‗what should I do in a particular situation?‘ Meta-ethics is therefore concerned with the nature
of ethical properties, statements, attitudes and judgments. Meta-ethics examines such themes
as what moral questions mean, and on what basis people can know what is ‗true‘ or ‗false‘.
2. Normative ethics, in contrast, is the study of ethical acts. It therefore focuses explicitly on
questions of ‗what is the right thing to do?‘ in general. Normative ethics is concerned with
questions of what people ought to do, and on how people can decide what the ‗correct‘ moral
actions to take are.
3. Applied ethics, which is concerned with how people can achieve moral outcomes in specific
situations. Therefore, it is concerned with the philosophical examination of particular – and
often complex – issues that involve moral judgments. Areas such as bioethics, environmental
ethics, development ethics and business/corporate ethics may be regarded as areas of applied
ethics. (The distinction between normative and applied ethics, however, is becoming
increasingly blurred.)
Meaning of Management Ethics:
‘Management Ethics’ is related to social responsiveness of a firm. It is ―the discipline dealing with
what is good and bad, or right and wrong, or with moral duty and obligation. It is a standard of
behavior that guides individual managers in their works‖.
―It is the set of moral principles that governs the actions of an individual or a group.‖
Business ethics is application of ethical principles to business relationships and activities. When
managers assume social responsibility, it is believed they will do it ethically, that is, they know what
is right and wrong.
Managerial ethics are standards of conduct or moral judgment used by managers of organizations in
caring out their business. Archi B Carroll notes that three major levels of moral or ethical, judgment
characterize managers: immoral management, amoral management, and moral management.
Immoral Management
Immoral management not only lacks ethical principles but also is actively opposed to ethical
behaviour. This perspective is characterized by principal or exclusive concern for company gains,
emphasis on profits and company success at virtually any price, lack of concern about the desires of

others to be treated fairly, views of laws as obstacles to be overcome, and a willingness to "cut
corners".
Moral Management
In contrast to immoral management, moral management strives to follow ethical principles and
percepts. While moral managers also desire to succeed, they seek to do so only within the
parameters of ethical standards and the ideals of fairness, justice, and due process. As a result,
moral managers pursue business objectives that involve simultaneously making a profit and engaging
in legal and ethical behaviors.
Amoral Management
The amoral management approach is neither immoral nor moral but, rather, ignores or is oblivious to
ethical considerations. There are two types of amoral management:
 Intentional: Amoral managers do not include ethical concerns in their decision - making, or
behavior; because they basically think that general ethical standards are more appropriate to
other areas of life than to business.
 Unintentional: Amoral managers also do not think about ethical issues in their business
dealings, but the reason is different. These managers are basically inattentive or incentive to
the moral implications of their decision-making, actions, and behaviour. Overall amoral
managers pursue profitability as a goal and may be generally well meaning, but intentionally
or unintentionally they pay little attention to the impacts of their behaviours on others.
What is International Business?

International business refers to the trade of goods, services,
technology, capital and/or knowledge across national borders and at
a global or transnational scale. It involves cross-border transactions of
goods and services between two or more countries.
Transactions of economic resources include capital, skills, and people

for the purpose of the international production of physical goods and
services such as finance, banking, insurance, and construction. International business is also known
as globalization.
To conduct business overseas, multinational companies need to bridge separate national markets into
one global marketplace. There are two macro-scale factors that underline the trend of greater
globalization. The first consists of eliminating barriers to make cross-border trade easier (e.g. free
flow of goods and services, and capital, referred to as "free trade"). The second is technological

change, particularly developments in communication, information processing, and transportation

technologies.
Means of businesses
Entry modes: Export/import, wholly owned subsidiary, merger or acquisition, alliances and joint
ventures, licensing
Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey
operations, management contracts, direct investment and portfolio investments.
Functions: marketing, global manufacturing and supply chain management, accounting, finance,
human resources.
Overlaying alternatives: choice of countries, organization and control mechanisms
Physical and social factors

