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Chapter 4
ter 7
ORGANIZING
4.1
TO THE
Fundamentals of Organizing,44
O Differentiation 4.2
and lntegration, 44
Organizational Structures,45
0 Vertical Structure, 45 O Horizontal Structure, 46 O O O Q
7.1
Marketing Managerne
7.2
Operations Managern
7.3
Human Resources
7-4
Financial Managemen
O
The Functional Organization, 46 7.5
The Divisional Organization, 46 The Matrix Organization, 47
The Financial
8.1
I
Starting a Business, {
O
Supplement to Chapter 4: Staffing, 51
LEADING
5.1 Leading and Managing, 62 5.2 Approaches to Leadership, 62 O Maslow's Hierarchy of Needs, 65 O Alderfer's ERG Theory, 66 O McClelland's Acquired Needs Theory, 67 5.3 The Leadership Grid: Caselet, 68
The Family Busine
O Franchising,9l O Startup,9S O Buyout,93 O Forms of Busines
Chapter 5 8.2
lnvesting in the Philig
O Role of Business O Board of lnvestnr 0 The Philippine Eo O Economic Zones,
i
8.3
lnternational Manage
Chapter 6 Exercises, 101
CONTROLLING
References,lSl
Managerial Control, 72
O Types of Control, 73 O Oualities of Effective ControlSystems, O The lmportance of Control, 74 O Areas of Control, 74 O Control Methods and Systems, 75 O The Balanced Scorecard, 77 6.2 The Balanced Scorecard: Caselet, 79 0rganization and Management: Concepts, Caselets, and Exercises
ffil
SPECIAL TOPICS IN MANAGE
4.3 Forms of Business Organizations, 48 4.4 A Flexible Organization: Caselet, 50
6.1
Jtrt
Technology Managan
Cbapter
The Network Organization, 48
FU]I(
73
TO THE FUNCNONAL AREAS OF MANAGEMENT
Heting
Management, 82
@rations Management, 83 ttrnan Resources Management, 84 linncial Management, 85
O !E
The Financial Officers in the Organization, 85
Bcfrnology Management, 87
I tr
r,P!CS
IN MANAGEMENT
Starting a Business, 90
$ The Family Business, 90 O Franchising, 91 O Startup,93 O Buyout,93 O Forms of Business and Legal Requirements, 8.rl
lnvesting in the Philippines, 95
O O
Role of Business in the Economy, 97
O
The Philippine Economic Zone Authority (PEZ.A),98
Board of lnvestments (BOl), 97
O Economic Zones, 98 8.3
94
International Management, 99
hrcbes, 101 ffirences, 131
Fundament
of ffinageme
ffi;*";
Competitive Advantage (Cost, lnnovation, Ouality, Service,
;;"
students are expected to:
: , , : :
1.
Management Functions
understand and
(Planning, Leading, Organizing, and Controlling)
aiferentiate the fundamentals of business
Management Levels
organizations and ,unagement and
2.
discuss and integrate the planning, organizing, staffing, directing, and controlling functions of management to current issues.
and Speed)
(Top-Middle-Frontline) ..
Management Skills (Technical, Decisional, lnterpersonal)
J1 V MANAGEMENT
T 1.1 Managemen#,BEfiiiflti !
$iqtl*
;;:i';,:i!,1l:",
,
[email protected]
,,;
Business environments are battlefields, and business organizations are engaged in combat. Familiar business terms include globalization, competitive advantage, and mobilization of resources. There is no doubt on the veracity of competition or'engagement' in a business environment. one only needs to walk inside a mall, open social networking sites, or simply surf the Net to prove the business atmosphere skirmishes. Business participants or the warring opponents have definite 'rules of engagement,' or the professed battlefields where competition for customers occur. Bateman and Snell (2008) enumerate cost competitiveness, innovation, quality, speed, and service as competitive advantage areas. Comparative Advantage: Rules of Engagement Ouality standards are altered constantly, because human desires adjust with new and modern technologies. ln truth, innovation is a particular strategy for all business organizations. Many groundbreaking innovations focus on speed, without compromising quality. As time cannot be recycled or reused, speed is a known requirement for most people. Enterprises that utilize new
technologies to address the quality and speed requirements of its target clients cannot, however, ignore the cost and service needs of its clientele. Cost is a primary concern for consumers, so managers must never fail to address this to be competitive. The balance to gain profit and remain affordable to clients is compulsory for business organizations. Bateman and Snell (2008) define innovation as the introduction of new products and services. with new technologies and an active social media via cyberspace, this competitive advantage aspect is growing at a dizzying pace. Managers should keep abreast of the latest technologies as innovation is expected to intensify with globalization. Quality is defined as the ability of a product or service to meet customer needs (Heizer, 2008). Because quality is an aspect that serves clientele desires, it must be managed well. ln the Philippines, the Bureau of Product Standards of the Department
ilitE
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tne ccEE-mfilllw or-ncale jl-he .'mu
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i/16'ry orgPrrua:6d'1s'lilG m*ErtSpe evaji.uator: anc pifla,"s, druided rnto tnree s.{u
:f
co{Jntnes in the,r Giocg,
&l
The Wodd Ecomonc Fmru !-!lEC) and the tiraEer"mtl :o,.rntry's Perfonnanoe }e }{{ 3'derse countries +or 3e GiEfu
The World Barurtrffi Cq Karte profite, with besc ffiice
Ttle CDS planning
+re.rc;h
of Trade and lndustry publishes brochures for product requirements to
acti'rities since 20OO.
set standards for customer safety and p-rotection. Consumer welfare and protection is also provided through the Food and Drug Administration under the Department of Health. certificates of Product Registration need to be issued for manufacturing companies before these go to the consumer market or are produced in bommercial volumes.
Due to globalmator ad I have establ ished cCI,ooe,rdTc private and public s€€1i3rE f,'T lll spurred dynamic cha'qes m' often launching fresn $ale '! engagementJ
0rganization and Management: Concepts, Caselets, and Exercises
scnlrce standards, such as
permits for food service personner r[rE by tre rocal governmentsanitary units and the Departr"r, or Hearth, and ffi neparrnent of rransportation and communications
for transport and 0u[lmil*rti€tion personnel are established for service industries by relevant 0rcnrr*nt agencies. Most service industries poti"" their member '@@mrrHrirs through codes of Ethics, e.g., code "t.o of Ethics for Auditors.
sm/*e is an intrinsic
requirement Jor ail customers, as
they need to [fl,rrc lrtrat they want when they need it] Most of us have our own experience
out of rong queues in service estabrishments to go ersewhere. know that this is a ross of income for their businesses. speed appears to be the buzz,wordof this miilennium. Fast-food outrets, ;lffinet search engines, and automated teiler machines are among the more rL,orflhr deveropments. customers expect to experience a product or service d a s'wift rate, so management must address their needs at a comparative '@r€ren faster pace. otr mnrm'ring
collins (2oog), in his book Good to Great, reiterates most of these wldfitfo," for great companies surveyed from pubricry risteo b00 ' rpanies in the United States. To a great *ir*, Fortune reriabirity_a I cornpound of thercost-innovation-quarity-sJrri""-.p"lJ aspects_is a ltu*dess principre. The research findings in the book show that business
rustainability incrudes management of ti"re competitive advantage concepts. Many organizations have estabrished other indices for comparative dimntage evaruation and direction. The Worrd Economic Forum has twerve f,,ikars' divided into three subsets, which are used to evaruate performance C countries in their Global Co*pltitiruness Reports. The world Economic Forum partners with the Makati Business club milBc) and the Management Association of the phirippines for inputs on the country's performance. The wEFoRUM arso has rocar research partners in #rcrse countries for the Grobar competitiveness and o*,e,. ,eports. The World Bank-funded City Development Strategy (CDS) has the Urban lGrte profile, with basic indicatois for evaruation of a city,s :rhe cDS planning frameworks and toorkits have served "orp"rii*'Jorffi] urban deveropment *tivities since 2000. Due to globarization
and technorogicar ifrnovations, these institutions have established cooperative efforts with partners and affiliates from the private and public sectors in many countries. Their research findings have spurred dynamic changes in the ii"tar of management and organization,
often launching fresh ways engagementJ
to 'mobirize forcesi for
innovative ,rures of
Chapter 1: Fundamentals of Management
-
The 'rules of engagement' and battlefields require soldiers and commanding officers. The language of business is, in fact, derived from military terms. Strategy, action plan, strengths, attack, and weakne.sses are some common terms. McNeilly (1996), in his book reviewing sun Tzu and the Art of Busrness, reiterates that marketing gurus philip Kotler, Al Ries, and Jack Trout have articles and books citing the applicability of military strategy to business. our present challenges on climate and environmental changes also utilize the same military business terms to'mobilize resources' for'greening' enterprises.
Mdbtu
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t
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fu
frrrcrorrs cn nnq
P@rms$ffi
srynlrrlrilScdb
2.
The students are divided into groups, with a company assigned
fiffimltrrsrm seq.'Ellllc
to each group. The companies may be utility (communication, electric, petroleum/gas, and water distribution), transport (land, sea, and air), or food service companies that they have experienced or have knowledge of.
& GA,\]'T char's a,e r! \e ran -ia1 5e ctlil -f,^:€ 3a- :er-g@0 F-*uotts au.lc A,mN i srlo,€ GAX{fi cffi
Each group evaluates their assigned company according to their quality, innovation, speed, cost, and service aspects.
ans$r'ers:
Each aspect is rated from 1-5, with b being the highest rating, and 1 as the lowest rating.
nccrrt frtetitom OryE
4.
The groups report on their assigned companies. The reasons for the ratings are explained, based on their own experiences or knowledge.
Ban-Do-Cheon-Acl m also caltreo as "ne ffnP rs as follonrs:
5.
The meaning of the competitive advantage aspects is reiterated
+
3.
to reinforce students' understanding thereof.
agtil"ttes iri s€OLrerEEil
Plan
'
Seiec rre old oPFlotJr-rrq.:
Managers: Commanding Off icers
Every enterprise, therefore, needs its managers who function as commanding officers in the business war. Bateman and Snell (2009) detail the functions and roles of managers as follows:
1.
Planning, or delivering strategic value;
2. Organizing, or building a dynamic organization; 3. Leading, or mobilizing people; and 4. Controlling, or learning and changing
organization and Management: Concepts, Caselets, and Exercises :, r i:t:!
:r:,!:rti::t:,!lr
rec
C 0
Descrpe
0 0 0
Devenoc an
Descr,ise a{[t& on the'co( cr
d
Do or rlnierilE
cretft + Reflect and act (r Cheot
SlitsCI'ed planning tools for managers and 'commanding officers,' also 1lilmd rmr Xd'e CDS toolkit for Philippine cities are:
fll- Srnp/e
Frequency Count,which allows prioritization of problems that
need to be addressed. The simple frequency count may be likened to an election tally, where the candidate with the highest votes gets chosen by the voting public. As a planning tool, the simple frequency @unt identifies the issues that receive the most number of votes as ttre main or priority issues; Flowchart, a sample of which is shown in figure 1.1 on page 8 for the functions of management, is a tool that puts key processes in symbolic patterns that are easyto understand. The symbols represent relationship sequences between and among different tasks; 3.
GANTT charts are useful for scheduling and planning projects. The chart may be considered a visual tool for the action plan. The action plan template in the Supplementary Exercises: Management Functions and Action Plans in this chapter may be developed into a simple GANTT chart, with emphasis on the 'What' and 'When' answers;
4. Activity Network Diagram (AND) is a planning tool used to diagram activities in sequence from start to finish; and 5.
Plan-Do-Check-Act (PDCA) cycle is a problem solving model. lt is also called as the lmprovement Storyboard Model. The PDCA cycle is as follows:
+
Plan
0
Select the problem that will be addressed, and describe the opportunity;
0 0
Describe the current situation surrounding the opportunity;
0 0 0 +
Describe all the probable causes of the problem and agree on the root cause/s; Develop an effective workable solution; Do or implement the solution; and
Check or review the result of the change.
Reflect and act on the learnings.
Chapter
1
:
Fundamentals of Management
&€trpntion€d terms a'e r ActivitY Network Diagram
PDCA Cycle
-esccfises to tfie cgm of custonrer fo needs in
Ir-,t
IL *.,tnt LO.ftY
Step 1 - ldentifY the tasks or activities of a Project, including the time required to comP[ete the task, and write these in 3" X
and JIT are often a o bsues that inhiate the
Ontl'TOlt!,
ffin
novel Planning and otg leadershiP stYles zd e norv haPPens with nsl
5" cards.
SteP 2 - Put all the task cards in order and link these with lines and arrows to show
l-
the sequence of activities' SteP 3 - RePeat the Process until the starting task is linked to the last activitY. (Source:CDS,
L
2OOO)
organizingmethodsandstructureshavechangeddramaticallyinrecent economies' Some terms that are now years, in response to shifts in global senior executives in their organizing part of the language o{ managlrs and function are:
1. 2.
of positions or jobs; Downsizing, or the planned removal an appropriate size for Rightsizing,means the efforts at achieving effective enterPrise Performance ;
S.CustomerRelationsManagement(CRM)'afunctionorenterprise unittaskedtofocusoninteractiverelationshipswithcustomers;
Gaismatic leadershiVlle
Luther King, and his'drer are dominant, self-coofider d of their beliefs' TheY are enthusiasm in their {ollffi
teadaCi or charismatic leader*rt Transformational
giving their foll6wers'nrd stimulating qualities'
or@ The senior management frul draw leadershiP models
rr*
il The same challenges and r control function of managemer* ilnotation for the tdrm 'conr'd' ls arrticipated. Senior executives helP o* for control sYstems that as follows:
1'
4,Reengineering,includeseffortstorevolutionizeorganizational systems and
needs; [r.o"""t"" to satisfy customer
2.
5.TotalaualityManagemenf(ToM),anintegrativeapproachto satisfaction of customer
the realization managemeni ,r,u, "rpports and techniques that result in through an extensive variety of tools and high lualitY $oods and services;
6.
Just
and apparatus to ln Irme (JlT), which calls forpubassemblies the
to the next stage in be produced in very small lots ""dd"liu"r"d process exactly at the time needed'
Caselets' and Exercises 0rganization and Management: Concepts'
cost#
3.
Education and commti of or there is inaccuraE
ParticiPation and id information for the chal resist the same; Facilitation and issues;
atP
4.
ManiPulation and @ wl inexpensive solution
5.
Explicit and imPlicita. t initiators at risk, but s
af@{,ementioned terms are actually organization concepts
Tfflfirm'
that are
M51lrynent responses to the comparative advantage'rules of engagement' ffigt ture account of customer focus and speed, while simultaneously rfiililGr€ qualrty needs in cost-effective ways. oRfu{. TOM, and JIT are often associated with quality and/or customer
Mmfuctuon issues that initiate the organizing function'
T}Ese novel planning and Organizing methods also give impetus for lmobilization of human frI|Irirmudive Ieadership styles and approaches. The ]mmnrEes' now happens with new leadership perspectives such as: Luther King, and his 'dream of a better worldl charismatic leaders are dominant, self-confident, and convinced of the ethical decency of their beliefs. They are able to stimulate a sense of adventure and enthusiasm in their followers.
2.
or charismatic leadership traits, (2) aptitudes or capabilities of giving their foll6wers individualized attention, and (3) intellectually stimulating qualities.
I
t I
(1) charisma, Transformational leadershrp, which is characterized by
The senior management or commanding officers of enterprises in effect row draw leadership models from the religious or nonbusiness sectors' The same challenges and innovative approaches are also found in the control function of management in the recent years. Because of the negative is connotation for the term 'control,' resistance and the need for collaboration cooperation anticipated. Senior executives have diverse approaches to elicit for control systems that help overcome or manage its negative implications as follows:
n
Education and communication, commonly used where there is lack of or there is inaccurate information; Participation and involvement, where initiators face a lack of information for the change, and other participants have the power to
n
resist the same;
1. D
2. 3.
Facilitation and suPPort, where the situations show adjustment issues; ,1.
4,Manipulationandco-optation,oftenthequickestandmost inexpensive solution when there is resistance; and
5.
Expticit and implicit coercion, which may put the senior managers or initiators at risk, but is essential for prompt execution' Chapter
1:
Fundamentals of Management
ffiP,mmimmrylui
The planning, organizing, leading, and controlling (POLC) functions of management systematically address the comparative advantage traits of enterprises.
fi' lhlre rlciun*tluflpal t" &mfl iww *rfi@* & qnmllrsry fiE Mr'rm,l
Although some words differ, Andrews (2008) offers a flowchart for the management functions, shown in figure 1.1 ,
f,lll'lItilmtr,,
e fumagem il, tur
t-
,olgille.srE SureUCm ACttgf
tilr+r
Change in procedures
ef 1.1
. Functions of management (Source: Andrews, 2008)
The figure shows the interdependent and cyclical nature of the functions, suggesting a set of skills and levels in an organization that are responsible for given functions. The management skills and levels also help explain the functions of management.
Management Levels: Chains of Command Top4evel managers
or senior executives are responsible for the
overall
management of the organization. Middle-level managers report to top-level managers and are located in the middle layers of the hierarchy, as shown in figure 1.2. Frontline managers supervise the operational activities and are also called operational managers.
Bateman and Snell (2008) enumerate
the key activities of
the
management levels, Top-level Managers:
1. 2.
3.
Establish high performance standards. lnstitutionalize a set of norms and values to support cooperation and trust. Create the corporate purpose and ambition.
0rganization and Management: Concepts, Caselets, and Exercises
:::nrlr'\.or8 t
qrrcu, -lBrrrr:illr:r:tgs ililU
ffim*ueU Figure
irc S$Smtl
fslend re filrsl
nmaregererfl *r''eg
cfl
ggt-i-:;f.t :- :Ea-!ffio mrr[]B$E -[3Fr 3]rlllLlllll*rm *m I umflf'x: -r{:clJllleE" man]lt uurff
{Mliirmde*e,
e'
Man age rs
:
rI h*eoo Lndividuals and support their activities' diverse units' T -n{- : spersed knowledge and skills across long-term short'term purpose and between tension the & lr#mnage ff-rc't on' ,Flrm,nirt
r I i
e Managers:
the business' growth opportunities for C,'eate and pursue new
A::act and develoP resources' within the unit' l"[anage continuous improvement
advances have
and communication technology but t!"^::li skills needed managem"nt py"mid' 'flattened' the for effective uifrhilI'raY dictate a steady progression still levels rEi'agement rulm and adicles \ru:rrt technologies
mwr:r*anc" ot o'g='ii"ii"""r goul::
y"""ge'"ni booll' skills' inclusive
o"*,"^T;;ilt
of
for,the 'uq'it"d evaluation' @nff*:se many solutitns exercises' and performance building team ?lsrrrrg modules,
levels Figure 1.2. Management (Source: Bateman and Snell' 2008)
of Management Chapter 1: Fundamentals
1.
