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Nature and Concept of 4. LEADING/DIRECTING
Management
Management
➔ It is the “Brain of Enterprises”
➔ Coordination of Human Effort and
Material Resource toward the
organization to achieve its objectives
➔ Management is the process of
coordinating and overseeing the work
performance of individuals working
together in organizations, so that they
could efficiently accomplish their
chosen aims or goals. It is also
defined the process of designing and
maintaining an environment for
efficiently accomplishing selected
aims (Heinz, Weihrich, and Koontz,
2005).
History of Management
➔ The word manage comes from the
Italian word “Maneggiare” meaning to
handle; which in turn derives from the
Latin word “Manus” meaning hand.
Functions of Management
1. PLANNING
➔ Involves determining the
organization’s goals or performance
objectives,
➔ defining strategic actions that must be
done to accomplish them, and
developing coordination and
integration activities.
2. ORGANIZING
➔ Demands assigning tasks, setting
aside funds, and bringing harmonious
relations among the individuals and
work groups or teams in the
organization
3. STAFFING
➔ Indicates filling in the different job
positions in the organization’s
structure
➔ Entails influencing or motivating
subordinates to do their best so that
they would be able to help the
organization’s endeavor to attain their
set goals
5. CONTROLLING
➔ Involves evaluating and, if necessary,
correcting the performance of the
individuals or work groups or teams
to ensure that they are all working
toward the previously set goals and
plans of the organization.
The Evolution of the Management
Theories are Divided into Three:
1. The Classical Theory of Management
2. Neo-Classical Theory
3. The Modern Management Theory
Intrinsic to the Nature of
Management
1. COORDINATION
➔ Harmonious, integrated action of the
various parts and processes of an
organization.
2. EFFICIENCY
➔ Being able to yield the maximum
output from a minimum amount of
input.
3. EFFECTIVENESS
➔ To produce an effect, or being able to
do things correctly.
Evolution of Management
Theories
1. THE CLASSICAL THEORY OF
MANAGEMENT
➔ Oldest formal school of thought which
began around 1900 and continued into
the 1920s
➔ This theory is mainly concerned with
the increasing efficiency of workers
and organizations based on
management practices, which were an
outcome of careful observation
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The Classical Theory of
Management has three kinds of
Management:
SCIENTIFIC MANAGEMENT
➔ Scientific Management focuses on
worker and machine relationships.
➔ Organizational productivity can be
increased by increasing the efficiency
of production processes
➔ F.W. Taylor (1856-1915)
Scientific Management Principles (under
Scientific Management)
➔ develop a science for each element of
an individual’s work to replace the old
rule of thumb method.
➔ scientifically select and then train,
teach, and develop workers
➔ heartily cooperate with the workers so
as to ensure that all the work is done
in accordance with the principles of
the science that has been developed.
➔ divide work and responsibility almost
equally between management and
workers.
BUREAUCRATIC MANAGEMENT
➔ Involves rules and regulations to
eliminate managerial inconsistencies
➔ A Bureaucracy should have: Written
Rules, System of task relationships,
Fair evaluation and reward, and
Hierarchy of authority
➔ Max Weber (1864-1920)
ADMINISTRATIVE MANAGEMENT
➔ An approach in management and
increasing productivity by
emphasizing organizational structure
and human behaviour
➔ Henri Fayol (1841-1925)
TOTAL QUALITY MANAGEMENT
Management philosophy that focuses
on the satisfaction of customers, their
needs, and expectations
W. Edwards Deming (1900-1993) and
Joseph M. Juran (1904-2008)
★ Deming’s 14 Points for Top
Management
1. Create a constancy of purpose for
improvement of products and services
2. Adopt a new TQM philosophy
3. Cease dependence on mass
inspection by doing things right and
doing it right the first time
4. End the practice of awarding business
on the basis of price tag alone.
5. Constantly improve the system of
production and services
6. Institute training.
7. Adopt and institute leadership.
8. Drive out fear
9. Break down barriers between staff
areas.
10. Eliminate slogans, focus on correction
of defects in the system.
11. Eliminate numerical quota for the
workforce.
12. Remove barriers that rob people of
“pride of workshop”
13. Encourage education and
self-improvement for everyone.
14. Take action to accomplish the
transformation.
★ Juran’s Fitness Quality
1. Quality of Design- through market
research, product, and concept
2. Quality of Conformance- through
management, manpower, and
technology
3. Availability- through reliability,
maintainability, and logistic support.
4. Full Service- through promptness,
competence, and integrity
★ Juran’s Quality Planning Roadmap
1. Identify your customers
2. Determine their needs
3. Translate them into one’s language
4. Develop a product that can respond to
needs
5. Develop processes which are able to
produce those product features
6. Prove that the process can produce
the product
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7. Transfer the resulting plans to the
operating forces.
GENERAL ADMINISTRATIVE THEORY
➔ Concentrates on the manager’s
functions and what makes up good
management practice or
implementation
➔ Henri Fayol (1841-1925) and Max
Weber (1864-1920)
2. NEO-CLASSICAL THEORY
➔ Referred as human relation of
thoughts
➔ The basic premise of this theory is the
the physiological and social aspects
of the worker as an individual and his
workgroup ought to be focused on.
