MG4 GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY (TH 10:30AM-12:00PM, 1:00-2:30PM)

GROUP 1
Renmar J. Cruz Mary Milet G. Mercado
Princess Elaine B. Galman Veronica L. Nabong
Dharbie Mae L. Hilaga

THE ORGANIZATION IN THE ENVIRONMENT STRUCTURES

Organizational structure is the pattern of relationships among positions in the organization and
among members of the organization. The purpose of structure is the division of work among members of
the organization, and the coordination of their activities so that they are directed towards achieving the
same goals and objectives of the organization. Structure defines tasks and responsibilities, work roles
and relationships and channels of communication.
Objectives of an Organizational Structure
1. Accountability for areas of work undertaken by groups and individual members of organization
2. Coordination of different parts of the organization and different areas of work
3. Effective and efficient organizational performance including resource utilization
4. Monitoring the activities of the organization
5. Flexibility in order to respond to changing environmental factors
6. The social satisfaction of members of the organization

1.1 Demographic Structure – Product and Labor Markets

Product Market
• A product market is where goods and services produced by businesses are sold to households.
• It includes a broad group of products that satisfy a general, yet similar, need.

Labor Market
• A set of social mechanisms though which labor is bought and sold
• The market in which workers compete for jobs and employers compete for workers
• It provides the structure through which workers and employers interact in relation to the jobs,
working conditions and pay.

LABOR MARKET TRENDS (2018)

• The Philippines is among Asia’s premier labor markets. The country houses a large and growing
young population with a median age of 23, a vital demographic advantage that can be leveraged
with proper investments in education and infrastructures.
• Currently, about 44.1 million people out of the 70.9 million – aged 15 years and above – are in
the labor force. This is approximately 62.2% labor force participation rate.
• The Philippines Statistics Authority (PSA) data also shows three in every five, or 61.2% of the
total employed persons, were salaried. Some 27.6% were self-employed, while 3.5% were
employers in own family-operated farms or business, and 7.7% were unpaid family workers.
 Primary Labor Market

Jobs tend to be highly skilled and highly paid, have clear lines of advancement, and offer greater than
average degrees of training and job security to workers.
Secondary Labor Market
Jobs tend to be low in pay, prestige and security, and offer little opportunity for advancement. They
also typically have a high turnover.

Demographics
Studies of a population based on factors such as age, race, sex, economic status, lifestyle, level of
education, income level and employment, among others
Demographic Trends
Describe the historical changes in demographics in a population over time
Value of Demographic Trends
Staying up to date on the latest demographic trends enables organizations to identify existing and
emerging markets for their products and services. By evaluating customers’ and prospects’
demographic trends, business decision-makers can identify changing needs in the marketplace and
adjust to them. Demographic trends can also help organizations spot future spending trends.

1.2 Socio-economic Structure – Distribution of Income and Wealth

Socio-economic
It refers to person’s position in society’s structural and functional systems. These are the divisions of
people by income and occupation.
Categories:

 Executives
 High level managerial
 Mid-level managerial
 Skilled Laborers
 Semi-skilled laborers
 Irregular workers
Distribution of Income and Wealth
Income is a net total of the flow of payments received in a given time period.
• Income distribution reveals what percentage of individuals are at various wage levels, information
that can reveal more about overall wage patterns than average income can.
Corporate Profits
  Corporate Profit Taxes
An assessment levied by a government on the profits of a company. The rate of corporate income
tax paid by a business varies between countries, although since corporations are legal entities
distinct from their owners and operators, they are typically taxed as if they were people

 Undistributed Corporate Profits

It is commonly termed as retained earnings. These are corporate profits that are neither paid as
corporate profit taxes nor paid to shareholders as dividends. It is important for the derivation of
personal income from national income

 Dividends
It is the distribution of reward from a portion of company’s earnings, and is paid to a class of its
shareholders. It can be issued as cash payments, as shares of stocks, or other property. Most
cash dividends are paid on a quarterly basis.

Income can be in the form of:

 Wages
It is a monetary compensation or remuneration paid by an employer to an employee in exchange
for work done in a company during a period of time; it can be on hourly, daily, or weekly. This
usually an hourly basis.