2'
The students are directed to plan a community outreach A reader or moderator is erected, and the students discuss the event, using an action plan template, as follows:
+ + + + +
What-list of activities for activity When-schedule or deadline for completion
of activity
where-rocation for activity and/or supprier for activity Who-person/s in charge or group assigned for activity How-required resources for the activity, e.g.,
mtd gcrmnr-rr-nr:me gM :a.Eilqf@e;
'il'iltslilm$gl.3 :rr
fr
ruunnnrmrwu
fe
sr;lll sffie"
:
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' '
+
3'
How much-estimated budget for activity The experience of the pranning activity is discussed to reinforce student understanding of ,rn"g"r"nt functions.
4.
The what-when-where'who-how-how
much temprate is rerated to the planning, organizing, leading, and controlling functions. The'who'answers are utirized for management leverand skirs discussions.
Deep and Sussman^(2000)
suggest solutions for management challenges in their book ACT on rtl through the ACT acronym: Analyze your situation. Choose your best strategy.
i,-er
:ne r-serrre illd Utl tax- k e efffird U
AtsM
3E ASry
;Oi.lr-Ser€,.'E'
rer :s Am{F{ Choose'r-h,e,r Bes iln p,alrsJ. a,rc Tract ffig suggestec cs-nsmfr A ow
Ilecision Tree
o ':f-r
Track your choice.
it
A \-r
The bookdetails
ectiveneS::ffij:n:;::,'J;i,*:;:nTff :,j:il1.J:n::i and accountability for management students and ur"in*. practitioners alike' lt is usefur personareff
to note thai the
aptitudes deveropment areas conform to the basic management "rgg".teJ qkiils"no risted by Bateman and
sneil (2008)-technicar, conceptuar, ,rd p"opre skirs. The aptitude to perform specialized tasks involving particular methods or processes are called technical skil/s, whire the iacirity to identify and resorve probrems for the benefit of an organization and iis ,"ri"r" are conceptuar and decisionar skills' lnterpersonar skilrs, or peopre aurin"a as pre Lrent to
"t,tt",
I
lNsil
:s *::e 3:rtgsB
vehicle,
chairs
E
'
o'ganization and Management: concepts, caserets, and Exercises
read,
'sjtr Y
1A
-t)
b( ier*aer
,mhro ,mithd
identified with mm conrmunicate effectively with others, are often flrlwla€Ers or candidates for executive positions'
the skill sets, levels, and functions allow for a definition ,dlilmqwrent as 'the process of working with people and resources to ,mlp*-h o'ganizational goals effectively and efficiently'" Effectiveness ll|f*
ilulmllrrary
goals are 1fiilrilililr pqancational goals are achieved, while efficiency means people' dffimC ndfi minimalwaste of money, time, materials' and
is-the pyramid allows for ,m*r"no* and bottom-to-top interaction, and the left-to-right, right-to lffi,ilrildc1c|icalflowoffunctionshelpvisualizeaneffectiveandefficient ffiUur€s 1.1 and 1.2 show what management
enterprise' mmummarrce across the business
the Let the students list the reasons why each one chose ABMtrack.ltishelpfultocoordinatewiththeschoolguidance counselor for this assignment' Allow them to Analyze their situation (evaluate their reasons); Ci"."" ir,eir besi strategy (future study or after K to 12 (journalizing approach or other ff"n.), and Track their choice suggested counselor'teacher programs)'
Decision Tree
Analyze, Choose, Act
Chapter
1
:
Fundamentals of Management
1.2 Managementt ens
*
Hnrn
Management Functions and Action plans Your famiry business, a fast-food franchise in a ouezon city mall, is creating another outret in a new mail in caroocan city. Using the management functions_planning, org"nirin*--["0,"n, and controlling-create an action pran to imprement *," u,Lin"". expansion,
ffi
Case Facts: The_ Caloocan City outlet has the same manpower requirement as the franchise in olezon city: one store supervisor (college graduate with two-year experience); two store assistants (college graduates with one-year experience); and three fronfline staff (high school graduates with one-year experience). The manpower training, materiars, and machinery requirements for the expansion wi, be provided by the franchisor. Th" ,on"y for the expansion is estimated at five miilion pesos (ps,ooo,o0ol, wiil
1ffiM ihfficMU
'lfi|,
Ulffiinm
sno-nC
A
f,ttpfur,rrr*,y lruomni thsmmrnrUffi-'il
e i re rar-i".i 4..ffi11;8 El-t:L.Jtr re lescrJ!firnE &r{]-rg ffiTi cmnffl * *r*Fre n'irlf :e r dtnrq; E n3,* n'il fe mmf :r-e- fff?u :rfililril{l t -,3r,u *r-rff rur.it #IIGq
--€ r,c€,se 3aie5 gle* r*rm: :a: $e araryze rllrtr
Action Plan Recommendation:
T'r:r::s. and be
l
,Whai,, ';-
-:
Plan
**ceg
C)O,
Uffin" F€,. ,gmlry|
:re ia- i a-snr**m dtt
f{:';.ee-'ruhen' DOr alnsrsr'
in NovemDer'
:'-o:-"'-"1 Functlon I H
0rganization and Management: Concepts, Caselets, and Exercises
Analyze
2C r
5-,
Reco--'eFffiB
Organize
Control
ltr
corroMnn
-re'trac*<'Dore€ a= am -:e 'track-what' ocu ansru *as cirosen. The tz,er-fl'11h,m =arted Action Plan
Lead
!e ffim',
r fucrm 3m"
:6(:l:r-a'
- -l : l':
fu
ruom6 tne
be provided by the famiry. The managers of the expansion wiil be "ro from famiry members, who wi, provide and direct the day-to-day operations and service requirements of the business (finance, rogistics, among others).
"""ornffi
omnm61
mCmn@.
using a simplified case method templaie.
Probrem statement: To recommend an action pran for the caroocan City food service outlet
ACf
Supplementa ry Exercises: Management Functions and Action Plans {!il$E
f}e ACT strategy for the family business fast-food
franchise
mlpmnrcing to Caloocan City. Create an action plan for the business fimwnsor]" using the table below for ihe recommended action plan. The ryrru@
auestions for the recommended template are:
-
M/lhat should be done with the family business? Should it expand
to Caloocan City?
L 3
caloocan city, when should the expansion start? when should the expansion be completed? H the family business is expanded to caloocan city, where should the resources (materials, manpower, money, machinery, among others) come from?
4. 5.
\l/ho will be in charge of the expansion? How will the expansion affect the family business resources
tf the family business is expanded to
(time, money' managernent, among others)?
6.
How much willthe exPansion cost? ,choose boxes' are also filled out, following the guide questions' The Note that the analyze boxes should answer the questions under a particular column. For example, the 'choose-what' box answer may be: "Yes, the family business should expand to caloocan cityl' and the 'choose-when' box answer may be: "The expansion should start in three months, and be completed in six monthsl' The 'track' boxes are also filled out, following the 'choose' answers' The ,track-what' box answer may be: "The caloocan city expansion was chosenl'The track-when box answer may be: "The expansion was
started in November 2015, and should be completed in April 20161' Action Plan Recommendation:
Chapter 1: Fundamentals of Management
Supplement to
l]rrffii$ffi n'
tff.gffiffiniqffitkiry
GEf'r]ircf,E a
The case method template, an academic toor for business courses, is also used to teach the decision-making stages, outlined by Heizer (2oog), in figure 1.3.
Er,SitE mndterrarcar ss mu.oinE :r,'e ffi &t':stri cor'id.. rr
frIIffitJrt ']Er
d
ar.}c
oper&
EdrErnalc
ciqre
q'cirse
itm
ftac'ts"
ofHt i
tt€€ erercrses trq
rrd
rnana,g€fiterf
pereqlb:rtes ior
tE
ffi" n!.etgs
and Bu il,{anagement. $th er
I,*eteer. Jay
Eourcation South
Asb
G( (hntemporarY Cotu-
Sdrrroeder, Roger
Singapore: McGraw
Figure 1 .3. Decision-making stages (Source: Heizer, 2OO8)
The decision-making stages are imperative in honing management skills for all business activities. The stages are reminiscent of the scientific method approach, which includes observation and problem-solving skills. The algebraic approach for stating the $iven variables to identify an unknown variable x also dictates a step-by-step approach to problem solving.
0rganization and Management: Concepts, Caselets, and Exercises
F
llilI:namrnnrry unknowns in the business environment and observation techniques derived from science and mathematics la f,.-ult'ul for business practitioners and students alike. Unlike rnd rnahematical solutions, however, managerial challenges ncluding the decisions that need to be made for them, are by rislq conflict, and uncertainty.
tffiihmod,rction and operations management courses
have established
fiGcs. sc*rematic diagrams that measure alternatives, the available r'case facts'often amend the chosen alternative.
lMimm bee exercises may be used to hone the skills of business ard management candidates. The decision models are prerequisites for the environmental analysis method in Chapter
book
rfr+d
Reaoings
X- Heizer, Jay and Barry Render. Operations l,llanagemenf. 9th ed. Singapore: Pearson Education South Asia Pte. Ltd.; 2008.
9- Scfrroeder,
Roger G. Operations Mainagement: hntemporary Concepts and Cases. 3rd ed.
Singapore: McGraw Hill; 2007.
Chapter 1: Fundamentals of Management
:.
#
Theffi and lts'Envlroffien Macro Environment
ffi"*,*"r*"' students are exPected
1.
2. :
to:
be aware and discuss the fundamentals of the external o{ and internal environments and business organizations be able to communicate and utilize environmental ?l1?lYsis models in relation
to Present issues'
(Political, Economic, Sociological' Technical) i
ComPetitive Environment (Porter's Five Forces)
SWOT (Strengths, Weaknesses' OPPortunities, Threats)
J-t V ENVIRONMENTAL ANALYSIS
2.1 Macro c)hapier 1 learnings show that organizations do not exist in a
The planning, organizing, leading, and controlling functions are dynamic environments-external and internal. The external
cor
environment,
includes the government, economic conditions, social, and other f, that generally affect all organizations, is also called the macro environn (Bateman and snell, 2oo8). The macro environment may be defined the acronym PEST, which lists the political, Economic, sociological, Technical variables in the said environment, as follows:
m*C,*.s
*dneilfi&
*{==dtf
Political, Governmental, and Legal
+ + + + + + + + + +
changes in tax laws
rgpbrdddrrltn lilrlgEsinl#d#
environmental protection laws
fiscal and monetary policies government regulations or deregulations import.export regulations
'} heryedrqnE
oil, currency, and labor markets
political conditions in foreign countries size of government budgets
specialtariffs
+
demand shift for different product and service categories
level of disposable income
availability of credit propensity of people to spend
"'
monetary and fiscal policies
GDP/GDRP trend consumption patterns
E0rganizationandManagement:concepts,Caselets,andExercises
.*##,*iili
ntnber of t*1h
+ + +
Teclrizl
.
lntemet
0 O 0
income differences by region and consumer group
interest, inflation, and tax rates
hstybs ard hiryrfp
Tecfinological and
shift to service economy
..$
s.idlt "0 ilrr$er of ruurgl rfr + rr;-agtarnrlxtErdl + social prograrns + social resporsnnY
r}
Economic
+ + + + + + + + + +
mg/srserdn.ryt
*
local and national elections
ffi
provides decrslm sPurs alters
d
P:'odrctiuirYd Product h c1ll
technological
adrrrm
new and imProved
Ptofi
sI A variation on the PEST u shortage of tectn*:d
Economic, Social or in the environment.
Socblogi{
*
price fluctuations
,fr, worker productivity levels
{i It +
unemployment trends
aeort of labor and caPital economic conditions in foreign countries
$cial, Sociological,
+ + + + + + + + * + + +
Cultural, Demographic, and Environmental
air and water Pollution control
attitudes toward product quality and customer service average level of education changes in tastes and preferences energy conservation and waste management life expectancy rates lifestyles and buying habits number of high school and college graduates number of women workers
per capita income and average disposable income social programs socialresponsibilitY
Technological and Technical
+
' + + +
lnternet
0 0 0
provides decision and support systems
spurs productivity and living standards alters product life cycles and distribution systems
technological advancements and developments new and imProved Products T,
shortage of technical skills
A variation on the PEST acronym is PESTEL, which stands for Political, Economic, Social or Sociological, Technical, Environment, and Legalfactors in the environment.
Environment or ecological factors include:
+ + + + + +
weather;
bilffi-
climate change;
ffinrr ffit
laws regulating environment pollution;
waste management; attitudes toward ,green,or ecological products; and attitudes toward and support for renewable energy.
hfl
lrrild tF*
Globalization and technological advancements have raised the concem for the aforementioned factors in the natural environment. Simultaneously, other issues affecting businesses and industries consist of the following:
l;m,bpddt UrgrariEtH
Legalfactors include:
+ + + * +
E@;
fsz-rCL&rglrm b nrryff
anti-trust law; discrimination law;
breftq
copyright, patents, intellectual property law;
and
enry*pr
data protection;
hreausad
health and safety law;
aeUoprnern pbru;
+
consumer protection and e-commerce; and
+
employment law
chapter 1 learnings arso showed arternative perspectives for the ,i,"ro environment, such as the World Economic Forum (WEFORUM) and City Development strategy (cDS) approaches. The twerve piilars used in the Global competitive Report of wEFoRUM provide comparative evaluation with other countries and locations. lt is helpful, especially for starting enterprises, to utirize the basic erements-institutions, infrastructure, macro environment, and health and primary education in their attempts to profile their chosen locations. Data from the local government units and their respective websites, if available, serve as guides for the macro environment
sketch.
As organizations progress in their respective industries, data for the wEFoRUM efficiency enhancer rist-h1$her education
and training, goods market efficiency, rabor market efficienty, financiar market deveropment, technology readiness, and market size-are usually available from industry suppliers, i.e., the banking sector, machinery, equipment and human .".orr"" suppliers, and the customer population.
{
Oeparut of R&
hreaus and agartiql
-
employee hea}lh operate.
d
Tkre Commission
Developmen! Foryide higher chrelopment.
csfr
m
Arrffiy
The annual reports d ic dorementioned list. Enafy. tt$ the Office of the Presirjert p*ans for the country. [lhcm - r gross national product inffdir r mdicators-are reported ard rsThese data are essentid
organization and Management: Concepts, Caselets, and Exercises
enterprises.
h
ilffitffimnnr fur the business sophistication and innovation elements
is
prrrate sector alliances. @ note that most progressive cities in the Philippines and have their own websites that provide valuable data for their irlilnw,o environment data they offer support the information from departments and bureaus.
lllffilnrrrn,umhlu
lflflffrrrffim
Fbfiirppines, the statistics essential to the CDS frameworks may firrmr selected departments of the national government, such as
(DTl), and its bureaus and qrncies, foi product and service standards, consumer protection qlruddines, incentive programs, export-import statistics, and other
furtment of Trade and lndustry
ffidata; illtl L
&re4]mglt
oJ Labor and Employment (DOLE), and its bureaus and
@kills
agencies, for banefits, and employee-employer rights
development, wage and ;
of lnterior and Local Government &rreaus and agencies, for
--denrelopment plans;
(DILG), and its
provincial, and local governmenl
and
of Public Works and Highways
its
hrreaus and agencies, for infrastructure
5, Department of Educatiqn (DepEd), and its bureaus
and agencies,
for basic education, skills training, and development; and
E,
Deparlment of Health (DOH), and its bureaus and agencies for employee health certificates, product registrations, and licenses to operate.
