Understanding

Business
Organization
and its
National
Environment
V I S AYA N E L E C T R I C
C O M PA N Y
Types of organizational structures
1. Hierarchical org structure
2. Functional org structure
3. Horizontal or flat org structure
4. Divisional org structures (market-based, product-based, geographic)
5. Matrix org structure
6. Team-based org structure
7. Network org structure
Hierarchical org structure
It’s the most common type of organizational structure––the chain of command goes from the top (e.g.,
the CEO or manager) down (e.g., entry-level and low-level employees) and each employee has a
supervisor.
Hierarchical org structure
Pros :
 Better defines levels of authority and responsibility
 Shows who each person reports to or who to talk to about specific projects
 Motivates employees with clear career paths and chances for promotion
 Gives each employee a specialty
 Creates camaraderie between employees within the same department

Cons:
 Can slow down innovation or important changes due to increased bureaucracy
 Can cause employees to act in interest of the department instead of the company as a whole
 Can make lower-level employees feel like they have less ownership and can’t express their ideas for the
company
Functional org structure
Similar to a hierarchical organizational structure, a functional org structure starts with positions with
the highest levels of responsibility at the top and goes down from there.

Primarily, though, employees are organized according to their specific skills and their corresponding
function in the company. Each separate department is managed independently.
Functional org structure
Pros
 Allows employees to focus on their role
 Encourages specialization
 Help teams and departments feel self-determined
 Is easily scalable in any sized company
Cons
 Can create silos within an organization
 Hampers interdepartmental communication
 Obscures processes and strategies for different markets or products in a company
Horizontal or flat org structure
A horizontal or flat organizational structure fits companies with few levels between upper management
and staff-level employees.

Many start-up businesses use a horizontal org structure before they grow large enough to build out
different departments, but some organizations maintain this structure since it encourages less
supervision and more involvement from all employees.
Horizontal or flat org structure
Pros
 Gives employees more responsibility
 Fosters more open communication
 Improves coordination and speed of implementing new ideas
 
Cons
 Can create confusion since employees do not have a clear supervisor to report to
 Can produce employees with more generalized skills and knowledge
 Can be difficult to maintain once the company grows beyond start-up status
Divisional org structure
In divisional organizational structures, a company’s divisions have control over their own resources,
essentially operating like their own company within the larger organization.

Each division can have its own marketing team, sales team, IT team, etc.

This structure works well for large companies as it empowers the various divisions to make decisions
without everyone having to report to just a few executives.
*Market-based divisional org structure - separated by market, industry, or customer type

*Product-based divisional org structure - separated by product line

*Geographic divisional org structure - separated by region, territories, or districts, offering more effective
localization and logistics
Divisional org structure
Pros
 Helps large companies stay flexible
 Allows for a quicker response to industry changes or customer needs
 Promotes independence, autonomy, and a customized approach
Cons
 Can easily lead to duplicate resources
 Can mean muddled or insufficient communication between the headquarters and its divisions
 Can result in a company competing with itself
Matrix org structure
A matrix organizational chart looks like a grid, and it shows cross-functional teams that form for
special projects.

For example, an engineer may regularly belong to the engineering department (led by an engineering
director) but work on a temporary project (led by a project manager).

The matrix org chart accounts for both of these roles and reporting relationships.
Matrix org structure
Matrix org structure
Pros
 Allows supervisors to easily choose individuals by the needs of a project
 Gives a more dynamic view of the organization
 Encourages employees to use their skills in various capacities aside from their original roles
Cons
 Presents a conflict between department managers and project managers
 Can change more frequently than other organizational chart types
Team-based org structure
A team-based organizational structure
groups employees according to teams––
think scrum teams or tiger teams.