 Rent
It is a compensation paid by a tenant or lessee to the property owner or lessor for use or
occupancy of a property.

 Interest
A fee paid for the use of another party’s money. To the borrower it is the cost of renting money,
while to the lender it is the income from lending it. Interest can also refer to the amount of
ownership a stockholder has in a company, usually expressed as a percentage.

 Pensions
It is a periodical or lump sum income received as a retirement benefit. It is also a private or
government fund or payments from which intermittent and regular benefits or allowances are paid
to a person upon his or her retirement or disability.

 Benefit Payments
It is a payment of money by the government to people who are ill, unemployed, poor or who have
children.

 Income from Self-employment

A taxable income earned from self-employment. Self-employed persons are those who act as
independent contractors, sole proprietors or members of a partnership.

 Inheritance
It is a money or property (assets) received from an ancestor either through will or no will from the
operation of intestacy or succession laws
Socioeconomic characteristics

 Ethnicity
It is an ethnic or social group that shares a common and distinctive culture, religion, language or
the like.

 Region
A region is an area of land that has common features. A region can be defined by natural or
artificial features. Language, government, or religion can define a region, as can forests, wildlife,
or climate.

 Gender
It is the range of characteristics pertaining to, and differentiating between masculinity and
femininity

 Job
A person’s role in society. It is an activity or piece of work, often performed in exchange of
payment. It is also a task people do as part of the routine of their occupation.

The Distribution of Wealth

Distribution of wealth is a comparison of the wealth of various members of groups in a society.
Wealth is an accumulated store of possessions and financial claims. It may be given a monetary value
if prices can be determined for each of the possessions.
Wealth consists of those items of economic value that an individual owns, while income is an inflow of
items of economic value.

1.3 Political-legal Structure – Political Parties and Pressure Groups

Political-Legal Environment

This is a non-market factor but it can still greatly impact a business. The political-legal
environment is a combination of a lot of factors such as the current political party in power, the degree
of politicization of trade and industry, the efficiency of the current government, government policies,
current legal framework, public attitude towards the economy etc.

All these factors will shape the political-legal environment in which the firm has to operate and
compete. There are three main elements of a political-legal environment.

1. Government
You must have often heard that an election year is an extremely important factor for the
economy. This is why the type of government governing at the center and the state has a
huge impact on the businesses. The government decides all the fiscal policies, monetary
policies, and taxation modules as well.
 So the type of government in power has a huge impact on the economy and the firms that
operate and compete in the economy. Like for example, the current government has the Make
in India initiative which is good for the manufacturing sector.

2. Legal
A sound legal system is essential to the success of any business. So a country must have
a sound and functioning legal system with laws that equally protect both consumers and
manufacturers. There are various other matters like company law, royalties’ law, patent law,
intellectual property rights. International laws etc. that also have a great influence on the
business of firms. For example, the new GST laws are going to have a significant effect on
the businesses.

3. Political
Political stability in a country is essential for a stable economy and stock market. Also,
various political groups also hold a lot of influence on businesses and unions. So the political
environment of a country is a major factor in the success of a firm.

1.4 The Environment’s Influence on Organizational Values, Attitudes and Behavior

Business Environment
It is a marketing term and refers to factors and forces that affect a firm's ability to build and maintain
successful customer relationships. The business environment has been defined as "the totality of
physical and social factors that are taken directly into consideration in the decision-making behavior
of individuals in the organization”.

Three levels of the environment

1. Internal environment – the internal elements of the organization used to create,

communicate and deliver market offerings.

Internal environmental factors are no doubt a great influence on any business. How
businesses use the right employee mix utilizing the most of the right resources says a lot
about the internal environmental factors. However, we can take the following factors as
internal environmental factors:
 Stakeholder goals
 Employee Mix
 Organization Culture
 Resources
 Strategy
 Organization Behavior
 Mission, Vision and Objectives

2. External Micro environment – small forces external the company that affect its ability to
serve its customers.
 Microeconomics involves factors of resources availability and usage that impact individuals
and businesses. As a company operator, understanding the core microeconomic factors
affecting your business helps in planning and preparation, as well as long-term business
strategy development.