'[he Commission on Hisher Education (CHED) and the Technical Skills d their bureaus anA P6!EG, m,E De higher education and technical'vocational skills training and @rdopment. The annual reports of these agencies show fundamental data in the &rementioned list. Finally, the State of the Nation Address (SONA) from the Office of the President summarizes past *complishments and future pens for the country. Macro environment indices-growth rates of the gross national product, inflation rates, interest rates, and other economic ndicators-are reported and reviewed. These data are essential for the macro environment report used by enterprises. Chapter 2: The 0rganization and lts Environment
6ffir
5rr
Porter Model
Knowledge of the macro environment PEST variables allows evaluation of business situations. The micro environment or the environment defined in the Porter model is composed of these five competitors, new entrants, suppliers, buyers, and substitutes, as in figure 2.1. The Porter model shows dynamic interaction between among the forces, as illustrated by the arrows. New entrants, subst and complements enter rival firms in an existing industry, as do and customers. The cyclical arrows in the center indicate uni movement of industry participants. The rival firms appear and hori positions, or are 'buffeted' by all five forces-including the position that belong to. At any point in time, each force in the model is not static-tha population of suppliers, customers, rival firms, new entrants, and substituter is shifting. (Source:CDS, 2000)
prdrlmdlt
rr
W
mr[llarr1ilril3fu,"finrH
mu'iEt!s
Aqes*-'rc mtt prr!'tr.G agrronn'il
tr:rEfrtc1b
ffumrnrmolr fi e so€crftr
rmlq/t
iE'Brcrlre r Cl; r O-ezor Ck! ulit
ftf ftrCOC SErr,Ce{r!h to crraw Oe
corrP*
Fr erarnPb" fu u4Pr I (Bpmr GtY nrail rc tf m firs the Grezr Olrr rmtEe otrtiets rn the sad E T\e other data r M ril e drfferent tor the tmr Ln
Cfir ard Caioocan Gfiy tilrlt
iamity food fragc" I ri :ne Ouezon Crty rnd E O-ezon CrtY' so gatt]4E r re drctated bY scheoles r Caoocan CitY mall s rot d ard waste disPosal offi rm reakness for the enterpr-
rpe
ffi t
Figure 2.1. Michael Porter's. five forces
(Source: Porter, 2002) The five forces in the Porter model are defined as follows:
'1. New entranfrestablishments that 'enter' a given industry compete with existing firms
0rganization and Management: Concepts, Caselets, and Exercises
to
Substitutes for both il: nclude cheaPer food and I for food delivery serv€es" il available and retacili 'eadily
p-
tg
n fiorcer E shorilr reen ard tstituteq supplkxr brrupted horizontd Ittat theil
tatic-the 6stitutes
m
frms+xisting establishments in a given industry that compete ,rnnfl sa.h other; also called industry participants Substrtutes-establishments with faster, more accessible and/or
4"
Sqpplreeestablishments
Rl,irat
for the c.leaper products and services that may serve as alternatives smducts and services of a given industry
that supply a given
industry's and other rcquirements for machinery, manpower, materials, money' resources
IBuyers-thepopulation,whetherindustrialorconsumer'that purchases a given industry's products and services gathered for a given hnformation for the five forces in the Porter model is the caselet humron in a specific industry sector or subsector. For example,
service th€ food franchise in chapter 1 will require data for the food fFrrbr in ouezon city, where the outlet is located. Another set of data, & for the food service sector in the expansion site, caloocan city, will be nuryired to draw the competitive environments for both sites' and the For example, the buyer population in the Ouezon City mall The malls' the said Ga,oocan city mall are taken from the 'foot traffic' in city malls consist of other food mwail firms in the Quezon city and caloocan mrvice outlets in the said locations' substitutes The other data on Porter's forces-suppliers, entrants, and ordinances in ouezon rdfrl be different for the two malls, in two cities' Local strengths for the c+ty and caloocan city may alter the opportunities and unit exists same family food franchise- For example, a materials recovery office of n the Ouezon City mall because it is required by the municipal outlets ouezon city, so garbage and waste disposal for the food service in the plans outlet are dictated by schedules and penalties. lf the expansion the garbage caloocan city mall is not subject to caloocan city ordinance, new outlet-effectively, a and waste disposal plans must be included for the 0[Irr
DS,2000) '
weakness for the enterPrise.
lbr,2002)
*rstry to
outlets may substitutes for both the ouezon city and caloocan city phone orders include cheaper food and snacks from lnternet websites or which offer carts, food for food delivery services, ambr.flant vendors, and/or readily available and relatively inexpensive food fare'
hrdilqf
It is important to note that the five forces in the porter model
dir,.tr[
population for the buyer population, for instance, is not an inactive The 'foot traffic,' or the population of potential consumers visiting the gi location, is not a single statistic. The population is perhaps higher during weekends or on holidays.
rffi;hhfi
rmqn*
The same is true for the other data-suppliers, entrants, substitutes, rival firms. There is a continuous flow of incoming suppliers and/or outgoi rivals. For the completion of the Porter model records, the vibrant nature of
ld.drfl
rr#-c
the competitive environment must be considered.
,Li*rl
qrf
The data derived from the PEST and Porter model are utilized to identify the strengths, weaknesses, opportunities, and threats (SWOT) of a given
Gfum r*nt !fuilff
enterprise.
cagrhry
SW0T Analysis
strengths and weaknesses refer to the presence or absence of internal resources in a given enterprise. lnternal resources may include management, manpower, money, materials, and machinery, including technology. Examples of enterprise strengths are skilled manpower, positive returns, and cuttingedge equipment, while weaknesses may be the lack of reiiable suppliers of materials, and limited production capacity.
,+
figuiG!f
t. Ctroearegr#fi
drsa.sra' -I the studenB rcttf,
The external and competitive environments give rise to opportunities and fhreats for the enterprise. The PEST variables may be employed as a checklist for opportunities and threats from the macro environment that a firm has little or no control of. For example, the food service industries may see the changes in tax laws, e.g., the imposition of value-added tax as a threat,
while the propensity to spend and consumption patterns may be viewed as an opportunity. The manufacturing industries may see technological advancements and developments as oppartunities and interest, inflation, and tax rates as threats.
A given enterprise has limited control of the competitive environment detailed in the Porter model. The horizontal variables-suppliers, rival firms, and buyers-may be viewed as the 'opportunity horizon.' coalition and alliance with suppliers, rival firms, and buyers is possible and convenient strategies for enterprises. The vertical variables-new entrants, rival firms, and substitutes-may be seen as the '*rreat horizon.' Rivalry for the same suppliers and buyers by new entrants and substitutes creates pressure for the industry participants.
"0rganization
and Management: Concepts, Caselets, and Exercises
tF
2.
Elir*t
srengilhsd;l
firm from fte stfl remprrre. Repeil sruoent chosen
3.
4.
petcefturf enbrtrb : $
sfi.ffibl Reiterate *te df opportunities; rd {
Allow the
completed
rrdE-
18,!Eicentificationofstrengths,weaknesses,opportgnities,andthreatsA strategies' and help management formulate rrn oe*ed SWOT analysis, as a strategy formulation *iitr= $ /OT matril,'sf,owi in figure 2.2,isused ffinmgme by business organizations'
d
Wnesence
Lack of reliable
ry
dXded
suppliers
p[
E
tn
rllt-lfirl@Wef
Limited managerial expertise
ilmrfrable
ffirwrctal rmstxJrces
and modern Limited service capabilitY eq.rPment
lilgr nal
lncrease tn consumPtion patterns lncreasing
disposable income lncrease tn population
lmposition of value'added tax Change in tasies and preferences Decreasing
disposable income
samPle Figure 2.2' SWOT matrix
Ltt les ng-
sof
!ws* 1. Choose
To achieve interactive a reputable firm or organizatio''n' that
discussion,
il;;;;is
hes
isa firm see
2.
iirent Lms, I and
il f.,
about the chosen and'reaknesses statements itl''r^JGWOf matrix
ihe students, and list these
student perception chosen enterPrise'
red
:
Elicit strengths
resources' and the H#;: i;p;; *'"'lo"'" '" lY:il, moneyt or resources of the on
ieat,
tcal lbn,
f"";;;;l "r'uini' mobile phone distributor ' are familiar with maY be used'
3. 4.
"npo*er'
the matrix uPon completion' Allow the students to analyze
strengths, weaknesses' Reiterate the definitions of with each statement in the opportunities, and threats comPleted matrix'
hient Lms, lame rc for
and lts EnYironment Chapter 2: The Organization
Alternative Discussion points and Assignments 't.
2.
Get the students to do a swor anarysis of their schoor and/or a chosen, student organization.
Get the students to cut articres on corporations from the business pages of widery-circurated magazines and let them
identify opportu 3.
n
ities and threats for
g iven- ind
considering a er
the service technicians andl or absences,
""p""it
situations.
ustries.
ns
The Parafraque
ofEceu
obtain recent foreign exchange indicators for Asian countries and discuss the effect of these on famiries of oFWs. The Singaporean dollar, the Japanese yen, and/or the European
office. However, the Sadan period. The Santa Rosa personnel, including a uranl
Plan a'walk-through' in a mail or business district with students,
Since the Sta. Rosa * the LTI Board assurnes tlilt than the Parafraque ofrce r suppliers will need to be krr
euro exchange rate against thd philippine peso may increase or decrease the purchasing power of said families. 4.
LTI is
instead. The human res(rrc
and discuss strengths and weaknesses of food service outlets in the chosen malr or business districts, based on the observed 'foot traffic.'
il
Create a SWOT
matift
Sdedlt Political Governance The main office of Lucky Terecompany, rncorporated (LTr) is rocated
in Parafraque city, seven to ten kirometers from the Makati business
district, where their contractor,.pLTC, is located.
PLTC is one of the biggest terecommunications companies in the Philippines. LTI was awarded the fibre optic connections for the pLTC customers in santa Rosa, Laguna, for a three-year period. The fiber ' optic contract will require LTlto move to Santa Rosa. LTI has fifteen
fibre optic technicians, five service vehicres, and fibre
optic instruments and materiars at their parafiaque office warehouse.
Their service technicians and their families live in various districts near Parafraque and Makati. one LTrdirector, who worked with pLTc before retirement, lives in the Santa Rosa area.
-
with the proposed transfer, the service technicians have requested
for living quarters in the new office, to%duce their commuting time and budget' At least two senior technicians are considering resigning from LTI because of the transfer.
+
capital or infrastructr arealtotal budge* a
Economic Developmerl
+ + + + +
percentage of pog* persons with colfeged business permit md availabiiity of pubtb
t
!e
type and availabilirydl average wage co6t
Social Development
+ +
crime rate (total
percent
of
nrrrfu
housetrff
households living
+
hh
percent of enrolmena h of students enrolfed h schoolage populatcrf
technicians
a commute allowance for their service e =nsidering commute for md. -1e human resources officer thinks that the longer late arrivals to due mrul'{oe technicians may decrease productivity weather and heavy traffic iilmr ansences, especially Outing inclement
-
aaranaque office rental is higher than the proposed santa Rosa rent to own.lease m -rourever, the Santa Rosa office is on a five-year .Tlllm
.JhesantaRosaofficehasspaceforthetechnicians,orlive-in
tprmnel. including a warehouse
and a garage area'
$E.rcetheSta.RosaofficeisoutsideoftheNationalCapitalRegion, are lower ; Board assumes that the food and transportation rates accounts, work permits, and ,ffiiltt*,, f-e Paraflaque office rates. LTI bank area' nurmr:rie+'s will need to be transferred to the Laguna
llffifii@
ie*te
Rosa office' a SWOT matrix for the LTI move to the Sta'
Selected Urban Karte lndicators Po,itical Governance
<*
(total capital investments in capital or infrastructure investments period) arearltotal budget average over three-year
Economic DeveloPment
+
(number of percentage of population with higher education persons with college degrees/total population)
+ + + +
registrations business permit and license issuances and availability of public transport type and availability of health services average wage cost
Social DeveloPment
+ +
year/total population) crime rate (total number of crimes per
+
school (number percent of enrolment in primary and secondary 'secondary schools/total of students enrolled in primary and school age PoPulation)
(number of households with forrfial housing householdslivinginformalhousing/totalnumberofhouseholds)
percent
of
Chapter 2: The 0rganization and lts Environment
*
Household poverty ratio (number of households below the poverty line/total number of househoiosT
Other Environmental Development
+ + +
park space person (square meters/person) major historical, cultural, or natural sites presence of fresh water aquifers and recharge areas (Source: CDS,
2OOO)
Alternative Assignments and Exercises 1.
A review of the most recent State of the Nation Address (SONA) Plesident Rodrigo Roa Duterte, the research findings in the .oj.
World Economic Forum (www,weforum.org), and thJ UniieO Nations MDGs (wwwun.org) provide reliable inputs
PEST variables. 2.
for
,"'!ry Jrr
the
of local government units (LGUs) websites provide reliable inputs for the PEST variabres, and are fine exampres of current macro environment profires and the cDS frameworks. Reviews
0rganization and Management: Concepts, Caselets, and Exercises
.t
Planning
ffin*,"'
The Planning Process
are exPected to:
1.
2'
Strategic Management Process
*" o'.""t"
understand and describe the fundamentals of the in business Planning function organizations and the.planning develop and integrate issues' {unction to contemPorarY
'
Strategic, OPerational' Tactical P[anning
and
StrategY Formulation' tmplemeniation' and Control
'
J-t
V
PLANNING
3.
I
The Planning PrOds*i;iii:;iriii:#
Alhr-a:,ve gca.s r,u, pI WmE ;.or tne OertfeC prrrd* tk :nr"enagers wa:I :c a:cutltl
Planning and Decision-Making
The planning process, as illustrated in figure 3.'r, is a'carbon copy'o{
the decision-making stages reviewed in the chapter 1 supplement, The formal steps in the planning process are more specific to the business cycle, and impute data gathering and number crunching activities. Both diagrams show arrows that imply a cyclical process thatls repeated on a regular basis. lt is expected that monitoring and control activities return to
situational analysis after a given period, proceeds to the steps, and repeated when the stipulated monitoring and control pe;iod is finished (Heizer, 2oog). General
decision-meking stages
$peeifie formal planning sleps
*ffi6crf6,,ly{easura"be" A,ffi mhtlm are fl"re filears bf rH
dineile irc
G--
goals.
and plan
*a.trma
gd, om,
dhffi*E:tages of eacil !iluFrc\..-Q SOme of the
Gca and plan seEctonh
ffi'e
denffi il-g, ennentation entaits h
Wn@
!@tron for the
I
r:o operation.
t*(o'rrtor and contror m'dh rerci-s the goal. often r"es1rr-pg1 pfr:l,.mance.
Frq David (2002) iltusrra:es ft
*Iegic
Management
nnrch already includes $lum :mrtunity (O). and th'ed f,Tl r 'gure 3.2 indicate a smfrr ffit"rify on the estabilsh'-,errc afil
Figure 3.1. The planning process
(Source: Heizer, 20Og)
situational analysis entails the gathering, interpretation, and summary
of relevant information for the pranning issue under consideration. In the decision-making model, the identification and diagnosis of the problem requires the use of tools like the simple Frequency count, Flowchart,
GANTT charts, Activity Network Diagram (AND), and the PDCA cycle,
IE-.oro11izationandManagement:Concepts,Caselets,andExercises I
I
t
I
The term vision is oterr cr Jo we want to go7 Bus'rescl Zuckerberg, and Bill Gates lr
ffi tf :* ,..
and
generation of choices plans.involY:. tn" and goals Goals are targets ,ilrernatrve in ,*r"ii*u] analvsis' -or be sMARTia"ntiii"l irJi[*1=
ii a,; i-
r,
*,.s
the
mh*
are the
and fr"I" ;"'t need ffiil rrragers want'tl-"I"o'olish' is able to ,ffi owffi cr,teasu'aai]';;;;:;;;;;h-:ii"I";'na'"u,,nt'andrime-bound' ot'senior executive ,"n"g"", the .""nJ'uy *hich to'
Ff,
hE*E hs.
Bd
Edonl 'lEf,um
to
,rePeated
r,2OO8)-
%;T:"llln ;#-n'' "ru,r",ion. fli*rrrantages of ffin',^g
o{ advantases and invorves the assessment prioritizing' or even
of with the'oulective
sime of the options
morst suitable and the selection of the involv'es Goal and ptan selection
.*;;n
for the identified Problem'
hrnplementationentailsthemobilizationofresourcestoputthechosen
*#:,"i";T
r ;
;"""o1
involves
ssJsthe god' o#''""qui'ing
*"u"'rement or accompli"l':T determtne
-t:,, the setting
uf
to of conttot systems
pelormance'
ffiegic
Management Process
;T'.HJ,,1:Jl''1ffi ""1'*,"ni:5:?:":,ff;'3;';'"'l-l3Xl"ffi ' +";.h* ::l#::f."i:Js): -^3*;1S:;?J'H:':T*i,'"J",' and
analYsis' The arrows nhrch alreatry rilvre-*eat and swul €Inatyoto' concepts' ff) 6T, and an initial \v/r e"and \-'rr' foponunlty (b), .--..,+^^6n,,. anSlvsis of Svv ?l-lu ilrtunity rnrr,liJ;;W a simultaneotjg anenterprtse' n figure 3.2 indicate, __r^r+harnic,sionluiaion,andgoalsof vrsron' o{ the mission'
lrH;; ;;"'"louti"r''ent
; *
F '
m'anagement model Figure 3.2' Strategrc
:Heizer,2008)
rtd
summarY
Fation. ln the I the problem nt Flowchart' CA cycle'
(Source: David' 2011)
to answer the question"'where exprained o?ien Mark is titt* W'tt Disney' The term vision pionee'" ;; ;;t to as they were able do we want togoe''Bu"iness called Zuckerberg, and
Bill?;;-il
'"i"'1""'
Chapter 3: Planning
'visualize' the future of their respective companies. A vision statement therefore, an affirmation of what the enterprise wants to become.
detarled in Ctq Trmgement step. of intemalstrgqgil
s resourceq e. rrternal resources.
fusr
formulation is a res sf,a*es that strategY. easl ilfrp Gre,ek word strategos ftil,llry) and ago (to lead)-
$hre€gre-s universal to organ
,A mission statement is a declaration of the purpose of the organization,
and often defines the scope of its operations in product, market, and service
terms. The vision and mission statements of enterprises were once said to
enterprises utilize this stn
L
Readers of sampre mission/vision statements are acquainted with selected companies, even without first-hand experience of these organizations.
Prospective employees occasionally read the mission/vision statements
of organizations they would like to join, to be able to evaluate their own
personal goals against the enterprise goals.
Goals are shorter-term directions, often stated in specific metrics, such as geographic, periodic, and other numerical terms. Goals allow organizations to be directed toward specific sites or locations, over stated periods of time, and with fixed profits or sales growth.
The synchronized examination of sw and or precedes the strategy formulation exercise, generally utilizing SWOT analysis. The analysis of external opportunities and threats includes analyses of the PEST factors-industry and market, competitors, political and rejulatory issues, social aspects, and human and iechnological resources. The tools
..0,19.:n]:ation and Management: Concepts, Caselets, and Exercises l
r t.. I:
line*
buyers. Alliances with il distributors in the consut strategies.
altered these views.
the mission/vision statements as the compass that directs the enterprise.
Vertical integration, vth;n aJong the vertical
be 'cast in stone,' but globalization and technological developments have
Effective mission/vision statements inspire and motivate the stakeholders of an enterprise' The stockholders or investors of an organization often utilize
fucentration, where ar ,rrdustry, focusing on a
3.