Geographical influences: There are many different geographic factors that affect international
business. These factors are: the geographical size, the climatic challenges happening throughout the
world, the natural resources available on a specific territory, the population distribution in a country.
Social factors: Political policies: political disputes, particularly those that result in the military
confrontation, can disrupt trade and investment.
Legal policies: domestic and international laws play a big role in determining how a company can
operate overseas.
Behavioral factors: in a foreign environment, the related disciplines such as anthropology,
psychology, and sociology are helpful for managers to get a better understanding of values,
attitudes, and beliefs.
Economic forces: economics explains country differences in costs, currency values, and market
size.
Global Corporations
A global company is generally referred to as a multinational corporation (MNC). An MNC is a company
that operates in two or more countries, leveraging the global environment to approach varying
markets in attaining revenue generation.
These international operations are pursued as a result of the strategic potential provided by
technological developments, making new markets a more convenient and profitable pursuit both in
sourcing production and pursuing growth.
International operations are therefore a direct result of either achieving higher levels of revenue or a
lower cost structure within the operations or value-chain. MNC operations often attain economies of
scale, through mass producing in external markets at substantially cheaper costs, or economies of
scope, through horizontal expansion into new geographic markets. If successful, these both result in

positive effects on the income statement (either larger revenues or stronger margins), but contain
the innate risk in developing these new opportunities.
Challenges
However, despite the general opportunities a global market provides, there are significant
challenges MNCs face in penetrating these markets. These challenges can loosely be defined
through four factors:
1. Public Relations: Public image and branding are critical components of most businesses.
Building these public relations potential in a new geographic region is an enormous challenge,
both in effectively localizing the message and in the capital expenditures necessary to create
momentum.
2. Ethics: Arguably the most substantial of the challenges faced by MNCs, ethics have
historically played a dramatic role in the success or failure of global players. For example, Nike
had its brand image hugely damaged through utilizing ‗sweat shops‘ and low wage workers in
developing countries. Maintaining the highest ethical standards while operating in developing
countries is an important consideration for all MNCs.
3. Organizational Structure: Another significant hurdle is the ability to efficiently and
effectively incorporate new regions within the value chain and corporate structure.
International expansion requires enormous capital investments in many cases, along with the
development of a specific strategic business unit (SBU) in order to manage these accounts and
operations. Finding a way to capture value despite this fixed organizational investment is an
important initiative for global corporations.
4. Leadership: The final factor worth noting is attaining effective leaders with the appropriate
knowledge base to approach a given geographic market. There are differences in strategies
and approaches in every geographic location worldwide, and attracting talented managers
with high intercultural competence is a critical step in developing an efficient global strategy.
Combining these four challenges for global corporations with the inherent opportunities presented by
a global economy, companies are encouraged to chase the opportunities while carefully controlling
the risks to capture the optimal amount of value. Through effectively maintaining ethics and a strong
public image, companies should create strategic business units with strong international leadership in
order to capture value in a constantly expanding global market.
Countertrade
Countertrade is a system of exchange in which goods and services are
used as payment rather than money.
Bartering: Bartering involves exchanging goods or services for other

goods or services as payment.

There are five main variants of countertrade:

1. Barter: Exchange of goods or services directly for other goods or services without the use of
money as means of purchase or payment.
2. Switch trading: Practice in which one company sells to another its obligation to make a
purchase in a given country.
3. Counter purchase: Sale of goods and services to one company in another country by a
company that promises to make a future purchase of a specific product from the same
company in that country.
4. Buyback: This occurs when a firm builds a plant in a country, or supplies technology,
equipment, training, or other services to the country, and agrees to take a certain percentage
of the plant‘s output as partial payment for the contract.
5. Offset: Agreement that a company will offset a hard currency purchase of an unspecified
product from that nation in the future. Agreement by one nation to buy a product from
another, subject to the purchase of some or all of the components and raw materials from the
buyer of the finished product, or the assembly of such product in the buyer nation.
Countertrade also occurs when countries lack sufficient hard currency or when other types of market
trade are impossible. In 2000, India and Iraq agreed on an ―oil for wheat and rice‖ barter deal,
subject to UN approval under Article 50 of the UN Persian Gulf War sanctions, that would facilitate
300,000 barrels of oil delivered daily to India at a price of $6.85 a barrel, while Iraq oil sales into Asia
were valued at about $22 a barrel. In 2001, India agreed to swap 1.5 million tons of Iraqi crude
under the oil-for-food program.
Opportunities
As gross domestic product (GDP) growth migrates from mature economies, such as the US and EU
member states, to developing economies, such as China and India, it becomes highly relevant to
capture growth in higher growth markets. It is a particularly strong visual representation of the
advantages a global corporation stands to capture, where the darker green areas represent where
the highest GDP growth potential resides. High growth in the external environment is a strong
opportunity for most incumbents in the market.
What is a Multinational Corporation?