Human Relations (under Neo-Classical
Theory)
➔ Emphasized the idea that individuals
are driven to perform better when they
feel like they belong and are valued on
the team.
➔ Elton Mayo conducts a social
experiment with Fritz Roethlisberger
and William Dickinson at Western
Electric Company’s Hawthorne Plant in
Chicago which led them to the result
called the “Hawthorne Effect” which
means that the workers collaborate
with others and do better in their tasks
when they are given special attention.
Behavioral Approach (under
Neo-Classical Theory)
➔ This approach was developed as a
response to consider the behavior and
motivation of employees.
3. MODERN MANAGEMENT
THEORIES
➔ Management theories represent ideas
that provide recommendations for
management strategies, frameworks,
and tools that organizations can
implement to aid their workforce or
culture.
➔ Leaders can use these theories as
guidance to meet organizational goals
or motivate employees. They can also
apply ideas from different theories
rather than solely relying on one
management theory. Modern
management theory represents one of
the numerous theories used by
organizations.
1. Quantitative Approach
➔ The quantitative approach involves the
use of quantitative techniques, such
as statistics, information models, and
computer simulations, to have better
decision-making.
➔ We use this approach when managers
make budgeting, scheduling and
quality control. It is helpful in
managing the production and delivery
of goods.
2. System Approach
➔ Related to organization system
defined as -“An established
arrangement of components which
leads to accomplish of particular
objectives as per plan.
3. Contingency Approach
➔ This theory was developed by Fred
Fiedler.
➔ This theory is a very special kind of
approach which states the success of
a leader does not only depends on his
abilities. This concept promotes that
managers must be able to adapt to the
changing environments of their
organizations, they should also make
better decisions depending on the
given situation.
4. Operational Approach
➔ Regards management as a universally
applicable body of knowledge that can
be brought to bear at all levels of
managing and in all types of
enterprise
➔ Recognizes that the actual problems
which managers face and the
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environment in which they operate
may vary between different
enterprises and levels.
Managerial Levels
➔ Organizations typically have three
levels of management with their
respective managers–top-level
managers, middle-level managers, and
frontline or lower-level managers.
Manager
➔ an individual engaged in management
activities such as supervising,
sustaining, upholding, and assuring
responsibilities for the work of others
in his/her work group, team,
department, or the organization, in
general.
Managerial Roles
➔ the various roles played by managers,
such as interpersonal, informational,
and decision-making roles.
Managerial Skills
➔ the various skill that managers must
process, such as conceptual human
and technical skills.
Top-Level Managers
➔ The general or strategic managers
who focus on long-term organizational
concerns and emphasize the
organization’s stability, development,
progress, and overall efficiency and
effectiveness.
➔ The top-level manager is the
professional who comes in c-suite
positions. He works as the head of the
organization. CEOs, COOs, Presidents,
Managing Directors, etc. come under
the category of top-level manageres.
Traditional - top-level executives set the
companies general direction by designing
strategies and by controlling various sources
Present Time - top-level executives must also
act as organizational guides who must
elaborate on the wider purpose of their
organizational existence, so that their
subordinates could identify and be committed
to its success in the three levels of
management.
Middle-Level Managers
➔ The tactical managers in charge of the
organization’s middle levels
ordepartments.
➔ They formulate specific objectives and
activities based on the strategic or
general goals and objectives
developed by top-level managers.
Frontline or Lower-Level Managers
➔ They are also known as operational
managers and are responsible for
supervising the organization's
day-to-day activities; they are the
bridges between management and
non-management employees.
Traditionally they are controlled and
instructed by top- and middle-level
managers to follow their orders in
support of the organization's major
strategy. Lately, however, their roles
have been expanded in some large
companies, as they are now
encouraged to be more creative and
intuitive in the exercise of their
functions, so that they, too, could
contribute to their company's progress
and development of new projects.
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Managerial Roles general public, the media, and
governmental organizations.

Negotiator Role
➔ A manager has to negotiate and
bargain with different outsides and
sometimes within the organization to
protect the organizational interests.

Figurehead Role
➔ In this role, a manager serves as the
organization’s symbolic leader. He has
to set a good example on behalf of his
company in important programs.
Resource Allocator
➔ Allocating human, finance,
information, and physical resources
properly are essential for productivity
and goal achievement.
Entrepreneurial Role
➔ Managers have to apply new,
innovative, and creative ways to do the
task as entrepreneurs do.

Leader Role Disturbance Handler

➔ Guiding and influencing teams of ➔ Unexpected conflicts and
employees toward organizational disturbances do arise in the
interests is an important leadership organization they need to be
role of the manager. managed.

Liaison Role Managerial Skills

➔ Managers communicate different
organizational matters to inside and 1. Conceptual Skills
outside people. He needs to establish ➔ Enables managers to think of
good relationships with outside people possible solutions to complex
and the community. problems. Through their ability
to visualize abstract
Monitor Role situations, they develop a
➔ Collecting important information from holistic view of their
inside and outside the organization organization and its relation to
and scanning involves a monitor role. the wider external
A SWOT analysis is an effective way to environment surrounding it.
better perform the monitor role. 2. Human Skills
➔ Enable managers in all levels
Disseminator Role to relate well with people.
