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Chapter 4
ter 7
ORGANIZING
TO THE FU]I(
4.1 Fundamentals of Organizing,44
7.1 Marketing Managerne
O Differentiation and lntegration, 44
7.2 Operations Managern
4.2 Organizational Structures,45
7.3 Human Resources Jtrt
0 Vertical Structure, 45
7-4 Financial Managemen
O Horizontal Structure, 46 ffil
O The Financial
O The Functional Organization, 46
7.5 Technology Managan
O The Divisional Organization, 46
O
Q
The Matrix Organization, 47
The Network Organization, 48
Cbapter I
SPECIAL TOPICS IN MANAGE
4.3 Forms of Business Organizations, 48
8.1 Starting a Business, {
4.4 A Flexible Organization: Caselet, 50
O The Family Busine
Supplement to Chapter 4: Staffing, 51
O Franchising,9l
Chapter 5 O Startup,9S
LEADING
O Buyout,93
5.1 Leading and Managing, 62
O Forms of Busines
8.2 lnvesting in the Philig
5.2 Approaches to Leadership, 62
O Maslow's Hierarchy of Needs, 65 O Role of Business i
O Alderfer's ERG Theory, 66

O Board of lnvestnr
O McClelland's Acquired Needs Theory, 67 0 The Philippine Eo
5.3 The Leadership Grid: Caselet, 68
O Economic Zones,
8.3 lnternational Manage
Chapter 6
Exercises, 101
CONTROLLING
References,lSl
6.1 Managerial Control, 72
O Types of Control, 73
O Oualities of Effective ControlSystems, 73
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
TO THE FUNCNONAL AREAS OF MANAGEMENT
Heting Management, 82
@rations Management, 83
ttrnan Resources Management, 84
linncial Management, 85
O The Financial Officers in the Organization, 85
!E Bcfrnology Management, 87
I
r,P!CS IN MANAGEMENT
tr Starting a Business, 90
$ The Family Business, 90
O Franchising, 91
O Startup,93
O Buyout,93
O Forms of Business and Legal Requirements, 94
8.rl lnvesting in the Philippines, 95
O Role of Business in the Economy, 97
O Board of lnvestments (BOl), 97
O The Philippine Economic Zone Authority (PEZ.A),98
O Economic Zones, 98
8.3 International Management, 99
hrcbes, 101
ffirences, 131
Fundament
of ffinageme
Competitive Advantage
ffi;*";
students are expected to:
1. understand and
;;"
(Cost, lnnovation, Ouality, Service,
and Speed)
Management Functions
(Planning, Leading, Organizing,
: aiferentiate the
and Controlling)
, fundamentals of business
organizations and Management Levels
,unagement and
, (Top-Middle-Frontline)
: 2. discuss and integrate
the planning, organizing, .. Management Skills
: staffing, directing, and (Technical, Decisional, lnterpersonal)
controlling functions
of management to J1
V
current issues.
MANAGEMENT
T
1.1 Managemen#,BEfiiiflti ! $iqtl* ;;:i';,:i!,1l:",

,,; ,hre@flffiic.ordmr
Business environments are battlefields, and business organizations ry ilitE m gFutnrmmn
are engaged in combat. Familiar business terms include globalization,

*-,rrmWtilt
rgl|lrcr,rlt.ll6 XtDt
competitive advantage, and mobilization of resources. There is no doubt on
the veracity of competition or'engagement' in a business environment. one
qtrm*s, [M r
only needs to walk inside a mall, open social networking sites, or simply surf WfiiffittililqJgn Co6*oSG
the Net to prove the business atmosphere skirmishes. $resr:nscqr
lh Y#iM trEli tflT rur'urmilfrq
Business participants or the warring opponents have definite 'rules of
rffinrltmmg aJr :r trrE 3Jmu! |
engagement,' or the professed battlefields where competition for customers

occur. Bateman and Snell (2008) enumerate cost competitiveness, mnrnps,rcm i:r6 i:re m eh
innovation, quality, speed, and service as competitive advantage areas. S@amffim*tmhu
lffihmn seeuE i engrps' ilidrf
Comparative Advantage: Rules of Engagement ffi #*a1@Otnenms. CLm
Ouality standards are altered constantly, because human desires adjust do gul'lrf rirEe" so ttrlggamlffi
with new and modern technologies. ln truth, innovation is a particular strategy @r cur lB$err @
for all business organizations. Many groundbreaking innovations focus on

fr,{iins 20@8 n rs d
speed, without compromising quality. As time cannot be recycled or reused,
mr.eilm€s iol' gr-ea ctr.w,r
speed is a known requirement for most people. Enterprises that utilize new
cEmTEEfles rn tlt Ll'lmd $r
technologies to address the quality and speed requirements of its target scil]'lS,cuFd Of tne ccEE-mfilllw
clients cannot, however, ignore the cost and service needs of its clientele. imrrnsess or-ncale jl-he .'mu
Cost is a primary concern for consumers, so managers must never fail n mara,br fi ncLcies tqal
to address this to be competitive. The balance to gain profit and remain i/16'ry orgPrrua:6d'1s'lilG
affordable to clients is compulsory for business organizations.
m*ErtSpe evaji.uator: anc
Bateman and Snell (2008) define innovation as the introduction of new pifla,"s, druided rnto tnree s.{u
products and services. with new technologies and an active social media :f co{Jntnes in the,r Giocg, &l
via cyberspace, this competitive advantage aspect is growing at a dizzying
The Wodd Ecomonc Fmru
pace. Managers should keep abreast of the latest technologies as innovation
!-!lEC) and the tiraEer"mtl
is expected to intensify with globalization.
:o,.rntry's Perfonnanoe }e }{{
Quality is defined as the ability of a product or service to meet customer 3'derse countries +or 3e GiEfu
needs (Heizer, 2008). Because quality is an aspect that serves clientele The World Barurtrffi Cq
desires, it must be managed well.
Karte profite, with besc ffiice
ln the Philippines, the Bureau of Product Standards of the Department 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 Due to globalmator ad I
protection is also provided through the Food and Drug Administration under
have establ ished cCI,ooe,rdTc
the Department of Health. certificates of Product Registration need to private and public s€€1i3rE f,'T lll
be issued for manufacturing companies before these go to the consumer
spurred dynamic cha'qes m'
market or are produced in bommercial volumes.
often launching fresn $ale '!
engagementJ
scnlrce standards, such as
r[rE by tre rocal governmentsanitary permits for food service personner
units and the Departr"r, or Hearth,
ffi neparrnent of rransportation and communications and
0u[lmil*rti€tion personnel are established for transport and
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
[fl,rrc lrtrat they want when they need to
they need it] Most of us have our own
experience
out of rong queues in service estabrishments
otr mnrm'ring
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.
collins (2oog), in his book Good to Great,
reiterates most of these
wldfitfo," for great companies surveyed from pubricry
risteo
' rpanies in the United States. To a great *ir*, Fortune b00
I
cornpound of thercost-innovation-quarity-sJrri""-.p"lJ reriabirity_a
ltu*dess principre. The research aspects_is a
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
spurred dynamic changes in the have
ii"tar of management and organization,
often launching fresh ways to 'mobirize forcesi for innovative ,rures of
engagementJ
Chapter 1: Fundamentals of Management

-
The 'rules of engagement' and battlefields require soldiers and Mdbtu

commanding officers. The language of business is, in fact, derived from ffifi,{orm
military terms. Strategy, action plan, strengths, attack, and weakne.sses are
some common terms. McNeilly (1996), in his book reviewing sun Tzu and
ffiquronrryfum
the Art of Busrness, reiterates that marketing gurus philip Kotler, Al Ries,
ffibacf,red-'
and Jack Trout have articles and books citing the applicability of military
lbmrffiimrblfi. dh
strategy to business. our present challenges on climate and environmental fumBtrtsttEffirntsilrl
changes also utilize the same military business terms to'mobilize resources'
Grr[ffi-lG
for'greening' enterprises. trnmmnr trgtffryU
t ffir:rrrmn a sarrmPhd
fu frrrcrorrs cn nnq
srynlrrlrilScdb P@rms$ffi
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 & GA,\]'T char's a,e r!
(land, sea, and air), or food service companies that they have \e ran -ia1 5e ctlil
-f,^:€ 3a- :er-g@0
experienced or have knowledge of.
F-*uotts au.lc A,mN
2. Each group evaluates their assigned company according to i srlo,€ GAX{fi cffi
their quality, innovation, speed, cost, and service aspects. ans$r'ers:
3. Each aspect is rated from 1-5, with b being the highest rating, nccrrt frtetitom OryE
and 1 as the lowest rating. agtil"ttes iri s€OLrerEEil
4. The groups report on their assigned companies. The reasons Ban-Do-Cheon-Acl m
for the ratings are explained, based on their own experiences also caltreo as "ne ffnP
or knowledge. rs as follonrs:
5. The meaning of the competitive advantage aspects is reiterated + Plan

to reinforce students' understanding thereof.
' Seiec rre old
oPFlotJr-rrq.:
Managers: Commanding Off icers C Descrpe rec

Every enterprise, therefore, needs its managers who function as 0 Descr,ise a{[t&
commanding officers in the business war. Bateman and Snell (2009) detail on the'co( cr
the functions and roles of managers as follows:
0 Devenoc an d
1. Planning, or delivering strategic value;
0 Do or rlnierilE
2. Organizing, or building a dynamic organization;
0 cretft
Cheot
3. Leading, or mobilizing people; and
+ Reflect and act (r
4. Controlling, or learning and changing
organization and Management: Concepts, Caselets, and Exercises
:, r i:t:! :r:,!:rti::t:,!lr
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 Describe the current situation surrounding the opportunity;
0 Describe all the probable causes of the problem and agree
on the root cause/s;
0 Develop an effective workable solution;

0 Do or implement the solution; and
0 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
-esccfises to tfie cgm
PDCA Cycle Ir-,t
ActivitY Network Diagram IL *.,tnt of custonrer fo
Step 1 - ldentifY the tasks or LO.ftY needs in cost#
activities of a Project, including Ontl'TOlt!, and JIT are often a
the time required to comP[ete ffin bsues that inhiate the
o
the task, and write these in 3" X

novel Planning and otg
leadershiP stYles zd e
5" cards.
SteP 2 - Put all the task norv haPPens with nsl
cards in order and link these
l- Gaismatic leadershiVlle
with lines and arrows to show
Luther King, and his'drer
the sequence of activities'
are dominant, self-coofider
SteP 3 - RePeat the Process of their beliefs' TheY are
d
until the starting task is linked to enthusiasm in their {ollffi
the last activitY. teadaCi
L Transformational
(Source:CDS, 2OOO)
or charismatic leader*rt
giving their foll6wers'nrd
stimulating qualities'
organizingmethodsandstructureshavechangeddramaticallyinrecent
years, in response to shifts in global
economies' Some terms that are now The senior management
or@
senior executives in their organizing frul
part of the language o{ managlrs and rr* draw leadershiP models
function are: The same challenges and
il
of positions or jobs; r
1. Downsizing, or the planned removal control function of managemer*
2. Rightsizing,means the efforts at achieving

an appropriate size for ilnotation for the tdrm 'conr'd'
arrticipated. Senior executives
ls
effective enterPrise Performance ; helP o*
for control sYstems that
S.CustomerRelationsManagement(CRM)'afunctionorenterprise as follows:
unittaskedtofocusoninteractiverelationshipswithcustomers;
1' Education and commti
4,Reengineering,includeseffortstorevolutionizeorganizational of or there is inaccuraE
needs;
systems and [r.o"""t"" to satisfy customer ParticiPation and id
2.
5.TotalaualityManagemenf(ToM),anintegrativeapproachto information for the chal
satisfaction
the realization of customer
managemeni ,r,u, resist the same;
"rpports and techniques that result in
through an extensive variety of tools atP
and 3. Facilitation and
high lualitY $oods and services;
issues;
and apparatus to
6. ln Irme (JlT), which calls forpubassemblies
ManiPulation and @
Just
to the next stage in the 4.
be produced in very small lots ""dd"liu"r"d wl
inexpensive solution
process exactly at the time needed'
5. Explicit and imPlicita.
initiators at risk, but s
t
Caselets' and Exercises

0rganization and Management: Concepts'
Tfflfirm' af@{,ementioned terms are actually organization concepts 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.
(1) charisma,
2. Transformational leadershrp, which is characterized by
or charismatic leadership traits, (2) aptitudes or capabilities of
giving their foll6wers individualized attention, and (3) intellectually
I stimulating qualities.
t
I 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
anticipated. Senior executives have diverse approaches to elicit cooperation
for control systems that help overcome or manage its negative implications
as follows:
1. Education and communication, commonly used where there is lack

of or there is inaccurate information;
D 2. Participation and involvement, where initiators face a lack of
n information for the change, and other participants have the power to
n resist the same;
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'

The planning, organizing, leading, and controlling (POLC) functions of ffiP,mmimmrylui
management systematically address the comparative advantage traits of
enterprises.
fi' lhlre rlciun*tluflpal
Although some words differ, Andrews (2008) offers a flowchart for the
t" &mfl iww *rfi@*
management functions, shown in figure 1.1 ,
& qnmllrsry fiE Mr'rm,l
f,lll'lItilmtr,,
e fumagem
il, ,olgille.srE SureUCm
tur
t- ACttgf irc S$Smtl
tilr+r :::nrlr'\.or8 t
Change in procedures
qrrcu, -lBrrrr:illr:r:tgs ililU
ffim*ueU fslend re filrsl
ef nmaregererfl *r''eg cfl
Figure 1.1 . Functions of management ggt-i-:;f.t :- :Ea-!ffio
(Source: Andrews, 2008) mrr[]B$E -[3Fr 3]rlllLlllll*rm *m I
umflf'x: -r{:clJllleE" man]lt uurff
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. Establish high performance standards.
2. lnstitutionalize a set of norms and values to support cooperation and
trust.
3. Create the corporate purpose and ambition.