A team organizational structure is meant

to disrupt the traditional hierarchy,
focusing more on problem solving,
cooperation, and giving employees more
control.
Team-based org structure
Pros
 Increases productivity, performance, and transparency by breaking down silos
 Promotes a growth mindset
 Changes the traditional career models by getting people to move laterally
 Values experience rather than seniority
 Requires minimal management
 Fits well with agile companies with scrum or tiger teams
Cons
 Goes against many companies’ natural inclination of a purely hierarchical structure
 Might make promotional paths less clear for employees
Network org structure
These days, few businesses have all their services under one roof, and juggling the multitudes of
vendors, subcontractors, freelancers, offsite locations, and satellite offices can get confusing.

A network organizational structure makes sense of the spread of resources.

It can also describe an internal structure that focuses more on open communication and relationships
rather than hierarchy.
Network org structure
Network org structure
Pros
 Visualizes the complex web of onsite and offsite relationships in companies
 Allows companies to be more flexible and agile
 Give more power to all employees to collaborate, take initiative, and make decisions
 Helps employees and stakeholders understand workflows and processes
Cons
 Can quickly become overly complex when dealing with lots of offsite processes
 Can make it more difficult for employees to know who has final say
Visayan Electric Company, Inc.
Visayan Electric Company, Inc. now is the second largest electric utility in the
Philippines.
It serves the cities of Cebu, Mandaue, Talisay, Naga and four municipalities of
the greater part of Metro Cebu - Liloan, Consolacion, Minglanilla and San
Fernando.
Its franchise service covers an area of about 674 km2 with an estimated
population of 1.73 million.
Visayan Electric Company, Inc.
Visayan Electric is owned and managed by publicly-listed Aboitiz Power
Corporation (PSE: AP) and Vivant Corporation.
Approximately 800 individual shareholders comprise the Visayan Electric
shareholders' roster.
Visayan Electric Company, Inc.
Mission : We are committed to deliver at the most reasonable cost, safe and
reliable electric service to the people and businesses we serve. We affirm that the
ultimate measure of success is the satisfaction of our customers.
Visayan Electric Company, Inc.
Vision: To be world class electric utilities with delighted customers and engaged
stakeholders.
Visayan Electric Company, Inc.
Objective: We aspire to further contribute to the economic development of Cebu
while improving the quality of life of its workforce and their families as well as
of the local community.
Stakeholder concept/theory
It suggests that shareholders are merely one of many stakeholders in a company.

The stakeholder ecosystem, this theory says, involves anyone invested and involved in, or affected by,
the company: employees, environmentalists near the company’s plants, vendors, governmental
agencies, and more.

It suggests that a company’s real success lies in satisfying all its stakeholders, not just those who might
profit from its stock.
Stakeholder concept/theory
VECO Stakeholders
Contractual stakeholders – customers, employees, business partners, contractors, suppliers,
shareholders, lenders and alliances

Community stakeholders – consumers, regulators, government agencies, local government, politicians,

local communities, traditional and social media, nongovernment organizations, trade groups, advocacy
groups
VECO Stakeholders
Customers

Source: VECO Power Supply Procurement

Plan 2020
VECO Stakeholders
Employees
INTEGRATED MANAGEMENT SYSTEM POLICY (IMS)
-Ensure consultation and participation of employees in Safety, Health, Environment and Quality (SHEQ)
programs
IMS: ENTHUSIASTIC LEADERS AND INFLUENCERS
• Management Team shall show leadership and commitment thru allocating sufficient resources, people and
training;
• Educate, train and motivate employees working for the organization and influence other interested parties to
carry out tasks professionally, courteously and expeditiously in safe and environmentally responsible manner,
and exemplify these values beyond the workplace.
VECO Stakeholders
Suppliers

