SENIOR HIGH SCHOOL

Organization and
Management
Quarter 1 – Module 3
The Firm and Its Environment
Organization and Management
Alternative Delivery Mode
Quarter 1 – Module 3: The firm and Its Environment
Second Edition, 2021

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Published by the Department of Education – Region X – Northern Mindanao.

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Language Editor: Jeremy C. Subaldo
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Development Team:
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Regional Director

Co-Chairpersons: Dr. Victor G. De Gracia Jr. CESO V

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Jonathan S. dela Peña, PhD, CESO V
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Mala Epra B. Magnaong, Chief ES, CLMD

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 SENIOR HIGH SCHOOL

Organization and
Management
Quarter 1 – Module 3
The Firm and Its Environment

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 TABLE OF CONTENTS

Page No.

OVERVIEW
What I Need To Know 1
Things to Remember To Get Through 1

Lesson 1- Environmental Forces and Environmental Scanning

What I Need To Know 3

What I Know 4
What’s In 5
What's New 5
What Is It 5
What's More 9
What I Have Learned 10
What I Can Do 10
Assessment 11
Additional Activities 11

References 12

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TO THE STUDENT

GREETINGS!
Welcome to the World of Organization and Management!

This module contains learning materials and activities for you to

accomplish. You are required to go through a series of learning activities. If
you’ve got questions, don’t hesitate to ask your teacher for assistance.

This will give you the opportunity to develop your skills in

O r g a n i z a t i o n a n d M a n a g e m e n t according to the Most Essential
Learning Competencies (MELC) developed by the Department of Education.

This module will prepare you to become a competent organizational

manager someday.

HOW TO USE THIS MODULE

In this module, you are going to define the functions, types and theories of
management. You will find activities for you to accomplish and read relevant lessons
in accordance with the essential competencies of this course. Each module contains
a lesson a n d quite a few learning activities which you can do for a week.

In performing the activities to finish the requirements of this module, please be

guided by the following:

1. Talk to your teacher f o r g u i d a n c e and agree on how you both

will organize the training under this module. Read through this module
carefully. It is divided into sections, which cover all the skills and
knowledge you need to successfully complete this third module.

2. Work through all information and complete the activities in each section.
Read the Lesson Information and accomplish the self - checks provided.

3. Please bear in mind that your teacher is always there to support your
learning progress. Do not hesitate to ask question to your teacher. He
can be reached through text or call, where you will be given the
opportunity to ask questions relative to your learning progress in this
module.

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4. There might be cases wherein you are to follow some internet links
provided herein to enhance your learning process as part of our “blended
approach” of learning.

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Introduction

In response to the challenges of COVID-19 pandemic, this module is designed

for home study, open and distance learning to equip you, our dear learners with the
essential knowledge, skills, attitude, and values relative to “Organization and
Management.”

This module includes information and activities to develop desirable values,

skills, and understanding through step-by-step procedures and helpful techniques that
will guide you on how to practice “Organization and Management Applications” to real-
life situations and also for lifelong learning.

Overview

The content of this module is designed for non-face-to-face contact with your
teacher. However, it is designed further to provide you with varied and relevant
activities to determine your understanding of the meaning, functions, types and
theories of management. This is crafted to focus on the different activities that will help
you enhance your skills and knowledge necessary to acquire the Most Essential
Learning Competencies (MELC) without coming to school.

I know that you are already excited to get started; however, there are some tips
that you have to remember:

1. Take the pre-test before proceeding to the lessons. This test would measure
your prior knowledge relative to the given lessons.
2. Read the instructions carefully and follow the precautionary measures.
3. Perform simple activities before reading the discussions.
4. Don’t forget to answer the Self-Tests.
5. If you are not sure of the meaning of some words used in this module, feel free
to consult the dictionary.
6. Answer the assessment test so that you will know how much you have learned
from the lessons.
7. This module has a nominal duration of 4 hours equivalent to one week lesson,
though your study is self-paced, you are encouraged to complete all of this
within one week only.

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 WHAT I NEED TO KNOW

This third learning module of Organization and Management for Senior High
School students is designed to provide learners with a better understanding of the
basic concepts of management and its theories.

In this module, the students are able to apply functions of management and
concepts in solving business and organizational issues and cases, explain the
meaning of environmental forces and environmental scanning, which enable the
learners to put into practice all the things which are mentioned here.
After studying this module, you will be able to:
1. Identify the forces and elements in business-firm environment using SWOT
analysis;
2. Identify the environment of local and international business firm; and
3. Describe the role of business towards the economy, the different phases of
economic development, and differentiate the various forms of business
organizations.