➔ After collecting and scanning he has Communicating, leading,
to distribute useful information to inspiring, and motivating them
different organizational units and become easy with the help of
outsiders also. human skills. Dealing with
people, both in the
Spokesperson Role organization’s internal and
➔ He has a legal obligation to disclose external environment, is
information about the company to the inevitable, so it is necessary
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for managers to develop these
human skills.
3. Technical Skills
➔ Technical skills are also
important for managers for
them to perform their task
with proficiency with the use
of their expertise. Lower-level
managers find these skills
very important because they
are the ones who manage the
non management workers
who employees varied
techniques and tools to be
able to yield good quality
products and services for their
company.
The Firm and Its Environment
Business Environment
➔ refers to the factors or elements
affecting business organization
➔ It is divided into the External and
Internal Business Environment.
➔ The combination of external and
internal factors that influence a
company’s operating situation.
➔ The business environment can include
factors such as: clients and suppliers,
its competition and owners;
improvements in technology; laws and
government activities; and market,
social and economic trends
Internal Environment External Environment
Existing within market Lies outside the
firm organization.
Set of elements or Is a set of political,
forces which affects economic,
organization's or firm's social and technological
behavior that are
largely outside the
control and influence of
business
Controllable factors. Unpredictable and
uncontrollable.
Factors of Internal
Environment
➔ Internal business environment refers
to the factors/elements within the
organization which may affect, either
positively or negatively, the
performance of the organization. The
following are the controllable factors
affecting the business:
1. Plans and Policies
➔ The plans and policies of the firm
should be properly framed taking into
consideration the objectives and
resources of the firm. Proper plans
and policies help the firm to
accomplish its objectives.
2. Human Resources
➔ The survival and success of the firm
largely depends on the quality of
human resources.
3. Financial Resources
➔ A firm needs adequate funds to meet
its working capital and fixed capital
requirements.There is a need to have
proper management of working
capital and fixed capital.
4. Corporate Image
➔ A firm should develop, maintain and
enhance a good corporate image in
the minds of employees, investors,
customers etc. Poor corporate image
is a weakness of the firm.
5. Plant and Machinery
➔ Plant and machinery are the internal
part of the business firm. If the
machines are obsolete or outdated,
they should be replaced by a new one,
or that adversely affects the business
firm.
6. Labor and Management
Relationship
➔ Better Labor- Management
relationship helps in increasing the
morale of the employees and
motivates them to put efforts in the
business. Such strong relationships
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enhance an organization's ➔ An important factor in the external
development. micro-environment of a firm is the
7. Promoter’s Vision supplier of its inputs such as raw
➔ The promoter should have far sight materials and components. To reduce
vision to forecast opportunities and risk and uncertainty business firms
threats in the business so that the prefer to keep multiple suppliers of
opportunities are properly grabbed, inputs.
and threats are diffused off in time. 2. Customers
➔ The people who buy and use a firm's
Factors of External product and services are an important
part of the external micro
Environment
environment. It is necessary to keep
➔ External environment consists of
the customers satisfied. A business
those factors that affect a business
firm must compete with rival firms to
enterprise from outside.
attract customers and thereby
➔ External environment includes
increase the demand and market for
shareholders, competitors, customers,
its product.
society. government laws and
★ Ultimate Customers - These
regulations, policies, and technology.
customers may be individual and
➔ It consists of micro-environment and
householders.
macro-environment.
★ Industrial Customers - These
customers are organization which buy
goods and services for producing
Micro-Environment Macro-Environment other goods and services for the
purpose of other earning profits or
Operating General Environment
fulfilling other objectives.
Environment or Remote
Environment. ★ Resellers - They are the intermediaries
who purchase goods with a view to
The factors that major and resell them at a profit. They can be
influence the uncontrollable wholesalers, retailers, distributors, etc.
company’s factors ★ Government and other non-profit
non-capacity to that influence the
customers - These customers
produce and serve organization's
the market. decision- making purchase goods and services to those
and affect its for whom they are produced, for their
performance and consumption in most of the cases.
strategies. ★ International Customers - These
customers are individual and
organizations of other countries who
Factors of Micro-Environment
buy goods and services either for
➔ Micro-environment includes those
consumption or for industrial use.
players whose decisions and actions,
Such buyers may be consumers,
have a direct impact on the company.
producers, resellers, and governments.
➔ Production and selling of
commodities. are the two important
3. Marketing Intermediaries
aspects of modern business. ➔ In the firm's external
➔ Accordingly, the factors that affects micro-environment, marketing
the micro-environment of business intermediaries play an essential role of
are; selling and distributing its products to
the final customer. Marketing provides
an important link between a business
1. Suppliers of Inputs
firm and its ultimate customers.
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4. Competitors
➔ Different firms in an industry compete
for sale of their products. This
competition may be based on pricing
of their products and non- price
competition through competitive
advertising such as sponsoring some
events to promote the sale of different
varieties and models of their products.