Source: VECO Power Supply Procurement

Plan 2020
VECO Stakeholders
Regulators and Government Agencies
VECO Stakeholders
Communities and Groups
Corporate Social Responsibility or CSR is the cornerstone of our non-energy
community involvement. Our mission is to utilitize our core competence in
electricity distribution in partnership and collaboration with affiliated
foundations in the promotion of education, environment and community
development within the company franchise area.
Economic Systems
•Market Economy
•Planned Economy
•Centrally Planned Economy
•Socialist Economy
•Communist Economy
Economic Systems
Market Economy
A market economy is an economic system in which the decisions regarding
investment, production and distribution are guided by the price signals created by
the forces of supply and demand.
Economic Systems
Planned Economy
A planned economy is a type of economic system where investment, production
and the allocation of capital goods takes place according to economy-wide
economic plans and production plans.
A planned economy may use centralized, decentralized, participatory or Soviet-
type forms of economic planning.
Economic Systems
Centrally Planned Economy
A centrally planned economy, also known as a command economy, is an
economic system in which a central authority, such as a government, makes
economic decisions regarding the manufacturing and the distribution of products.
Centrally planned economies are different from Market Economies, in which
such decisions are traditionally made by businesses and consumers.
Economic Systems
Socialist Economy
It comprises the economic theories, practices and norms of hypothetical and
existing socialist economic systems.
Economic Systems
Communist Economy
Communism (from Latin communis, 'common, universal') is a philosophical,
social, political and economic ideology and movement whose ultimate goal is the
establishment of a communist society, namely a socioeconomic order structured
upon the ideas of common ownership of the means of production and the absence
of social.
Economic Systems
The economy of the Philippines is the world's 31st largest economy by nominal
GDP according to the International Monetary Fund 2020 and the 13th largest
economy in Asia.
The Philippines is one of the emerging markets and the 3rd highest in Southeast
Asia by GDP nominal after Thailand and Indonesia.
Economic Systems - VECO
Despite of our present state of economy wherein, we are facing difficult
challenges, especially in these times of Pandemic crisis, still Visayan Electric
Company (VECO) still achieved their goals and the top management to stand
still in the business world with lesser competition being the top supplier of
electric power in the Visayas.
Taxation
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual
or legal entity) by a governmental organization in order to fund government spending and various
public expenditures
Taxation
The most important objective of taxation is to raise required revenues to meet expenditures.

Apart from raising revenue, taxes are considered as instruments of control and regulation with the aim
of influencing the pattern of consumption, production and distribution.

Taxes thus affect an economy in various ways, although the effects of taxes may not necessarily be
good. There are same bad effects of taxes too.
Taxation
• Taxation can influence production and growth. Such effects on production are analysed under
three heads:

1. Effects on the ability to work save

2. Effects on the will to Work, Save and Invest:

3. Effects on the Allocation of Resources:

• Taxation can influence on Income Distribution

Inflation
Rising prices, known as inflation, impact the cost of living, the cost of doing business, borrowing
money, mortgages, corporate, and government bond yields, and every other facet of the economy.
Inflation can be both beneficial to economic recovery and, in some cases, negative.
Inflation
If inflation becomes too high, the economy can suffer; conversely, if inflation is controlled and at
reasonable levels, the economy may prosper.

With controlled, lower inflation, employment increases. Consumers have more money to buy goods
and services, and the economy benefits and grows.

However, the impact of inflation on economic recovery cannot be assessed with complete accuracy.
Labor Force
Labor represents the human factor in producing the goods and services of an economy.

The quantity and quality of labor that individuals supply is an important factor in determining the
economy’s level of production and rate of growth.
Labor Force
People with jobs, people looking for jobs and businesses seeking employees make up what is known as
the labor market.

This interaction between people supplying labor services and businesses demanding workers’ services
is what determines the wages and salaries paid to employees and the total number of people employed.
Labor Force
Important aspect of the labor market:

1. The contribution made by the unique skills and abilities of all types of people.

2. The mobility of the workers that it comprises.

Labor Force
Just about everything that happens in the economy affects the labor market.

Changes in the demand for goods and services, the size of the population and the minimum-wage rate
can each have substantial impact on the job market.