THINGS TO REMEMBER TO GET THROUGH

To learn and benefit from this module, follow the following steps:

1. Read the module title and the module introduction to get an idea of what the
module covers. Specifically, read the first two sections of this module
carefully. The first section tells you what this module is all about while the
second section tells you of what you are expected to learn.

2. Never move on to the next page unless you have done what you are
expected to do in the previous page. Before you start each lesson, read first
the INSTRUCTIONS.

3. Work on the activities. Take note of the skills that each activity is helping
you to develop.
4. Take the Assessment-Test after you are done with all the lessons and
activities in the module.

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5. Meet with your teacher. Ask him/her about any difficulty or confusion you
have encountered in this module.

6. Finally, prepare and gather all your outputs and submit them to your teacher.

7. Please write all your answers of the tests, activities, exercises, and others
on your separate activity notebook.

GOOD LUCK AS YOU BEGIN THIS MODULE!

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LESSON ENVIRONMENTAL FORCES
1 AND ENVIRONMENTAL
SCANNING
Competencies:
a. Identify various forces/elements of the firm’s environment.
(ABM_AOM11-1c-d-4)
b. Summarize these forces using the PEST and SWOT analyses. (ABM_AOM11-
1c-d-5)
c. Describe the local and international business environment of a firm
(ABM_AOM11-1c-d-6)

WHAT I NEED TO KNOW

At the end of this lesson, the learners are expected to:

1. Identify the forces and elements in business-firm environment using SWOT
analysis;

2. Identify the environment of local and international business firm; and

3. Describe the role of business towards the economy, the different phases of
economic development, and differentiate the various forms of business
organizations.

WHAT I KNOW

Pre – Test
A. Direction: Read each statement carefully and choose the best answer from the
given options.
1. All of the following are elements of direct action components of external environment
except one.
a. Customer b. Suppliers
c. Economic Condition d. Competitors

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2. All of the following are elements of indirect action components of external
environment except:
a. Technological b. Socio-Cultural
c. Political-legal d. Government Agencies
3. These are factors outside the business organization which may affect the
performance of the business either positively or negatively.
a. External Business Environment c. Internal Business Environment
b. Business Environment Scanning d. PESTLE analysis
4. It refers to the stakeholders of organizations, such as the consumers, competitors,
suppliers, financial institutions, and government agencies.
a. Business Environment Scanning c. Direct Action Elements
b. Indirect Action Elements d. Globalization
5. These are the socio-economic condition, socio-cultural situation, political-legal
situation, technological situations and international-world ecological situations.
a. Indirect Action Elements c. Direct Action Elements
c. Post-Fordism d. Globalization
6. These are intermediary to business sectors which purpose is to provide financial
services company.
a. Financial Institutions c. Government Agency
b. Suppliers d. Competitors
7. It is the subject of the business including their loyalty and patronage which is the
very vital on the sustainability of business firm.
a. Customers c. Suppliers
b. Government Agencies d. Competitors
8. It is a management tool of analyzing business opportunities purposes.
a. SWOT analysis c. Environmental Scanning
b. Market Research d. None of the above
9. It is a method of projections, estimates and anticipating the future events related to
business.
a. SWOT analysis c. Business Forecasting
c. Market Research d. None of the above
10. It is the process of observing, measuring, evaluating and emulating best practices
of the recognized business industry.
a. Business Benchmarking c. Business Forecasting
b. Market Research d. None of the above

WHAT’S IN

Activity 1.
a. What makes a good manager?
b. Do you think a good manager could be a good leader? Why?
c. In your own opinion, what is the difference between a manager
and a leader?
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 WHAT’S NEW

Activity 1. Assume that you are going to treat your friends to a restaurant to eat.

1. Can you write down your preferences and considerations before choosing the best
place to eat?
2. Why do you choose such preferences and considerations?

V WHAT IS IT

What is Business?
It is an economic endeavor that provides goods and services aiming for a reasonable
profit. A reasonable profit or income is considered as a reward for a business owner
who takes the risk in rendering products, goods and services with an efficiency and
effective manner.