5. Publics
➔ Environmentalists, media groups,
women's associations, consumer
protection groups, local groups,
Citizens Association are some
important examples of publics which
have an important bearing on the
business decisions of the firm. The
existence of various types of publics
influences the working of business
firms and compels them to be socially
responsible.
Factors of Macro-Environment
1. Demographic Factors
➔ includes the size and growth of
population, life expectancy of the
people, rural-urban distribution of
population, the technological skills,
and educational levels of the labor
force.
2. Economic Factors
➔ includes all those forces which have
an economic impact on business.
Accordingly, total economic
environment consists of agriculture,
industrial production, infrastructure,
and planning, basic economic
philosophy, stages of economic
development, trade cycles, national
income, per capita income, savings,
money supply, price level and
population.
3. Technological Factors
➔ Technology implies systematic
application of scientific or other
organized knowledge to practical
tasks or activities. Technology is
about the application of tools,
methods and techniques to improve
production and processes. Business
makes it possible for technology to
reach the people in proper format.
4. Cultural Environment
➔ Culture involves knowledge, beliefs,
morals, law, customs, traditions, etc.
Culture shapes the attitude and
behavior of the society.
5. Natural Environment
➔ Natural environment influences
business in diverse ways. Business in
modern times is dictated by nature.
The natural environment is the
ultimate source of many inputs such
as raw materials and energy, which
firms use in their productive activity.
6. Political Environment
➔ The political environment in a country
influences the legislation and
government rules and regulations
under which a firm operates.
7. Legal Environment
➔ The state sets the formal rules, law
and regulations for the country’s
operational system. It creates a
framework of rules and regulations
within which a business has to operate
and follow. Some of the laws are (1)
Consumer Protection Act-1986, (2)
Factories Act-1948 (3) The
Environmental Protection Act-1986.
Environmental Scanning
➔ It involves the seeking for and sorting
through data about the organization’s
environment. It is a process of
gathering, analyzing, and dispensing
information for tactical or strategic
purposes. It is monitoring and
interpreting sweeps of social, political,
economic, ecological, and
technological events to spot budding
trends that could eventually impact
industry.
Components of Environmental
Scanning
1. Developing a competitive mindset
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➔ by seeking and sorting through data.
about the environment, you may be
able to understand and predict the
various changes, opportunities and
threats that may affect organizations
in the future.
2. Considering future business
scenarios
➔ by realistic consideration of both
worse-case scenario or unfavorable
future conditions, as well as middle
ground possible conditions, you will
have an idea or what to do in the
future.
3. Business prediction (also known
as business forecasting)
➔ is a method of predicting how
variables in the environment will alter
the future of business. It could be
used in making decisions regarding
offshoring, branching out locally, and
expanding or downsizing the
company. However. the accuracy of
such business predictions cannot
always be assured.
Benchmarking
➔ is the process of measuring or
comparing one’s own products,
services, and practices with those of
the recognized industry leaders in
order to identify areas for
improvement.
Techniques of Environmental
Scanning
➔ PEST ANALYSIS - stands for
Political, economic, social, and
technological analysis
● POLITICAL - or politically
motivated factors that could
impact the organization.
● Examples: Government policy,
political stability or instability,
bureaucracy, corruption,
competition regulation,
foreign trade policy, tax policy,
trade restrictions,
labor/environmental/copyright
/consumer protection laws,
funding grants & initiatives,
etc.
● Questions to ask: What
government policies or
political groups could be
beneficial or detrimental to
our success? Is the political
environment stable or likely to
change?
● ECONOMIC - Overall economic
forces that could impact on
your success.
● Examples: Economic trends,
growth rates, industry growth,
seasonal factors, international
exchange rates, International
trade, labor costs, consumer
disposable income,
unemployment rates, taxation,
inflation, interest rates,
availability of credit, monetary
policies, raw material costs,
etc.
● Questions to ask: What
economic factors will affect
us moving forward? How does
the performance of the
economy affect us at the
moment? How are our pricing,
revenues, andcosts impacted
by each economic factor?
● SOCIAL - Social attitudes,
behaviors, and trends that
impact on your organization
and target market.
● Examples: Attitudes and
shared beliefs about a range
of factors including money,
customer service, imports,
religion, cultural taboos,
health, work, leisure, the
environment; population
growth and demographics,
immigration/emigration,
family size/structure, lifestyle
trends, etc.
● Questions to ask: How do our
customer’s beliefs and values
influence their buying habits?
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How do cultural trends and
human behavior play a role in
our business?
● TECHNOLOGICAL
Technology that can affect the
way you make, distribute, and
market your products and
services.
● Examples: Technology and
communications
infrastructure, legislation
around technology, consumer
access to technology,
competitor technology and
development, emerging
technologies, automation,
research and innovation,
intellectual property
regulation, technology
incentives, etc.
● Questions to ask: What
technological advancements
and innovations are available
or on the horizon? How will
this technology impact our
operations?