 Suppliers - suppliers can control the success of the business when they hold the
power. The supplier holds the power when they are the only or the largest supplier of
their goods; the buyer is not vital to the supplier’s business; the supplier’s product is a
core part of the buyer’s finished product and/or business.
 Employees - the availability of qualified, motivated employees for your business type
is vital to economic success. If you operate a highly technical business, for instance,
you might have to pay more in salary to attract a limited number of available,
specialized workers.
 Competition - those who sell same or similar products and services as your
organization are your market competition, and the way they sell needs to be taken into
account. How does their price and product differentiation impact you? How can you
leverage this to reap better results and get ahead of them?
 Customers - who the customers are and their reasons for buying the product will play
a large role in how you approach the marketing of your products and services to them.
 Investors - shareholders and investors may help fund your company at start-up or as
you look to grow. Without funds to build and expand, you likely can't operate a
business. You could look to creditors, but you have to repay loans with interest. By
taking on investors, you share the risks of operating and often gain support and
expertise. You do give up some control, though.
 General Public - your organization has a duty to satisfy the public. Any actions of your
company must be considered from the angle of the general public and how they are
affected. The public have the power to help you reach your goals; just as they can also
prevent you from achieving them.

3. External Macro environment – larger societal forces that affect the survival of the
organization.

Business is affected by different external macro-environment factors which collectively form

the business environment. These include:
 Economic - the economic factors of the business environment are all the variables
that impact how the consumer spends their money and the power of that purchase.
 Social - the socio-cultural environment looks at the demographic characteristics of the
current business environment. It looks at the values, customs and norms of the
environment of which a company or organization is placed.
 Legal - the legal environment includes the laws and regulations of a state. The laws
and regulations will influence the way in which an organization will market or sell the
product and services.
 Political - the entire political environment includes looking at government policies and
the risk and instability of current political factors.
  Technological - the technological environment is becoming a lot more important in
the modern day business environment. New technology produces new opportunities
for companies and organizations to create, sell and promote a product.
Culture: Your Environment for People at Work

 Culture is the environment that surrounds you at work all of the time.
 Culture is a powerful element that shapes your work enjoyment, your work relationships, and
your work processes.
 But, culture is something that you cannot actually see, except through its physical
manifestations in your workplace.
Culture is represented in a group’s:

 language
 decision making
 symbols
 stories and legends; and
 daily work practices
Central Concepts of Culture
1. Culture=Behavior
2. Culture is learned
3. Sub-cultures form through rewards
4. People shape the culture
5. Culture is negotiated
6. Culture is difficult to change
1.5 The Role of the Government and its Impact on Organizations

1. Permission to Form
- most businesses need to register with a state government to operate. Corporations need
a charter, and other forms of businesses, such as limited liability companies or
partnerships, need other forms of registration. The function of this registration is usually
to define the financial liability the owners of the company have. It limits their risk to the
amount they have invested in that particular organization. Registration also allows the
government to monitor companies to execute its other functions in the business world.

2. Contract Enforcement
- businesses contract with other businesses. These contracts may be complex, such as
mergers, or they may be as simple as a warranty on supplies purchased. The government
enforces these contracts. Companies bring one another to court just as individuals do. An
oral agreement can constitute a contract, but usually only a written agreement is provable.
If one party fails or refuses to meet its obligation under a contract, a company will turn to
the legal system for enforcement.
 3. Consumer Protection
- the government’s role in business includes protecting the consumer or customer. When a
vendor fails to honor the guarantee, the purchaser has recourse in the law. Likewise, when
a product causes harm to an individual, the courts may hold the vendor or manufacturer
responsible. Labeling is another requirement the government imposes on marketers.
Many foods, for example, must display nutritional content on the packaging. The U.S. has
been making advances in consumer rights for decades. However, the consumer
movement still needs considerable development to protect the public.
4. Employee Protection
- many state and federal agencies work to protect the rights of employees. The
Occupational Health and Safety Administration, for example, is an agency under the
Department of Labor. Its mission is to ensure a safe and healthful work environment. The
Equal Opportunity Commission protects employees from discrimination.
5. Environmental Protection
- when a marketing transaction impacts a third party--others besides the marketer and
purchaser--the effect is called an “externality.” The third party is often the environment.
Thus, it is the government's role to regulate industry and thereby protect the public from
environmental externalities. Whether the government is effective in this role is a matter of
much discussion. The Gulf oil spill of 2010 has been cited as evidence of lax oversight.
6. Taxation
- governments at all levels tax businesses, and the resulting revenue is an important part
of government budgets. Some revenue is taxed at the corporate level, then taxed as
personal income when distributed as dividends. This is in no way inappropriate, since it
balances the tax burden between the company and individual and allows the government
to tax more equitably.