{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
between short'term purpose and
& lr#mnage the tension
ff-rc't on'
,Flrm,nirt e Managers:
the business'
r growth opportunities for
C,'eate and pursue new
I A::act and develoP resources'

within the unit'
i l"[anage continuous improvement
advances have
\ru:rrt technologies and communication technology
but t!"^::li skills needed
'flattened' the managem"nt py"mid' for effective
uifrhilI'raY
rEi'agement levels still dictate a steady progression
and adicles
y"""ge'"ni booll'
rulm
mwr:r*anc" ot o'g='ii"ii"""r goul:: skills' inclusive of
@nff*:se many solutitns
for,the o"*,"^T;;ilt
'uq'it"d evaluation'
team building exercises' and performance
?lsrrrrg modules,
levels
Figure 1.2. Management
(Source: Bateman and Snell' 2008)
of Management
Chapter 1: Fundamentals
mtd gcrmnr-rr-nr:me gM
1. The students are directed to plan
a community outreach :a.Eilqf@e;
'il'iltslilm$gl.3 :rr '
fr ruunnnrmrwu fe sr;lll sffie" lNsil
2' A reader or moderator is erected,

and the students discuss the :s *::e 3:rtgsB :
event, using an action plan template, 3q:Enr=r€r8t lffi {
as follows:
+ What-list of activities for activity J:&S firG m
lDrfiIffi1l:-&r*,:ra
nrqlF *rrn-EL negm :# nnrm
+ When-schedule or deadline for completion
' '
of activity ffiWurrree :ir{3 'i Yram *ilirm
+ where-rocation for activity and/or
supprier for activity a:i: :r:fi:|__lE*Tm
+ Who-person/s in charge or group trllE l$tr:ir=r ;rt,*rr j 'r.,ll,.t*m0m
assigned for activity pmmrrmw"ro= 3cr:ss :re a.sruG r
+ How-required resources for the
activity, e.g.,vehicle,
chairs
+ How much-estimated budget for
activity i,-er :ne r-serrre illd Utl
3' The experience of the pranning
activity is discussed to reinforce AtsM tax- k e efffird U
student understanding of ,rn"g"r"nt ;Oi.lr-Ser€,.'E' 3E ASry
functions.
4. The what-when-where'who-how-how
much temprate is rerated A ow rer :s Am{F{
to the planning, organizing, leading, Choose'r-h,e,r Bes iln
and controlling functions.
The'who'answers are utirized for p,alrsJ. a,rc Tract ffig
management leverand skirs
discussions. suggestec cs-nsmfr
Deep and Sussman^(2000) Ilecision Tree

suggest solutions for management
challenges in their book ACT
on rtl through the ACT acronym:
Analyze your situation.
Choose your best strategy.

o
':f-r it
Track your choice. A
\-r
The bookdetails 'sjtr
personareff ectiveneS::ffij:n:;::,'J;i,*:;:nTff :,j:il1.J:n::i Y
1A
and accountability for management
students and ur"in*. practitioners -t)
alike' lt is usefur
b(
to note thai the
aptitudes ier*aer
areas conform to the basic management deveropment
qkiils"no "rgg".teJ
risted by Bateman and
(2008)-technicar, conceptuar, sneil
,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
benefit of an organization and the
iis ,"ri"r" are conceptuar and
skills' lnterpersonar skilrs, or peopre decisionar
aurin"a as pre Lrent to read,
"t,tt",
E o'ganization and Management:
concepts, caserets, and Exercises
I
,mhro mm conrmunicate effectively with others, are often
identified with
,mithd flrlwla€Ers or candidates for executive positions'
ll|f* the skill sets, levels, and functions allow for a definition
ilulmllrrary
,dlilmqwrent as 'the process of working with people and resources to
,mlp*-h o'ganizational goals effectively and efficiently'" Effectiveness
goals are
1fiilrilililr pqancational goals are achieved, while efficiency means
people'
dffimC ndfi minimalwaste of money, time, materials' and
ffiUur€s 1.1 and 1.2 show what management is-the pyramid allows for
,m*r"no* and bottom-to-top interaction, and the left-to-right, right-to
lffi,ilrildc1c|icalflowoffunctionshelpvisualizeaneffectiveandefficient
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
*
Management Functions and Action plans Hnrn
ffi ACf omnm61 fu
Your famiry business, a fast-food franchise mCmn@.
in a ouezon city ruom6 tne 1ffiM
mall, is creating another outret in a new
mail in caroocan city. Using
the management functions_planning, org"nirin*--["0,"n, ihfficMU
and 'lfi|,
controlling-create an action pran to imprement
*," u,Lin"". expansion, Ulffiinm sno-nC !e ffim',
using a simplified case method templaie. r fucrm 3m"
Probrem statement: To recommend
an action pran for the caroocan
A f,ttpfur,rrr*,y lruomni
City food service outlet thsmmrnrUffi-'il
Case Facts: The_ Caloocan City outlet e i re rar-i".i 4..ffi11;8
has the same manpower El-t:L.Jtr re lescrJ!firnE
requirement as the franchise in
olezon city: one store supervisor &r{]-rg ffiTi cmnffl
(college graduate with two-year
experience); two store assistants
(college graduates with one-year
experience); and three fronfline staff
* *r*Fre n'irlf :e r dtnrq;
(high school graduates with E n3,* n'il fe mmf
one-year experience).
The manpower training, materiars, and :r-e- fff?u :rfililril{l
machinery requirements for
the expansion wi, be provided by the franchisor. t -,3r,u *r-rff rur.it #IIGq
Th" ,on"y for the
expansion is estimated at five miilion pesos (ps,ooo,o0ol,
wiil be
--€ r,c€,se 3aie5 gle*
provided by the famiry. The managers
of the expansion wiil be "ro r*rm: :a: $e araryze rllrtr
from famiry
members, who wi, provide and direct Uffin" F€,. ,gmlry|
the day-to-day operations and :6(:l:r-a' C)O,
service requirements of the business (finance,
rogistics,
**ceg
:re ia- i a-snr**m dtt
among others). """ornffi f{:';.ee-'ruhen' DOr alnsrsr' ltr
Action Plan Recommendation: T'r:r::s. and be corroMnn
- -l : l':
-re'trac*<'Dore€ a= am
l
,Whai,,
';-
-:e 'track-what' ocu ansru
-:
*as cirosen. The tz,er-fl'11h,m
Plan
=arted
in NovemDer' 2C r 5-,
Action Plan Reco--'eFffiB
Organize
Functlon I H
:'-o:-"'-"1
Lead Analyze
Control
0rganization and Management: Concepts,

Caselets, and Exercises
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 caloocan city, when should
tf the family business is expanded to
the expansion start? when should the expansion be completed?
3 H the family business is expanded to caloocan city, where
should the resources (materials, manpower, money, machinery,
among others) come from?
4. \l/ho will be in charge of the expansion?
5. How will the expansion affect the family business resources
(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:

Supplement to tff.gffiffiniqffitkiry l]rrffii$ffi n'
GEf'r]ircf,E
a
The case method template, an academic toor for business courses, is Er,SitE
frIIffitJrt ']Er
also used to teach the decision-making stages, outlined by Heizer (2oog), d mndterrarcar ss
in figure 1.3. mu.oinE :r,'e ffi
&t':stri cor'id.. rr
ar.}c oper&
EdrErnalc ciqre
q'cirse ftac'ts" ofHt i
itm tt€€ erercrses trq
rrd rnana,g€fiterf
pereqlb:rtes ior tE
ffi"
n!.etgs
and Bu
I,*eteer. Jay
il,{anagement. $th er
Eourcation South Asb
G(
Sdrrroeder, Roger
(hntemporarY Cotu-
Singapore: McGraw F
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.

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.

:.
Theffi
and lts'Envlroffien
Macro Environment
ffi"*,*"r*"'
students are exPected to: i
(Political, Economic, Sociological'
Technical)
ComPetitive Environment
1. be aware and discuss the (Porter's Five Forces)
fundamentals of the external
o{ SWOT
and internal environments
business organizations and
(Strengths, Weaknesses'
2. be able to communicate OPPortunities, Threats)
and utilize environmental
?l1?lYsis models in relation
J-t
: V
to Present issues'
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 cor
dynamic environments-external and internal. The external
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&
Political, Governmental, and Legal *{==dtf ffi
+ changes in tax laws
rgpbrdddrrltn
+ environmental protection laws
lilrlgEsinl#d#
+ fiscal and monetary policies
mg/srserdn.ryt
+ government regulations or deregulations
'} heryedrqnE ..$
+ import.export regulations
* hstybs ard hiryrfp
+ local and national elections
r} s.idlt
ntnber of t*1h
+ oil, currency, and labor markets
"0 ilrr$er of ruurgl rfr
+ political conditions in foreign countries
+ rr;-agtarnrlxtErdl
+ size of government budgets
+ social prograrns
+ specialtariffs
+ social resporsnnY
Economic
Tecfinological and Teclrizl .
+ shift to service economy

+ lntemet
+ demand shift for different product and service categories
0 provides decrslm d
+ income differences by region and consumer group
O sPurs P:'odrctiuirYd
+ level of disposable income
0 alters Product h c1ll
+ availability of credit
+ technological adrrrm
+ propensity of people to spend
+ new and imProved Ptofi
+ interest, inflation, and tax rates "' + shortage of tectn*:d sI
+ monetary and fiscal policies
A variation on the PEST u
+ GDP/GDRP trend Economic, Social or Socblogi{
+ consumption patterns in the environment.
E0rganizationandManagement:concepts,Caselets,andExercises
.*##,*iili
* price fluctuations
,fr, worker productivity levels
{i unemployment trends
It 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 provides decision and support systems
0 spurs productivity and living standards

0 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;
+ climate change; bilffi-
+ laws regulating environment pollution;
ffinrr
ffit
+ waste management;
+ attitudes toward ,green,or ecological products; and hfl
+ attitudes toward and support for renewable energy. lrrild tF*
Globalization and technological advancements have raised
the concem
for the aforementioned factors in the natural environment.
other issues affecting businesses and industries consist
Simultaneously,
of the following:
l;m,bpddt
Legalfactors include:
UrgrariEtH
E@;
+ anti-trust law; fsz-rCL&-
+ discrimination law; rglrm b nrryff
+ copyright, patents, intellectual property law;
breftq and enry*pr
* data protection;
hreausad
+ health and safety law; aeUoprnern pbru;
+ consumer protection and e-commerce; and { Oeparut of R&
+ employment law
hreaus and agartiql
-
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 employee hea}lh csfr
with other countries and locations. lt is helpful, especially operate.
for starting
enterprises, to utirize the basic erements-institutions,
environment, and health and primary education in
infrastructure, macro Tkre Commission m
their chosen locations. Data from the local government
their attempts to profile d Developmen! Arrffiy
units and their Foryide higher
respective websites, if available, serve as guides
for the macro environment chrelopment.
sketch.
The annual reports d ic
As organizations progress in their respective industries,
data for the dorementioned list. Enafy. tt$
wEFoRUM efficiency enhancer rist-h1$her education and training, goods the Office of the Presirjert
market efficiency, rabor market efficienty, financiar
technology readiness, and market size-are usually
market deveropment, p*ans for the country. [lhcm - r
available from industry gross national product inffdir r
suppliers, i.e., the banking sector, machinery, equipment
and human .".orr"" mdicators-are reported ard rs-
suppliers, and the customer population.
These data are essentid h
organization and Management: Concepts, Caselets,
enterprises.
and Exercises
ilffitffimnnr fur the business sophistication and innovation elements is
prrrate sector alliances.
lllffilnrrrn,umhlu @ 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.
lflflffrrrffim Fbfiirppines, the statistics essential to the CDS frameworks may
firrmr selected departments of the national government, such as
furtment of Trade and lndustry (DTl), and its bureaus and

qrncies, foi product and service standards, consumer protection
qlruddines, incentive programs, export-import statistics, and other
ffidata;
oJ Labor and Employment (DOLE), and its bureaus and
illtl
L &re4]mglt
agencies, for @kills development, wage and
banefits, and employee-employer rights ;
of lnterior and Local Government (DILG), and its

&rreaus and agencies, for provincial, and local governmenl
---
denrelopment plans;
of Public Works and Highways and 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
m,E De d their bureaus anA P6!EG,
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 prdrlmdlt
evaluation of business situations. The micro environment or the rr
environment defined in the Porter model is composed of these five
competitors, new entrants, suppliers, buyers, and substitutes, as W
in figure 2.1. The Porter model shows dynamic interaction between mr[llarr1ilril3fu,"finrH
among the forces, as illustrated by the arrows. New entrants, subst mu'iEt!s
and complements enter rival firms in an existing industry, as do Aqes*-'rc mtt
and customers. The cyclical arrows in the center indicate uni prr!'tr.G agrronn'il
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
ffumrnrmolr tr:rEfrtc1b
fi e so€crftr rmlq/t
population of suppliers, customers, rival firms, new entrants, and substituter
is shifting.
iE'Brcrlre r Cl;
r O-ezor Ck! ulit
(Source:CDS, 2000) 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
Ln
rmtEe otrtiets rn the sad E