➔ SWOT ANALYSIS - stands for
Strengths, Weaknesses, Opportunities
and Threats analysis. This method
was created in the 1960s by Albert
Humphrey of the Stanford Research
Institute, during a study conducted to
identify why corporate planning
consistently failed. Since its creation,
SWOT has become one of the most
useful tools for business owners to
start and grow their companies.
● STRENGTHS - refer to internal
competencies possessed by
an organization that will
enable it to achieve its
objective.
● WEAKNESSES - are areas that
limit or inhibit an
organization’s overall success.
● OPPORTUNITIES - refer to
economic, socio-cultural,
political, technological,
demographic, and industrial
trends 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 to an organization’s
present and future
competitive position.
PEST ANALYSIS SWOT ANALYSIS
A measurement tool The identification of
which is used to strengths,
assess markets for weaknesses,
a product or a opportunities, and
business at a given threats is called
time frame. SWOT analysis, and
help management
These can influence formulate
marketing and strategies. These
relationships that a factors determine
company has the course of action
worked hard to to ensure the growth
develop. Knowing of the business.
ahead of time that a
change may be
occurring will help in
making better
business decisions.
➔ ETOP ANALYSIS - stands for the
Environmental Threat Opportunity
Profile. It helps an organization to
analyze the impact of the environment
based on threats and opportunities.
➔ QUEST - stands for the Quick
Environmental Scanning Technique.
This technique is designed to analyze
the environment quickly and
inexpensively so that businesses can
focus on critical issues that have to be
addressed in a short span.
The Local and International
Business Environment of the
Firm
Local Business Environment
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➔ is driven by specific local conditions Geert Hofstede, cited by
and market characteristics. Yet, it also SCHERMERHORN (2008), showed how
operates in a larger economic context. selected countries ranked on the five cultural
➔ At the local level, the business must dimensions he studies
compete for employees, resources
from suppliers at a competitive price, ➔ POWER DISTANCE - The degree to
local advertising and marketing which a society accepts or rejects the
channels. The most successful unequal distribution of power among
businesses are well-managed creating people in organizations and the
a compelling value proposition relative institutions of society.
to its local competitors.
➔ UNCERTAINTY AVOIDANCE - The
➔ Business intelligence and local
degree to which society is
community buyer values are critical for
uncomfortable with risk, change, and
management pricing, inventory, and
situational uncertainty.
marketing strategies. Still, a local
➔ INDIVIDUALISM-COLLECTIVISM -
business operates in a larger
The degree to which a society
economic context.
emphasize individual
accomplishments versus collective
The International Business Environment accomplishments.
➔ is the environment outside the
➔ MASCULINITY FEMININITY - The
Philippines and in different sovereign
degree to which a society values
countries, with factors that are distinct
assertiveness and feelings of material
to the home environment of the
success versus concern for
organization and the foreign country
relationship.
where the organization operates.
➔ TIME ORIENTATION - The degree to
which a society emphasizes
Understanding the local and international
short-term thinking versus greater
business environment of the firm requires
concern for the future or long- term
managers of organizations to sharpen their
thinking.
cultural intelligence.

Cultural Intelligence Phases of Economic

➔ is an individual’s ability to favorably
receive and adjust to an unfamiliar
way of doing things.
Anthropologist EDWARD T. HALL, as cited by
SCHERMERHORN (2008), the way people
approach and deal with the time varies across
cultures.
➔ Monochronic Culture is a culture
where people tend to do one thing at a
time
➔ Polychronic Culture is a culture that
is more flexible on time and is used to
accomplish many different things at
one time.
Development
Economic Development
➔ is a total process which includes not
only economic growth or the increase
in the given amount of goods and
services produced by the country's
economy, but also considers the
social, political, cultural, and spiritual
aspects of the country's growth
Economic Development Phases
➔ are the distinct stages involved in the
total process of economic
development in a particular country.
These include economic growth,
improvement of the Human
Development Index (HDI), availability
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of benefits provided by science and which "adopts a framework of inclusive
technology, and the societal growth, which is high growth that is sustained,
improvement of the opportunities and generates mass employment, and reduces
general welfare of its members poverty." The PDP is focused on the following
areas:
Economic Growth
➔ increase in the given amount of goods 1. Pursuit of Inclusive Growth
and services produced by the 2. Macroeconomic Policy
country's earning 3. Competitive Industry and Services Sectors
4. Competitive and Sustainable Agriculture and
Adam Smith was the first "development Fisheries Sector
5. Accelerating Infrastructure Development
economist." His work, The Wealth of Nations,
6. Resilient and Inclusive Financial Sector
was published in 1776. The scientific study of
7. Good Governance and the Rule of Law
the processes and problems of society in Asia,
8. Social Development
Africa, and North America has emerged only
9. Peace and Security
over the past 50 years.
10. Conservation, Protection, and
Rehabilitation of the Environment and Natural
In September 2000, world leaders gathered for
Resources
the Millennium Summit, and thus adopted the
United Nations (UN) Millennium Declaration.