A multinational corporation is a company that operates in its home country, as well as in other
countries around the world. It maintains a central office located in one country, which coordinates
the management of all other offices such as administrative branches or factories.
Multinational Corporation
It isn‘t enough to call a company that exports its products to more than one country a multinational
company. They need to maintain an operation in other countries and must make a foreign direct
investment there.

Multinational Firms
With the advent of improved communication and technology,
corporations have been able to expand into multiple countries.
Multinational Corporation: A corporation or enterprise that operates in multiple countries.
A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation registered in

more than one country or has operations in more than one country. It is a large corporation which
both produces and sells goods or services in various countries. It can also be referred to as an
international corporation. The first multinational corporation was the Dutch East India Company.
 Ford: Ford is a multinational corporation with operations throughout the world.
Corporations may make a foreign direct investment. Foreign direct investment is direct investment
into one country by a company located in another country. Investors buy a company in the country
or expand operations of an existing business in the country.
A corporation may choose to locate in a special economic zone, a geographical region with economic
and other laws that are more free market- oriented than a country‘s typical or national laws.
Multinational corporations are important factors in the processes of globalization. National and local
governments often compete against one another to attract MNC facilities, with the expectation of
increased tax revenue, employment and economic activity. To compete, political powers push toward
greater autonomy for corporations. MNCs play an important role in developing economies of
developing countries. Many economists argue that in countries with comparatively low labor costs
and weak environmental and social protection, multinationals actually bring about a ―race to the top.‖
While multinationals will see a low tax burden or low labor costs as an element of comparative
advantage, MNC profits are tied to operational efficiency, which includes a high degree of
standardization. Thus, MNCs are likely to adapt production processes in many of their operations to
conform to the standards of the most rigorous jurisdiction in which they operate.
As for labor costs, while MNCs pay workers in developing countries far below levels in countries
where labor productivity is high (and accordingly, will adopt more labor-intensive production
processes), they also tend to pay a premium over local labor rates of 10% to 100%.
Finally, depending on the nature of the MNC, investment in any country reflects a desire for a
medium- to long-term return, as establishing a plant, training workers and so on can be costly.
Therefore, once established in a jurisdiction, MNCs are potentially vulnerable to arbitrary government
intervention like expropriation, sudden contract renegotiation and the arbitrary withdrawal or
compulsory purchase of licenses.

Thus both the negotiating power of MNCs and the ―race to the bottom‖ critique may be overstated
while understating the benefits (besides tax revenue) of MNCs becoming established in a jurisdiction.
Characteristics of a Multinational Corporation

Not all businesses can be called a multinational corporation. There are certain features that must be
met for them to be named as such. The following are the characteristics of multinational
corporations:
1. Very high assets and turnover to become a multinational corporation, the business must be
large and must own a huge amount of assets, both physical and financial. The company‘s
targets are so high that they are also able to make substantial profits.
2. Network of branches multinational companies keep production and marketing operations in
different countries. In each country, the business oversees more than one office that functions
through several branches and subsidiaries.
3. Control, in relation to the previous point, the management of the offices in other countries is
controlled by one head office located in the home country. Therefore, the source of command
is found in the home country.
4. Continued growth, multinational corporations keep growing. Even as they operate in other
countries, they strive to grow their economic size by constantly upgrading and even doing
mergers and acquisitions.
5. Sophisticated technology, when a company goes global, they need to make sure that their
investment will grow substantially. In order to achieve substantial growth, they need to make
use of capital-intensive technology, especially in their production and marketing.
6. Right skills, multinational companies employ only the best managers who are capable of
handling huge funds, using advanced technology, managing workers, and running a huge
business entity.
7. Forceful marketing and advertising, one of the most effective survival strategies of
multinational corporations is spending a huge amount of money on marketing and advertising.
It is how they are able to sell every product or brand they make.
8. Good quality products, because they use capital-intensive technology, they are able to produce
top-of-the-line products.
Reasons for Being a Multinational Corporation