T\e other data r M
ril e drfferent tor the tmr
Cfir ard Caioocan Gfiy tilrlt
rpe iamity food fragc" I
ri :ne Ouezon Crty rnd E
O-ezon CrtY' so gatt]4E r
ffi t
Figure 2.1. Michael Porter's. five forces
(Source: Porter, 2002)

re drctated bY scheoles r
Caoocan CitY mall s rot d
ard waste disPosal offi rm
reakness for the enterpr-
Substitutes for both il:
nclude cheaPer food and I
The five forces in the Porter model are defined as follows: for food delivery serv€es" il
'1. New entranfrestablishments that 'enter' a given industry available and retacili
to 'eadily
compete with existing firms

p- tg Rl,irat frms+xisting establishments in a given industry that compete
,rnnfl sa.h other; also called industry participants
m Substrtutes-establishments with faster, more accessible and/or

for the
c.leaper products and services that may serve as alternatives
smducts and services of a given industry
n fiorcer
E shorilr 4" Sqpplreeestablishments that supply a given industry's
and other
reen ard rcquirements for machinery, manpower, materials, money'
resources
tstituteq
supplkxr IBuyers-thepopulation,whetherindustrialorconsumer'that
brrupted purchases a given industry's products and services
horizontd
Ittat theil gathered for a given
hnformation for the five forces in the Porter model is
tatic-the the caselet
humron in a specific industry sector or subsector. For example,
6stitutes
th€ food franchise in chapter 1 will require data for the food
service
0[Irr
fFrrbr in ouezon city, where the outlet is located. Another set of data,
DS,2000) & for the food service sector in the expansion site, caloocan city, will be
'
nuryired to draw the competitive environments for both sites'
For example, the buyer population in the Ouezon City mall
and the
the said malls' The
Ga,oocan city mall are taken from the 'foot traffic' in
mwail firms in the Quezon city and caloocan
city malls consist of other food
mrvice outlets in the said locations'
substitutes
The other data on Porter's forces-suppliers, entrants, and
rdfrl be different for the two malls, in two cities' Local
ordinances in ouezon
c+ty and caloocan city may alter the opportunities and
strengths for the
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
outlet plans in the
are dictated by schedules and penalties. lf the expansion
the garbage
caloocan city mall is not subject to caloocan city ordinance,
and waste disposal plans must be included for the
new outlet-effectively, a
weakness for the enterPrise.
substitutes for both the ouezon city and caloocan city

outlets may
phone orders
lbr,2002) include cheaper food and snacks from lnternet websites or
food carts, which offer
for food delivery services, ambr.flant vendors, and/or
readily available and relatively inexpensive food fare'
*rstry to
It is important to note that the five forces in the porter model hrdilqf
population for the buyer population, for instance, is not an inactive dir,.tr[
rffi;hhfi
The 'foot traffic,' or the population of potential consumers visiting the gi
location, is not a single statistic. The population is perhaps higher during rmqn*
weekends or on holidays.
The same is true for the other data-suppliers, entrants, substitutes,
rival firms. There is a continuous flow of incoming suppliers and/or outgoi ld.drfl
rivals. For the completion of the Porter model records, the vibrant nature of rr#-c
the competitive environment must be considered.
,Li*rl
The data derived from the PEST and Porter model are utilized to identify
the strengths, weaknesses, opportunities, and threats (SWOT) of a given
qrf
enterprise.
Gfum
r*nt !fuilff
SW0T Analysis cagrhry
strengths and weaknesses refer to the presence or absence of internal ,+
resources in a given enterprise. lnternal resources may include management, figuiG!f

manpower, money, materials, and machinery, including technology. Examples
of enterprise strengths are skilled manpower, positive returns, and cutting-
edge equipment, while weaknesses may be the lack of reiiable suppliers of
materials, and limited production capacity. t. Ctroearegr#fi
The external and competitive environments give rise to opportunities
drsa.sra' -I
the studenB rcttf,
and fhreats for the enterprise. The PEST variables may be employed as a tF
checklist for opportunities and threats from the macro environment that a firm 2. Elir*t srengilhsd;l
has little or no control of. For example, the food service industries may see firm from fte stfl
the changes in tax laws, e.g., the imposition of value-added tax as a threat, remprrre. Repeil
while the propensity to spend and consumption patterns may be viewed sruoent
-
petcefturf
as an opportunity. The manufacturing industries may see technological chosen enbrtrb :
advancements and developments as oppartunities and interest, inflation, $
and tax rates as threats.
3. Allow thesfi.ffibl
4. Reiterate *te df
A given enterprise has limited control of the competitive environment
opportunities; rd {
detailed in the Porter model. The horizontal variables-suppliers, rival firms,
completed rrdE-
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.
and Management: Concepts, Caselets, and Exercises

"0rganization
18,!Eicentificationofstrengths,weaknesses,opportgnities,andthreatsA
strategies'
rrn oe*ed SWOT analysis,
and help management formulate
as a strategy formulation
*iitr= $ /OT matril,'sf,owi in figure 2.2,isused
ffinmgme by business organizations'
lmposition of
d Wnesence Lack of reliable lncrease tn
value'added tax
consumPtion
ry dXded suppliers
p[ rllt-lfirl@Wef
patterns
lncreasing Change in tasies
ilmrfrable Limited
disposable and preferences
E ffirwrctal managerial
income
tn rmstxJrces expertise
lncrease tn Decreasing
lilgrand modern Limited service disposable
capabilitY population
eq.rPment income
nal samPle
Figure 2.2' SWOT matrix
Ltt
les
ng- !ws*
sof To achieve interactive
1. Choose a reputable firm or organizatio''n' that
discussion, f"";;;;l "r'uini' mobile phone distributor
hes il;;;;is ' are familiar with maY be used'
isa about the chosen
2. Elicit strengths and'reaknesses statements
itl''r^JGWOf matrix
firm
il f., ihe students, and list these
resources' and the
see
ieat,
H#;: i;p;; *'"'lo"'"
on
'" lY:il,
moneyt or resources of the
student perception "npo*er'
red
chosen enterPrise'
tcal the matrix uPon completion'
lbn, 3. Allow the students to analyze
strengths, weaknesses'
Reiterate the definitions of
with each statement in the
4.
:
iirent opportunities, and threats

Lms, comPleted matrix'
I
and
hient
Lms,
lame
rc for
and lts EnYironment

Chapter 2: The Organization
Alternative Discussion points and Assignments
't. Get the students to do a swor anarysis of their LTI is considering a er
schoor and/or
a chosen, student organization. instead. The human res(rrc
the service technicians ns
2. Get the students to cut articres on corporations from andl or absences,
the
business pages of widery-circurated magazines
and let them situations. ""p""it
identify opportu n ities and threats for g iven- ind ustries.
The Parafraque ofEceu
3. obtain recent foreign exchange indicators for Asian office. However, the Sadan
countries
and discuss the effect of these on famiries of period. The Santa Rosa
Singaporean dollar, the Japanese yen, and/or
oFWs. The il
the European personnel, including a uranl
euro exchange rate against thd philippine peso
may increase or
decrease the purchasing power of said families. Since the Sta. Rosa *
the LTI Board assurnes tlilt
4. Plan a'walk-through' in a mail or business
district with students, than the Parafraque ofrce r
and discuss strengths and weaknesses of food
service outlets suppliers will need to be krr
in the chosen malr or business districts, based
on the observed
'foot traffic.' Create a SWOT matift
Sdedlt
Political Governance
The main office of Lucky Terecompany, rncorporated
(LTr) is rocated + capital or infrastructr
in Parafraque city, seven to ten kirometers from arealtotal budge* a
the Makati business
district, where their contractor,.pLTC, is located.
Economic Developmerl
PLTC is one of the biggest terecommunications
Philippines. LTI was awarded the fibre optic
companies in the + percentage of pog*
connections for the pLTC persons with colfeged
customers in santa Rosa, Laguna, for a three-year
period. The fiber
optic contract will require LTlto move to Santa
Rosa.
'
+ business permit md t
LTI has fifteen fibre optic technicians, five service vehicres,
and fibre
+ availabiiity of pubtb !e
optic instruments and materiars at their parafiaque
Their service technicians and their families
office warehouse. + type and availabilirydl
live in various districts near
Parafraque and Makati. one LTrdirector, who
worked with pLTc before
+ average wage co6t
retirement, lives in the Santa Rosa area.
Social Development
with the proposed transfer, the service technicians have +
-
for living quarters in the new office, to%duce
requested crime rate (total nrrrfu
their commuting time and
budget' At least two senior technicians are
considering resigning from
+ percent of housetrff
LTI because of the transfer. households living hh
+ percent of enrolmena h
of students enrolfed h
schoolage populatcrf
a commute allowance for their service technicians
- e
=nsidering commute for
md. -1e human resources officer thinks that the longer
mrul'{oe technicians may decrease productivity
due to late arrivals
iilmr ansences, especially Outing inclement
weather and heavy traffic
aaranaque office rental is higher than the proposed santa Rosa

.Tlllm
rent to own.lease
m -rourever, the Santa Rosa office is on a five-year
.JhesantaRosaofficehasspaceforthetechnicians,orlive-in
tprmnel. including a warehouse and a garage area'
$E.rcetheSta.RosaofficeisoutsideoftheNationalCapitalRegion,
are lower
llffifii@ ; Board assumes that the food and transportation rates
,ffiiltt*,, f-e Paraflaque office rates. LTI bank
accounts, work permits, and
nurmr:rie+'s will need to be transferred to the Laguna
area'
Rosa office'
ie*te 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
+ crime rate (total number of crimes per
year/total population)
(number of
+ percent households with forrfial housing
of
householdslivinginformalhousing/totalnumberofhouseholds)
school (number
+ percent of enrolment in primary and secondary
'secondary schools/total
of students enrolled in primary and
school age PoPulation)
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
.oj. findings in the ,"'!ry
World Economic Forum (www,weforum.org),
and thJ UniieO
Nations MDGs (wwwun.org) provide reliable Jrr
inputs for the
PEST variables.
2. Reviews 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.
.t
0rganization and Management: Concepts,

Planning
The Planning Process
ffin*,"'
are exPected to:
*" o'.""t"
'
Strategic Management
Process
Strategic, OPerational'
and
1. understand and describe Tactical P[anning
the fundamentals of the
Planning function
in business StrategY Formulation'
2'
organizations and
develop and integrate

the.planning
'
tmplemeniation' and Control
J-t
{unction to contemPorarY
issues' V
PLANNING
3. I The Planning PrOds*i;iii:;iriii:# Alhr-a:,ve gca.s r,u, pI
WmE ;.or tne OertfeC prrrd*
Planning and Decision-Making tk :nr"enagers wa:I :c a:cutltl
The planning process, as illustrated in figure 3.'r, is a'carbon *ffi6crf6,,ly{easura"be" A,ffi
copy'o{
the decision-making stages reviewed in the chapter 1 supplement, mhtlm are fl"re filears bf rH
The
formal steps in the planning process are more specific to the
business dineile irc goals.
cycle, and impute data gathering and number crunching activities.
Both G-- and plan *a.trma
diagrams show arrows that imply a cyclical process thatls repeated
regular basis. lt is expected that monitoring and control activities
on a dhffi*E:tages of eacil gd,
situational analysis after a given period, proceeds to the steps, and
return to !iluFrc\..-Q SOme of the om,
repeated
when the stipulated monitoring and control pe;iod is finished (Heizer, Gca and plan seEctonh
2oog).
ffi'e !@tron for thedenffi I
General
$peeifie il-g, ennentation entaits h
decision-meking stages formal planning sleps
Wn@ r:o operation.
t*(o'rrtor and contror m'dh
rerci-s the goal. often r"es1rr-pg1
pfr:l,.mance.
*Iegic Management Frq

David (2002) iltusrra:es ft
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, The term vision is oterr cr
Flowchart,
GANTT charts, Activity Network Diagram (AND), and the PDCA Jo we want to go7 Bus'rescl
cycle,
Zuckerberg, and Bill Gates lr
IE-.oro11izationandManagement:Concepts,Caselets,andExercises
I
I
t
I
ffi
tf
:*
,..
and
generation of choices
plans.involY:. tn"
ii
a,;
,ilrernatrve goals and Goals are targets
in ,*r"ii*u] analvsis'
i-
r, *,.s -or ia"ntiii"l irJi[*1= be sMART-

and fr"I" ;"'t need
the to'
ffiil rrragers want'tl-"I"o'olish'
is able to
,ffi owffi cr,teasu'aai]';;;;:;;;;;h-:ii"I";'na'"u,,nt'andrime-bound'
the ,"n"g"", ot'senior executive
mh* are the .""nJ'uy *hich
Ff, o{ advantases and
hE*E invorves the assessment
hs. Bd %;T:"llln ;#-n'' "ru,r",ion. with the'oulective
ofprioritizing' or even
fli*rrrantages of
Edonl sime of the options
to ffin',^g morst suitable and
'lEf,um
involv'es the selection of the
,rePeated Goal and ptan selection
r,2OO8)- .*;;n for the identified Problem'
hrnplementationentailsthemobilizationofresourcestoputthechosen
*#:,"i";T *"u"'rement or accompli"l':T
;"""o1 involves
-t:,, uf
determtne
of conttot systems
to
the setting
r
ssJsthe god' o#''""qui'ing
pelormance'
ffiegic Management Process

;T'.HJ,,1:Jl''1ffi ""1'*,"ni:5:?:":,ff;'3;';'"'l-l3Xl"ffi '
nhrch alreatry rilvre-*eat
-^3*;1S:;?J'H:':T*i,'"J",'
and
+";.h* ::l#::f."i:Js):
ff) concepts'
analYsis' The arrows
and swul €Inatyoto'
ilrtunity \v/r e"-
foponunlty (b), rnrr,liJ;;W
.--..,+^^6n,,. anSlvsis of Svv ?l-lu 6T, and an initial
and \-'rr'
; a simultaneotjg
n figure 3.2 indicate, __r^r+harnic,sionluiaion,andgoalsof
vrsron'
anenterprtse'
o{ the mission'
lrH;; ;;"'"louti"r''ent
;
F
' m'anagement model
:Heizer,2008) Figure 3.2' Strategrc
(Source: David' 2011)
rtd summarY
Fation. ln the is o?ien exprained to answer the question"'whereMark
The term vision titt* W'tt Disney'
I the problem pionee'" ;; ;;t to
nt Flowchart' do we want togoe''Bu"iness called as they were able
CA cycle' Zuckerberg, and
Bill?;;-il '"i"'1""'
Chapter 3: Planning
'visualize' the future of their respective companies.
A vision statement detarled in Ctq
therefore, an affirmation of what the enterprise wants to
become. 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
,- fucentration, where ar
,rrdustry, focusing on a
A mission statement is a declaration of the purpose of the organization, enterprises utilize this stn
and often defines the scope of its operations in product, market,
terms. The vision and mission statements of enterprises were
and service L Vertical integration, vth;n
once said to aJong the vertical line*
be 'cast in stone,' but globalization and technological developments
have buyers. Alliances with il
altered these views.
distributors in the consut
Effective mission/vision statements inspire and motivate the strategies.
stakeholders
of an enterprise' The stockholders or investors of an organization
the mission/vision statements as the compass that directs the
often utilize 3. Concentric diversificati<x
enterprise. related products and se
Readers of sampre mission/vision statements are acquainted adding new businesses t
with selected companies, even without first-hand experience of these
tn the business battlefield. ttx
organizations.
tr managers, while the armY in
Prospective employees occasionally read the mission/vision sakeholders. All these stakehold
statements
of organizations they would like to join, to be able to evaluate an the strategic management Pro
their own
personal goals against the enterprise goals.
Strategy monitoring is a conl
Goals are shorter-term directions, often stated in specific
metrics, erercise, as it entails Perfom
such as geographic, periodic, and other numerical terms. activities. Control tools and aPP
Goals allow
organizations to be directed toward specific sites or locations, itr'l Chapter 1-education and
over stated
periods of time, and with fixed profits or sales growth. participation and involvement'
The synchronized examination of sw and or precedes the support, manipulaiion and cooPt
strategy and implicit coercion-maY be
formulation exercise, generally utilizing SWOT analysis.
strategic management steP.
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:
pnnc ;iPles for this
in Chapter 2 serve as guiding
end approaches detailed
*xm:il:H::rensths and weaknesses
enta.s the assessment
Jii i'*'n' mu'k"tin g' operations'
g t'"""
d the organi'ution' " " "
resources'
;;;Jr',^"rnal "1"J""*' the SWOT analysis exercise'
David
is a resuk of is derived
Strategy formulation recog"'Ii *
a miliiary term'
i2o11) states ** Iio'"gy' easily
(riritu,J'fj;;i,, "na i" " combination
of
rrorn the Greek *"il ;;;gr"