Concentric diversificati<x related products and se adding new businesses t
tn the business battlefield. ttx while the armY in managers, tr sakeholders. All these stakehold an the strategic management Pro
Strategy monitoring is a conl erercise, as it entails Perfom activities. Control tools and aPP itr'l Chapter 1-education and participation and involvement' support, manipulaiion and cooPt and implicit coercion-maY be strategic management steP.
pnnc ;iPles for this 2 serve as guiding Chapter in end approaches detailed
*xm:il:H::rensths "
d the organi'ution' " resources'
g
enta.s the assessment and weaknesses "
t'"""
Jii i'*'n'
mu'k"tin g' operations'
David ;;;Jr',^"rnal "1"J""*' SWOT analysis exercise' the of resuk a is is derived
*
Strategy formulation a miliiary term' recog"'Ii easily of Iio'"gy' i2o11) states (riritu,J'fj;;i,, "na i" " combination rrorn the Greek and aeo (to lead)'
** *"il ;;;gr"
;;;iJ*v)
to organizations are: Strategies universal
l.Concentration'whereanor9anizationstays^in1^sinOlesectoror oi service' Most start-up singte'proJu"t a on focusing industry' this enterprises utilize
2.
verticat
strategy'
aH organization intesration,*n,11,1:T[,:*"J::Hil',Jt"; io;;rd' to its
mX,:I""*
T'nff:-l'io'' "*' " ;1l::'partne
rsh
i
ps with
distributorsintheconsu.",",ij],"examplesofverticalintegration strategtes' apPend an organizatior 1 to
which allows effectively Concentric diversification' prooutj* related "nJ ""*i""","',j"'"r*i"al-business' to the organization' adding n"* uJ"in"sses th::1"^"^}'i:"':1""T: the military generals battle{ield' business ln the includes al'm:'fl1ffi?l"J"l'"""ion step or manasers, while are tr Allthu"" stakeholders process' ,iltt" strategic management
3'
*:
i;;ffi
"ilffi;r.t'
#$fm,gg*ffiM and imPlicit coerc'
strategic management
flit
step'
(Source: CDS,2ooo)
frril tr
b;ir
m
il
hrq [!q
Figurg S.S. Strategic, tactical, and operational planning
(Source: David, 2011)
As stated in chapter 1, a, management revers pedorm the pranning, organizing, controiling,
and reading functions. Figure o.g shows the pranning function of the management revers, and the time horizon for the given planning activity.
Management and planning Levels
strategic planning
is done by top-rever managers over a rong period of time, and is not heavy on detairs, or metrics. Middre-rever managers
complete tacticar pranning over oneto two-year period, with more specific metrics. Meticurous and thorough short-term ptans (tor p"ri"o. ress than a year) performed by frontrine ,"nrg"r" is cailed operationar pranning.
k Assign the students to use strategic, tacticar, and operationar planning for their future higher "' ' "Or"",i"r-il;O,"rr#; goals over ten years, two years, and six months
periJJ;:
2.
Ge&the students to discuss and comment on these prans with their respective parents and/or guardians.
All plans must. be SMART: Specific, Measurable, Attainable, Realistic, and Time-bound.
Srrurd
MEx Sm{r mrdu
hcf,inc
illwfl firut
og
ilm,/FlIE
in an enterpnse rilines, the dfficutty faced by the management e1e1c]s3s tlre alignment of the ua'io'" ptannins "lltl"^t::"1:1": revJ or details increases, and the is required for the alignment [rmrizon is shortened. A control system detailed in chapter 6' is a crucial and the balanced
fcffi;ffi;;;,;*t*lo*n,ir'" b
achieve this.
""or""urd,
a sample strategy map' shown this cfrapter on the planning function' four
alignment using the e 3.4, is a visual ,"fr.L""it*ion of the of the balanced scorecard'
+
@
Financialgoal
n lJ
Customer goal
lnternal goal
Learning and growth goal Figure 3'4. StrategY maP
Long-termvalueisthegoaloftheentireenterprise'whiletherevenue goal set by^t"O'""-:l^T,'::n":;:: tvth goatis a strategic"planning excettence ."r"n_y-"ai period. rhe operationat is the response ot t'e 'iOAleievel'managers:" ]1"-i".1"::?^Y:""1* the information j*,::J;T#;;to two-year period.lniovation and a,"l:n"'!:i:,9:,i:0"':i:: nolosy systems may be taigeted ov:r
lffi;;r;;;:
t
the map looks like a clearoften mandates
llJBil',r'"?in""tt""li,r" *unJs"'"' Although level and!ime-horizon configuration, tr," o"i"iL ;i;"; exchanges' communication and information
3.
3
Strategy Formu1x1is11,:rldplGnentation, and Control : Caselet urstfllllll'
Strategic
Ma
n
agement Process
l
llrf,mnr
n$ffi
mall, has The family business, a fast-food franchise in a ouezon city There are completed the second outlet in the new mall in caloocan city.
&
Manila.
IIolyprm
in Metro opportunities for opening more outlets in other malls and cities Use the strategic management process to plan the business
nrnmr............rrmft
r
-rigflsf,ImmI -
$ $ilM
g,rowth.
Problem statement: To create the vision, mission, goals,
trllc
mr,r,qffird
and
strategies for the family food service outlets
case Facts: The students research PEST variables for
Metro
and Manila, and complete the alternatives, evaluation of alternatives, recommendations.
Al
Alternatives: Ev al u ati o n
of Alte rn ativ e s:
&io
-
d Slru
Recomtmendations:
:
&r' llt
Sfil
:
illl Irlru
iS
+
#'re0r91nieationandManagement:Concepts,caselets,andExercises
Metro Manita Devetopment t l^.,^r--ts Authoiity
=--
vision: ,,Towards
n,'nt'' Jmane' world'class :" metropolis" " 'ttcttupotts" Miooi^-. r^ ,As Mission: a humrna metropotis, h^r_^ M3llo.noritan Manira wi, become riro n, n r rl r -Man'la rnetropotis, r, t' As all' oJ':H r"rroolli lny.t]""I "n global'oriented a " ;l';"^'for hansaction center,:":'n
:,*il.";; ;;r?"ane ::"i.
flff
il
,"' i:[: #:',il#
il",Til
#l
#*g ;f ***
in the areas beyond aaministrat-r'Je its poriticar and il;atjri"".Xunities
Alternativo
1
1:rT"r
Asciar-*^--
" ^;:#;:Jf:: sv ro,'" ;t';;
provide data forst activi
tneir
2'
t
i
ilH: J:l[, :::.':l
for LGUs ", "lll respec;;J""0"#ctors
"r"
ort",i'pr"."rr""o ^[:l ,,
eo'"rnrent-owned or controred corporations also publish annuat r"oon. iiu","#rl'gria" strategy formrrarT
ffiSSJT3lo.
s
,
es' 1, u
Exercises
rhe studen,"
I
"i,,,1,'"-".',11" #:JT;JJi::, -ad"naand review the vision,
mission, and goals
+
+ +
of:
different schools and universities t thev plan to go their hisher elucation;;;"J:" that to for popular social nt search ensine sites; and hish ratins :arnment, radio, and television stations. "r,",.,'l::::,t
*:
SuoPlement to StiaiesY (cDS)
strategy published a city Development ln MaY 2000' the world Bank process cities' with four planning (CDS) Planning ,ootf.i, for Philippine phases:
+ + + +
SPecific; Eoslation' sr'rctt li En"ttotrnerE Thre CDS & #ps:
StePf:ffi
now? Phase 1: Where are we
SteP 2: PrgU
like to be? Phase 2:Where would You there? we need to address to get Phase 3: What issues do must we take to get there? Phase 4: What actions
SteP e:
All phases were professed the citY's stakeholders'
participation of participatory or encouraged
ends..with the swor phase 1 incrudes situationar anarysis and evaluation of with a vision statement' ufl:'-
template' Phase 2 ends philosophy and and a listing o{ local government community expectati;;s
Rti SteP 4: ffi SteP 5: H SteP
6:0u
SteP 7:
II
'ftle sreF
t
rfiErehor5
principles'Phaseeendswithoptionsoralternaiivesforthestlategicissues in resultingfromtheto-''ufutionoitf'"vision:tat:men::Il::"-oincludesthe ,nl'ffiil;;il u",iri,iu, for the strategies formulated
1.r
imptementation Phase 4.
TI
d F il
AlthoughtheCDSplanningprocessechoesthestrategicmanagement plans are required
development mandates planning process, "nllo, "p""iti" legislation' as follows: for the CDS, basei on Philippine
Lt
a
l.ComprehensiveLandUsePlan(CLUP),aten.to.fifteen.yearguide as regislated through Zoning the deveropment of the area,
il &|
for
Ordinance;
2.
Comprehensive Development to i.Pl"ment the CLUP;
plan Ptan (CDP)' a three- to six-year
3.LocalDevelopmentlnvestmentPlan(LDIP)'athree-yearplanwith in the CDP; tf'" pt"n" aqd projects enclosed and LDIP (AlP)' a tool for linking the CDP
4.
Annual lnvestment Plan with the annual citY budget;
and Housing Framework' the Development -{ou" Urban National 5. by and urbanizable areas prepared comprehen"i'u prJ io' the Board every five years; and the Land u"" nJgrr"tory sectoral and focused 6. Social Reform Agenda' an . area-based intervention for poverty alleviation'
Exerctses Concepts' Caselets' and 0rganization and Management:
::;'i:tfirrii':.,,Jri:'i!,ri'i,ii
t I
ttfl
:.
v !s
bt
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he
in
nt Dd
de ng
hn i
irh
he by
F
The Organizing Fundamentals are expected to:
1.
2. ''
understand and discuss the fundamentals of the organizing function in business organizations and
describe and discuss the to current
;,t#;i;Jon
iss-ues, such as employee relations'
(Differentiation and lntegration)
Organizational Structu res (Vertical and Horizontal)
J} V ORGANIZTNG
4.1 Fundamentals of
-
chapter 1 showed the hierarchy levels in an enterprise in the shape of
"nqitr
a pyramid, without position titles or specific roles. Figure 4.1 elucidates the chain of command or hierarchy in the organizational chart.
iltffiil
fifim ilm-r
L
'rf,m
t'ilm
---
t,
uF
fif:dffi *"r.{* (@|fi
,$,ettr
lb&S{: Itrln
lwilntsrs ril,lrc €qlmfi"rufi
@. 4s $u'l Figure 4.1, Organizational chart
(Source: Bateman and Snell, 2OO8)
T:
@mrtrrB
tm
l&full*rm;ruilt
'
l1*r* n6mei
fhe organizational chart is a traditional picture of the positions in a
,f,ull't:rmu m
firm, how they are arranged, who reports to whom, and what the specific positions execute in the enterprise. The boxes represent different roles and the reporting authority is represented by the levels of the boxes and the lines connecting them. Although the chart shows structure, it does not explain its design issues.
n :::fr mf:t:rgl[0r" ul'r,rr,:r"
Design issues relate to
two fundamental concepts for organizational structures-differentiation and integration. Differentiation means that the enterprise is involved in many tasks, with diverse skills and methods. The tasks have to be divided, and groups specialize in parts of the larger task. /nfegration is achieved with coordination, communication, and collaboration as it involves linking parts of the enterprise into a whole.
fe I
er*4:Lnnile ,frsm3-? fll&r!'Io
mnrt-
Differentiation and lntegration
i
*ii@
lll' :::r-trI-f I rm&rr3n H l;:rl-r :irlg -rtrE
trpf
:}: fr*8 -tl* :ssgn :arler::sP
|
1I: :!ir: g
a-E
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3ee6r f;€ :nliieff ilHE0ro3n1zationandManagement:concepts,caselets,andExercises
The students are assigned to review organizational charts with uneven levels or hierarchies and broken lines of authority. The differentiation and integration concepts are reiterated to explain the charts. The students are assigned to draw an organizational chart of their student organizations or household relationships.
1.2 Vertical Structure The vertical structure, or top to bottom line in an organization, is rooted on basic concepts.
owners of enterprises have definitive authority, which is defined as 'the legitimate right to make decisions and to tell other people what to do.' As shown in figure 4.1, the chief Executive officer (cEo) can give orders to the Human Resources (HR), Marketing, Finance, Accounting, and Manufacturing personnel in the lower boxes. As previously stated in Chapter 1, the rnanagement levels in the pyramid show the hierarchy, also levels of authority, in an organization. ln a corporate setup, the authority vested to the Board of Directors in a corporation is assignej to the CEO. Figure 4.1 also shows five subordinates
under the CEO. This number of subordinates who report directly to an executive or supervisor is called span of control. Some organizations are tall, where managers have fewer subordinates, while other organizations are flat, with managers having more subordinates. lt is believed that optimal span of control is achieved when it is $l) narrow enough to permit managers to maintain control over subordinates, while (2) not too narrow to permit over control over subordinates. Different management levels and spans of control allow for authority to be spread in organizations. This is where delegation is a paramount concept. The assignment of new or additional responsibilities to a subordinate is called delegation (Bateman and Snell, 2008). This concept allows managers to get more work done through others-an essential feature in supervision and administration. Delegation permits critical decisione to be made at the lower levels of the organization, the term for whioh is called decentralizatiott,
Horizontal Structure
Line functions are actions rerated to the principal activities of a firm, or have ultimate responsibility for the operational decisions of the organization. Typical line functions include manufacturing tasks, such as design, fabrication, assembly, and distribution. staff functions are specialized or professional skills that support the line departments. some staff functions have huge responsibility in organizations, e.g., the approving and monitoring activities of finance groups.
Some el
1.
End
ffi
2.
ptre
3.
heC
ind
der
kodd rElagef" d The students are assigned to review charts of school organizations to explain their horizontal-and vertical structures.
The Functional 0rganization
The business functions shown in figure 4.1-marketing,
finance, accounting, and human resources-are sets of specialized skills that are grouped together. This type of chart shows a functional organization, where the jobs are grouped together in departments with the specified skills and/ or business functions. Some examples of functional organizations include:
1. an English department for a university teaches all the English subjects in the university, regardless of the courses or programs that the students are enrolled in;
2.
3.
the purchasing department of an enterprise buys all the materials, supplies, and other resources required by an enterprise, whether these inputs are required by marketing, finance, accounting, human resources, or other departments; and the city health department is responsible for all health services provided by the city for its constituents.
The Divisional 0rgmization
when the products, customers, and/or geographical locations of an enterprise grow and continue to diversify, a. functional structure may not
serve its development needs. A divisionalorganization, where the enteiprise
is grouped into products, custorhers, or geographical locations, maybe a better structure.
0rganization and Management: Concepts, Caselets, and Exercises
1. eq
2. thel 3. chg 4. slil &rc*m
grdr as foxl <Srisirns
rr
mjthdirr tile eramC
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ariirGpirfb h mdrn#
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r*lsrld rftor.ld E erlcd
i i
i
I'
fm' or ption.
Some examples of divisional organizations include:
1.
English departments setup
for
I '"
university branches located in
different Provinces or regions;
Fign,
2.
purchasing departments created for each enterprise branch, located in different cities; and
prins
3.
health centers set up for'barangays' to provide the health services of each barangaY in the citY.
tso, ptions i I
Product divisions, where all the business functions ar'e under a single manager, offer several advantages, as follows:
Lj r
I
h"",
h "r" It",." iand/ F
t I r l"
fslish
r"" t
piats, lether
l-"n : I
hea I I rI
1. ease in managing the information and communication needs; 2. the product or service has the full commitment of its personnel; 3. clear responsibilities are communicated; and 4. skills and other training needs are more profound for the personnel' Customer divisions are structured around types of customer groups' such as institutional/corporate and retail/consumer buyers, while geographic divisions are built along districts, territories, regions, and countries' Many multinational corporations are built along geographic units, where position title examples are country managers and regional heads. Some technologybased corporations are structured around'computer users' advertisers, and technology-developers. Other recent developments have altered technology-developers into tablet and e-reader divisions; The Matrix Organization
The functional and divisional organization advantages and needs are utilized in a matrix organization. A dual reporting relationship occurs in matrix organizations, as a manager reports to both functional head and a product exlcutive. Although u ,"tri* organization violates the unity-of-command principle because of the dual repbrting relationships, it provides flexibility and malleability.
h* not
prioritization by the lower executive in a matrix organization is an essential adjustment. The product and functional managers of the lower executive should team up to avoid conflicts. Positive collaboration between managers
pise
often results in fast and cost-effective decisions'
I
Pea i
I l'
ChaPter tl:
dorefi dsadrarc
The The Network 0rganization
a collection of independent, mostly single key to the function enterprises that collaborate on a good or service. The is network organization is electronic communication, where information
A
rd
network organization is
For example, shared with member enterprises with distinct competencies' of transport the hospitality industry in a given tourism destination has a wealth who providers, food service suppliers, product suppliers, and distributors provide the needs of tourists and travellers'
Sob Prop,ri6't0
The students are assigned to research on Asia-Pacific multinational to: organizations in the hospitatity and pharmaceutical industries
1. list the advantages and disadvantages of functional
and
divisional organizations and
2,enumeratepositiontitlesandbenefitsofthepersonnelin network and matrix organizations'
Partns
4.3 Forms sf An organization is defined as having two or more individuals working may take toward the attainment of a goal or goals. A business organization any of the following forms: 1.
sole proprietorship, where an individual owns all the assets, is the simplest business form
2.
;
partnership, where an association
of two or more persons carry
on as co-owners of a business for profit. Article 1767 of the New civil code states: ',By the contract of partnership, two or more persons bind themselves to contribute money' propedy, or industry fund, with the intention of dividing the profits among io u
"o*ron
themselve'bt 3.
corporation, where a separate body consisting of at least five individuals is treated by law as a unit. section 2 of the corporation code of the Philippines states: 'An artificial being created by operation of law, having the right of succession and the powers, and properties expressly authorized by law, or incident to "itribut"", its existencel'
0rganization and Management: Concepts, Caselets, and Exercises
CorP
and power tools used,such as computers, sewing machines' per performance standards, like one hundred sewn dresses 4. 'hour shift and ten cars sold per month;
3.