There is a reason why many companies want to become multinational corporations. Here are some of
them:
1. Access to lower production costs it is a very common reason for companies to go global
because if they set up production in other countries, especially in developing economies, they
spend less on production costs. Though outsourcing is a way of doing this, setting up
manufacturing plants in other countries may be even cheaper.
2. Proximity to target international markets it is beneficial to set up business in countries where
the target market of a company is. It helps reduce transport costs, and it gives multinational

corporations easier access to consumer feedback and information, as well as to consumer

intelligence.
3. Avoidance of tariffs when a company produces or manufactures its products in another
country where they sell them, they are exempt from import quotas and tariffs.
Models of Multinational Corporations

The following are the different models of multinational corporations:
1. Centralized in the centralized model, companies put up an executive headquarters in their
home country and then build various manufacturing plants and production facilities in other
countries. Its most important advantage is being able to avoid tariffs and import quotas and
take advantage of lower production costs.
2. Regional the regionalized model states that a company keeps its headquarters in one country
that supervises a collection of offices that are located in various countries. Unlike the
centralized model, the regionalized model includes subsidiaries and affiliates that all report to
the headquarters.
3. Multinational in the multinational model, a parent company operates in the home country and
puts up subsidiaries in different countries. The difference is that the subsidiaries and affiliates
are more independent in their operations.
Models of MNCs
Advantages of Being a Multinational Corporation there are many benefits of being a multinational
corporation including:
1. Efficiency in terms of efficiency, multinational companies are able to reach their target
markets more easily because they manufacture in the countries where the target markets are.
Also, they can easily access raw materials and cheaper labor costs.
2. Development in terms of development, multinational corporations pay better than domestic
companies, making them more attractive to the local labor force. They are favored in some
way by the government because they also pay local taxes, which help boost the country‘s
economy.
3. Employment in terms of employment, multinational corporations hire local workers who
know the culture of their place and are thus able to give helpful insider feedback on what the
locals want.
4. Innovation as multinational corporations employ both locals and foreign workers, they are
able to come up with products that are more creative as a result of their convergence.
Congratulations for finishing Prelim Module.

Cbme1 Prelim

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CBME1: BUSINESS ORGANIZATION and MANAGEMENT || MODULE 1 || PRELIM ||

CARD-MRI Development Institute, Inc. Modular Learning Page 1 of 31

Course This is an introductory course in management for business and

Evidence of To assess the students acquired competencies and/or learning outcomes,

All activities must be written in a separate paper and to be submitted

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Summative Description of expectation, real-world context, and Rubrics

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Icon Used in this module

Activation of your prior knowledge icon.

Acquisition of new knowledge icon.

Acquisition of new knowledge icon (for online references transcription)

Application of acquired knowledge and/or competency icon.

Assessment of acquired knowledge and/or competency icon.

CARD-MRI Development Institute, Inc. Modular Learning Page 4 of 31

Good day everyone!

Welcome to your Business Organization and

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Welcome to Module 1 of your Business Organization and Management subject. This

Our objectives for Lesson 1 are the following:

Let’s activate your prior knowledge!

 Define management in your own words, based on what you

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Let’s Acquire New Knowledge!

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Steps in Planning Function

Planning function of management involves following steps:

2. Establishment of Planning Premises

3. Choice of alternative course of action

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4. Formulation of derivative plans

6. Follow up/Appraisal of plans

The Evolution of Management Thought and the Evolution of Management Theories

Here are the management theories:

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SCIENTIFIC MANAGEMENT THEORY

❖ apply scientific approach in doing a task. It follows a step-by-step procedure in performing a

❖ introduce the Principles of Scientific Management

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ADMINISTRATIVE MANAGEMENT THEORY

❖ promotes top-down approach

❖ develops the 14 Principles of Management:

2. Authority and Responsibility

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6. Subordination of Individual Interest

9. Scalar Chain of Authority

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10. Maintenance of Order

12. Stability/Security of Tenure

13. Employee Initiative to General Interest

14. Promotion of team spirit or Esprit de Corps

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❖ management is defined by clear set of rules

❖ promotes formal and impersonal relations

❖ develops a clear hierarchical structure of authority

❖ follows a legal-rational approach

ORGANIZATIONAL BEHAVIOR (OB) APPROACH

❖ focus on analyzing and understanding the behavior of people within

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❖ recognize the psycho-social aspects of every employees

TOTAL QUALITY MANAGEMENT (TQM)

❖ focus on customer satisfaction both external and internal