;;;iJ*v) and aeo (to lead)'
to organizations are:
Strategies universal
a singte'proJu"t oi service' Most start-up

l.Concentration'whereanor9anizationstaysîn1^sinOlesectoror
focusing
industry'
on
enterprises utilize
this strategy'
aH organization
2. verticat intesration,*n,11,1:T[,:*"J::Hil',Jt"; io;;rd' to its
rsh ps with
T'nff:-l'io'' "*' " ;1l::'partne
i
mX,:I""*
distributorsintheconsu.",",ij],"examplesofverticalintegration
strategtes' an organizatior 1 to
apPend
which allows
3' Concentric diversification' effectively
related prooutj*
"nJ ""*i""","',j"'"r*i"al-business'
to the organization'
adding n"* uJ"in"sses
the military generals
*:
th::1"^"^}'i:"':1""T:
business battle{ield'
ln the
or manasers, while
i;;ffi includes al'm:'fl1ffi?l"J"l'"""ion step
are tr
Allthu"" stakeholders
"ilffi;r.t'
,iltt" strategic management
process'
#$fm,gg*ffiM
and imPlicit coerc'
strategic management
step'
(Source: CDS,2ooo)
flit
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 planningis done by top-rever managers over
of time, and is not heavy on detairs, or metrics. a rong period
Middre-rever managers
complete tacticar pranning over one-
to 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, Srrurd
planning for their future higher
tacticar, and operationar MEx
"Or"",i"r-il;O,"rr#;
goals over ten years, two years, and "' ' Sm{r
six months periJJ;: mrdu
2. Ge&the students to discuss and comment hcf,inc
on these prans with
their respective parents and/or guardians. illwfl
All plans must. be SMART: Specific, firut og
Measurable, Attainable, ilm,/FlIE
Realistic, and Time-bound.
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
fcffi;ffi;;;,;*t*lo*n,ir'" is required for the alignment
[rmrizon is shortened. A control system
and the balanced detailed in chapter 6' is a crucial
""or""urd,
b achieve this.
a sample strategy map' shown
this cfrapter on the planning function'
alignment using the four
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
tvth goatis a strategic"planning
goal set by^t"O'""-:l^T,'::n":;::
lffi;;r;;;: t ."r"n_y-"ai period. rhe operationat
excettence
is the response ot t'e 'iOAleievel'managers:" ]1"-i".1"::?^Y:""1*

j*,::J;T#;;- to two-year period.lniovation and
the information
nolosy systems may be taigeted ov:r

a,"l:n"'!:i:,9:,i:0"':i::
the map looks like a clear-
llJBil',r'"?in""tt""li,r" *unJs"'"' Although often mandates
configuration, tr," o"i"iL ;i;";
level and!ime-horizon
exchanges'
communication and information
3. 3 Strategy Formu1x1is11,:rldplGnentation, and Control : Caselet
urstfllllll'
agement Process
l
Strategic Ma n llrf,mnr
The family business, a fast-food franchise in a ouezon city
mall, has & n$ffi trllc
completed the second outlet in the new mall in caloocan city.

There are nrnmr............rrmft r
in Metro -rigflsf,ImmI
opportunities for opening more outlets in other malls and cities
Use the strategic management process to plan the business IIolyprm -
Manila.
g,rowth.
$ $ilM
mr,r,qffird
Problem statement: To create the vision, mission, goals, and
strategies for the family food service outlets

case Facts: The students research PEST variables for Metro
Manila, and complete the alternatives, evaluation of alternatives,
and
recommendations.
Alternatives: Al
- &io
Ev al u ati o n of Alte rn ativ e s: d
Recomtmendations: Slru
: &r'
llt
Sfil
: illl
Irlru
iS
#'re0r91nieationandManagement:Concepts,caselets,andExercises
t l^.,^r--ts
Metro Manita Devetopment =--
vision: ,,Towards Authoiity
n,'nt''
Jmane' world'class
:" metropolis"
Miooi^-. r^
Mission: ,As " 'ttcttupotts"
h^r_^
a humrna metropotis, -
M3llo.noritan Manira
:,*il.";; ;;r?"ane
rnetropotis, -Man'la riro n, n r rl r
oJ':H
wi, become
r"rroolli lny.t]""I "n
hansaction center,:":'n ;l';"^'for
"
all'
r, t' As a il
global'oriented
,"' i:[: #:',il#

flff ::"i.
aaministrat-r'Je
il",Til
in the areas beyond
#l #*g ;f ***
il;atjri"".Xunities its poriticar and
Alternativo Asciar-*^--
1 Exercises
1:rT"r
provide data forst " ^;:#;:Jf::
sv ro,'" ;t';;
activi t i es' 1, u , ilH: J:l[, :::.':l
tneir ", "lll
respec;;J""0"#ctors for LGUs ^[:l
ort",i'pr"."rr""o
"r" ,,
2'
eo'"rnrent-owned or controred
ffiSSJT3lo. I
also publish annuat corporations
strategy formrrarT r"oon. iiu","#rl'gria"
s rhe studen,"
#:JT;JJi::, -ad"naand
"i,,,1,'"-".',11"
mission, and goals review the vision,
of:
+ different schools
and universities t
their hisher elucation;;;"J:" that thev plan to go
to for
+ popular social
nt *:
search ensine sites;
+ hish ratins
:arnment, radio,
and
"r,",.,'l::::,t and television stations.
SPecific;
Eoslation' sr'rctt -
SuoPlement to
StiaiesY (cDS)
li En"ttotrnerE
Thre CDS &
strategy
published a city Development
ln MaY 2000' the world Bank process
cities' with four planning #ps:
(CDS) Planning ,ootf.i, for Philippine
phases: StePf:ffi
now?
+ Phase 1: Where are we SteP 2: PrgU
+ Phase 2:Where would You

like to be?
SteP e: Rti
we need to address to get
there?
+ Phase 3: What issues do SteP 4: ffi
must we take to get there? SteP 5: H
+ Phase 4: What actions
participation of 6:0u
participatory or encouraged SteP
All phases were professed
the citY's stakeholders' SteP 7: II
ends..with the swor
phase 1 incrudes situationar anarysis and evaluation of
'ftle sreF t
template' Phase 2 ends

with a vision statement' ufl:'- rfiErehor5
philosophy and
and a listing o{ local government
community expectati;;s
principles'Phaseeendswithoptionsoralternaiivesforthestlategicissues
resultingfromtheto-''ufutionoitf'"vision:tat:men::Il::"-oincludesthe
,nl'ffiil;;il u",iri,iu, for the strategies formulated
imptementation
in
1.r
Phase 4.
TI
d
AlthoughtheCDSplanningprocessechoesthestrategicmanagement
mandates
plans are required
development F
planning process,
"p""iti" "nllo,
legislation' as follows: il
for the CDS, basei on Philippine
Lt
l.ComprehensiveLandUsePlan(CLUP),aten.to.fifteen.yearguide
as regislated through Zoning a
the deveropment of the area,
for il
Ordinance;
Ptan (CDP)' a three- to six-year
plan &|
2. Comprehensive Development
to i.Pl"ment the CLUP;
t
I
3.LocalDevelopmentlnvestmentPlan(LDIP)'athree-yearplanwith ttfl
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;
Urban -{ou"
Development and Housing Framework' the
5. National
and urbanizable areas prepared
by
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:tfir-
rii':.,,Jri:'i!,ri'i,ii
:.
v
!s
bt
Ir
of
!d
ES
he
in
nt
Dd
de
ng
hn
i
irh
he
by
F
The Organizing
Fundamentals
(Differentiation and lntegration)
are expected to:
1. understand and discuss Organizational Structu res
the fundamentals of the (Vertical and Horizontal)
organizing function in business
organizations and J}
V
2.
'' describe and discuss the ORGANIZTNG
;,t#;i;Jon to current
iss-ues, such as employee relations'
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 iltffiil
chain of command or hierarchy in the organizational chart. fifim
ilm-r
L 'rf,m
t'ilm
---
t, uF
fif:dffi
*"r.{*
,$,ettr
(@|fi lb&S{: Itrln
lwilntsrs
ril,lrc €qlmfi"rufi
@. 4s $u'l
Figure 4.1, Organizational chart @mrtrrB T: tm
(Source: Bateman and Snell, 2OO8) l&full*rm;ruilt
' l1*r* n6mei
fhe organizational chart is a traditional picture of the positions in a ,f,ull't:rmu m i
firm, how they are arranged, who reports to whom, and what the specific n :::fr
positions execute in the enterprise. The boxes represent different roles and mf:t:rgl[0r"
the reporting authority is represented by the levels of the boxes and the lines ul'r,rr,:r" fe I
connecting them. Although the chart shows structure, it does not explain its er*4:Lnnile
design issues. ,frsm3-? fll&r!'Io
mnrt- *ii@
Differentiation and lntegration lll' :::r-trI-f I
Design issues relate to two rm&rr3n H
fundamental concepts for organizational l;:rl-r :irlg
structures-differentiation and integration. -rtrE trpf
Differentiation means that the enterprise
:}: fr*8 |
is involved in many tasks, with diverse -tl* :ssgn

skills and methods. The tasks have to be
:arler::sP
divided, and groups specialize in parts of
1I: :!ir: g
the larger task. /nfegration is achieved with coordination, communication,
a-E 3JT1l{-l
and collaboration as it involves linking parts of the enterprise into a whole.
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
Some el
Line functions are actions rerated to the principal activities of a firm, or
have ultimate responsibility for the operational decisions of the organization. 1. End
Typical line functions include manufacturing tasks, such as design, ffi
fabrication, assembly, and distribution. staff functions are specialized or 2. ptre
professional skills that support the line departments. some staff functions ind
have huge responsibility in organizations, e.g., the approving and monitoring
activities of finance groups.
3. heC
der
kodd
rElagef" d
The students are assigned to review charts of school organizations
to explain their horizontal-and vertical structures.
1. eq
2. thel
3. chg
The Functional 0rganization
The business functions shown in figure 4.1-marketing, 4. slil
finance,
accounting, and human resources-are sets of specialized skills that are
grouped together. This type of chart shows a functional organization, where
&rc*m
grdr as foxl
the jobs are grouped together in departments with the specified skills
and/ <Srisirns rr
or business functions.
mjthdirr
Some examples of functional organizations include: tile eramC
1. an English department for a university teaches all the English b*ed oc1
subjects in the university, regardless of the courses or programs md tecfrt
that the students are enrolled in;
Edlnolosf
2. the purchasing department of an enterprise buys all the materials, IhI*L

supplies, and other resources required by an enterprise, whether TtE tr
these inputs are required by marketing, finance, accounting, human +rreolhe
resources, or other departments; and the agar&ufr
3. city health department is responsible for all health services provided ariirG-
by the city for its constituents. pirfb h
mdrn#
The Divisional 0rgmization
ftioiE
when the products, customers, and/or geographical locations of an r*lsrld
enterprise grow and continue to diversify, a. functional structure may not rftor.ld E
serve its development needs. A divisionalorganization, where the enteiprise erlcd
is grouped into products, custorhers, or geographical locations, maybe
a
better structure.

i
i
i
Some examples of divisional organizations include:
I '"
I'
fm' or 1. English departments setup for university branches located in
ption.
different Provinces or regions;
Fign,
tso, 2. purchasing departments created for each enterprise branch, located
ptions in different cities; and
prins 3. health centers set up for'barangays' to provide the health services
i of each barangaY in the citY.
I
Product divisions, where all the business functions ar'e under a single
manager, offer several advantages, as follows:
1. ease in managing the information and communication needs;

Lj
r
2. the product or service has the full commitment of its personnel;
3. clear responsibilities are communicated; and
I
4. skills and other training needs are more profound for the personnel'
h"",
h Customer divisions are structured around types of customer groups'
"r"
It",." such as institutional/corporate and retail/consumer buyers, while geographic
iand/
F
divisions are built along districts, territories, regions, and countries' Many
t multinational corporations are built along geographic units, where position
I
r title examples are country managers and regional heads. Some technology-
l" based corporations are structured around'computer users' advertisers,
fslish and technology-developers. Other recent developments have altered
r"" technology-developers into tablet and e-reader divisions;
t
piats, The Matrix Organization
The functional and divisional organization advantages and needs are
lether
utilized in a matrix organization. A dual reporting relationship occurs in matrix
l-"n organizations, as a manager reports to both functional head and a product
:
exlcutive. Although u ,"tri* organization violates the unity-of-command
I
hea
I principle because of the dual repbrting relationships, it provides flexibility
I and malleability.
rI prioritization by the lower executive in a matrix organization is an essential
adjustment. The product and functional managers of the lower executive
h*
not should team up to avoid conflicts. Positive collaboration between managers
I often results in fast and cost-effective decisions'
pise
Pea
i
I
l'
ChaPter tl:
Thedorefi
The Network 0rganization rd dsadrarc
A a collection of independent, mostly single
network organization is
key to the
function enterprises that collaborate on a good or service. The
is
network organization is electronic communication, where information
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

organizations in the hospitatity and pharmaceutical industries
to:
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
io u fund, with the intention of dividing the profits among CorP
"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'

and power
3. tools used,such as computers, sewing machines'
per
performance standards, like one hundred sewn dresses
4. 'hour
shift and ten cars sold per month;
job context,like work at night, teaching on weekends and
holi
and work from home; and
6. human requirements, like a masters' degree

for college teacl
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'
The students are assigned to bring a.