6.
holi job context,like work at night, teaching on weekends and and work from home; and for college teacl human requirements, like a masters' degree
boardpassersforaccountants'workexperienceforsupervtsoryF
and computer work, specific physical characteristics for computers' literacY for most jobs. or determine: Job analysis information is used to decide
1. the Person to hire; 2. the comPensation for the job; 3. job standards as basis for actual performance; 4. training and development programs;and
5.
unassigned,tasks and duplication of assignments'
job or HELP WANTED The students are assigned to bring a. advertisement from a major newspaper to class' An interactive class discussion will include:
1.
the reason/s for selecting the particular advertisement;
2,arankingoftheimportanceoftheavailableinformationtothe important' and student/s (1-5 ranking, with 5 being the most 1 being the least imPortant);
3,
now the studentis an assumption on whether three years from
* would qualify or
4.
meet the job requirements; and
years to what would the student/s do over the next three qualify for the job advertisement'
and Exercises 0rganization and Management: Concepts, Caselets'
F d h
r : I I
F
t
Figure 4.3. The recruitment process flowchart OrOalizAion and Management: Concepts, Caselets, and Exercises
Many students i see on-the'job training (oJt) ," a program. The oJT school-related J i:.-1,,,:i::::: rs usua'y assigned to an exper,#"a'"roervisor who acts as mentor. The understudy, trainee or new hire, is ,"oach"d, by the mentor. - Job rotation is an OJT form. Under th. P.fo9ram, an emptoyee is from one work assio;";;;^ :::::::"'t moved thai hershe new job trained in "J,--0" ",. in multiple work asr.
tif
jl;lx lliJ"i,#;
ffili**,nl*i::
*",[;;?::ril ffLjn:;"'"
resisnedemproyees;:n;trJllil;Jrrl;L:#""l,"rH"iT"ri::1 training involves hav. _ .fRRr"nticeship craftsman' Most vocationar schoor classroom instruction and apprenti"""h,.p training
.;;ff [":;ffi:r1:l
1H:' ;"ffi::"j
under a master craftsman. ror exampre, a parrnership
,|,;r"; ;;L with said man ura",;"il[:,Y[:tJ|.iln]?. ]",'n assu red emprovment with its certification. tn a subdivisio, i, ,h""#J;[",5,il:H::#*:r1lr; ,'T:it.:nir3#1,]aE""I
*ffiU:coordination
with its uaran Jav, conducts on-sit"'r"cru itment for
Geographicr,,{ employees may be trained conferencing. This :^"Oi?ted through video is cared distance t"rrniig,--^nj-,"=J"ru,,y
jru;: ryjffi:?I. :?l:::'ff n:
c o m m u n ic
ate
w
,:;xf::'r"tt' sutdes-an
J
i
t
h,,.,
;ffi#
programs.
",,.,'" " ro
iri"
;
done
-,,",.i,'i*" *,:,h"' *o,kp,aces byin ; ;;" r* I "i;31 "lill I fi :i;#
;ilrr"J"" :? soft uni-n"ra copies of participants w"ir-p'"prred ;,':HX,H;t are a must for distance train ins f'lvoelrtct.r(rns learnini enhance-interaction,
Government and private sector ariances regisrate and issue guiderines for the HR practitioners for most, if n"ilff, of the HR tasks.
A', emproyer'erlr^oy,"" reratrbnships .rn organizations and the conduct
of the same are covered in the taotr coaes of most countries. Philippines, the Depa.rtment rn the of r-roo,, (D.LE) is the nationar agency tasked with this rore, primarirv"ratmproyment iiu ,ari.istration of the rabor code.
lffitt,n.nd
Management: concepts, caselets, and Exercises
bl-related h where a br trainee bntor. The
iis
moved
lbained in bs trained Ssent, or
l a master I between craftsman.
iLhip with fnent with
d
acquire 'electronic hitment for t
pgh video i done by
$laces
in
pPloyees lhe use of l.copies of led training
F
learning
rnes
the
same
ln the national code.
The Labor code of the Philippines includes guidelines of the following:
+ + + + + +
Pre-employment
HRD Program Conditions of EmPloYment Health SafetY and SocialWelfare Labor Relations Post-emPloYment
The pre-employment guidelines of the Philippine Labor code include recruitments and placement of workers and the employment of nonresident aliens. Definitions for the terms worker, Seaman' license, overseas employment, and emigrant are detailed in the pre-employment guidelines'
The National Manpower Development Program and the Training and Employment of special workers are included under HRD Program. Some details of these programs include the terms apprenticeship and handicapped workers, inclusive of working conditions for them'
working conditions and rest periods, wages, and working conditions for special groups of employees are covered by the DOLE's Conditions of Employment. The regular hours of work of an employee cover eight hours a day. ln the health sector, the working hours have more conditions and details, dependent on the municipality, and size of the health organization'
Medical, dental and occupational safety, employees' compensation and state insurance fund, medicare, and adult education are detailed under Health, Safety, and Social Welfare. The DOLE may, for instance, prescribe first-aid medicine and equipment, dependent on thb nature and conditions of the work in a given establishment (DOLE, Book lV-Health, Safety, and SocialWelfare). Labor guidelines include policy and definitions, National Labor Relations Commission (NLRC), Bureau of Labor Relations, labor organizations, coverage, unfair labor practisSs, collective bargaining and administration
of agreements, strikes, lockouts, and foreign involvement in trade union activities and special provisions. ln the Philippines, the National Labor Relations commission (NLRC) is an attached agency of the Department of Labor and Employment, which is tasked with program and poliby coordination.
Post-employment guidelines cover termination from emPloYment and retirement f rom service.
'..: .)
An employu, ,?y. terminate an emproyment for any
causes (DOLE, Book Vl-post Employment):
* + + + +
of^
the foilowing
serious misconduct or wilful disobedience;
gross and habitual neglect of duties; fraud or wilful breach of trust; commission of crime or offense; and
other cause similar to the aforementioned.
The compulsory retirement age in the phirippines is at age 68. The raw directs a retirement compensation of one-harf month sarary fJr every year of service for an employee who has served an establishment for at least five
years.
Alternative Assig n ments 1.
Newspape. articres about actuar incidents on serected jobs and inherent hazards or dangers that these jobs entail ,"y O" discussed in class.
2.
class discussions on expected wages and benefits of the students in their pranned future careers may be faciritated,
inclusive of preparatory training and skills that tirey may prepare themselves for, while stiil in the academic environments. 3.
Searches on websites of labor organizations and employer associations may be assigned to detail other approaches on organizational development. For example:
0 0 0
The People Management Association of the philippines Employers' Confederation of the philippines Trade Union Congress of the philippines
0rganization and Management: Concepts, Caselets, and Exercises
Lead'ing Mir !.i:
i;li!
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itxG,
'.." r , ,=';.;1,,,r, ' 't "'
'
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are expected to:
1.
2.
be aware and understand the fundamentals of the Ieading function in business organizations and
i; W.ti
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$i"Etl"ijr
SS!:iiffi
,
l
Leaders and Managers The Leadership Grid
Jt V
LEADING
discuss and integrate the leading function to present issues, such as the gender issue in management and leadership.
il G
+ decisivere + coolness u + initiative + iustice + selt-imProt + assertirrcn + emPathY + sense dl + creativi$7 + bearing + humilitY + tact
A leader's s sinceritY, GomPa
manifest in diw H and when tlx management fu upheld and md
il
1.
TfE
cht
2'
TtE find lad
--.fl There is conduct thent
book, Felicb moral, divinq considered u
instinctivelY- l
human
instir
+ decisivenesa + coolness under stress + initiative + justice + self-improvement + assertiveness + empathy + sense of humor + creativity + bearing + humility + tact
,necessarily of longevity managers leadership
I is helpful
,
A leader,s self-confidence is habitually due to deep wisdom, genuine sincerity, compassionate humanity, and audacious courage. Ail these traits manifest in diverse situations of -success, fairure, oouoi ano chailenges. lf and when the traits and virtues are deepry-rooted orirt to rast, the management functions and performance standards of "no his team and unit are upheld and maintained. fiuired of lrasize is f-eaders in the
The crass is assigned to find the definition of at reast five character traits tisted desirabte ror tfrsUnit;i
f
;;;";;;r.''"
The students ,personalize, the terms and their ,""ning" Oy finding occasions whrgre they possessed, or found themselves lacking, in the said trait.
[onn-oo, [ituents, I
There is
a
generar conviction that peopre are naturary good, and n s. to t h e raw. n n o g uiio,"1,, c o n t r acts f;::,y^": :::?r0 book, :ll Feticiano (2ooo) broalry aernes raw ", moral, divine, and state raw. Niturar rawsare raws of the co"nscience, and considered universar to men. Men generary know what is right and wrong instinctively. Arthough this may u" Jp"n to arguments and Jxceptions, the human instinct is naturar, and conscience conducts their behavioi.
illl,
i
I
ii
;"l,i"iil;fiffi;r#fi:j;
4.
ego-independence' self-esteem;and
status' recognition' and achievement' freedom'
5.self-actualizatiorrealizingone's{ultpotential'becomingeverything one is caPable of being'
Ac$t
needsfr affiliation, and P'orc and god ra The keY
success
*iit" Po*"r refers I peoPle'
oeo' Thetheoryspeci{iesthatpeoplesatisfytheirphysio,ogt:1'needs{irst' tl""itv needs' then social'longer :;i;t' to s'ui;; 11of needs is satis{ied' it is no then proce"a
il;
$c0lelland's
on"" and then self-actualiz"iion. motivator' considered a Potent
a set
The need th€dl adra emPowerment
be an inaccurate simplistic and found to considered is do theory Maslow,s in hazardous jobs often instanc",*"ork"r, For ful{il their human motivation theory. u"cause they need to n""j" security ind sateif not ignore trreir piv"i"i"g'"al desires {irst' ,^- :^ +h6 {or selfhowever' is th1 need this.lh"ory' from An essential learning human'resource not iust organizatiol" t look at i"f''afi'uJts *f actualization, ff;#;ithat "ho'ld be developed' as a business cos;
.".Prim#
are obiective ooerate in oh laws' regardt
^'"Jf:;:::: ll,lllln."",
the three sets o{ needs and srowth (ERG) are
under the Alderfer theory'
relatedness
needs' all material an'd physiological needsa$e Existence andleelings' as they
sharinioitt'o'i^"
people to creatively needsare satisfied inilnn "iuat growth neft" *hil" retationship"' "n"ot""ge are about ihemseLes or their environments' and efficiently changl *1]T needs can occur-simultaneously' ln The ERG theory po"]yl't"* of both theories for managers importance The and/or untike Maslow's tnJo'V' kno*LJg" that self-actualization i*'n" f";;i';n' their leaderthiP motivators for work accomplishment' growth needs
"'";;t;;;l
and Exercises Concepts' Caselets' Organization and Management:
(!
,
and
hing first. ego. nger
McClelland's Acquired Needs Theory The key needs for managers, according to McClelland, are achievement, affiliation, and power needs. Achievement means an orientation toward success and goal realization. Affiliation reflects a strong wish to be liked, while power refers to the need to persuade or be in command of other people.
The need theories have been used in job design, training needs, and empowerment advances by managers and leaders of diverse industries.
rate
rdo freir
rcli
McClelland's Acquired Needs Theory
just
ds
"...Principles, unlike values, are objective and external. They
general is not courageous, he will be unable
operate in obedience to natural laws, regardless of conditions..l'
to
-Stephen R. Covey tss
ey ely
{y,
in
br
t:
G
rE
-4"-E
r
(Source: Covey, 2009)
"lf a
conquer doubts or create great plans. lt is the business of the general to be serene and inscrutable, impartial and self-controlled. lf serene, he is not vexed; if inscrutable, unfathomable; if upright, not improper; if self-controlled, not confused..l'
-Shen Pao-hsu (Source: McNeilly,
1
996)
5.3 The Leader$hlplGti$$;
ffi$i;t*:i;:';':.::.i
:'
The Lucky Telecompany, lncorporated (LTl) was awarded the fiber optic connections for the PLTC customers in Santa Rosa, Laguna, for a three-year period.
The newly elected president reorganized the enterprise. LTI Sta. Rosa now has three fiber optic teams. Each team has two fiber optic technicians and a driver-messenger per service vehicle. The three teams are assigned to different districts in Santa Rosa, and they work on eighthour shifts for six day work weeks.
One team is assigned to stay in living quarters of the new office on a bi-weekly basis, to reduce their commuting time and budget. A senior technician stays in the living quarters on a monthly basis. All teams do round-robin shifts for the Santa Rosa office stay. The newly elected LTI president budgeted allowances for the Sta. Rosa stay of the teams. The human resources officer has observed that productivity of the teams increase, during their in-houses stay,, due to early movement from the office-warehouse, while productivity decreases once they are out of their in-house stays.
a
fellowship that often professional relationships. Senior discourages teamwork and technicians sometimes assign housework to the driver-messenger and younger technicians. The LTI Board think the newly elected president often lets the senior technicians get away with shortened work hours, especially for teams that do not stay in the Sta. Rosa office.
What style of management should the team leader or senior technician use? What should the human resource officer do with the fluctuating prgductivity? ls the shortened working hours the LTI President's prerogative? Why or why not?
,9*ll:1,,r,
and Management: Concepts, Caselets, and Exercises
Ther th€o
2.
Gru disc
The LTI director, who worked with PLTC before retirement, was elected president after the transfer.
However, the teams have developed
1.
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Let the t sports enterl encourage t their selecte
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lat
to ES
bn
br nd
mt
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ith LTI
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r \Sl
Controfti ffi I
ffin*,*,*'",r0*,.
Managerial Control
: are expected to:
: : , , , :
1.
2
understand and explain the fundamentals of the controlling function in business organizations and communicate and
discuss
the controlling function to current issues.
Control Methods and Systems The Balanced Scorecard t.]
Y7
V
^
CONTROLLING
'r
I* U
6.1
rrd
control is defined to be any process that directs the activities of individuals toward the achiever"nt'of organizationar goars (Bateman and Snell, 2008). o rgan izationar or manageriar controris the systematic process through which managers regurate organizationar activities to make them consistent with established expectations detaired in prans, targets, and standards of performance. The control process is shown in figure 6.1.
1 P.rn'l bundy cloct
determine P reference. t
six-month fu Types
off
There a
1.tu
on'
ofg
2.h
efrl ste
3.tu
orl
4.
Btt
at
em
Qualitiesr
Effecri the memb
within rea Figure 6.1. Control process
standards are estabrished prior to performance. For exampre, the schoor grading system is planned and put in place before students are accepted. student grades are based on their day-to-day performance in crass, such as in class recitations, tests, projects, and participation in class activities. Grades are monitored and compared with the passing and fairing marks. lf many students receive fairing marks, corrective action is probabry necessary' such as changes in teaching methods. lf many students still get failing marks after the change in teachiig methods is effected, a revision in the grading system may be compulsory t meet student expectations. This process is arso appried in business organizations. For exampre, a reward may be given to an emproyee who has never been rate in reporting for work over a five-year period. office time is set at g a.m. to 12 noon Organization and Management: C0ncepts, Caselets, and Exercises
{* rr
*
:r'ir:.'.;,;.,it
Contl strategY c
system b so theY a hours. Th implemen
the Perilr thereforq ExcePtiot examPle,
are not
h
Rem equatedl submissi equated'
of and
and I p.m. to 5 p.m. A daily time record (DTR) needs to be punched in a bundy clock every time an employee comes into and g"t. ouiot the office to deJermine punctuarity. The DTR is periodicaily reviev,ied ara Lept for future reference' However, a five-year standard may be difficurt to achieve, so a six-month to one-year period may be used instead. Types of Controt
There are four types of control, as follows:
1'
Feed Forward or preriminary euatity contror, which focuses on the human, materiar, and financiar resources that frow into an
organization;
2'
concurrent contror, which consists on monitoring of ongoing employee activities to ensure their concurrence wiir estabrished
standards;
3'
Feedback
or output contror, which focuses on the organization,s
output; and
4'
Bureaucratic contror, which utirizes rures, poricies, hierarchy of
authority, reward systems, and otherformarmechanisms to infruence employee behavior and assess performance. Qualities of Effective Controt Systems
!t L B
Effective contror systems are generary rinked to strategy, accepted by the members, accurate, frexibre, timety, equipped to pointiut exceptions, within reasonabre costs, and abre to piovide conective measures. control systems shourd be rinked to strategy to be effective. For a strategy citing motivated personnel'for the achieilr"niJ goats, a reward system is set. The reward system shourd be acceptea oy irre emproyees, so they are willing to submit reports and occasionaily *ort u"yond office The reports and DTRs must be accurate. tf the strategy schedure of lours. implementation was set for a one-year period and found tote unrearistic, the period may be shortened to sixr;nonths. The contror system shourd, therefore, be frexibre, to enabre the emproyees to meet the standards. Exceptions are arso. incruded to crarify credentiars for the standards. For example, the reward system must inditate that supervisors and managers are not included in the reward system. Rewards are often rimited, and the cost of the reward system shourd be equated to the set standard. For exampre, a motivationarstiategy for report submission and occasionar overtime work over a six-month period cannot be equated to a Fl OO,OOO reward. Chapter 6:
It is also important to reiterate that corrective measures are essential if the system is found to be defective. For example, overtime work that was not signed nor approved by the supervisor cannot be included as performance in qualifying for the reward system. The Importance of Control
Control systems allow for effective implementation of the planning and organizing concepts detailed in chapters 3 and 4. The controlsystems ensure that activities are done according to plans and that goals are attained. They also assist the managers and supervisors in the delegation of authority, as controls often motivate managers to dispense authority. Areas of Control
A control system is applied in the areas shown in figure 6.2.
The a irformatiu hvoice,fu on busirr (3) consll producb i Reilb
better ser the BIR I reports o
Ftrgt with hd costs aft eplainer oPPorhr transacti controls
Equ and ref outPuts
Ano
the erq TESUITE
Figure 6.2. Areas of control
Control system ensures (1) orderly and efficient conduct of business and (2) adherence to management policies. The areas of control are (1)information, (2)finance, (3) employee behavior, and (4) opprations. lnformation should be available at the right time and at the right place. Often, in the desire to have complete and accurate information, there is a
need to wait long to the point that information become stale. lnternal aid external deadlines are imposed on financial reporting. For example, at the end of each banking day, the bank balances actual cash with balance per records. At the end of the month, result of operations and financial position are determined. The deadlines set by the SEC, BlR, SSS, PhilHealth, and HDMF are to be met monthly, quarterly, and annually. Failure to meet deadlines means penalties and interest for the delayed compliance. ln obtaining loans, reports to prove credit worthiness are required by credit grantors.
examir hiree's emPloY
becofli
Codtd Btt
polkie the m cornpc
adtst
h
Adn*l tirne : be irl throtl
The accounting and government forms are designed
to contain information needed by internal users as well as external users. The sales invoice,.for example, shows relevant data for the seller and buyer. signatures on business forms (1) pinpoint responsibility, (2) grant authoiity, and (3) consummate a transaction as when the buyer ackniwledges delivery of products in good condition. Ins ensure
ired. They Urority, as
Review of forms is done by systems analysts and government units to better serve their purpose. Frequently used governr"ni forms are
those of the BIR for tax compliance and those of philHealth for HDME and .sss, reports on employees.