Changes in the economy have perhaps the most significant impact on the overall job market.
Labor Force
Changes in technology and productivity growth are also important considerations in the labor market.

One possible effect of technological advances can be the displacement of workers in industries that
have found more efficient production techniques.
How does business influence the
economy?
When there is an economic boom, businesses are able to hire more employees.

This enables employees to spend their income with various businesses.

Hence, increasing profits for business owners.

The lower the unemployment rate, the more likely it is that your business will see significant profits.
 Philippine Competition Act
The PCA was passed in 2015 after languishing in Congress for 24 years.

It is a game changing legislation that is expected to improve consumer protection and help accelerate
investment and job creation in the country, consistent with the national government’s goal of creating
more inclusive economic growth.
 Philippine Competition Act
Enforcement of this law will help ensure that markets are open and free, challenging anticompetitive
business practices while maintaining an environment where businesses can compete based on the
quality of their work.
 Philippine Competition Act
A competitive market means a market with multiple buyers and multiple sellers, driving market prices
lower and offering consumers more choices.

A truly competitive market encourages efficiency and innovation, and forces businesses to excel.
 Philippine Competition Act
The act reflects the belief that competition:

• Promotes entrepreneurial spirit,

• Encourages private investments,

• Facilitates technology development and transfer, and

• Enhances resource productivity.

Market Systems
1. Perfect Competition - with Infinite Buyers and Sellers

2. Monopoly - with One Producer

3. Oligopoly - with a Handful of Producers

4. Monopolistic Competition - with Numerous Competitors

5. Monopsony - with One Buyer

Market Systems
1. Perfect Competition - with Infinite Buyers and Sellers

Perfect competition is a market system characterized by many different buyers and sellers.

In the classic theoretical definition of perfect competition, there are an infinite number of buyers and
sellers.

With so many market players, it is impossible for any one participant to alter the prevailing price in the
market. If
Market Systems
2. Monopoly - with One Producer

A monopoly is the exact opposite form of market system as perfect competition.

In a pure monopoly, there is only one producer of a particular good or service, and generally no
reasonable substitute.

In such a market system, the monopolist is able to charge whatever price they wish due to the absence
of competition, but their overall revenue will be limited by the ability or willingness of customers to
pay their price.
Market Systems
3. Oligopoly - with a Handful of Producers

An oligopoly is similar in many ways to a monopoly.

The primary difference is that rather than having only one producer of a good or service, there are a
handful of producers, or at least a handful of producers that make up a dominant majority of the
production in the market system.
Market Systems
4. Monopolistic Competition - with Numerous Competitors

Monopolistic competition is a type of market system combining elements of a monopoly and perfect
competition.

Like a perfectly competitive market system, there are numerous competitors in the market.

An example of monopolistic competition is the market for music. While there are many artists, each
artist is different and is not perfectly substitutible with another artist.
Market Systems
5. Monopsony - with One Buyer

Market systems are not only differentiated according to the number of suppliers in the market.

They may also be differentiated according to the number of buyers.

Whereas a perfectly competitive market theoretically has an infinite number of buyers and sellers, a
monopsony has only one buyer for a particular good or service, giving that buyer significant power in
determining the price of the products produced.
Global factors that shape national
business activities
Businesses are affected by an external environment as much as they are affected by the competitors.

Global factors influencing business are legal, political, social, technological and economic.

Understanding of these factors is important while developing a business strategy.

Global factors that shape national
business activities
Social factors

These factors are related to changes in social structures.

These factors provide insights into behaviour, tastes, and lifestyles patterns of a population.

Consumer religion, language, lifestyle patterns are all important information for successful business
management.

Social media is now considered the main form of communication and is now part of our day to day
activity. With this, there is an increase in demand for consumer electronics.
Global factors that shape national
business activities
Legal factors

These factors that influence business strategies are related to changes in government laws and
regulations.