The MDGs and the PDP can help guide the
By doing so, they had committed their nations
management of businesses in the Philippine
to a global partnership toward the reduction of
setting. In particular, the PDP must be taken
extreme poverty and the pursuit of the
into consideration in order to deem
Millennium Development Goals (MDG).
management as appropriate or
country-specific.
The MDGs, according to the UN, are "the
world's time-bound and quantified targets for
Another potential means for economic growth
addressing extreme poverty in its many
and development is the planned integration of
dimensions income poverty, hunger, disease,
the 10 Southeast Asian nations in 2015 which
lack of adequate shelter, and exclu- sion-while
include the Philippines. The Association of
promoting gender equality, education, and
Southeast Asian Nations (ASEAN) Economic
environmental stability." The deadline for the
Community (AEC) could help the Philippines
fulfillment of the MDGs was set for 2015. The
achieve its goal of inclusive growth that
following are the MDGs:
creates jobs and reduces poverty.
1. Eradicate extreme hunger and poverty
ASEAN Economic Community (AEC) presents
2. Achieve universal primary education
both opportunities and challenges: "ASEAN
3. Promote gender equality and empower
Community 2015: Managing Integration for
women
Better Jobs and Shared Prosperity”
4. Reduce child mortality
5. Improve maternal health
● Benefits: Freer flow of goods, services,
6. Combat HIV/AIDS, Malaria, and other
investments, and labor leading to
diseases 7. Ensure environmental
potential growth and prosperity.
sustainability
● Challenges: Ensuring inclusive growth
8. Develop a global partnership for
and shared prosperity by
development
implementing policy
recommendations.
Meanwhile, the National Economic and
Development Authority (NEDA) has laid out the
Philippine Development Plan (PDP) 2011-2016,
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- Strengthening regional
cooperation for structural
changes.
- Improving business and job
opportunities, quality, and
wages.
- Enhancing skills, boosting
productivity.
- Managing labor migration
effectively.
It is evident from the PDP focused areas that
they cover not only the economic and
industrial goals of the Philippines but also the
social, environmental, and peace and security
aspects.
Obviously, managers of businesses here in the
Philippines must be concerned about the
findings of the study, as these are new
challenges for them. The improvement of
management style and the skills training and
education of their human resources are
needed in order to cope with the possible
changes that will be brought about by the
ASEAN integration in 2015.
For Philippine businesses:
- Prepare for new competition and
adapt management styles.
- Invest in skills training and education
for human resources.
- Embrace AEC for shared regional
prosperity.
- traditional
"Inclusive growth means, first of all, growth
that is rapid enough to matter, given the
country's large population, geographical
differences, and social complexity. It is a
sustained growth that creates jobs, draws the
majority into the economic and social
mainstream, and continuously reduces mass
poverty."
NEDA
(National Economic and Development
Authority.)
Forms of Business
Organizations
➔ The form of a business organization
may depend on its purpose, nature of
operations, and resources. However, a
business organization's form may
change with the changing times and
the demands they present.
Organization
➔ a collection of people working
together to achieve a common
purpose
Business Organization
➔ a collection of people working
together to achieve a common
purpose in relation to their
organization’s mission, vision, goals,
and objectives, sharing a common
organizational culture.
Organizational Culture
➔ the set of beliefs and values shared by
organization members which guide
them as they work together to achieve
their common purpose
Changing Forms of Business
Organizations
➔ Change is constant and organizations
continue to undergo various changes
to ensure effectiveness, efficiency, and
relevance in the world of business
➔ Business organizations may be
(simple, functional,
divisional, profit, or nonprofit) or
open/flexible in form according to
Robbins and Coulter (2009).
1. Simple Business Organizations
➔ these refer to business organizations
with few departments, centralized
authority with a wide span of control,
and with few formal rules and
regulations.
2. Functional Business Organizations
➔ these pertain to business
organizations that group together
those with similar or related
specialized duties that introduce the
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concept of delegation of authority to
functional managers like the
personnel manager, sales manager, or
financial manager but allow CEOs to
retain authority for strategic decisions.
3. Divisional Business Organizations
➔ these are business organizations
made up of separate business units
that are semi-autonomous or semi-
independent, with a division head
responsible for his or her unit’s
performance.
4. Profit Business Organizations
➔ these are business organizations
designed for the purpose of achieving
their organizations' mission, vision,
goals, and objectives and maintaining
their organizational stability through
income generation and profit-making
activities. Immediate revenues or cost
factors account for their success or
failure.
5. Non-Profit Organizations
➔ these are business organizations
designed for the purpose of achieving
their organizations' mission, vision,
goals, and objectives, providing
service to clients without expecting
monetary gains or financial benefits
for their endeavors. Their success or
failure may be measured by the high
or low evaluation scores they obtain.
6. Open/Flexible Business
Organizations
➔ these are formed to meet today’s
changing work environment.
Other Forms of Business
Organizations
1. Team Structures
➔ where the organization as a whole is
made up of work teams (small, but
focused) that work together to achieve
the organization's purpose; popular in
collectivist culture.
2. Matrix Business Organizations
➔ those which assign experts or
specialists belonging to different
functional departments to work
together on one or more
projects;exhibit dual reporting
relationships in which managers
report to two superiors-the functional
manager and the divisional manager.