Finance controls include budgets. Actual transactions are compared with budget. overbudget and underbudget call for explanations. standard costs are set and compared with actual costs. Variances are analyzed and explained. There should be immediate recording of transactions to minimize opportunity for manipulation. No one person should be in control of a transaction. There should be counterchecking. However, make sure that controls do not lead to too much delay. Equipment enhances control. use of computers speeds up recording and reporting. Equipment reads to efficiency in operations, producin!
outputs on scheduled time and at budgeted costs. i i
I
F
i i
)
I. Fness
U
are
lL
Another significant contror area is employee behavior. At point of entry, the employee fills up an application form and submits papers to support resume. Employee is subjected to tests and interviews. physical medical examinations cap the hiring process. The documents form part of the hiree's permanent file. This fire together with current fire keep track of the employee's performance. The permanent file as well as the current file become a monitoring file. Control Methods and Systems
ace.
lsa and the
per EflOn
lahh,
heet F- fn
Fdit t
Bureaucratic control eonsists of the standard operating procedures and policies that prescribe correct employee behavior. Exam[les of these are the use of time cards for attendance, wearing of uniform, proper use of company facilities, among others. Axeward system recognizes employees' adherence to company rules and regulations.
lnfoimation technorogy (rr)
is now an important area for
concem.
Admittedly, efficiency is enhanced with lr. However, it is important to monitor time spent for personal use of rr by emproyees. security measures are to
be installed to detect fraud. How much of the resources is lost "orp"ny through unauthorized use by employees?
lnternal control system consists of all policies and procedures adapted to enhance adherence to company policies, promote operational efficiency, safeguard assets, prevent and detect frauds and errors, and lead to accurate, complete, and timely financial information. More visible are the accounting controls. Sales transaetions are documented with sales invoices, delivery receipts, and receivables. Cash transactions are evidenced by official receipts, cash vouchers, bank checks, bank statements, among others.
Control environment includes the management philosophy
and
operating style. Company culture is defined by the functions of the Board of Directors and its committees. External control is done by the Central Bank when they audit Philippine banks. Personnel policies and procedures may be strict or lax. Authority and responsibility are clearly defined or ambiguous. The organizational structure may be tall (top management way above rank and file) or flat (top management close to rank and file). There are entities where the workers never get to see the president of the company. ln some companies, social activities like annual excursions, Christmas parties, and anniversary celebrations are opportunities for employers and employees to meet. Company policies of (1) "no animal testingl' (2) 'tno child laborl' (3) assumption of corporate social responsibility, amohg others, define company culture.
A commu efficient and e of health, diag
We are cr
First Prfur efficient med
Second; promotion
d
Third Pil in terms of services;arr Fourth ;
1
reasonable r The BalancC
The
balr
measuremeril
Characteristics of State Law
1. lt is
promulgated by
legitimate state authority.
2.
ltis.intendedforcommon observance.
3. lt is intended for the
The Art of Politics
'!t must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things."
common good. (Source: Feliciano, 2000)
,
(Source: The Prince and the Dr'scourses, Readings in Social Science, UR 1997)
of organizati methodolog The frart
executive ofl
past accorq poorlY addr vision, mlss The actions enterPrisesr
leveldirecli The
bC
control, as' future and;
cause-an* There:
+Rl
+q, +hr +ol
I
p
Company Vision-Mission: A Tool for Control Medical Diagnostics,lnc. .
adapted
pfficiency,
iaccurate,
pounting
I
y
delivery official
l
VISION A community of dedicated people committed to lead in providing effiiient and effective medical diagnostic services through maintenance of health, diagnoses, researches, and prevention of disease.
hers.
MISSION
i
)hv
and board of Fal Bank hes may
fuuous. iYe rank
Entities h some bs, and lbyees
We are community whose... First priority is to provide accurate, ethical, total quality, and costefficient medical-diagnostic services; Second priority is the holistic development of its members and the promotion of each member's rights, integrity, and dignity; Third priority is to seek and develop new opportunities for growth in terms of technology and coverage in providing medical-diagnostic services; and
Fourth priority is
to
generate fair business profit and provide
Ilabor," ,Aefine I
i
il lto
I
i"'
I
F/ hl ?l V
The Balanced Scorecard
The balanced scorecard was founded on the belief that performance measurement systems retying targely on financial measures gets in the way of organizational growth and progress. This framework and management methodology was based on research done by Kaplan and Norton in 1990.
The framework was designed to address common issues faced by executive officers such as single measures of performance and focus on past accomplishments, as financial measures are wont to do. Other issues poorly addressed by financial measures include the strategic aspect-the vision, mission, and goals were not linked to the tasks at ground level. The actions in the battlefield had fragile links to the strategic direction of enterprises-perhaps also a failure of management to communicate the toplevel directions of the business organizations to field personnel.
The balanced scorecarO aadb a strategic dimension to managerial control, as the framework offers multiple performance measures, balances future and past actions, communicates the top-level vision, and defines the cause-and-effect of operational tasks to the business mission and vision. There are four perspectives offered by the framework:
+ + + +
Financial perspective
Customer perspective lnternal perspective Organizational learning perspective
The financial
::,JHJ:JiHSlf ^!:liiJ:*i,ffi ^i,""J:,TJ:i,$:[,:i,:h;:lli"j perspectver,"""Jll"ffi ;:l,i::j"+:ff :fffi ::trilff",fi and cost' and
ill;l
the organization"r r"rr,.,irg perspective assesses learning, market innoiation, continuous assets. ".J,ri"i,""iual Arthough the terms seem tedious anddifficurt to interpret, of companies who have useJ -i,,the experience ih" attbst io communicate' not simpry to
;;"*ork
controlttre
Depen
to'balanct same as a mission. tool.
E
lFl""".i"t Custorns
"rprbirity pe.formar,"". ,ro,"rentation "ntrrprise
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The links between perspectives and the use of the framework sampre of common enterprise through a ouiectives'is
demonstrated in figure 6.3.
rH:
tmprore gross- o"r"top I f I partnerships I Rrofit margin based on trust,
"iliil
itii
*f*
tncrease f erira effectiveness "r,irr. I of I offer portfolio for sales force creative solutions professionalism, and shared values I
]
As sttt efforts and parlnershi enterprise.
I
Reduce manufacturing and purchase
costs Pursue
economic value-added opportunities
Become preferred lmprove delivery Create customer supplier performance and projectfocused teams Outperform other suppliers
mprove esponsiveness o opportunities
lmprove responsiveness and reliability irFsupply of
Build capability to differentiate on service provision
C L
technological capabilities
products and services
p"r"@ (Source: CHRSA, lnc., 20OO)
ouoo
I
br"iness
|
,o
I
Build
Figure 6.3. Batanced Scorecard(BSC)
6.2 Thcl
op*
Region.
I t'"y h* | *'"ir p*
I
L,*
",.o
I
tooa
L
- _ _.
"e.
j.
.
strareholder
lut measures fhe internal I cycle time, lcontinuous eleerience rpability to rnentation
il
Dependent on the situation of the enterprise, objectives,,may :o 'balance'the firm's performance be rinked measures, while simurtaneousry Safi.leasacommunicationtoolto.direct,goalstowarotrretusinessvisionuse the
il:T'"'
Figure 6'4 is a sampre communication and
Customer
6.3.
,"onuJ,li'performance :
Develop customer p".tn"r"hip" b"Gf on trust, professionalism, and shared
j:
i I I
lnternal r
i
Financial
rallow top_
[rrough a
i,
ij
Organizational Learnin g
lncrease effectiveness of Create customer and oroi
i: j
""t*Eil
Figure 6.4. Sample scorecard
(Source: CHRSA, lnc., 2000)
As shown in the sampre scorecard,.the team (fierd personner) efforts and human resource .sares training on effective sares performance arows with customers that u-ltimaiety improve s;;;;r,sins or the
t!i I ,{
!
:.,#:il-:s
*
,
g *.
6.2 The Balaned
1,
t
'' I ,fl i[r {
1,
I *
The famiry business, a fast-food franchise, has two outrets-one in a Quezon city ma, and
the othea in a crroo""n city-,rlrL.*," famiry business is considering borrowi"g r*q" or adding'alJirnrr equity to open more outrets in othe*urr"" .ni cities in # G;l;;"r capitar Region. As they developed ,f,"i, ui.i*, mission, goals, anJ,strategies, they have found out thaithe contror sy"i"r" do not sufficientry evaruate
I !
:l
I
1 I
{
f
f .!
l
Create a balanced scorecard to manage the business growth. ro create the baranced scorecard ror the ramiry
t..::Z:li::J;::3*''
eva,
--% case Factsl The.strr"{onra ^^
uation
il ;;,J:: ]i:,:"jj;ff:: jh ::"" *",u l*,atives,
;
Case Facts: Alternatives: Eval uation
of Alternatives:
Recommendations:
Research is assigned to the students on:
1.
n
:T::::r"
s, ro,,
g
provisions, for the
diagnostic statisr. a anJ nd m m"oi"ar e d ca r p roress on and i
rures
of the # ;;I"i:: other ::?.:11,1,," ent health #," ii"i'orrlorrYrrln"
HeJi;
re g u tatio
g. ?
and the
:,::1,_:,ind1ds Department or
overnrn
priority; --"v urrurrry; "u"ona
or Hearth ;;;ffi ,::jil}l^1jl il ;;"1#:::,the Department T:i#,?:r",rff i
4.
ffiffi,
controlsystems,
The students
Arr
1lil
on financial information, for the fourth
AlternativG! Asci^ _ _ _ _ignments and
creatr
Exerci"""
_.--
r-' """o' oaldn_ced scorecards, *; r";;ff:::li,ilanced a strategic goal of with four with being a ,rnug"r-LrJr, period. ,"nr"r,' perspectives, ipectives, with
lntr
At
ilE
ae epecl
1. tr
tr
1.
2.
ir Seelig, Tina. What t Wish I Knew When tWas 20. New York: HarPer one; 2009. Sandberg, Sheryl. Lean /n. USA:
Atfred A. Knopf; bors.
';:,tl:,
2.
ur
tr b
ITr
%
/nd
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-;*..'.
.
lntroduction to the Functional Areas of Management #Iilij..
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Marketing Management
,
At the end of the chapter, the students
:
-'xpected
.
1. 2.
to:
recognize and identifY the functional management areas in business organizations and
understand and utilize the {unctional management areas to life and career choices'
Operations Management Human Resource Management Financial Management TechnologY Management
JL
V
FUNCTIONAL MANAGEMENT AREAS
Ms-ffi&
"i._.-.,:
il
7.1 Marketing Management Markei";g management is the functional management area that closest to customers. lts activities
7.2 0pcr is
,"L," identifying customers, and interpret these back to needs _,o the enterpril" to,. its business reaction. Marketing management areas include the following: + product and/or service planning
+ pricing + distribution + promotions + market research + customer service Marketing managers are tasked to meet the key objectives (customers, competition, of the 3cs and of marketing as follows: "orp"n9 to satisfy the needs, wants, and expectations of target customers; to outperform competition;and
.
+ + +
to ensure corporate health and profit.
Heizer i as follows:
+ + + + + + + + + +
des
qu€r
pro(
locz layo
hun
sup inve
sch
mart
As
infe Operations processing
(transport
s
(manufactur The students are assigned to:
1.
i:t:.]:*
sales personnel, and/or interact with merchandisers
tn supermarkets and other public areas;
2.
discuss their findings on the product, price, promotion, and place (location or distribution) ;.;;;" of the chosen product and/or service;
3.
compare prices of a single product andlorservice; and discuss their findings on the product and price differences.
4.
Accoun facilitate m< IrldI1A$erS
t
stimulate ct
W The
t
f.
ir
F
2.€
F
ffig*-
a-:l;:hl
7.3 Human Resources Management (HRM) deals with formalsystems forthe management of peopre.within an organization (Baternan anJsneil, 200g). rn the past, HRM was cailed personier management Every emproyee,s initiar interaction is with the HRM personner, and each work rife is purposely tracked by HRM units and "rpLy"",. aciivities. It is often repeated that the human resource is the most important asset
of all organizations.
Financiar statements attest to this decraration_the highest cost percentages are attributed to sararies, wages, and benefits of personnel. Manpower, after ail, is required to run the mlchines, design the work areas, interact with crientere, and deriver the goods ,na serui""s of enterprises
Labor planning and job design are required for
in human resource management. Heizer (2OO4) competitive advantage states that the HRM
competitive advantage strategy should ensure that people: 1. are efficientry utirized within the constraints of other operations management decisions and
2'
have a reasonabre quarity of work rife in an atmosphere of mutuar commitment and trust.
7.1 fl
Y
Thefi the use r business and ah stocldro5
Person lE The
Hrr
ln snt cash,
crt
ffi
lo"terni lProculs I laanagp
L-
ls the cr
I
I Handler
concem
I
The students are assigned
to interuiew.their schoor guidance ,o"k i,ir"*i"**
counselors on iob interview guiderines and/or a*ange by school guidance counselors on their chosen job's.
Alternative Assig n ments Schedule activities with
0 0 0
school psychorogist and/or guidance counseror to discuss HRM tests dnd their use for selection ,nO ,""ruitr"nii"spor?s, kinesthetic, and physicar education instructors to discuss health issues relevant to personal growth and development;and school alumnae who are well-liked, or admired, to discuss their personal challenges in school the workplace.
and Management: Concepts, Caselets, and Exercises
'.".
r*.ll+i:!i.,;*.':,
;fil***+.r.*,i,;
lakes
c
I
rrk""
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I
Er. r"k"" I
"nOlor,
"9rganization
t
rrk"" o
I
c
I
E*" Wod
and liah comPaq
The cre
financid also fori
r
7.4 Financier*n*mffiifftw*&t,$rmwffiM
bms forthe
l2ooe).
tn
fee's initial rork life is rtant asset
ation-the rcnefits of lesign the ervices of
ggi$sgi1;x,:r',
The finance person takes charge of the investments of the stockholders,
rhe use of funds in the operation, and the distribution of income of the cusiness owners. Stakeholders include the stockholders or equity owners and also the lenders or loan grantors. ln a corporate setup, they are the stockholders, bondholders, and trade and nontrade creditors. The finance person referred to above generally bears the title chief financialofficer. The Financial 0fficers in the Organization
ln small organizations, the chief financial officer is in direct charge of cash, credit, and accounting.
dvantage
he HRM
Determines fund requirements
Takes care of budget
Procures funds
Plans for control
Manages cash
Takes care of systems installation
ls the custodian of funds
Evaluates objectives, policies, and procedures
Handles foreign exchange
concerns
Reports and interprets results of operation and financial position
Takes care of bank relations
Reports to government entities
Takes care of investor relations
Administers taxes
Takes care of corporate
Scans environment
lerations
f mutual
investments Takes care of credit and collection
Protects resources
Takes care of insurance
Consults and coordinates with other departments
Takes care of employee benefits Figure 7. Duties and functions of a treasurer and a controller
Working capital management'bonsists of managing the current assets and liabilities. Aside from the cash inflow and the cash outflow from the company's main business, the company may obtain credit lines from banks. The credit line may be collateralized or non-collateralized. The goat of financial management of funds is profit maximization, not only short term but also for a long term. Chapter 7: lntroduction to the Functional Areas of Management
Part of the finance function is financial analysis. The functions of a financial analyst are the following:
1. provides guidance and analysis
in making investment decisions to
business and individuals;
2. gathers financial information, analyses, and makes recommendation; 3. assesses the economic performance of companies and industries; 4. analyzes the following: commodity prices, sales, costs, expenses, and tax rates to determine the values and project future earnings of the company;
5. evaluates ability of companies to repay debts; and 6. programs, budgets, costs, and analyses credit. oualifications of a financial analyst are mathematical skills, problem solving skills, good oral and written communication skills, and people skills. He should be confident, mature, independent, and of good moral character. Ouestions to Be Answered by the Finance person:
1. How much cash should be held? 2. Should we invest in securities? 3. Should we sell on cash or on account basis?
4. How much inventory should be held? 5. Should we invest in long-term investments? 6. How much should we invest in property, plant, and equipment
14. s 15- u 16- u 1?-
H
Tln t
G{itdh Gocn bs
-uctrte lrd eql
crnmdl
E
7.5 ItE
Iunaim hflueru The
bdrml 1.
2-
3"
(PPE)?
7.
4Should we lease or purchase?
8. Should we purchase or develop? 9. Can we hold prepayments to a minimum? '10. should we
5-
purchase in cash or on credit terms? what are the best Th
terms? 1
1.
12. Which.iban terms
13.
acc€P techJr are ol
Are tax remittances on time? should we choose?
What types of short-term financing are available?
0rganization and Management: Concepts, Caselets, and Exercises i.:
j ,:qi:ii:?l:i: :iiilj
are d goab
!,rs
of a
tions to
dation; Sries; enses,
irgs of
$lem skills. Ncter.
14. Should we choose short- or long-term financing? 15. What ar.e the available bonds? 16. Which type of ownership should we choose? 17. How much should be financed by the owners? The aforementioned questions can be grouped into questions on (1) capitalbudgeting, (2)capitalstructure, and (B)working capitalmanagement. cost benefit relationship is important to capital budgeting. The capital structure consists of debt financing, or money requirements from creditors and equity financing, or money requirements from the business owners. A common form of debt financing is the floating of bonds.
7.5 The management of technology is perhaps the most intimidating functional area of management because of its dizzying pace and scope oi influence. Technology is often synonymous with innovation or change. The critical factors that should be considered in the management of technology include:
1.
anticipated market receptivenessr
or answers to questions
on
satisfying the need for the new product or service and its applications;
2.
technological feasibility, or the necessities required to hurdle technical obstacles for imprementing or completing an innovation;
3.
economic viability, or the financiar feasibility of the new product or service to ensure its adoption by end-users;
4.
anticipated competency developmenf, or the need to develop competencies to allow for adoption of the innovation; and
5.
organizational suitability, which addresses the cultural issues and management systems of an organization that guarantee adoption of an innovation.