job or HELP WANTED
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);
now the studentis
3, an assumption on whether three years from
meet the job requirements; and
* would qualify or
years to
4. 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
program. The oJT training (oJt) ," a
school-related
tif J i:.-1,,,:i:::::
rs usua'y assigned
understudy, trainee
to an exper,#"a'"roervisor
jl;lx lliJ"i,#;
who acts as mentor. The
ffili**,nl*i::
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
",.
*",[;;?::ril ffLjn:;"'" "J,--0"
trained in
in multiple work asr.
resisnedemproyees;:n;trJllil;Jrrl;L:#""l,"rH"iT"ri::1
_ .fRRr"nticeship training involves hav.
craftsman' Most vocationar schoor
classroom instruction .;;ff [":;ffi:r1:l 1H:' ;"ffi::"j
and apprenti"""h,.p training
under a master craftsman.
,'T:it.:nir3#1,]aE""I
,|,;r"; ;;L ror exampre, a parrnership
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;
with its uaran
*ffiU:coordination 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
ryjffi:?I. :?l:::'ff n:
jru;: done
-,,",.i,'i*" *,:,h"' *o,kp,aces byin
c o m m u n ic ate w i t h,,.,
",,.,'" "
iri" ; ; ;;" r* I "i;31 "lill
I fi :i;#
;ilrr"J"" :?
ro enhance-interaction,
,:;xf::'r"tt' soft uni-n"ra copies of
sutdes-an
programs.
J ;ffi# participants w"ir-p'"prred
;,':HX,H;t are a must for distance train ins
f'lvoelrtct.r(rns
learnini
Government and private
sector ariances regisrate
for the HR practitioners and issue guiderines
for most, if n"ilff, of
the HR tasks.
A', emproyer'erlrôy,"" reratrbnships
.rn organizations and the conduct of the same
are covered in the taotr
Philippines, the Depa.rtment coaes of most countries.
of r-roo,, rn the
agency tasked with this (D.LE) is the nationar
rore, primarirv"ratmproyment
iiu ,ari.istration of the rabor
code.
lffitt,n.nd Management: concepts,

caselets, and Exercises
bl-related The Labor code of the Philippines includes guidelines of the following:
h where a
br trainee
+ Pre-employment
bntor. The + HRD Program

+ Conditions of EmPloYment
iis moved
+ Health SafetY and SocialWelfare
lbained in
bs trained + Labor Relations
Ssent, or + Post-emPloYment
The pre-employment guidelines of the Philippine Labor code include

l a master recruitments and placement of workers and the employment of nonresident
I between aliens. Definitions for the terms worker, Seaman' license, overseas
craftsman. employment, and emigrant are detailed in the pre-employment guidelines'
iLhip with
The National Manpower Development Program and the Training and
fnent with
d acquire Employment of special workers are included under HRD Program. Some
'electronic details of these programs include the terms apprenticeship and handicapped
hitment for workers, inclusive of working conditions for them'
t
working conditions and rest periods, wages, and working conditions
pgh video 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
i done by a day. ln the health sector, the working hours have more conditions and
$laces in
pPloyees details, dependent on the municipality, and size of the health organization'
lhe use of Medical, dental and occupational safety, employees' compensation
l.copies of and state insurance fund, medicare, and adult education are detailed under
led training Health, Safety, and Social Welfare. The DOLE may, for instance, prescribe
F learning first-aid medicine and equipment, dependent on thb nature and conditions
'..: .)
of the work in a given establishment (DOLE, Book lV-Health, Safety, and

rnes SocialWelfare).
Labor guidelines include policy and definitions, National Labor Relations
the same Commission (NLRC), Bureau of Labor Relations, labor organizations,
ln the coverage, unfair labor practisSs, collective bargaining and administration
national of agreements, strikes, lockouts, and foreign involvement in trade union
code. 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
of^ the foilowing
causes (DOLE, Book Vl-post Employment):
* 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 The People Management Association of the philippines
0 Employers' Confederation of the philippines
0 Trade Union Congress of the philippines
0rganization and Management: Concepts, Caselets,

and Exercises
Lead'ing
Mir :: ffffiffi#ffiwffi itxG, i; W.ti :i: 'r':W $i"Etl"ijr SS!:iiffi
!.i: i;li! i:;r,:,:,j,:::::

j
:::; , , i '.." r , ,=';.;1,,,r,
:i:::l:r..:::i:r:r:. : ::::a : ' '::" ; ':';j;;":;'::
,
!i;l;iiir:::;'!,i:i:' ::::;:::. 't "' ' l
are expected to: Leaders and Managers

1. be aware and understand The Leadership Grid
the fundamentals of the
Ieading function in business
Jt
V
organizations and
LEADING
2. 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
,necessarily
+ coolness under stress
,
of
longevity + initiative
managers + justice
leadership
+ self-improvement
I is helpful + assertiveness
+ empathy
+ sense of humor
+ creativity
+ bearing
+ humility
+ tact
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
f character traits tisted desirabte ror
definition of at reast five
tfrsUnit;i ;;;";;;r.''"
[onn-oo, The students ,personalize, the
terms and their ,""ning" Oy
finding occasions whrgre they possessed,
[ituents, or found themselves
I lacking, in the said trait.
There is a generar conviction that peopre

are naturary good, and
illl,
book, :ll f;::,y^": :::?r0
n s. to t h e raw. n n
i
I o ii
g uiio,"1,, c o n t r acts
Feticiano (2ooo) broalry aernes raw ",
moral, divine, and state raw. Niturar
;"l,i"iil;fiffi;r#fi:j;
rawsare raws of the co"nscience,
considered universar to men. and
Men generary know what is right
instinctively. Arthough this may and wrong
u" Jp"n to arguments and Jxceptions,
human instinct is naturar, and the
conscience conducts their behavioi.
$c0lelland's Ac$t
status' recognition' and
achievement' freedom' The keY needsfr
4. ego-independence'
self-esteem;and affiliation, and P'orc
success and god ra
5.self-actualizatiorrealizingone's{ultpotential'becomingeverything *iit" Po*"r refers I
one is caPable of being'
peoPle'
The need th€dl
oeo'
to :;i;t' il; tl""itv needs' then social'longer
Thetheoryspeci{iesthatpeoplesatisfytheirphysio,ogt:1'needs{irst'
then proce"a s'ui;; 11of needs is satis{ied' it is no emPowerment
adra
on"" a set
and then self-actualiz"iion.
motivator'
considered a Potent
be an inaccurate
is considered simplistic and found to do
theory
Maslow,s
instanc",*"ork"r, in hazardous jobs often
For
human motivation theory. n""j" u"cause they need to
ful{il their
not ignore trreir sateif ind security
piv"i"i"g'"al desires {irst' ,^- :^ +h6 {or self-
from this.lh"ory' however' is th1 need
An essential learning human'resource not iust
*f i"f''afi'uJts organizatiol" t look at
actualization,
as a business cos;
ff;#;ithat "ho'ld be developed'
.".Prim#
are obiective
ooerate in oh
laws' regardt
the three sets o{ needs
^'"Jf:;:::: ll,lllln."", and srowth (ERG) are
(!
under the Alderfer theory' relatedness
needs'
all material an'd physiological
Existence needsa$e andleelings' as they
sharinioitt'o'i^"
needsare satisfied inilnn "iuat people to creatively
*hil" growth neft"
are about retationship"' "n"ot""ge
ihemseLes or their environments'
and efficiently changl
The ERG theory po"]yl't"*
*1]T needs can occur-simultaneously' ln
The importance of both theories for managers
untike Maslow's tnJo'V' and/or
f";;i';n' i*'n" kno*LJg" that self-actualization
their leaderthiP
motivators for work accomplishment'
growth needs
"'";;t;;;l
and Exercises
Concepts' Caselets'
Organization and Management:
, and McClelland's Acquired Needs Theory
The key needs for managers, according to McClelland, are achievement,
hing 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
first.
people.
ego.
nger The need theories have been used in job design, training needs, and
empowerment advances by managers and leaders of diverse industries.
rate
rdo
freir
McClelland's Acquired
rcli Needs Theory
just
"...Principles, unlike values, "lf a general is not

are objective and external. They courageous, he will be unable
operate in obedience to natural to conquer doubts or create
laws, regardless of conditions..l' great plans. lt is the business
ds
of the general to be serene
-Stephen R. Covey and inscrutable, impartial and
tss (Source: Covey, 2009) self-controlled. lf serene, he
ey is not vexed; if inscrutable,
ely unfathomable; if upright, not
improper; if self-controlled, not
confused..l'
{y,
in -Shen Pao-hsu
br (Source: McNeilly, 1 996)
t:
G
rE
-4"--
E
r
5.3 The Leader$hlplGti$$; ffi$i;t*:i;:';':.::.i :'
1. Ther
The Lucky Telecompany, lncorporated (LTl) was awarded the fiber th€o
optic connections for the PLTC customers in Santa Rosa, Laguna, for a
three-year period.
2. Gru
disc
The LTI director, who worked with PLTC before retirement, was j,,d
elected president after the transfer.
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 Let the t
are assigned to different districts in Santa Rosa, and they work on eight- sports enterl
hour shifts for six day work weeks. encourage t
their selecte
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.
ffi
... Gar
Rosa stay of the teams. The human resources officer has observed that lc"
productivity of the teams increase, during their in-houses stay,, due to lna
early movement from the office-warehouse, while productivity decreases I r-".
once they are out of their in-house stays. lou
However, the teams have developed fellowship that often a lr"
discourages teamwork and professional relationships. Senior ,.D'
lo.
t,.
technicians sometimes assign housework to the driver-messenger and
younger technicians. The LTI Board think the newly elected president I r-"
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?
and Management: Concepts, Caselets, and Exercises

,9*ll:1,,r,
la.
lat
to
ES
bn
br
nd
mt
E,
io'r
ith
LTI
"i-
^ r \Sl
Controfti ffi
I
ffin*,*,*'",r0*,.
: are expected to:
Managerial Control
Control Methods and
: 1. understand and explain Systems
: the fundamentals of the
, controlling function in business The Balanced Scorecard
organizations and t.]
, Y7
V
, 2 communicate and discuss ^
the controlling function

CONTROLLING
: to current issues. 'r
I*
U
6.1
rrd 1 P.rn'l
control is defined to be any process that bundy cloct
directs the activities of
individuals toward the achiever"nt'of determine P
organizationar goars (Bateman and
Snell, 2008). reference. t
six-month fu
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,
Types off
targets, and standards of There a
performance.
The control process is shown in figure

1.tu
6.1. on'
ofg
2.h
efrl
ste
3.tu
orl
4. Btt
at
em
Qualitiesr
Effecri
the memb
within rea
Contl
Figure 6.1. Control process strategY c
standards are estabrished prior to performance. system b
For exampre, the schoor
grading system is planned and put in place so theY a
before students are accepted.
student grades are based on their day-to-day performance hours. Th
in crass, such as
in class recitations, tests, projects, and participation implemen
in class activities.
the Perilr
Grades are monitored and compared with
the passing and fairing thereforq
marks. lf many students receive fairing marks,
corrective action is probabry ExcePtiot
necessary' such as changes in teaching
methods. lf many students still get examPle,
failing marks after the change in teachiig
methods is effected, a revision in are not h
the grading system may be compulsory
t meet student expectations. Rem
This process is arso appried in business
organizations. For exampre, a equatedl
reward may be given to an emproyee
who has never been rate in reporting submissi
for work over a five-year period. office
time is set at g a.m. to 12 noon equated'
Organization and Management: C0ncepts,
{*
rr
* :r'ir:.'.;,;.,it
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
of comes into and g"t. ouiot the office
deJermine punctuarity. The DTR is periodicaily to
and 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

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
!t be acceptea oy irre emproyees,
so they are willing to submit reports and
L occasionaily *ort u"yond office
The reports and DTRs must be accurate.
B lours. tf the strategy schedure of
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 a
the system is found to be defective. For example, overtime work that was not irformatiu
signed nor approved by the supervisor cannot be included as performance hvoice,fu
in qualifying for the reward system. on busirr
(3) consll
The Importance of Control producb i
Control systems allow for effective implementation of the planning and Reilb
organizing concepts detailed in chapters 3 and 4. The controlsystems ensure better ser
that activities are done according to plans and that goals are attained. They the BIR I
also assist the managers and supervisors in the delegation of authority, as reports o
controls often motivate managers to dispense authority.
Ftrgt
Areas of Control with hd
costs aft
A control system is applied in the areas shown in figure 6.2.
eplainer
oPPorhr
transacti
controls
Equ
and ref
outPuts
Ano
the erq
TESUITE
examir
hiree's
Figure 6.2. Areas of control
emPloY
Control system ensures (1) orderly and efficient conduct of business becofli
and (2) adherence to management policies. The areas of control are
(1)information, (2)finance, (3) employee behavior, and (4) opprations. Codtd
Btt
lnformation should be available at the right time and at the right place.
polkie
Often, in the desire to have complete and accurate information, there is a
the m
need to wait long to the point that information become stale. lnternal aid
cornpc
external deadlines are imposed on financial reporting. For example, at the
end of each banking day, the bank balances actual cash with balance per
adtst
records. At the end of the month, result of operations and financial position h
are determined. The deadlines set by the SEC, BlR, SSS, PhilHealth, Adn*l
and HDMF are to be met monthly, quarterly, and annually. Failure to meet tirne :
deadlines means penalties and interest for the delayed compliance. ln be irl
obtaining loans, reports to prove credit worthiness are required by credit throtl
grantors.
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.
Review of forms is done by systems analysts and government