7. Investor Protection
- government mandates that companies make financial information public, thereby
protecting the rights of investors and facilitating further investment. This is generally done
through filings with the Securities and Exchange Commission. Whether federal regulation
has been adequate is a matter of much debate.

The Effects of Government Policies on Businesses

1. Market Catalyst 4. Interest Rates
2. Political Stability 5. Regulations
3. Government Spending

1.6 The Influence of Political Parties and Pressure Groups on Government Policies

Political Parties

 They are voluntary organizations made up of members with broadly similar views that seek to
form Government through securing the election of its candidates.
Pressure Groups

 They are organizations whose members all share common interests and goals, and they wish
to influence Government to attain these goals.

Types of Pressure Groups

Sectoral Pressure Group
• Relating to the various economic sectors of society to a particular economic section.
• Refers to group which work to protect and advance the interest of a specific social groups in a
certain society.
Religious/ Attitude Pressure Groups
• These are the fastest growing group in the Philippines with regards to putting pressure on the
government.
• They are considered as one of the powerful group.

How do political parties influence policy formulation?

• Try to be elected
• Work alongside pressure groups
• Create policy when in power
• Boycott political engagements
How do pressure groups influence policy formulation?
• Lobby key policy makers • Distribute Leaflets
• Fund parties • Media
• Boycott firms • Demonstrating
• Civil disobedience

1.7 Case Study: A State Policy regulating the Behavior of Businesses

How Does the Law Affect Businesses?

Change in business laws means changes in the way businesses operate. Taxation policy
is one the government policies that affect businesses directly because taxation is based on
the amount of money earned by all businesses. For example, increase in corporation taxes
which focus on the businesses profits has an effect similar to increase in costs. VAT (value
added tax) is also a tax policy that will affect the bottom line, although in most governments
VAT, is a cost on the consumer and not the business owner.
• Business laws affect employer to employee relationships and vice-versa. For instance, it
is mandatory for employers to follow government regulations regarding the way they treat
their employees and their hiring mechanism.
• When it comes to international trade, business laws are imposed in regards to
international trade tariffs. Such rules and regulations are strict on the kind of products
going in and out internationally. The international trade rules and regulations also enforce
guidelines on the parties that should take part in international trade.
• Lastly, governments impose business rules and regulations to ensure that all businesses
are run in line with codes of ethics, good health and safety of the consumers.

Employment laws

• These laws pertain to minimum wages, benefits, safety and health compliance
• SSS, other pensions
• Changes in minimum wage law
• Occupational safety and health standards amended by DOLE
• The objective of this issuance is to protect every workingman against the dangers
of injury, sickness or death through safe and healthful working conditions, thereby
assuring the conservation of valuable manpower resources and the prevention of
loss or damage to lives and properties, consistent with national development goals
and with the State’s commitment for the total development of every worker as a
complete human being.

Cosmetics Excise Tax

All cosmetic surgeries, aesthetic procedures, and body enhancements intended to improve,
alter, or enhance a person's appearance are now subject to a tax of 5%.
Tobacco Excise Tax
The excise tax on cigarettes aims to reduce the amount of smokers and respiratory and
cardiovascular diseases one can catch from the act, as well as generate additional revenue
for health oriented programs and services.
From its original excise tax of ₱30 in 2017, the tax on tobacco increased to ₱32.50 on January
1, 2018, ₱35 on July 1, 2018, will increase to ₱37.50 on January 1, 2019, and ₱40 on January
1, 2020. Afterwards, it will increase annually by 4% from January 1, 2024.
Import of Chinese workers
A total of 3.12 million Chinese citizens entered the Philippines from January 2016 to May
2018, according to the Bureau of Immigration. Within these figures is a number of Chinese
workers, which is still unknown.