The chief technology officer (CTO) position has seen increasing acceptance in recent years. The position is tasked to manage the information technology function of an organization. cros have critical positions as they are often directly in touch with the external partners of an enterprise. They are also tasked to integrate the said external information with the internal goals of the organization.
Chapter 7: lntroduction to the Functional Areas of Management
Alternative Assig n ments a nd Exercises
+
Audio-visual activities utilizing classic films and movies or television shows making use of more recent technologies are scheduled. (The effect of the technologies on jobs and organizations is discussed in interactive lectures after the audiovisual activities.)
+
Suggested film shows include:
0 0 A
The Sarnt (fusion technology) The Net (lnternet) Person
of lnterest (satellite imaging)
What I Wish I Knew When I Was 20
sP*
"...The master of the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his education and his recreation, his love and his religion. He simply pursues
inI
his vision of excellence in whatever he does, leaving others to decide whether he is working or playing. To him, he is always doing both..l' -Lao-Tzu, Chinese Taoist philosopher (Source:Seelig, 2009)
at nd{
ee expefi
l.
un sf,
.-$r "f,
2. or sF it. ',ij
0rganization and Management: Concepts, Caselets, and Exercises
.
Sp ecial Top rcs rrrs :JES
'0"
a
I
N
I
I
,!
tru,. |
ln Management -.\..;;
rcfx
f
'
|
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m*o*r,nr.,ro"r,. to: the business and 2. communicate and describe the understand and explain special topics in organizations
r:.'l
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' '"t,:",....' .."
.:
.'.
.
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,
Starting a Business
i
lnvesting in the Philippines
are expected
1.
'..
... I t
,':'','.,
: .
lnternational Manageme nt
:
.
p I
8.1
e Many times our basic ph;':::rogica! needs are
satrsflrj with income from employment. However, the expanded need to satisfy family usualry calls for more income that salaried jobs cannot provide. ns wL ,or" ,p the hierarchy of needs, we desire to extend to others for their material needs. As we look around, at the present time, successful businesses are into corporate social responsibility (csR) which means that beyond individual and family needs, they have more resources which they are willing to share with others.
&
u t-
The motivation to go into business is so attractive. To some it is easy but to others it may be difficult. To the children, family business may be an easy way to be in business, Hopefuily the chirdren may be as motivated as their parents who hand to them the ,ready made', business.
3
4,
5
The Family Business
6
The family business is an entity in which members of the family are directly involved in its operations. ownership is within the family. Family values affect
I
business decisions. Relationship among members of the family affects the functioning of the organization. Generations of family business exist. young family members plan for their participation in their iarents' business while pursuing the academic studies. participation may be fulltime or part time.
0
Family business passes from one generation to another. At the start they may be small, but the opportunity to grow and to exist in succeeding generations are always possible. we see them in the business of cars, hotels, supermarkets, educational institutions, among others. concerns on survival and profitability go hand in hand with keeping family values and relationship. Hopefully, individual needs are not in conflict with business neeas. Disciplining employees who are famiry members can be more probrematic compared to dealing with emproyees who are nonfamiry members.
I
a
*l
a
I
Advantages of Family Business:
1. willingness
of famiry members to sacrifice when the need arises
like foregoing perks, freezing sarary adjustments, extending working
hours
2.
strohg family rerationship and values influence company curture
more by doing than talking.
3. 4.
Desire to preserve famiry asset and desire reputation impact positively on the business
Frr
preserve famiry
Itr
Family name is itserf an advertisement for commitment to quarity and
ha tol
value of product and service.
0rganization and Management: Concepts, Caselets, and Exercises
to
1" I I
h b FU h F h,
5. 6.
w
!r :
v
fy
I
Positive results from collaboration of family members.
Disadvantages of Family.Business: 1
.
2.
Passing the leadership from one generation to the next is complicated. It entails legal, tax, and relationship problems'
Professional abilities may better
be obtained from
nonfamily
members.
r
Fr
I
Family name is symbol of high ethical standard.
3. Successors may find it difficult to introduce changes. 4. Extended working hours of parents put pressure on their children' 5. Differences in opinion on business matters may strain family life. 6. Tendency to push hesitant children to family business careers
h b
7.
Sibling and in-laws rivalry
8.
ls le
Family members not active in the business have stake as partial owners.
9.
Family feuds threaten employees who are nonfamily members.
i
n tr h,
c F F f" !
To address concerns of family businesses, the following are adopted:
1. Rely on competent professional 2. Avoid favoritism.
to
be
and management personnel.
3. Promote healthy relationships. 4. Plan and effect professionaldevelopment. 5. Draw vision-mission statements understandable to family members and nonfamily members.
!
E
g E
b
6.
Plan for succession
7.
Study the legal requirements of transfer of ownership.
Franchising 'Franchising is an agreement bdween a franchisor and the franchisee. The franchisor sets the terms of the franchise contract which the franchisee has to follow. Franchise is a privilege to do business granted by the franchisor to the franchisee.
4. Tem
Franchisor provides:
1. names 2. logos
gro
Startup
3. products 4. operating procedures 5. 6.
Starnl
business i business a
training
Sourcr
marketing
1.tu
7. financing
da
ITE
Franchisee:
2. Fi
1. pays initial capital investment; 2. pays periodic royalties and fees; and 3. abides by the limits of the franchise.
by
3.
Fk
of
an
Advantages of Franchising:
1.
2.
3.
4.$
Fast start-up time. The franchise is usually widely known business set up packaged for those availing of it. Lower failure, The business has been tested in different conditions and settings.
s[
F 5.E'
ot
p.
Formal training is provided. The staff requirement is met by models
or templates replicated in a new franchisee.
4.
Marketing methods are replicated and proven to be effective as per due diligence study. Advertising by franchisor benefits all franchisee.
5.
Managerial assistance is provided to franchisee.
tr
6.F g
si
Buyout Disadvantages of Franchising:
1. 2.
3.
Less independence in operation. Franchisee should abide by terms of the fraflchisee.
Capital requirement is usually high. Majority of supplies are to be sourced from franchisor. Opportunity to buy from cheap sources is limited.
Strict compliance with franchise fees and royalties may take considerable chunk of revenues.
a
Buyo business
one oPb reasons:
1.
tr
2.r
!
3.t
t
4.
Termination and sanction clauses are usually very strict thus limiting growth of franchisee.
Startup
Startup is creating a business from scratch. Other forms of having a business is through buyout, franchising, and family business. Most small business are startups although large businesses also start from the ground. Sources of Startup ldeas
1.
Family business-The family is in the business of operating a mall. A
daughter sets up an outlet for ready made ladies dresses within the mall.
2.
Friends and relatives-lmpressed by the food being served to them by hostess Pia, they motivate the latter to put up a restaurant.
3.
Hobby-A lady banker doing embroidery as a hobby started a factory of embroidered garments sold to specialty stores for balikbayans and for pasalubong.
4.
Suggestion-A couple suggested to their daughter to set up a prep school in their vacant house in a suburban subdivision where many young children live.
5.
Education/profession-A lady dermatologist opens a factory of cosmetics. This makes her a recipient of triple income: (a) royalty, (b) profit from the business, and (c) professional fee from her medical
slness ilitions rcdels :
!s per
practice.
6.
hisee.
Prior work experience-A medical technologist was challenged to set up a medical diagnostic laboratory after experiencing work in similar setup here in the Philippines and in other countries.
Buyout brms
bbe Bs is
Buyout is acquiring'an existing business. An investor wishing to have a business with quick startup time would not start from scratch. For quick starl, one opts to buyoui somebody's businesS. He does this for the following
reasons:
r?
1. 2.
to reduce uncertainties;
3.
to obtain an operating business with demonstrated ability to
kea
to obtain the existing business at a price lower than starting from the ground considering that start up period is also a cost; and earn
profit. Chapter 8: Special Topics in Managemenl
2. Theinvestorwantingtobuyanexistingbusinessneedstocontract leads for "business for sale]' The matchmaker" o, brokerJ who [rovide investor or buYer should: f
.
3. sEc
for sale;" investigate and evaluate the "business know whY the business is for sale;
2. 3. determine the integrity of the seller; 4. examine the financial data; 5. determine the fair value of the business; 6. consult accountants and lawyers'
Sea.c a coq CorP(
their' lnterr
4. sEc co(p SEC
and
5.
Forms of Business and Legal Requirements
Chapter4introducedtheformsofbusiness_soleproprietorship, partnership,"no"o,poration,includingtheiradvantagesanddisadvantages' of Trade and lndustry (DTl) administers ln the Philippines, the Department
Reg fees
8.2 Invd The SE
2014 werer
for Sole proprietor (BTRCP Form No' Business Name npifi"ution Forms may be done through the Business 18A). Online registration of enterprises (BNRS). Foi food establishments' petition Name Registration-t;", information sheets and for barangay business'permits, and the requisite by the Bureau of Food and Drug under licenses to op"r"t",'e being issued the DePartmcnt of Health'
+Co +Re
knowl as the G" The DTI administers R'A' 10644' otherwise f"g::l: and medium enterpnses small, micro, strengthen to seeks Act. R.A. 10644 (ftllSHllgt) to create job opportunities in the Philippines'
+R +R
TheGoNegosyoActestablishesMsMEorBusinessAssistanceCenters, alsocalledN"go"yoCentersincollaborationwithlocalgovernmentsunits (LGUs) and other agencies' of the Negosyo centers are The value of the enterprises that may avail the following:
+ + +
Micro: not more than ?3,000'000
Medium:,F15,OOO,OO1-f100'000'00
e:Services for companies' as follows:
Reserve
a
Company, through SECiRegister'
comPanY registration; Caselets' and Exercises 0rganization and Management: Concepts'
+Re
+M
+R +R +F +F +F
+t +l +l
Small: F3,OOO,OO1-?15'000'000
Corporationscomplywithregistrationrequirementsadministered.by (SEC)' The SEC also offers the Securities and E'change Commission
1.
+ie
+r
El€n
the
web-based
richest
2'
Search Registered Companies, which gives information on whether a corporation or.partnership is registered with the SEC under the Corporation Code of the philippinJs;
3'
sEC iview, offers companies the convenience of getting copies of their documents, twenty-four hours a day, seven days a week, via
rtract
I The
lnternet;
4'
sEC Express sysfem, an arternative mode of securing copies of corporate or partnership without having to go s- persoiaily to the rvrvvrrs
SEC;and
5' fiip, nes.
brs No. ess llon
rtd iler
t0 ES
ns,
ls
I B
8.2
Registration carcurafor, which computes the approximate registration fees of registering stock corporations.
I
The sEC-registered corporations in the phirippines as of Jury
2O14 were;
+ + + + + +
Region 44 and
+
48 (CALABARZON and M|MAROpA)
Region S (Bicol
Region)
+ # + + + +
+ +
Cordillera Administrative Region
Region
(CAR)
gl,
:
I (llocos Region)
2,122 17,225
Region) Region 3 (Central Luzon Region) National Capital Region (NCR) Region 2 (Cagayan Valley
Z658 g2,47g
:192,785
:
44,9O9
z,og2
Region) Region 7 (CentralVisayas Region) Region 8 (Eastern Vsayas Region) Region 9 (Zamboanga peninsula) Region 10 (Northern Mindanao) Region 1 1 (Davao Region) .i Region 6 (Western Visayas
Region 12
201b,
(SOCCSKSARGEN)
b,ggs
I
:
24,600 g,1gg g,970
5,1gs
:
16,731 g,SOs
Region 1s (CARAGA)
3,043 Autonomous Region in Muslim Mindanao (ARMM) : 1,450 Eleven Filipinos are incruded in the Forbes 201b rist of rrle worrd,s vYUIru !i -r the richest. Their business investments are in the forowing:
+
j:::,..a ro!,s ^va
'
r
i t
__.*l
';l;i;t; i,f '':l
1. 2.
E
supermalls, banking, and property development; airlines, telecommunications, property development, banking, hotels
and power;
bi s*
3. casino property development and port operations; 4. property and resort develoPment; 5. airline and tobacco; 6. property development and banking; 7.
ifi h6 ]€q
ht
property develoPment;
rtrr
8. fast{ood industry; 9. supermarkets; 10. 1
1.
Tra
insurance; and
dG
real property develoPment.
of
other 2015 positive news on Philippine investments include the following:
+ + + + + + + + + + +
I
gE
to
ir
car sales are uP; capital expenditure budgets are hiked; economic growth rate has risen above historical performance; growing remittances of overseas Filipino workers (OFWs);
F
€r
d
new wave of foreign direct investments; extended basic education;
e
family planning and reproductive health;
a
cash transfer programs to help poor famities;
foreign exchange rate
$ :?44,from $ 1 : P55 1
r in 2009;
continued expansion of business process outsourcing (BPO); and bright future for retail industries.
lndividuals desiring to invest in the Philippines should make due diligence on the reasons for doing business, as published by the World Trade Press Country Bu$iness Guides (2007).
0rganization and Management: Concepts, Caselets, and Exercises
€
i
I
Role of Business in the Economy
[els
Businesses provide jobs to the population who in turn are able to buy goods and services. Businesses pay taxes, that finance government spending for infrastructures and operations. Goods produced and services rendered satisfy the needs of consumers. Businesses introduce new products and innovations that improve standards of living. Economic competition drives businesses to act socially desirable manner. Many exercise corporate social responsibility (CSR), also referred to as service beyond profit. Reviews of trade statistics show the vital role of business in an economy. ln the Philippines, domestic trade transactions in the fourth quarter, 2014
grew by 15.7o/o, compared to the same period in 2013. The volume of transactions was aI 5.27 million tons, versus 4.56 million tons in 2013. Trade transactions were usually through water transport for both years. The value of domestic trade transactions in the fourth quarter, 2014 decreased by 8.5 percent, compared to the same period in 2013. The value of transactions was at P136,52 billion, compared to ?149.18 in 2013. the
to
The use of water transport for domestic trade transactions is distinctive the Philippine geography. lt indicates the need for supplementary
investment in water conveyances.
During the fourth quarter of 2014, food and live animals constitute P40.76 billion of the domestic trade value, with machinery and transport equipment al?32.2 billion, and manufactured goods classified by materials at F20.06 billion. Board of lnvestments (B0l)
Dd
The Philippine Board of lnvestments (BOl) is the lead government agency tasked to promote investments in the Philippines. The BOI is an attached agency of the Department of Trade and lndustry, and it assists Filipino and foreign investors to venture and prosper in desirable areas of economic activities. Some of these sought-after cost-effective activities include Business Process Outsourcing (BPO), the Electronics lndustry, Renewable Energy, and Shipbuilding.
tce PSS
Upon evaluation of its application for registration under the Omnibus lnvestments Code and the list, of the lnvestments Priorities Plan, BOIregistered companies may be granted the following incentives: Fiscal lncentives
+ +
income tax holiday exemption from taxes and duties on imported sPare parts (NOLCO) Chapter 8: SpecialTopics in
M.n.g.r.nrf,;
+
impost and fees dues and export tax' duty' wharfage from exemption
(clE)
+' + + +
spare parts and of duty on capital equipment' reduction of the rates o{ EO 528 accessories bY virtue stocks and genetic materials tax exemption on breeding
+*
kt
+ol
rr
+G r
tax credits from taxable income additional deductions
in th
cou
Nonfiscal lncentives
* + +
Bases underl with ct
Sfi
nationals emPloYment of foreign
procedures simplification of customs equipment importation of consigned warehouse bonded manufacturing/trading privilege to operate a
Zone Authority (PEZA) The Philippine Economic
to promote ThePhilippineEconornicZon'eAuth.ority(PEZA)isalsoanattached ana rnar"trv that is tasked rrro" o"pun",i"li'ot facilitate agency of the regi"t"'' g'ant incentive:'to'-"nd in extend investments, """itt"n""' a"'"'"ts operations engaged i;;""to' oo"'utii;; the busine"" are encouraged to locate export-orientea inside selected
;i-"}^r,o;res
manuil"**g
and servicefacilities
ttr"
by the President of
"orniry-froctaimed Zones' "r""",r,rorghlout as PEZA Sfecial Economic
investments in various zones deveroped to encourase of the PhitiPPines include:
"Til:1:::::mic ,"gion.
which l.AuroraPacificZoneandFreeportAuthority(APEco),locatedinthe thulC"teway to the Pacific" province ot'i*o'"' dubbed "t mariculture' in transhipment' logistics'
encourages"ii-*'i'n"nts tourism,
ri";;i"' ;;;;;y, and other agro-industrial
sectors
;
2,AuthoritfoftheFreeporTAreainBataan(AFAB),locatedinMariveles, to be Bataan,isagovernment-owneJ,nJcontrolledcorporationcreated of 2ooe' rhe FAB used bv Repudil theBataanExportProcessrngZone'thefirstecononriczoneinthe
ffi;;;:';f;" iH ;i
PhitiPPines;
C*d
adt
+
+ + +
4., n'i"r \I dornel I tung* I invesl I ofbu I econ
e
8.3 t
G world devd MATY
ecofi
beo
3.
lfees t t
b I
and
Bases Conversion and Development Authorty (BCDA), created under Republic Act7227 (Bases Conversion Act of.1g92), is vested with corporate powers to:
+
accelerate the sound conversion of former military base lands into globally competitive investment centers;
+
optimize revenue generation from the disposition of former Metro Manila camps; and
+
create opportunities for employment in Central Luzon.
i
The BCDA efforts have given rise to a premier business district in the 15O-hectare Bonifacio Global City (BGC) and one of the country's longest and most modern toll roa#the 93.77-kilometer Subic-Clark-Tarlac Expressway (SCTEX) that transforms the Subic-
Clark corridor into
a
world-class logistics hub. Other BCDA-
administered zones include the following:
hed
bte hte
!in
+
Clark Special EconomicZone (CSEZ) and Clark Freeport Zone (CFZ) in Pampanga;
+ + +
Bataan Technology Park (BTP) in Morong, Bataan; Poro Point Freeport Zone (PPFZ) inl-a Union; and the John Hay Special Economic Zone (JHSEZ) in Baguio City.
Fte
Why Do Business in
lor
tte Philippines?