Ins ensure units to
better serve their purpose. Frequently used governr"ni forms
ired. They those of
are
Urority, as
the BIR for tax compliance and those of HDME and philHealth for
reports on employees.
.sss,
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 Another significant contror area is employee behavior. At point
i of entry,
the employee fills up an application form and submits papers
I
to support
resume. Employee is subjected to tests and interviews. physical
F
medical
examinations cap the hiring process. The documents form part
i
of the
hiree's permanent file. This fire together with current fire keep
i
)
track of the
I. employee's performance. The permanent file as well as the
current file
Fness become a monitoring file.
U are
lL
Control Methods and Systems
ace. Bureaucratic control eonsists of the standard operating procedures
and
lsa policies that prescribe correct employee behavior. Exam[les
of these are
and the use of time cards for attendance, wearing of uniform, proper
use of
the company facilities, among others. Axeward system recognizes
employees'
per adherence to company rules and regulations.
EflOn
lnfoimation technorogy (rr) is now an important area for
lahh, concem.
Admittedly, efficiency is enhanced with lr. However, it is important
heet to monitor
time spent for personal use of rr by emproyees. security
measures are to
F- fn be installed to detect fraud. How much of the resources is lost
Fdit through unauthorized use by employees? "orp"ny
t
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 A commu
controls. Sales transaetions are documented with sales invoices, delivery efficient and e
receipts, and receivables. Cash transactions are evidenced by official of health, diag
receipts, cash vouchers, bank checks, bank statements, among others.
Control environment includes the management philosophy and We are cr

operating style. Company culture is defined by the functions of the Board of First Prfur
Directors and its committees. External control is done by the Central Bank efficient med
when they audit Philippine banks. Personnel policies and procedures may Second;
be strict or lax. Authority and responsibility are clearly defined or ambiguous. promotion d
The organizational structure may be tall (top management way above rank Third Pil
and file) or flat (top management close to rank and file). There are entities in terms of 1
where the workers never get to see the president of the company. ln some services;arr
companies, social activities like annual excursions, Christmas parties, and Fourth ;
anniversary celebrations are opportunities for employers and employees reasonable r
to meet. Company policies of (1) "no animal testingl' (2) 'tno child laborl'
(3) assumption of corporate social responsibility, amohg others, define
The BalancC
company culture.
The balr
measuremeril
of organizati
Characteristics The Art of Politics
methodolog
of State Law
'!t must be considered that The frart
1. lt is promulgated by there is nothing more difficult to
executive ofl
legitimate state authority. carry out, nor more doubtful of
past accorq
2. success, nor more dangerous
ltis.intendedforcommon poorlY addr
to handle, than to initiate a new
observance. vision, mlss
order of things."
3. lt is intended for the The actions
(Source: The Prince and the enterPrisesr
common good. Dr'scourses, Readings in Social
leveldirecli
(Source: Feliciano, 2000) , Science, UR 1997)
The bC
control, as'
future and;
cause-an*
There:
+Rl
+q,
+hr
+ol
I
p adapted Company Vision-Mission: A Tool for Control
pfficiency, Medical Diagnostics,lnc. . l
iaccurate, VISION
pounting A community of dedicated people committed to lead in providing
I delivery effiiient and effective medical diagnostic services through maintenance
y official of health, diagnoses, researches, and prevention of disease.
hers.
MISSION
i
)hv and We are community whose...

board of First priority is to provide accurate, ethical, total quality, and cost-
Fal Bank efficient medical-diagnostic services;
hes may
Second priority is the holistic development of its members and the
fuuous. promotion of each member's rights, integrity, and dignity;
iYe rank
Entities Third priority is to seek and develop new opportunities for growth
in terms of technology and coverage in providing medical-diagnostic
h some services; and
bs, and
lbyees
Fourth priority is to generate fair business profit and provide
Ilabor,"
,Aefine
The Balanced Scorecard
I
The balanced scorecard was founded on the belief that performance
i measurement systems retying targely on financial measures gets in the way
il
lto I
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
i"' I
past accomplishments, as financial measures are wont to do. Other issues
poorly addressed by financial measures include the strategic aspect-the
F/ 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
hl enterprises-perhaps also a failure of management to communicate the top-

level directions of the business organizations to field personnel.
?l
V 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
Depen
::,JHJ:JiHSlf ^!:liiJ:*i,ffi î,""J:,TJ:i,$:[,:i,:h;:lli"j to'balanct
perspectver,"""Jll"ffi
;:l,i::j"+:ff :fffi ::trilff",fi same as a
and cost' and the organization"r r"rr,.,irg
perspective assesses
ill;l mission. E
learning, market innoiation, continuous tool.
".J,ri"i,""iual assets.
Arthough the terms seem
tedious anddifficurt
of companies who have useJ to interpret,
-i,,the experience lFl""".i"t
communicate' not simpry
ih" ;;"*ork
attbst io to Custorns
controlttre "rprbirity
pe.formar,"". ,ro,"rentation
"ntrrprise
*nffi:ir;n::["J;ulnhi:L:1",r;;'ff:Ji^,,a.w,.p
The links between perspectives
and the use of the framework
sampre of common enterprise through a
ouiectives'is demonstrated in figure
6.3.
rH:
itii
tmprore gross- o"r"top
I
I Rrofit margin
f
"iliil
I partnerships
I
tncrease
I
effectiveness
f erira
"r,irr.
of I offer portfolio
*f* As sttt
efforts and
based on trust, for
sales force creative parlnershi
professionalism, solutions
and shared values
]
enterprise.
I
Reduce Become preferred lmprove
manufacturing supplier
delivery Create customer 6.2 Thcl
performance
C
and purchase and project-
costs focused teams
Pursue Outperform other mprove
economic suppliers
esponsiveness
Build capability L ouoo
value-added
o opportunities
to differentiate on I br"iness
opportunities service provision op*
| ,o
lmprove I Region.
responsiveness
Build
I t'"y h*
and reliability
technological | *'"ir p*
capabilities
I
L,*
irFsupply of
products and ",.o
services
I tooa
Figure 6.3. Batanced "e.
Scorecard(BSC) p"r"@ L - _ _.
(Source: CHRSA,
lnc., 20OO)
j.
il
strareholder
. Dependent on the situation i,
lut measures of the enterprise, objectives,,may ij
:o 'balance'the firm's performance be rinked
fhe internal measures, while simurtaneousry
Safi.leasacommunicationtoolto.direct,goalstowarotrretusinessvision- use the i
I cycle time,
lcontinuous
il:T'"'
Figure 6'4 is a sampre communication
and ,"onuJ,li'performance :
eleerience Financial
rpability to Customer
rnentation Develop customer p".tn"r"hip" j:
b"Gf
rallow top_ on trust, professionalism, i
and shared
I
I
lnternal i:
lncrease effectiveness of j
[rrough a
r 6.3.
Organizational Learnin g
Create customer and oroi ""t*Eil
Figure 6.4. Sample scorecard
(Source: CHRSA,
lnc., 2000)
As shown in the sampre scorecard,.the t!i
efforts and human resource .sares
team (fierd personner)
training on effective sares performance arows
I
,{
with customers that u-ltimaiety !

improve s;;;;r,sins
:.,#:il-:s or the *
,
g
*.
6.2 The Balaned 1,
'' I t
,fl
i[r
{
1,
I
The famiry business, a fast-food *
franchise, has two outrets-one I
a Quezon city ma, and
!
in
the othea in a crroo""n city-,rlrL.*,"
business is considering borrowi"g famiry :l
I
to open more outrets in othe*urr""

r*q" or adding'alJirnrr equity
1
I
Region. As they developed

.ni cities in # G;l;;"r capitar
,f,"i, ui.i*, mission, goals, anJ,strategies, {
they have found out thaithe
contror sy"i"r" do not sufficientry f
evaruate f
.!
Create a balanced scorecard

to manage the business growth.
ro create the baranced scorecard
t..::Z:li::J;::3*'' ror the ramiry
case Factsl The.strr"{onra --%
^^
eva, 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.
:,::1,_:,ind1ds and the rures
Department
re g u tatio
or
n s, ro,,
HeJi; # ;;I"i::
#," ii"i'orrlorrYrrln"
other ::?.:11,1,,"
g overnrn
ent
of the
health
provisions, for
the
lntr
?
g. :T::::r"
diagnostic statisr.
--"v urrurrry;
"u"ona
priority;
anJ
a nd m
and
m"oi"ar
e d ca r p roress
i
on il ;;"1#:::,the Department
;;;ffi ,::jil}l^1jl
i
or Hearth
T:i#,?:r",rff
Arr
1lil
4. controlsystems,
on financial information,
ffiffi, for the fourth
AlternativG! Asci^ _ _ _ _-
ignments
-
_.--
and Exerci"""
The students creatr
r-' """o' oaldn_ced scorecards,
period. *;
perspectives,
r";;ff:::li,ilanced
ipectives, with
a strategic goal of
being a ,rnug"r-LrJr,
with
with four At ilE
,"nr"r,' ae epecl
1. tr
tr
ir
1. Seelig, Tina. What
t Wish I Knew 2. ur
When tWas 20.
one; 2009.
New York: HarPer tr
b
2. Sandberg, Sheryl.
Lean /n. USA:
Atfred A. Knopf;
bors.
';:,tl:,
ITr
/nd
-i-
I, -;*..'. .
lntroduction to the Functional

Areas of Management
#Iilij.. i:'liii:liiiitii'r+i1i:i:"i'r"r'
,+fg* *$r*ffi-,, ,i, ,u' 'tffi$r$ffi*ti '',
Marketing Management
At the end of the chapter, the students : Operations Management

-'xpected to: .
Human Resource
1. recognize and identifY the Management
, functional management areas
Financial Management
in business organizations and
2. understand and utilize the TechnologY Management

JL
{unctional management areas
to life and career choices'
V
FUNCTIONAL
MANAGEMENT AREAS
Ms--
ffi&
"i._.-.,: il
7.1 Marketing Management
Markei";g management is
7.2 0pcr
the functional management
closest to customers. lts activities area that is Heizer i
,"L," identifying customers,
and interpret these back to _,o needs as follows:
the enterpril" to,. its business reaction.
Marketing management areas
include the following:
+ des
+ product and/or service planning + qu€r
+ pricing + pro(
+ distribution + locz
+ promotions + layo
+ market research + hun
+ customer service + sup
. Marketing managers are tasked

to meet the key objectives
+ inve
(customers, competition, of the 3cs
and of marketing as follows: + sch
+ "orp"n9
to satisfy the needs, wants,
and expectations of target
customers;
+ mart
+ to outperform competition;and As infe
+ to ensure corporate health
and profit.
Operations
processing
(transport s
(manufactur
The students are assigned
to: Accoun
1. sales personnel, and/or interact facilitate m<
i:t:.]:*
tn supermarkets and
other public areas;
with merchandisers
IrldI1A$erS t
2. discuss their findings on stimulate ct

the product, price, promotion,
3.
place (location or distribution)
and/or service;
compare prices of a single

;.;;;"
product andlorservice;
and
of the chosen product
W The t
and
4. discuss their findings on the
product and price differences. f. ir
2.€
F
ffig*-
a-:l;:hl
7.3
7.1 fl
Y
Human Resources Management (HRM)

deals with formalsystems forthe Thefi
management of peopre.within an organization
(Baternan anJsneil, 200g). the use r
the past, HRM was cailed personier rn
management Every emproyee,s initiar business
interaction is with the HRM personner,
and each work rife is and ah
purposely tracked by HRM units and
aciivities. "rpLy"",. stocldro5
It is often repeated that the human Person lE
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 The Hrr
personnel. Manpower, after ail, is ln snt
required to run the mlchines, design
work areas, interact with crientere, and the
deriver the goods ,na serui""s of cash, crt
enterprises
Labor planning and job design are required
competitive advantage strategy should

for
in human resource management. Heizer (2OO4) competitive advantage
states that the HRM
ensure that people:
ffi
lo"terni
lProculs
1. are efficientry utirized within the constraints of
other operations
management decisions and I laanagp
2'
L-
have a reasonabre quarity of work rife I ls the cr
in an atmosphere of mutuar
commitment and trust.
I Handler
concem
I
The students are assigned
counselors on iob interview guiderines
by school guidance counselors on
and/or a*ange
their chosen job's.
to interuiew.their schoor guidance
,o"k i,ir"*i"** t
I
I
rrk"" o
lakes c
I rrk""
I inrestm
"
Schedule activities with

Alternative Assig n ments
Er.
r"k""
I c
0 school psychorogist and/or guidance
counseror to discuss
I
0
HRM tests dnd their use for selection
,nO ,""ruitr"nii"-
spor?s, kinesthetic, and physicar education
E*"
instructors to
discuss health issues relevant to personal
growth and Wod
development;and
and liah
0 school alumnae who are well-liked,
or admired, to discuss comPaq
their personal challenges in school The cre
the workplace.
"nOlor, financid
also fori
and Management: Concepts, Caselets,
"9rganization and Exercises
'.".
r*.ll+i:!i.,;*.':,
;fil***+.r.*,i,;
r 7.4 Financier*n*mffiifftw*&t,$rmwffiM ggi$sgi1;x,:r',
bms forthe The finance person takes charge of the investments of the stockholders,
l2ooe). tn rhe use of funds in the operation, and the distribution of income of the
fee's initial cusiness owners. Stakeholders include the stockholders or equity owners
rork life is and also the lenders or loan grantors. ln a corporate setup, they are the
stockholders, bondholders, and trade and nontrade creditors. The finance
rtant asset person referred to above generally bears the title chief financialofficer.
ation-the
The Financial 0fficers in the Organization
rcnefits of
lesign the ln small organizations, the chief financial officer is in direct charge of
ervices of cash, credit, and accounting.
dvantage
he HRM Determines fund requirements Takes care of budget
Procures funds Plans for control

lerations
Manages cash Takes care of systems installation
f mutual ls the custodian of funds Evaluates objectives, policies, and

procedures
Handles foreign exchange Reports and interprets results of
concerns 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
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 14. s
financial analyst are the following:
15- u
1. provides guidance and analysis in making investment decisions to
16- u
business and individuals;
1?- H
2. gathers financial information, analyses, and makes recommendation;
Tln t
3. assesses the economic performance of companies and industries;
G{itdh
4. analyzes the following: commodity prices, sales, costs, expenses, Gocn bs
and tax rates to determine the values and project future earnings of
-uctrte
the company; lrd eql
5. evaluates ability of companies to repay debts; and crnmdl
6. programs, budgets, costs, and analyses credit.
7.5 E
oualifications of a financial analyst are mathematical skills, problem
solving skills, good oral and written communication skills, and people skills.
ItE
He should be confident, mature, independent, and of good moral character.
Iunaim
hflueru
Ouestions to Be Answered by the Finance person:
The
1. How much cash should be held? bdrml
2. Should we invest in securities? 1.
3. Should we sell on cash or on account basis?
4. How much inventory should be held? 2-
5. Should we invest in long-term investments?