3. Project Business Structure
➔ a business organizational form with a
flexible design, where the employees
continuously work on projects
assigned to them; projects may be
short-term or long-term and members
disband
4. Boundaryless Business
Organization
➔ a business organization whose design
eliminates vertical, horizontal, or
external boundaries, and is described
to be flexible and unstructured; there
are no barriers to information flow
and, therefore, completion of work is
fast.
5. Virtual Business Organization
➔ made up of a small group of full-time
workers and outside experts who are
hired on a temporary basis to work on
assigned projects;members usually
communicate online.
Planning
➔ refers to a process that involves
setting the organization’s goals,
establishing strategies for
accomplishing those goals, and
developing plans of action or means
that managers intend to use for the
organization’s goals.
Planning is important because:
1. Planning provides direction to all the
organization’s human resources. - If a
firm or a work unit knows what they
are trying to achieve, they would
coordinate their actions and
collaborate.
2. Planning reduces uncertainty. -
Managers consider future variables or
events that may affect the company.
By knowing what to do, uncertainty
gets lessened, and workers/managers
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know how to react to changes in
appropriation.
3. Planning results in minimizing waste.
- Proper coordination makes sure that
negative practices, ineffectiveness,
and inefficiencies can be detected
easily to be corrected or eliminated.
4. Controlling won’t be possible without
planning. - Goals and standards will be
absent when there are no plans, and
organizations can’t check someone’s
work properly without standards.
Goals vs Plans
Goals
➔ refer to the targets that the
management wants to reach.
Plans
➔ refer to the means/action to achieve
the goals.
Vision, Mission, and Objectives
Vision
➔ refers to the mental image of what the
organization will be in the future, as
desired by the management and
employees. In other words, what does
the company aspire to be?
Mission
➔ refers to the basic purposes of an
organization and the range of its
operations. In other words, how will it
be achieved and why does the
company exist?
Objectives
➔ refer to the steps needed to attain the
desired ends.
Types of Plans
1. Comprehensiveness - The
completeness of planning coverage of
a certain plan. Some plans may cover
the entire organization or just one
specific firm.
a. Strategic Plans
- Plans that establish the
organization’s overall goals
and apply to the entire firm.
These plans are broad in
scope and used to achieve
long-term objectives.
- It involves the analysis of
various external
environmental factors,
competitions, and internal
resources and often looks at
the future for about three to
five years.
- These plans are in the hands
and the responsibility of the
CEO, president, general
manager of the company, or
the top-level management in
general.
b. Tactical Plans
- Plans that translate the
strategic plans into specific
goals for specific parts of the
organization. These plans
concern with the coordination
of work in different
departments.
- Most of these are short in
time frame, and these plans
contribute to the overall
strategic plans but are
independent of other tactical
plans.
c. Operational Plans
- Plans that only apply to a
particular unit area only, with a
narrow scope. These are
common in the small units of
the company.
- Operational plans are
straight-to-the-point and least
complex, but the achievement
of the company goals won’t be
attained if these aren’t
precise.
2. Time-frame - The representation of
the amount of time or how far into the
future you want to plan. Sometimes, it
might cover entire years or certain
months.
a. Long-term plans
- Plans that go beyond three
years or longer. Long-term
plans mostly involve all of the
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functional areas of the
organization itself.
- Everyone must understand the
long-term plans of the
company to avoid confusion
and for the organization
members’ attention to stay on
track.
b. Shore-term plans
- Plans that cover one year or
less. These plans lead toward
the overall long-term goal of
the company, no matter how
short.
- These plans are the
responsibility of the unit or
department heads.
3. Specificity - Refers to very detailed,
clearly defined plans in which the
goals and objectives are explicitly
stated, and easily understandable by
someone.
a. Specific Plans
- Plans that are clearly stated
and which have no room for
interpretation.These plans are
achieved in what is only said
in the plan.
- These plans must be very
understandable in language.
b. Directional Plans
- Plans that are flexible and give
general guidelines, and allow
freedom for interpretation.
- Even if flexible, these plans
must still be related to the
strategic plans which won’t
get out of what it entails.
4. Frequency - Refers to the number of
instances or times in which a plan may
be used. Some plans are single-use
but sometimes, some plans are
reused and used frequently.
a. SIngle-use plans
- Plans that are only used or
stated once only. These are
plans that are only relevant for
a specific time period.
- These plans are applied to the
entire organization.
- Examples include: budgets,
targets, projects
b. Standing plans
- Plans that are ongoing. These
provide guidance for different
activities that are done
repeatedly.
- Standing plans are used over
and over again, unless
abandoned or modified. These
help in consistently solving
routine matters.
- Examples include: policies,
rules, procedures, long-term
objectives and missions.