It has often been said that the Filipino people is the country's ps i
he hr' ie,
primary asset. The more than one hundred million population is a huge domestic market for consumer goods. The proficiency with the English language makes the Filipinos highly trainable. lncentives to entice foreign investors are in place. Privatization and deregulation add sustainability
of businesses. The Philippines is one of the most exciting emerging economies in the world. lnflation is controlled and gross domestic product (GOp) per capitagrows at double digit.
r ,
ts,
td I De
he
8.3
r
Globalization removes borders and restrictions between nations and world economies. Because management keeps pace with the dynamic developments brought about by globalization, the term international managemenf has come to fore. lnternational management views the global economy as its environment, and needs to be acquainted with new terms to be competitive. Chapter 8: Special Topics in Management
produce with an outside provider to is no Outsourcing means contracting g*a"-and services' The Philippines to of one or more "'n""i'"iion'"Process outsourcing, which continues "tterm-Business the to stranger even in the rural of the call center industry, nr"*in phenom",Irl witness the areas.
offshoringmovesworktoothercountries,oftenimplementedbylarge of origin' Assembly labor costs i" itr"it countries with lower conglomerates to reduce beel relocated to countries plants manufacturrng of computer lines fravl services such as accounting' years' wage costs, uno "u"i i'ot"""ionul recent have seen upsurges in programming, and ooo[e"ping
Ext
ffip019anzationandManagement:ConceptS,Caselets,andExercises
produce
les is no jnues to the rural by large
tIl
isembly h lower rmputer
Exercises
t
I l.
F'
write the letter only' Fill in the blanks with the correct word or phrase' a.
Management
b.
Leading
c.
Organizing
d.
Action plan
6
Planning
f. lnnovation g. Efficiency h. Effectiveness i. Management levels j. Controlling
or delivering strategic value, uses tools' such as the
1.
flowchart and GANTT chart'
2.Thetermsdownsizing,rightsizing,andreengineeringareoftenused function of managers'
in the
_--,
or mobilizing people' sometimes use
3.
New perspectives in - charisma. the term
4.
There is often negative connotation for
the
function of
managers. 5. 6.
Top, middle, and frontline are
-.-
in an organization'
is the process of working with people and resources to accomplish organizational goals effectively and efficiently'
7.
means organizational goals are achieved'
means goals are achieved with minimal waste of money' time, materials, and PeoPle' is the introduction of new products and services' 9. questions asks the 'what-where-when-how-how much' 10. An.-_ for management cases. 8.
B' Write the letter only' Match column A with column A
to The ability of a product or service meet customer needs of positions or 2. The planned removal
a.
downsizing
b.
rightsizing
c.
customer relations manager
d.
reengineering
e.
totalqualitY management
1.
jobs 3.
4.
Efforts to revolutionize organizational
and Processes to
satisfY
"yr,"*t customer needs The eff orts at achieving an apProPriate size for ef{ective enterPrise Performance
5. An integrative aPProach to
,unugu*Lnt that suPPorts th" realizition of customer satisfaction
6.
of tools through an extensive variety in high result and techniques that qualitY goods and services A visual tool for scheduling and planning Proiects
unit tasked to focus on interactive relationships with customers calls for An organizing method that to be sub-aJsemblies and apparatus
7. A function or enterprise
8.
produced
9. A 10.
Planning
tool that ',Puts
keY
easy processes in symbolic patterns to understand to A Planning tool that is usedfrom diagram ,"ti'iti"" in sequence start to finish
(roM)
f.
just in time (Jtt)
g. flowchart h. GANTT chart
i. qualitY .i. activitY network
being described in each statement' ldentify the management level ToP-level managers
fiLM)
(MLM) Middle-level managers (FLM) Frontline managers
the unit
1. Manage continuous improvement within 2. Create the corporate purpose and ambition
4.
-
standards Establish high performance and trust
(s), weakness (w), opportunity ldentify the following if it is a strength (O), or Threat (T). Changes in tastes and Preferences 2. Presence of skilled manPower 3. lncrease in consumPtion Patterns 4. Decreasing disPosable income 1.
6.
New and modern equiPment
7.
Limited managerial exPertise Available financial resources
8. 9. 10.
lncrease in PoPulation Limited service caPabilitY
statement' being described in each tdentify the government agency
lndustry (DTl) Department of Trade and Employment (DOLEJ Department of Labor and (DILG) Local Government Department of lnterior and and Highways (DPWH) Department of Public Works (DePEd) Department of Education
(DOH) Department of Health 1.
EmploYee-emPloYer rights
Product and service standards 3. EmploYee health certificates 4. Skills training and develoPment
2.
Consumer Protection 6. Government develoPment Plans 7. lnf rastructure develoPment
5.
products
Registration of cosmetic investors 9. lncentives for foreign
8.
10.
ExPort-imPort statistics
Match column.A with column B. Write the letter
only-.
A 1.
A strategy where an organization stays in asingle sectoror industry
A
planning term that indicates shorter-term directions 3. "Where do we want to go?" 2.
4.
The strategy that refens to
expansion of an organization backward to its suppliers or forward to its buyers 5. Business persons who visualize the future of their respective companies 6.
The planning term that
is a
declaration of the purpose of the organization 7.
8.
Business purpose
A strategy where an organization adds related products and services to its original business The step in the planning process gathering, entails
that
the
interpretation, and summary of relevant information 10.
Bill Gates, Mark Zuckerberg, and Walt Disney
d.
vtston
b.
mission statement
c.
visionaries
d.
situational analysis
e.
goals
f.
vertical integration
g' diversification h.
concentration
I ii fr
r r l;
**
(Sp)' ldentify the form of business organization as sole proprietorship partnership (P), or corporation (C) from the information provided' Then, indicate whether the given information is an advantage or a disadvantage'
Business Organization Form 1.
Limited capital
2.
Practically unlimited life
3.
Broader source of caPital
4.
Subject to more government requirements
5. Capacity as a legal entitY 6. Limited liability of owners for entity's debt
7.
Easy to form
8.
Suited to Practice of profession
9.
Flexibility of oPerations
10.
Limited life
Advantage/ Disadvantage
Exerci$d'8
B' Write the letter only' Match column A with column B
A
This staffing function
1.
job orientation (Jo)
determines
who to where decision is made on bY the hire from the Pool created
b.
recruitment (R)
recruitment Process'
c.
selection (S)
d.
on-the-iob
ing f unction refers This to determining an emPloYee's staff
training (OJT)
performance.
The duties of given .iob Positions una ,f," characteristics of PeoPle in this who should fillthem are done
3.
staffing function'
4. 5.
the This staffing function determines job' kind of PeoPle for the poolof staffing function where a
(rD) f.
performance appraisal (PA)
$;
reward sYstem design (RSD)
h.
job analYsis (JA)
i.
job descriPtion
The
is develoPed' iob applicants involves the 6. This staffing function oP"t"tionalization of
design
"nJ continuous workforce improvement'
7.
training and develoPment
6
fringe The plan for monetary and in this U"n"iit" of employees is done staffing function'
L This staffing function
documents
details of what a job entails
9.
new This staffing activity provides
*itf' U*i"
background
"*ploY""" information about the enterprtse'
10.
activity' the ln this organizing/staffing
bY a new frire is tasked to learn iob actuallY doing it'
UD)
job sPecification
.(JS)
5i'i;a mg::..
',,E1$!QisG..$
Scop, ' i::: i::i ' r: ::::l:::r!:
: ,:r::l : ,r,. '':: :::;:::i.i;::;: r:,:ir:
ldentify which need in Maslow's Hierarchy (of Needs) is described for below. Write PN for physiological needs, SS for safety and security, SN social needs, E for ego, and SA for self-actualization'
-L frJ
1.
Self-esteem
2.
Food and water
3.
Friendship
4.
Shelter
-td
5.
Affection
,"Jtr
6.
Becoming everything one is capable of doing
Frv
7.
E pf{
;" dt
T \{
\ft Eq -d s-" ,r't
,.,>
sI l rJ
I" J-
fe L
8. 9. 10. 1
1.
12. 13.
Sex Freedom Love
Protection against threat and deprivation Achievement Belonging
Status
14. Recognizing one's full Potential
15.
Recognition
Match iolumn A with column B. Write the letter only.
A
1.
A orchestrates important.change effectively.
2. -
shows low concern for people
and low concern for production.
r I
3. -_L shows high concern for people production. and
4,A
I I
deals with
day-to-day
organization complexities.
r,
5. {
reflects'a strong wish to be liked, according to McClelland. \
I
efficiently change themselves or their environments.
I I
i
k
'Makeyour partner a real partnerl
A" 'Seven Habits of Highly Effective People'
I
9"--
is the facility to take action and provides the strength and daring to
achieve something.
10.
means an orientation toward su&ess and goal realizatibn.
impoverished management
b.
power
6..
team management
di
manager
e.
Stephen Covey
!'a
affiliation
g. h.
growth needs
ERG theory, k or leaders need to address 'to creatively and A encourage people
6.r Under Aldeder's
i.
I
g,
SherylSandberg leader achievement
Match column A with column B. Write the letter only.
A 1.
2.
B
Any process that directs the activities of
a.
individuals toward the achievement of organizational goals.
b.
The type of control that utilizes rules, policies, hierarchy of authority, reward systems, and other formal mechanisms to influence employee behaviour and An area of control that includes budgets or standards; actual data is compared against budgets and analyzed.
4.
A control method orsystem that includes all the policies and procedures adopted
by the management of an enterprise to assist in achieving management objectives. 5.
An
internal control structure that
includes the series of tasks and records
of an entity by transactions that
are
processed as a means of maintaining financial records.
accounting system bureaucratic
control d.
internal control
e.
finance
assess performance. 3.
control
r
B' Write the letter only' Matqh column A with column A
activities relate to identifying these custome, needs and interPret
Its
1.
business back to the enterprise for its reaction.
This functional
2.
is
management
sometimes called
a.
operations management
b.
human
resources management
area
Personnel
marketing management
management. use of Its activities relate to the efficient machines, sPace' and Personnel'
3. 4.
This functional management area for relates to the formal sYstem an the management of PeoPle within organization'
h
v.
Its
activities involve innovation or
change.
6.
lt takes charge of the use of funds
in
operations. 7.
the It answers questions on satisfying
8.
This functional management
o
service' need for a new Product or
of assesses the economic performance cqmpanies and industries' distribution' Its activities involve pricing'
,na
Promotion
services.
10.
area
of
Products and/or
rl
area is in This functional management charge of qualitY management'
technologY management
e.
financial management
(T) or Controller/ ldentify if the function listed below is that of a Treasurer
Comptroller (C).
-
1. Scans the environment 2. Takes care of credit and collection 3. Manaoes cash 4. Takes care of budget 5. Takes care of bank relations 6. Administers taxes 7.
Plans for control
8.
Procures funds
9.
Handles foreign exchange concerns
10. Takes care of systems installation 11.
Reports and interprets results of operations and financial position
12. Custodian of funds 13.
Takes care of investor relations
14. Consults and coordinates with other departments 15. Determines fund requirements 16. Evaluates objectives, policies, and procedures 17.
Protects resources
18. Takes care of corporate investments 19. Reports to government entities
20. Takes care of emPloYee benefits
,' ii'
Match column A with column B. Write the letter only. A 1.
B
This is the lead government agency tasked to promote investments in the
a.
Philippines. 2.
These incentives include income tax holiday and tax credits. 4.
manufacturing business
This business type is
sometimes called a merchandising business.
c.
6.
This government agency is attached to the Department of Trade and lndustry (DTl) and is tasked to promote investments, facilitate the business operations of investors, among others.
This business practice is often implemented by conglomerates to reduce labor cost. involves
contracting with an outside provider
produce one
e.
direct labor
f.
outsourcing
g.
Board of lnvestments
h.
fiscal incentives
i.
Business Process
Outsourcing
This business practice
to
servtce business Philippine Economic Zone Authority
This business type is engaged in converting raw materials to finished products.
5.
trading business
or more of
offshoring
an
organization's goods or services. 8.
Call center industry
9.
Example businessed' include doctors' clinics, law offices, CPA practitioners
10.
This is an element of manufacturing that converts raw materials to finished products.
*i *,
Books Andrews,sudhir'TextbookofFoodandBeverageManagement.NewDelhi: Company Limited' 2008' Tata McGraw HitiPublishing
Asbury,stephenandPeterAshwell'HeatthandSafety'Environmentand """6'rany 2007' Audits'USA: Elsevier Ltd''
AsianDevelopmentBankandtheWorldBank.TheNewSocialPolicyAgenda inAsia' Manila: ADB' 2000' Banastao,CristinaB.andSotitaA,Frias.Entrepreneurship.MakatiCity:Katha -Publishing, 2008' Leading and Scott A' Snell' Management: 2008' and S' Thomas Bateman, New York: McGraw Hill' Collaborating i^l C"*ietitiveWortd'
Champoux,JosephE,l)singFitmtoVisualizePrinciplesandPractices'USA: College Publishing' 2000' South-Western
Strategic M{'ug."\"2t'rloncePts Pte Ltd'' 201 1' Education South Asia
David, Fred R'
Pearson and Cases' 13th ed'
.Deep,samandLyleSussman'ActonltlMassachusetts:PerseusPublishing, 2000' Feliciano,JulieDavid,obtigationsandContractsSimptified.ouezonCity: JMC Press, lnc', 2000' Makati L' Fajardo' Elementary Accounting' Consolacion and A. Solita Frias, ' "-ii*V, frtha Publishing Co'' lnc'' 2013' JREN Prints Finance' Makati CitY: Business in Textbook A' Sotit a Frias,
EnterPrises
,2012:
Theory: L' Fajard o' Textbook in Auditing Consolacion and lnc" A' co" Solita Frias, oro"n city: Katha Publishing
Assuranceuna
nJii"iservices.
2008. Express' Garbade,Dieter'WalkingtheCorporateTtghtrope:Practi.calAdviceonHowto ti, oiino side. London: Minerva Keep a
r"r"tn{uii'"^;:,;;;,:;
2000. Like Steven D' Levitt' Think Dubner, Stephen J' and
Books, Ltd', 2014'
a
Freak' London: Pengutn
R.r".*rIC
Heizer, Jay and Barry Rend er. An lntroduction to operations Management. Singapore: Pearson Education South Asia Pte' Ltd'' 2006'
Atd
{
Heizer, Jay and Barry Render. General Principles in Operations Management'
Singapore: Pearson Education South Asia Pte' Ltd', 2004'
I
2000. Kaufman, Ron. UP Your Service/ singapore: Ron Kaufman Pte' Ltd.,
2002' Lencioni, Patrick. The Five Dysfunctions of a Team. USA: Jossey-Bass, Best Lipman, Frederick D. and steven E. Hall. Executive compensation ' Prarctices. USA: John Wiley and Sons, lnc', 2008' university McNeilly, Mark. sun Tzu and the Art of Busrness. New York: oxford Press, 1996. Moyer, R. Charles, James R' McGuigan, and Ramesh P' Rao' Contemporary Financial Management Fundamentals. singapore: Thomson Learning
Asia,2006. for Nolan, James L. et al. Phitippines Busrness: The PorTable Encyclopedia 1996. Press, Trade Doing Busrness with the Philippines. USA: World panopio, lsabel and Adelisa Raymundo. sociology: Foc,us on the Philippines' Ouezon CitY: Ken, lnc., 2004. Porter, Michael E. Competitive Strategy: Techniques for Analyzing and Competitors' Canada: Simon and Schuster,2OO2'
lndustries
Behavior Reiss, Steven. Who Am l?: The 16 Basic Desires that Motivate Our and Define our Personality. New York: Penguin Putnam, lnc., 2000.
one, Seelig, Tina. what I wish I Knew When I Was 20. New York: Harper 2009. Dorng SGV & Co. and Private lnvestment & Trade Opportunities Philippines' Buslness in the Phitippines. Manila: SGV and Co,2OO7' The
city Development strategy Kit for Philippine cities. world Bank Report, 2000,
l,uc
I h
}rrnent F
V€,nent.
000. 52O02.
h Best rersrty I
DPorary
nrning
dia for )6.
prhes.
Ustries
Audio Boolts Collins, Jim. Good to Great: lNhy Some Companies Make the Leap...and Others Don't.
Hendricks, Michael. Busrness Ethics: Essential Tips on How to Start a Busrness. (Adapted reprint narrated by Violet Meadow). USA: Speedy Publishing LLC., 2004
Websites Department
of
Labor and Employment. Accessed April 30, 2016'
http ://www.dole. gov.ph/labor-codes/view/4
Department
of Labor and
Department
of Labor and
Employment. Accessed April http ://www.dole. gov.ph/labor-codes/view/5 Employment. Accessed April
2016.
30,
2016.
30,
2016.
http ://www.dole. gov.ph/labor-code sl view I 7
Department
of
Trade and
lndustry. http ://www.dti. gov.ph/dti/index. ph p
Accessed April
Metropolitan Manila Development Authority. Accessed April 30, 2016. http://mmda.gov.ph/
Securities and Exchange Commission. Accessed April lnvior
30,
30,
2016.
http://www.sec. gov. ph/
Wikimedia Commons. Accessed April
30, 2016.
https://commons
l-G ate s-i n*W EF 2C200 7. j p g By -o/o (http://creativecommons.org World Economic Forum ICC BY-SA 2.0 .
w i ki m
/l
Doing
rg /wi ki / Fi eolo 3A B I
i
I
icenses/by-sa/2.0)l
Wikimedia Commons. Accessed April 30, 2016. https://commons w i ki m e d a. o r g /w i ki / F i e o/o 3 A M a r k-Z u c ke r b e rg-e m-s ete m b ro By Presid6ncia do M6xico (Flickr) [CC BY 2.0 (http -de-2014.jpg .
wft,
e d i a. o
i
I
://creativecom mons.org/l icenses/by
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education, professional particularly in the field of the city of Antipolo of the president and nou"'nunt"' of commission member administration, a is development, pubtic nighe' tducation' 5he she is an a*ao *n,r,"'"0 Education' ot Philippine Hisher lnstitute of rech"r.n, *,""lit^"tiza-tion ,n" an on Force of Educational Policv' on Higher Education lnstitute (KEDI) Journal Educational editoriat board memu.-r;;;.;." cent€r for )rganization Regional int"rn"tionut, peer-reviewed
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