3"
6. How much should we invest in property, plant, and equipment
(PPE)?
4-
7. Should we lease or purchase?
8. Should we purchase or develop? 5-
9. Can we hold prepayments to a minimum?
'10. should we purchase in cash or on credit terms? what are the best
terms? Th
acc€P
1 1. Are tax remittances on time?
techJr
12. Which.iban terms should we choose? are ol
13. What types of short-term financing are available? are d
goab

i.: j ,:qi:ii:?l:i: :iiilj
!,rs of a 14. Should we choose short- or long-term financing?
15. What ar.e the available bonds?
tions to
16. Which type of ownership should we choose?
dation; 17. How much should be financed by the owners?
Sries;
The aforementioned questions can be grouped into questions on (1)
capitalbudgeting, (2)capitalstructure, and (B)working capitalmanagement.
enses, cost benefit relationship is important to capital budgeting. The capital
irgs of 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
$lem
skills. The management of technology is perhaps the most intimidating
functional area of management because of its dizzying pace and scope
Ncter. 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 audio-
visual activities.)
+ Suggested film shows include:

0 The Sarnt (fusion technology)
0 The Net (lnternet)
A 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
his vision of excellence in whatever he does, leaving others to decide
inI
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,
"f,
.-$r
2. or
sF
it.
',ij

.
Sp ecial Top rcs

a
rrrs
:JES
I
I
N
ln Management
'0" I f rcfx -.\..;; ,':'','.,
"
... I t
,!
' '.. '., ',', '..,''',
tru,. | r:.'l .
.: .'.
.
| "
'
'"t,:",....' .." ':,' ' : . '"
"""""
'
m*o*r,nr.,ro"r,.
to:
are expected
, Starting a Business
i
lnvesting in the Philippines
1. the
understand and explain :
business
special topics in .
lnternational Manageme nt
and
organizations :
2. communicate and describe the

.
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 u
of needs, we desire to extend to others for their material needs.
As we look t-
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.
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 3
be an easy
way to be in business, Hopefuily the chirdren may be as motivated
as their 4,
parents who hand to them the ,ready made', business.
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. I
Family values affect
business decisions. Relationship among members of the family 0
affects the
functioning of the organization. Generations of family business
exist. young
family members plan for their participation in their
iarents' business while a
pursuing the academic studies. participation may
be fulltime or part time.
Family business passes from one generation to another.
At the start I
they may be small, but the opportunity to grow and to exist
in succeeding *l
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
a
and relationship.
Hopefully, individual needs are not in conflict with business I
neeas.
Disciplining employees who are famiry members can be more probrematic
compared to dealing with emproyees who are nonfamiry members.
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. Frr
3. Desire to preserve famiry asset and desire to preserve famiry Itr

reputation impact positively on the business
ha
4. Family name is itserf an advertisement for commitment
to quarity and tol
value of product and service.

1"
I
5. Family name is symbol of high ethical standard.

I
h
b
6. Positive results from collaboration of family members.
FU Disadvantages of Family.Business:
h 1 . Passing the leadership from one generation to the next is complicated.
F It entails legal, tax, and relationship problems'
h,
2. Professional abilities may better be obtained from nonfamily
r members.
Fr
w 3. Successors may find it difficult to introduce changes.
!r 4. Extended working hours of parents put pressure on their children'
:
5. Differences in opinion on business matters may strain family life.
v 6. Tendency to push hesitant children to family business careers
fy 7. Sibling and in-laws rivalry
h
b 8. Family members not active in the business have stake as partial
ls owners.
le 9. Family feuds threaten employees who are nonfamily members.
i
n To address concerns of family businesses, the following are to be

adopted:
tr
h, 1. Rely on competent professional and management personnel.
c
2. Avoid favoritism.
F
F 3. Promote healthy relationships.
f" 4. Plan and effect professionaldevelopment.
!
5. Draw vision-mission statements understandable to family members
and nonfamily members.
!
E
g
6. Plan for succession
7. Study the legal requirements of transfer of ownership.
E Franchising
'Franchising is an agreement bdween a franchisor and the franchisee.
b 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.
Franchisor provides: 4. Tem
1. names gro
2. logos Startup
3. products Starnl
business i
4. operating procedures
business a
5. training
Sourcr
6. marketing
1.tu
7. financing da
ITE
Franchisee:
2. Fi
1. pays initial capital investment; by
2. pays periodic royalties and fees; and 3. Fk
3. abides by the limits of the franchise. of
an
Advantages of Franchising:
4.$
1. Fast start-up time. The franchise is usually widely known business s[
set up packaged for those availing of it. F
2. Lower failure, The business has been tested in different conditions 5.E'
and settings. ot
p.
3. Formal training is provided. The staff requirement is met by models
or templates replicated in a new franchisee. tr
4. Marketing methods are replicated and proven to be effective as per
6.F
g
due diligence study. Advertising by franchisor benefits all franchisee.
si
5. Managerial assistance is provided to franchisee.
Buyout
Disadvantages of Franchising:
Buyo
1. Less independence in operation. Franchisee should abide by terms business
of the fraflchisee. one oPb
reasons:
2. Capital requirement is usually high. Majority of supplies are to be
sourced from franchisor. Opportunity to buy from cheap sources is 1. tr
limited.
2.r
3. Strict compliance with franchise fees and royalties may take a !
considerable chunk of revenues.
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
slness school in their vacant house in a suburban subdivision where many
young children live.
ilitions 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
rcdels
practice.
:
!s per
6. Prior work experience-A medical technologist was challenged to
hisee.
set up a medical diagnostic laboratory after experiencing work in
similar setup here in the Philippines and in other countries.
Buyout
Buyout is acquiring'an existing business. An investor wishing to have a
brms 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
bbe reasons: r?
Bs is 1. to reduce uncertainties;
2. to obtain the existing business at a price lower than starting from the
kea ground considering that start up period is also a cost; and
3. to obtain an operating business with demonstrated ability to earn
profit.
Chapter 8: Special Topics in Managemenl

2. Sea.c
Theinvestorwantingtobuyanexistingbusinessneedstocontract a coq
leads for "business for sale]' The
matchmaker" o, brokerJ who [rovide CorP(
investor or buYer should: 3. sEc
for sale;"
f . investigate and evaluate the "business their'
lnterr
2. know whY the business is for sale;
3. determine the integrity of the seller; 4. sEc
co(p
4. examine the financial data; SEC
and
5. determine the fair value of the business; 5. Reg
6. consult accountants and lawyers' fees
Forms of Business and Legal Requirements

Chapter4introducedtheformsofbusiness_soleproprietorship,
8.2 Invd
partnership,"no"o,poration,includingtheiradvantagesanddisadvantages' The SE
of Trade and lndustry (DTl) administers 2014 werer
ln the Philippines, the Department
for Sole proprietor (BTRCP Form No' +Co
Business Name npifi"ution Forms
may be done through the Business
18A). Online registration of enterprises +Re
(BNRS). Foi food establishments' petition
Name Registration-t;",
for barangay business'permits, and the requisite
information sheets and +ie
by the Bureau of Food and Drug under +Re
licenses to op"r"t",'e being issued
the DePartmcnt of Health'
knowl as the G"
+M
The DTI administers R'A' 10644' otherwise f"g::l: +R
seeks to strengthen micro, small, and medium enterpnses
Act. R.A. 10644
(ftllSHllgt) to create job opportunities in the Philippines' +R
TheGoNegosyoActestablishesMsMEorBusinessAssistanceCenters,
+R
alsocalledN"go"yoCentersincollaborationwithlocalgovernmentsunits +R
(LGUs) and other agencies' +F
of the Negosyo centers are
The value of the enterprises that may avail +F
the following:
+F
+ Micro: not more than ?3,000'000
+t
+ Small: F3,OOO,OO1-?15'000'000
+l
+ Medium:,F15,OOO,OO1-f100'000'00 +l
Corporationscomplywithregistrationrequirementsadministered.by
(SEC)' The SEC also offers +r
the Securities and E'change Commission
e:Services for companies' as follows: El€n
a Company, through SECiRegister' the web-based richest

1. Reserve
comPanY registration;
Caselets' and Exercises

0rganization and Management: Concepts'
rtract 2' Search Registered Companies, which gives
information on whether
I The 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
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' Registration carcurafor, which computes

the approximate registration
fees of registering stock corporations.
fiip,
8.2 I
nes.
The sEC-registered corporations
brs in the phirippines as of Jury gl, 201b,
No. 2O14 were;
ess + Cordillera Administrative Region (CAR)
llon : 2,122
rtd
+ Region I (llocos Region) 17,225
iler + Region 2 (Cagayan ValleyRegion) Z658
+ Region 3 (Central Luzon Region)
g2,47g
t0 + National Capital Region (NCR)
ES :192,785
+ Region 44 and 48 (CALABARZON and M|MAROpA) : 44,9O9
+ Region S (Bicol Region)
ns, z,og2
ls + Region 6 (Western Visayas Region) I b,ggs
# Region 7 (CentralVisayas Region)
: 24,600
+ Region 8 (Eastern Vsayas Region)
g,1gg
+ Region 9 (Zamboanga peninsula)
g,970
+ Region 10 (Northern Mindanao)
5,1gs
+ Region 1 1 (Davao Region)
.i : 16,731
+ Region 12 (SOCCSKSARGEN) g,SOs
I + Region 1s (CARAGA)
3,043
B
+ Autonomous Region in Muslim Mindanao (ARMM)
: 1,450
Eleven Filipinos are incruded in the
rrle worrd,s
r
Forbes 201b rist of

-r the vYUIru !i i
richest. Their business investments
are in the forowing: t
j:::,..a
ro!,s ^va __.*l
' ';l;i;t; i,f '':l
1. supermalls, banking, and property development; E
2. airlines, telecommunications, property development, banking, hotels
I
and power; gE
bi
3. casino property development and port operations; s*
4. property and resort develoPment; ifi
h6
5. airline and tobacco; ]€q
6. property development and banking;
7. property develoPment; ht
8. fast{ood industry; rtrr
9. supermarkets; Tra
10. insurance; and

dG
1 1. real property develoPment.
of
other 2015 positive news on Philippine investments include the
following: to
+ car sales are uP; ir
+ capital expenditure budgets are hiked;
F
+ economic growth rate has risen above historical performance;
€r
+ growing remittances of overseas Filipino workers (OFWs); d
+ new wave of foreign direct investments;
+ extended basic education;
+ family planning and reproductive health; e

a
+ cash transfer programs to help poor famities; r
+ foreign exchange rate $ :?44,from $ 1 : P55
1 in 2009; €
+ continued expansion of business process outsourcing (BPO); and

i
I
+ 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).

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
The use of water transport for domestic trade transactions is distinctive
to 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)

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
Dd include Business Process Outsourcing (BPO), the Electronics lndustry,
Renewable Energy, and Shipbuilding.
Upon evaluation of its application for registration under the Omnibus

tce
lnvestments Code and the list, of the lnvestments Priorities Plan, BOI-
PSS
registered 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,;

Bases
impost and fees underl
wharfage dues and export tax' duty'
+ exemption from with ct
(clE)
of duty on capital equipment'
spare parts and +*
+' reduction of the rates kt
o{ EO 528
accessories bY virtue
stocks and genetic materials
+ol
+ tax exemption on breeding rr
+ tax credits +G
+ additional deductions
from taxable income r
in th
Nonfiscal lncentives cou
* emPloYment of foreign
nationals Sfi
C*d
procedures
+ simplification of customs adt
equipment
+ importation of consigned +
warehouse
privilege to operate a
bonded manufacturing/trading
+
Zone Authority (PEZA)
The Philippine Economic +
ThePhilippineEconornicZon'eAuth.ority(PEZA)isalsoanattached to promote
rrro" ana rnar"trv that is tasked +
agency of the o"pun",i"li'ot facilitate
extend regi"t"'' g'ant incentive:'to'-"nd in
investments, """itt"n""'
oo"'utii;; i;;""to' a"'"'"ts operations engaged
the busine"" are encouraged to locate
export-orientea
inside selected
manuil"**g and servicefacilities
"r""",r,rorghlout
ttr"
"orniry-froctaimed
as PEZA Sfecial Economic
Zones'
by the President of
4.,
n'i"r
;i-"}^r,o;res \I dornel
investments in various
I tung*
"Til:1:::::mic zones deveroped to encourase I invesl
of the PhitiPPines include:
I ofbu
e
,"gion. I econ
l.AuroraPacificZoneandFreeportAuthority(APEco),locatedinthe which
thulC"teway to the Pacific"
province ot'i*o'"' dubbed "t mariculture'
encourages"ii-*'i'n"nts
in transhipment' logistics'
sectors ;
tourism, ri";;i"' ;;;;;y, and other agro-industrial 8.3 t