Environmental Forces and Environmental Scanning

Understanding the organizational management is essential in operating a firm or
business enterprise. This is more meaningful if the person who engages in the
business have the basic knowledge in environmental scanning to seek for relevant
information beneficial to the business operation. Environmental scanning is a process
of knowing environmental forces of business which is necessary for growth and
sustainability of a business enterprise. Business enterprise environment forces are the
factors and principal elements that affect the performance of the business firm and it
is divided into two parts: the INTERNAL business environment and EXTERNAL
business environment. The internal business environment includes factors within the
organization which may affect the performance of an organization either positively or
negatively while the external business environment includes factors outside the
organization that are relevant and may affect the performance of the organization.

For Blended Learning:

You may click the link below to enhance your learning process in this lesson:
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https://www.youtube.com/watch?v=J7u5cM1mwB8
 Two Elements in the External Environment
1. Direct Action Elements. (Microenvironment) It is known as the “Operating
Environment.” It refers to the stakeholders of an organization, such as the
consumers, competitors, suppliers, financial institutions, and government
agencies.
2. Indirect Action Elements. (Macroenvironment). These are the socio-economic
condition, socio-cultural situation, political-legal situation, technological
situations and international-world ecological situations.

The Direct-Action Components of the External Environment

The success of a business organization depends on the influence of the
elements on the direct-action components of the external environment such as:
1. Customers. It is the subject of the business including their loyalty and
patronage which is very vital on the sustainability of the business firm.
Therefore, good customer service may apply and because first impression
and a good experience last, these customers may also bring another
customer to your business firm. A customer might be individual, institutional
like other organization, club, business firm and government agency.
2. Suppliers. Business firm should establish and maintain good relationship
with the supplier because it is the one who provides materials needed in the
production. In business, there is always a competition. Therefore, it is good
to establish goodwill so that the business firm will take advantage of the
competition among suppliers to obtain better quality and lower price of
products and services, fast and on time deliveries and good after sales
service.
3. Labor supply. The line “a square peg in a square hole” means the right
person in a right position. Business should consider the ability, skills, attitude
and experience of individuals during the recruitment period to avoid turn-
over of workers. Business owners should also give necessary benefits and
good compensation.
4. Competitors- It means rivalry of business industry. Business owners should
consider looking upon the industry competition because it may affect the
profitability and performance of the business. When the competition is high,
business owners must find a way to innovate and intensify its marketing and
promotion.
5. Financial Institutions. These financial institutions are intermediary to
business sectors. Their purpose is to provide financial services because
business usually needs funds for additional capital and further expansion.
6. Government Agencies. Change is the only constant in this world. The
changes in government policies may affect the business organization. For
example, the TRAIN Law in the Philippines will affect the business industry
because of the increase in taxation on the sugar related products, cars,
liquors and cigarettes.

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The Indirect-Action Components of the External Environment

1. Economic Condition- The business firm should consider the economic

condition in the decision-making. The trend of economic condition is not
firm. There is always a fluctuation even the inflation rate, gross domestic
products, employment, and the income levels of dollar remittance of OFW’s.
2. Socio-Cultural Situation - Business organization should look into the custom
and traditions of the people in dealing with business. For instance: It is nice
to sell fruits during Christmas season because fruits during this time are
saleable or engage in business during Fiesta, Lenten Season, Convergence
of Farm Products “Taboan” and even during pay day.
3. Political-Legal- Business firm may be affected by the laws and regulation
implemented by the government. For example: Mining and logging industry
are affected by some promulgated laws.
4. Technological Condition- Technology is life for a business firm; without it,
business would be left behind. Technology is an instrument used for
advancement, innovation and development to increase production and
minimize cost. Imagine, how could the business moves on if there are no
computers, no internet connection, MIS and other programs and
technological infrastructure?
5. International Relation- It is good for a business firm to be updated about
information regarding the global economy because local businesses are
affected by the global or international economic affairs, particularly the
import and export industries like what happened when China refuses to buy
our export banana. The banana industry in the Philippines is losing as an
effect of the refusal of China.

Components of the Internal Business Environment

The internal business environment of the organization are the resources such
as manpower, money, machines, materials, methods and research and development
used in the production of goods and services. This internal business environment shall
be subjected to internal analysis so that that the business firm will see its internal
strength, weaknesses, opportunities and threats (SWOT) before the organizational
planning.

For Blended Learning:

You may click the link below to enhance your learning process in this lesson:
https://www.youtube.com/watch?v=2xquSq0MSAc
https://www.youtube.com/watch?v=Rfn_gfWJIoQ

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Components of Environmental Scanning: Developing a Competitive Mindset,
Business Forecasting, PESTLE and SWOT analysis, and Benchmarking

It is a quest for business firms to seek for advancement through environmental

scanning to find data and environmental information relevant to the organizational
development of business firm. Entrepreneurs nowadays have a positive mindset to
make their enterprise successful. They look at every challenge as an opportunity. They
can see an opportunity in adversity by doing environmental scanning through Political,
Economic, Social, Technological, Legal and Environmental (PESTLE) Analysis and
the Strength, Weaknesses, Opportunities, and Threats (SWOT) analysis. SWOT
analysis is a management tool used for analyzing business opportunities. Developing
a competitive mindset is essential to every entrepreneur to win the war of competition.
As Sun Tzu said in his book the Art of War, Knowing the terrain where your enemy
are, and knowing yourself is the greatest strategy in winning the war. This principle is
exactly applicable to business environmental scanning that is the actual monitoring
and evaluation in knowing the data and environmental information which the business
owner may be able to understand and forecast the various opportunities and threats
that might affect the life of business organization in the near future.

Modes of Environmental Scanning

1. Ad hoc environmental scanning – The word “Ad hoc” is derived from the Latin
word which means “For this” and it signifies the things created or done for a
particular purpose as necessary. Thus, this mode of environmental scanning is
done and only applicable during crisis situation to determine whether the
problem is either external or internal.
2. Regular scanning – It is done usually once a year or at the regular intervals.
3. Continuous scanning – It is the continuous monitoring and collection of data
related to the factors affecting the business organization environment.

For Blended Learning:

You may click the link below to enhance your learning process in this lesson:
https://www.youtube.com/watch?v=Dfp23xSqpdk

Business Forecasting
It is also known as “business prediction”. It is a method of projecting, estimating,
and anticipating the future events related to business environment based on calculated
relevant information. It could be used as a basis in decision-making process of a
business organization.

Business Benchmarking
It is the process of observing, measuring, evaluating and emulating best
practices of the recognized business industry in terms of the products, goods and
services in order for the observers to identify their areas of improvements.

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The Local and International Business Environment of the Firm
Business Environment of the firm will evolve and vary according to socio-
cultural situations, economic conditions and standards of a certain location. It means
that every country has its own culture, norms and tradition when it comes to business.
Therefore, it is very important that all managers should require to understand and
develop their “Cultural Intelligence” that will enable them to develop their ability to
adopt the different cultures that affect the management practices in the business
organization both local and international. Local business environment of the firm may
have been influenced by the international and global environment in terms of economic
condition and standards. Today’s local entrepreneurs have dared to accept the
challenge to become globally competitive and ready to face the worldwide
environment. Entrepreneurs today are updated and innovative. They can practice the
concept of global standard in a local setting where quality of products and services are
provided regardless of cultural differences. For example, in the Philippines, you can
see Korean Restaurants and Japanese Restaurants and look who are their
customers? mostly Filipinos. It is an indication that most entrepreneurs of today are
culturally intelligent because they can easily understand the cultural influence that
affects their behavior and the business organization.

WHAT’S MORE

Definition of Terms

Environmental Scanning – It is a process of seeking and classifying

environmental data and information use for business organization.

External Business Environment – Is a factor outside the business

organization which may affect the performance of the business either positively or
negatively
Gross Domestic Product (GDP) – It is a total output of goods and services
produced within or inside the country.

Gross National Product – It is a total output of goods and services produced

by within or domestic and from outside the country.

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 Internal Business Environment - It is a factor within or inside the business
organization which may affect the performance of the business either positively or
negatively.

Inflation - It is a period when the general price increases and the value of
money decreases as indicated in the consumer price index.

SWOT Analysis – It is a technique that identifies the Strengths and

Weaknesses of the company, as well as its Opportunities and Threats.

WHAT I HAVE LEARNED

Activity 1.
Do SWOT analysis of yourself. Identify your own Potentials or Strengths,
Weaknesses, Opportunities and Threats.

WHAT I CAN DO

Activity 1. Indicate your answer to match the conditions with the kind of
environment it belongs and the type of factors classified in the SWOT analysis.
SWOT
Condition
Environment (Strength, Weaknesses,
(External or Internal) Opportunities, and
Example :
Threats)
Economic Downturn External Threat
Lack of management
skills
New Competitors
Lack of marketing
Strategy
Poor Brand Image
Poor customer service
More suppliers of raw
materials

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 Teamwork and
coordination of
employees
Upgraded technologies
and MIS
New government policies,
rules and regulations

ASSESSMENT

I. Direction: Read each statement carefully and choose the best answer from the given
options.
1. All of the following are elements of direct action components of external environment
except one.
a. Customer b. Suppliers
c. Economic Condition d. Competitors
2. All of the following are elements of indirect action components of external
environment except:
a. Technological b. Socio-Cultural
c. Political-legal d. Government Agencies
3. These are factors outside the business organization which may affect the
performance of the business either positively or negatively.
a. External Business Environment c. Internal Business Environment
b. Business Environment Scanning d. PESTLE analysis
4. It refers to the stakeholders of organizations, such as the consumers, competitors,
suppliers, financial institutions, and government agencies.
a. Business Environment Scanning c. Direct Action Elements
b. Indirect Action Elements d. Globalization
5. These are the socio-economic condition, socio-cultural situation, political-legal
situation, technological situations and international-world ecological situations.
a. Indirect Action Elements c. Direct Action Elements
c. Post-Fordism d. Globalization
6. These are intermediary to business sectors which purpose is to provide financial
services company.
a. Financial Institutions c. Government Agency
b. Suppliers d. Competitors
7. It is the subject of the business including their loyalty and patronage which is the
very vital on the sustainability of business firm.
a. Customers c. Suppliers
b. Government Agencies d. Competitors
8. It is a management tool of analyzing business opportunities purposes.
a. SWOT analysis c. Environmental Scanning

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 b. Market Research d. None of the above
9. It is a method of projections, estimates and anticipating the future events related to
business.
a. SWOT analysis c. Business Forecasting
c. Market Research d. None of the above
10. It is the process of observing, measuring, evaluating and emulating best practices
of the recognized business industry.
a. Business Benchmarking c. Business Forecasting
b. Market Research d. None of the above

II.
1. Identify and discuss the difference between microenvironment and
macroenvironment.

2. Why are SWOT analysis and PESTLE essential to a business firm? Explain.

3. What is the purpose of conducting SWOT analysis? How does it benefit the
business firm?

4. Why do environmental forces affect the performance of a business firm?

5. Why should business organizations conduct environmental scanning?

ADDITIONAL ACTIVITIES

1. Do a research on the potential business venture and opportunities in your

community based on the result of your SWOT analysis and PESTLE.

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REFERENCES:

Roberto G. Medina,2015, Business Organization and Management, Revised Edition,

Sampaloc, Manila: Rex Book Store, Inc.(RBSI)
Helena Ma. F. Cabrera, PhD, Anthony DC. Altarejos, Phd, and Riaz Benjamin, 2016,
Organization and Management, Textbook,Quezon City, Manila: Vibal Group,
Inc.
Cynthia A. Zarate, 2016, Organization and Management for Senior High School, 839
EDSA, South Triangle, Quezon City: C&E Publishing, INC.

Internet Sources:

https://www.youtube.com/watch?v=Dfp23xSqpdk
https://www.youtube.com/watch?v=2xquSq0MSAc
https://www.youtube.com/watch?v=Rfn_gfWJIoQ
https://www.youtube.com/watch?v=J7u5cM1mwB8

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 xiv
Pretest1 – WHAT I KNOW
1. C. Economic Condition 6. A. Financial Institutions
2. D. Government Agencies 7. A. Customers
3. A. External Business Environment 8. A. SWOT analysis
4. C. Direct Action Elements 9. C. Business Forecasting
5. A. Indirect Action Elements 10. A. Business Benchmarking
Assessment
I.
1. C. Economic Condition 6. A. Financial Institutions
2. D. Government Agencies 7. A. Customers
3. A. External Business Environment 8. A. SWOT analysis
4. C. Direct Action Elements 9. C. Business Forecasting
5. A. Indirect Action Elements 10. A. Business Benchmarking
II. (The answers may differ to their thoughts and opinion)
ANSWER KEY:
For inquiries or feedback, please write or call:
Department of Education – Alternative Delivery Mode (DepEd-ADM)

Office Address: Masterson Avenue, Upper Balulang, Zone 1, Cagayan de

Oro City, Cagayan de Oro, Lalawigan ng Misamis Oriental
Telefax:
Email Address:

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