For a successful business operation it is important that the businesses consider the legal issues involved
in a particular situation and should have the capability to anticipate ways in which changes in laws will
affect the way they must behave.

From the point of view of business it is important that they are aware of these changes in the areas of
consumer protection legislation, environmental legislation, health & safety and employment law, etc.
 Global factors that shape national
business activities
Legal factors - VECO

Consumer groups in Cebu have opened an online signature campaign for the public to participate in to urge
the Congress and the Senate to probe the alleged overcharging of electricity bills by Visayan Electric
(formerly VECO) during the enhanced community quarantine (ECQ)…

…The consumer group is hoping that all victims of overcharging will come forth and sign the online petition.

In their statement, Visayan Electric said that due to the Data Privacy Act, they cannot publicly discuss details
of individual accounts of customers in public.

Read more: https://cebudailynews.inquirer.net/349260/consumer-groups-want-probe-over-alleged-overcharging-by-visayan-electric#ixzz6lPcjM2KO
Global factors that shape national
business activities
Economic factors

These factors involve changes in the global economy.

A rise in living standards would ultimately imply an increase in demand for products thereby,
providing greater opportunities for businesses to make profits.

An economy witnesses fluctuations in economic activities. This would imply that in case of a rise in
economic activity the demand of the product will increase and hence the price will increase. In case of
reduction in demand the prices will go down.
Global factors that shape national
business activities
Economic factors

Business strategies should be developed keeping in mind these fluctuations.

Other economic changes that affect business include changes in the interest rate, wage rates, and the
rate of inflation. Incase of low interest rates and increase in demand.

Global economic status affects every types of business. Ex. the recession between 2007 to 2009, high
inflation rates in the Philippines.
Global factors that shape national
business activities
Political factors

This refers to the changes in government and government policies; greatly influence the operation of
business.

This has gained significant importance off late. For example: companies operating in the European
Union have to adopt directives and regulations created by the EU. The political arena has a huge
influence upon the regulation of businesses, and the spending power of consumers and other
businesses. Business must consider the stability of the political environment, government’s policy on
the economy etc.
Global factors that shape national
business activities
Political factors

Government policies depend on the political culture. For example, DENR policies for mining
businesses during the Aquino admin is different from the Duterte admin.
Global factors that shape national
business activities
Technological factors

These factors greatly influence business strategies as they provide opportunities for businesses to adopt
new innovations, and inventions.

This helps the business to reduce costs and develop new products. Organisations need to consider the
latest relevant technological advancements for their business and to stay competitive.

Technology helps business to gain competitive advantage, and is a major driver of globalization.
Global factors that shape national
business activities
Technological factors - VECO

This factor goes along with economical factors.

As city expansions are rising, demand for electricity is also rising. VECO will expand their facilities to
cope up with the demand.

VECO will venture into state-of-the-art innovations that will not just improve its efficiency of
servicing the consumers but offer lesser cost in operation and management.
Philippine Government policies
and directives on businesses
Philippines is one of the fastest growing economies.

With a growing economy, it offers great opportunities for investments and business developments.

These developments must follow policies and directives imposed by the government.
Philippine Government policies
and directives on businesses
Government policies guide businesses.

Businesses should also be flexible to respond to changing rules and policies.

Governments require businesses to secure necessary permits and certifications before they can be fully
operational.

They also require businesses to pay taxes. Taxes are the lifeblood of a government. They help the
government fund their projects for economic development.
Philippine Government policies
and directives on VECO
VECO must adhere to government directives. If VECO has plans to acquire a certain technology that
would enhance their consumer service, they must ensure that these technologies applies certain
policies especially with regards to environmental health and safety.
 Thank
You
GROUP 2

MARIO CABALLES

JOHNDEL CHRISTOFER
DUNTING

F E R N A N D O M A R T I N O L A R I TA

RUBY ORBINO

MICHELLE SAIRONAL