2,AuthoritfoftheFreeporTAreainBataan(AFAB),locatedinMariveles, G
ffi;;;:';f;" iH ;i
Bataan,isagovernment-owneJ,nJcontrolledcorporationcreatedto be
of 2ooe' rhe FAB used world
bv Repudil
devd
theBataanExportProcessrngZone'thefirstecononriczoneinthe MATY
PhitiPPines;
ecofi
beo
lfees 3. Bases Conversion and Development Authorty (BCDA), created
t under Republic Act7227 (Bases Conversion Act of.1g92), is vested
t with corporate powers to:
b and
I + accelerate the sound conversion of former military base lands
i
into globally competitive investment centers;
+ optimize revenue generation from the disposition of former Metro
Manila camps; and
+ create opportunities for employment in Central Luzon.
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:
+ Clark Special EconomicZone (CSEZ) and Clark Freeport Zone

(CFZ) in Pampanga;
hed + Bataan Technology Park (BTP) in Morong, Bataan;

bte + Poro Point Freeport Zone (PPFZ) inl-a Union; and the
hte
+ John Hay Special Economic Zone (JHSEZ) in Baguio City.
!in
Fte
lor Why Do Business in tte Philippines?
It has often been said that the Filipino people is the country's
primary asset. The more than one hundred million population is a huge
domestic market for consumer goods. The proficiency with the English
ps language makes the Filipinos highly trainable. lncentives to entice foreign
i investors are in place. Privatization and deregulation add sustainability
he of businesses. The Philippines is one of the most exciting emerging
hr' economies in the world. lnflation is controlled and gross domestic
ie, product (GOp) per capitagrows at double digit.
r
,
ts,
td
8.3 r
I
De Globalization removes borders and restrictions between nations and
he 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
with an outside provider to
produce
Outsourcing means contracting is no
of
g*a"-and services' The Philippines to
one or more "'n""i'"iion'"Process outsourcing, which continues
to the
"tterm-Business
stranger even in the rural
phenom",Irl nr"*in of the call center industry,
witness the
areas.
offshoringmovesworktoothercountries,oftenimplementedbylarge
of origin' Assembly
labor costs i" itr"it countries
conglomerates to reduce with lower
plants beel relocated to countries
lines of manufacturrng fravl computer
services such as accounting'
wage costs, uno "u"i i'ot"""ionul recent years'
have seen upsurges in
programming, and ooo[e"ping
Ext
ffip019anzationandManagement:ConceptS,Caselets,andExercises
produce
les is no
jnues to
the rural
by large
isembly
h lower
rmputer
tIl
Exercises
t
I
l.
F'
Fill in the blanks with the correct word or phrase'

write the letter only'
a. Management f. lnnovation
b. Leading g. Efficiency
c. Organizing h. Effectiveness
d. Action plan i. Management levels
6 Planning j. Controlling
1. or delivering strategic value, uses tools' such as the
flowchart and GANTT chart'
2.Thetermsdownsizing,rightsizing,andreengineeringareoftenused
in the function of managers'
3. New perspectives in _--, or mobilizing people' sometimes use

- charisma.
the term
4. There is often negative connotation for the function of
managers.
5. Top, middle, and frontline are -.- in an organization'
6. is the process of working with people and resources to

accomplish organizational goals effectively and efficiently'
7. means organizational goals are achieved'
8. means goals are achieved with minimal waste of money'

time, materials, and PeoPle'
9. is the introduction of new products and services'

questions
10. An.-_ asks the 'what-where-when-how-how much'
for management cases.
B' Write the letter only'
Match column A with column
A
to a. downsizing
1. The ability of a product or service
meet customer needs b. rightsizing
2. The planned removal

of positions or c. customer
jobs relations
3. Efforts to revolutionize organizational manager
and Processes to satisfY
d. reengineering
"yr,"*t
customer needs
totalqualitY
4. The eff orts at achieving an e.
apProPriate size for ef{ective

management
(roM)
enterPrise Performance
5. An integrative aPProach to f. just in time (Jtt)
,unugu*Lnt that suPPorts th" g. flowchart
realizition of customer satisfaction
through an extensive variety
of tools h. GANTT chart
and techniques that result in high i. qualitY
qualitY goods and services
.i. activitY network
6. A visual tool for scheduling and
planning Proiects
unit tasked
7. A function or enterprise
to focus on interactive relationships
with customers
calls for
8. An organizing method that
to be
sub-aJsemblies and apparatus
produced
9. A Planning tool that ',Puts keY
easy
processes in symbolic patterns
to understand
10. A Planning tool that is usedfrom to
diagram ,"ti'iti"" in sequence
start to finish
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
standards
4. Establish high performance
- and trust
(s), weakness (w), opportunity
ldentify the following if it is a strength
(O), or Threat (T).
1. Changes in tastes and Preferences

2. Presence of skilled manPower
3. lncrease in consumPtion Patterns
4. Decreasing disPosable income
6. New and modern equiPment

7. Limited managerial exPertise
8. Available financial resources
9. lncrease in PoPulation
10. Limited service caPabilitY
statement'
being described in each
tdentify the government agency
Department of Trade and

lndustry (DTl)
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
2. Product and service standards
3. EmploYee health certificates
4. Skills training and develoPment
5. Consumer Protection
6. Government develoPment Plans
7. lnf rastructure develoPment
products
8. Registration of cosmetic
investors
9. lncentives for foreign
10. ExPort-imPort statistics
Match column.A with column B. Write the letter only-.
A
1. A strategy where an organization d. vtston
stays in asingle sectoror industry b. mission statement
2. A
planning term that indicates
c. visionaries
shorter-term directions
3. "Where do we want to go?" d. situational analysis
4. The strategy that refens to e. goals

expansion of an organization f. vertical integration
backward to its suppliers or
forward to its buyers g' diversification
5. Business persons who visualize h. concentration
the future of their respective
companies
6. The planning term that is a
declaration of the purpose of the
organization
7. Business purpose
8. A strategy where an organization
adds related products and
services to its original business
The step in the planning process
that entails the gathering,
interpretation, and summary of
relevant information
10. Bill Gates, Mark Zuckerberg, and
Walt Disney
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 Advantage/
Organization Disadvantage
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
Exerci$d'8

Match column A with column
B
A
determines job orientation
1. This staffing function (Jo)
who to
where decision is made on
bY the recruitment (R)
hire from the Pool created b.
recruitment Process' c. selection (S)
This ing f unction refers
staff
to determining an emPloYee's d. on-the-iob
training (OJT)
performance.
3. The duties of given .iob Positions
6 training and
una ,f," characteristics of PeoPle develoPment
in this (rD)
who should fillthem are done
staffing function' f. performance
the
4. This staffing function determines appraisal (PA)
kind of PeoPle for the
job'
$; reward sYstem
staffing function where a
poolof
5. The design (RSD)
is develoPed'
iob applicants job analYsis (JA)
involves the h.
6. This staffing function
design oP"t"tionalization of i. job descriPtion
"nJ
continuous workforce improvement' UD)
fringe
7. The plan for monetary and job sPecification
in this .(JS)
U"n"iit" of employees is done
staffing function'
documents
L This staffing function
details of what a job entails
new
9. This staffing activity provides
*itf' U*i" background
"*ploY"""
information about the enterprtse'
activity' the
10. ln this organizing/staffing
a bY
new frire is tasked to learn iob
actuallY doing it'
5i'i;a mg::.. ',,E1$!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
Epf{
2.
3.
4.
Food and water
Friendship
Shelter
-td ;" dt
5. Affection
,"Jtr 6. Becoming everything one is capable of doing
Frv 7. Sex
T
\{ 8. Freedom
\ft 9. Love
Eq 10. Protection against threat and deprivation
-d
s-" 1 1. Achievement
,r't sI
,.,> l rJ 12. Belonging
I"
J- 13. Status
fe 14. Recognizing one's full Potential
L 15. Recognition
Match iolumn A with column B. Write the letter only.
A
1. A orchestrates important.change g, impoverished
effectively. management
2. - shows low concern for people b. power

and low concern for production. 6.. team management
3. -_L shows high concern for people di manager
r production.
and
I
e. Stephen Covey
4,A deals with day-to-day
I
I
organization complexities. !'a affiliation
r, g.
5. { reflects'a strong wish to be liked, growth needs
according to McClelland. \ h. SherylSandberg
I 6.r Under Aldeder's ERG theory, k leader
i.
leaders need to address or
encourage people 'to creatively and A achievement
efficiently change themselves or their
I
I
environments.
I
k 'Makeyour partner a real partnerl
i A" 'Seven Habits of Highly Effective
I People'
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.
Match column A with column B. Write the letter only.
A B
1. Any process that directs the activities of a. control
individuals toward the achievement of
b. accounting
organizational goals.
system
2. The type of control that utilizes rules,
policies, hierarchy of authority, reward bureaucratic
systems, and other formal mechanisms control
to influence employee behaviour and d. internal
assess performance. control
3. An area of control that includes budgets
e. finance
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.
r

Matqh column A with column
activities relate to identifying

a. operations
1. Its these management
custome, needs and interPret
back to the enterprise for its
business b. human
reaction. resources
management area management
2. This functional
is sometimes called Personnel marketing
management. management
use of
3. Its activities relate to the efficient technologY
machines, sPace' and Personnel' management
4. This functional management area
relates to the formal sYstem
for e. financial
management
the management of PeoPle within
an
organization'
h
v. Its activities involve innovation or
change.
lt takes charge of the use of funds
in
6.
operations.
the
7. It answers questions on satisfying
service'
need for a new Product or
area
8. This functional management of
assesses the economic performance
cqmpanies and industries'
distribution'
o Its activities involve pricing'
,na Promotion of Products and/or
services. rl
area is in
10. This functional management
charge of qualitY 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 ii'
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
Match column A with column B. Write the letter only.
A B
1. This is the lead government agency a. trading

tasked to promote investments in the business
Philippines.
manufacturing
2. This business type is sometimes business
called a merchandising business.
c. servtce
These incentives include income tax
business
holiday and tax credits.
Philippine
4. This business type is engaged in
Economic
converting raw materials to finished
Zone Authority
products.
5. This government agency is attached e. direct labor
to the Department of Trade and f. outsourcing
lndustry (DTl) and is tasked to
promote investments, facilitate the g. Board of
lnvestments
business operations of investors,
among others. h. fiscal incentives
6. This business practice is often i. Business
implemented by conglomerates to Process
reduce labor cost. Outsourcing
This business practice involves
offshoring
contracting with an outside provider
to produce one or more of an
organization's goods or services.
8. Call center industry
9. Example businessed' include doctors'
clinics, law offices, CPA practitioners
*i
10. This is an element of manufacturing
that converts raw materials to finished
products.
*,
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http ://www.dole. gov.ph/labor-codes/view/4
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DPorary Department of Labor and

Employment. Accessed April 30, 2016.
http ://www.dole. gov.ph/labor-codes/view/5
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Department of Labor and Employment. Accessed April 30, 2016.
http ://www.dole. gov.ph/labor-code sl view I 7
dia for
)6. Department of Trade and
lndustry. Accessed April 30, 2016.
prhes. http ://www.dti. gov.ph/dti/index. ph p
Metropolitan Manila Development Authority. Accessed April 30, 2016.

Ustries
http://mmda.gov.ph/
Securities and Exchange Commission. Accessed April 30, 2016.
lnvior http://www.sec. gov. ph/
Wikimedia Commons. Accessed April 30, 2016. https://commons

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a a

O Alderfer's ERG Theory, 66

1.1 Managemen#,BEfiiiflti ! $iqtl* ;;:i';,:i!,1l:",

are engaged in combat. Familiar business terms include globalization,

engagement,' or the professed battlefields where competition for customers

for all business organizations. Many groundbreaking innovations focus on

Chapter 1: Fundamentals of Management

The 'rules of engagement' and battlefields require soldiers and Mdbtu

5. The meaning of the competitive advantage aspects is reiterated + Plan

Managers: Commanding Off icers C Descrpe rec

organization and Management: Concepts, Caselets, and Exercises

fll- Srnp/e Frequency Count,which allows prioritization of problems that

3. GANTT charts are useful for scheduling and planning projects.

0 Select the problem that will be addressed, and describe the

0 Develop an effective workable solution;

0 Check or review the result of the change.

Chapter 1 : Fundamentals of Management

the task, and write these in 3" X

2. Rightsizing,means the efforts at achieving

Caselets' and Exercises

Luther King, and his 'dream of a better worldl charismatic leaders

1. Education and communication, commonly used where there is lack

3. Facilitation and suPPort, where the situations show adjustment

Chapter 1: Fundamentals of Management

Management Levels: Chains of Command

0rganization and Management: Concepts, Caselets, and Exercises

rI h*eoo Lndividuals and support their activities'

I A::act and develoP resources'

fr ruunnnrmrwu fe sr;lll sffie" lNsil

2' A reader or moderator is erected,

Deep and Sussman^(2000) Ilecision Tree

Choose your best strategy.

Decision Tree Analyze, Choose, Act

Chapter 1 : Fundamentals of Management

0rganization and Management: Concepts,

Chapter 1: Fundamentals of Management

Figure 1 .3. Decision-making stages

The decision-making stages are imperative in honing management

0rganization and Management: Concepts, Caselets, and Exercises

Chapter 1: Fundamentals of Management

+ shift to service economy

$cial, Sociological, Cultural, Demographic, and Environmental

+ air and water Pollution control

* number of women workers

+ per capita income and average disposable income

Technological and Technical

0 provides decision and support systems

0 spurs productivity and living standards

A variation on the PEST acronym is PESTEL, which stands for Political,

lllffilnrrrn,umhlu @ note that most progressive cities in the Philippines and

furtment of Trade and lndustry (DTl), and its bureaus and

of lnterior and Local Government (DILG), and its

of Public Works and Highways and its

E, Deparlment of Health (DOH), and its bureaus and agencies for

rmtEe otrtiets rn the sad E

Figure 2.1. Michael Porter's. five forces

(Source: Porter, 2002)

0rganization and Management: Concepts, Caselets, and Exercises

m Substrtutes-establishments with faster, more accessible and/or

substitutes for both the ouezon city and caloocan city

resources in a given enterprise. lnternal resources may include management, figuiG!f

and Management: Concepts, Caselets, and Exercises

iirent opportunities, and threats

r, ,.s -or ia"ntiii"l irJi[1= be sMART-