The Steps in Planning
According to Schermerhorn (2008). these are
the 5 steps in planning:
1. Define your goals/objectives; by
identifying desired outcomes/results
in very specific ways
2. Determine where you stand in relation
to set goals/objectives; know your
strengths/weaknesses
3. Develop premises regarding future
conditions; anticipating future events,
generating alternative scenarios,
identifying if the things in it help or
hinder your goals
4. Analyze and choose among action
alternatives; list and carefully evaluate
possible options and choose the one
that is most likely to accomplish the
goals
5. Implement the plan and evaluate
results; take corrective action and
revise plans as needed
Planning at DIfferent Levels in the Firm
Top-level Management Planning (Strategic
Planning)
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➔ Top-level managers are responsible
for the organization’s strategic
planning, which involves the
organization’s long-term goals and
strategies. These plans are planned
and executed by the CEOs, company
presidents or senior executives. They
are helped by a management team by
creating these.
➔ Strategic planning may include the
overall goals of the organization, the
maintenance of its stability, and the
culture inside it to increase
productivity, profitability, effectiveness,
and efficiency among others.
Middle-level Management Planning (Tactical
Planning)
➔ refers to a set of procedures for
transforming broad strategic goals
into specific plans/goals that are
applicable in one portion or
department of an organization.
➔ It focuses on major actions that
contribute its share for the
achievement of the strategic plan.
Frontline/Lower-level Management Planning
(Operational Planning)
➔ involve identifying the specific
processes/procedures required at the
lower level. It also involves repetitive,
routine tasks that are done by the
lower-level units. Frontline managers
can influence the strategy formation in
the higher levels.
Planning Techniques and Tools and their
Applications
1. Forecasting
➔ is an attempt to predict what may
happen in the future, according to
Schermerhorn (2008). All planning
types often use forecasting, and are
planning aids.
➔ Forecasting may be qualitative using
opinions (like consumer surveys,
market research, asking of experts,
etc.) or quantitative using statistics
(like unemployment rates, GDP/GNP,
stock market data, etc.). Forecasting
can be inaccurate, due to human
judgment.
2. Contingency Plans
➔ are prepared by managers, ready for
implementation when things turn out
as they should be.
➔ This is colloquially referred to as Plan
B by some.
➔ Trigger points are contingency factors
that indicate whenever the prepared
alternative plan should be
implemented. These are changes in
attributes, conditions or factors that
initiate a reaction that may lead to
different states of affairs.
3. Scenario Planning
➔ Planning that considers the future
state of affairs is known as scenario
planning. It is the long-term version of
contingency planning.
➔ It allows the organization to plan
ahead, to make adjustments in their
strategies. Future state of affairs are
identified and as such, alternative
plans are made to prepare for sudden
changes.
➔ Future scenario challenges might
include environmental pollution,
human rights violations, climate &
weather changes, earthquake
damages, and others.
4. Benchmarking
➔ is the process of making meaningful
comparisons between a company's
performance and the performance
of identified best practices.
➔ The main purpose of benchmarking is
to find out what other
people/organizations do well, and to
incorporate it in their own company’s
practices.
➔ Benchmarking has two types:
a. External Benchmarking
- refers to the search for the
best practices used by other
organizations that enabled
them to achieve superior
performance.
b. Internal Benchmarking
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- The encouragement of the
employees working in
different departments to learn
and involve by sharing each of
their best practices.
5. Participatory Planning
➔ A planning process that includes the
people who will be affected by the
plans, and those who will be asked to
implement them in all planning steps.
➔ The positive results of this technique
include creativity, increased
acceptance, understanding and
commitment to the plan’s success.
Decision-making
➔ The process of choosing any action
among different alternatives. It is a
process that starts withidentifying the
problem and often ends with
evaluating the solutions to that
problem.
➔ After careful consideration, a choice
will be made, which is called a
decision.
➔ Deciding things is a component of
planning, as this is where you weigh
possible measures for the best
outcome possible.
Types of Decisions
1. Structured or programmed decision
➔ Decisions that are repetitive and can
be handled with a routine approach.
These are used for resolving problems
that are straightforward, familiar, and
easily defined.
➔ For example, a customer complains
about hair in their food. This is not
unusual, and standardized solutions to
the problem may be available.
2. Unstructured or nonprogrammed
decision
➔ Decisions that are made for new,
unusual problems that arise or
incomplete information. These are
unique, non-recurring, and need
custom-made decisions.
➔ For example, a hotel company is
suddenly asked to put up a new
branch in a new city, with a new
market and new people. This problem
has incomplete information and needs
to be solved with unstructured
decisions, to meet the demand.
Conditions in Decision-Making
1. Certainty conditions
➔ Known as the ideal conditions for
deciding problems. A manager can
make exact decisions as the results of
all alternatives are already known.
➔ For instance, fixed interest rates in
banks and fixed costs in materials.
2. Risk conditions
➔ More common conditions in deciding
problems. The possible outcomes can
be estimated by quantifiable means,
but the exact result is unknown.
➔ For example, launching a new product
in the market or investing in a
company.
3. Uncertainty conditions
➔ All possible outcomes and their
effects are unknown to the
decision-maker, and the results cannot
be estimated. In other words, you have
no knowledge about what can happen
next.
➔ Sudden unforeseen disasters
impacting production and supply can
be an example of this.
Process of Decision-Making
According to Robbins and Coulter (2009) in
their book, Management: