Management

 The process of utilizing the resources of the organization in an effective and efficient manner to
attain targeted objectives
 through planning, organizing, staffing, leading and controlling.

Effectiveness

 Doing the right thing

Efficiency

 Doing the thing right

6M’s

 Manpower
 Money
 Machines
 Materials
 Method
 Market

Main characteristics of management

1. Continuous and never ending process

2. Getting things done through people
3. Result oriented
4. Multidisciplinary in nature
5. A group and not an individual activity
6. Follows established principles or rules
7. Aided but not replaced by computers
8. Situational in nature
9. Need not be an ownership
10. Both an art and science
11. Management is all pervasive
12. Management is intangible
13. Uses a professional approach in work
14. Dynamic in nature

PLANNING

 Is the management function concerned with defining goals for future performance and how to
attain them
 a significant function of all other functions
 Planning is a strategy –which is a bunch of decisions that focuses on the organizational goals to
pursue, actions to take and the managing of resources towards goal accomplishment.

Organizing

 Involves assigning tasks, grouping tasks into departments, and allocating resources
 Organizational structure – a formal system visualizing the task and reporting connections that
harmonize and inspire members to work together for goal and objective achievement.
 -the foundation of a company; absence of this structure shall make the day -to -day operation of
the business hard and unproductive.
Staffing

 Includes recruitment, training and development, performance appraisals, promotions and

transfers.

Leading

 Involves motivating, communicating, guiding and encouraging people in the organization.

 It requires the leader to coach, assist, and solve problem with employees.
 Extremely important and challenging
 A good leader inspires employees, heightens morale and promotes effective communication
amongst employees.
 The trend is now empowering employees to become self directed and self motivated.
 Through the encouragement of managers, employees can be able to visualize and understand
the important roles they play in achieving the organizational goals and objectives.
 the product of effective leadership is well committed organizational members.

Controlling

 The process of continuously checking results against predetermined goals and objectives and
takes any curative actions needed to make plans stay on track.
 It involves comparing actual performance to planned performance
 It is valuable for guaranteeing all other functions of the organization are in place and are
operating effectively and efficiently
 Involves setting up performance standards and checking the productivity of employees to make
sure every employees performance targets those standards.
 Frequently directs to the detection of situation and problems that must be addressed.
 The level of performance influences the accomplishment of the entire phases of the
organization

 HISTORY OF MANAGEMENT THOUGHTS

BUREAUCRATIC MANAGEMENT
MAX WEBER
German Sociologist
(1864 – 1920)

 “ The exercise of control on the basis of knowledge”

 Focus on the use of rules & dividing organization into hierarchies to guarantee efficiency
and effectiveness.

 7 Advantageous Attributes
1. RULES
- serve as a norm for guiding or directing action or conduct of employees in the workplace
and provide the discipline which the organization requires to attain goals & objectives.
2. IMPERSONALITY
– provides equity and fairness for all employees by not consenting to subjective personal or
emotional reflection during evaluation procedures
3. DIVISION OF LABOR
– is the clear splitting and defining of work based on specialization and personal
experience.

4. HIERARCHICAL STRUCTURE
- categorize jobs based on the level of authority. This assist in directing employee behavior.

5. AUTHORITY STRUCTURE
– refers to who has the right to decide”

3 types of authority
 Traditional Authority – founded on custom, ancestry, gender, birth order, etc.
 Charismatic Authority – visible in a leader whose mission and vision in life
encourage others.
 Rational-legal Authority – based on the uniform application of established laws and
rules. Obedience by subordinate is given to a superior because of a set of uniform
principles like the organization’s hierarchy.

6. COMMITMENT
- the visualization of employee and the organization as being loyal to each other over the
span of the working life of the employee.

7. RATIONALITY
– attaining the organizational goals in the most efficient way. Logical and scientific manners
of using financial and human resources

SCIENTIFIC MANAGEMENT
FREDERICK TAYLOR
Father of Scientific Management
(1856 – 1915)

 “75 % science and 25 % common sense” w/emphasis in the use of systematic study
to find the “one best way” of doing a task.
 Assembly lines and other mechanistic routinized activities
 “scientific management means knowing exactly what you want men to do and
seeing that they do it in the best and cheapest way”. –based on 4 principles
 SPECIALIZATION as the only source of authority
 MONEY as motivating factor for employees to work to their capacity
4 PRINCIPLES OF SCIENTIFIC MANAGEMENT

 Develop a science for each element of work by studying, analyzing and determining the “one
best way” to do work.
 Scientifically select, train, teach and develop workers to assist them achieve their full potential.
 Cooperate with employees to guarantee execution of the scientific principles
 Divide the work and the responsibility evenly among management and workers.

Lillian & Frank Gilbreth

 1ST woman to receive a Ph.D. in Industrial Psychology
 Noted for championing the workers via standard days, scheduled rest
breaks and normal lunch breaks.
 Motion study – use of motion pictures to study worker’s motion.
 Help in rehabilitation and employment of 13 million wounded and
disabled soldiers

Henry Gantt (1861 – 1919)

 Gantt Chart – a visual representation of the progress being carried
out for each stage of work in a project.

 Introduced the QUOTA SYSTEM & BONUSES

 Recommended that companies must train & develop their

workers to achieve best performance levels.

ADMINISTRATIVE MANAGEMENT
HENRY FAYOL
-5 functions of managers (planning, organizing, coordinating,
commanding, controlling).

-14 principles of management

-Managers are molded through the combination of education and

experience.
14 PRINCIPLES OF MANAGEMENT
1. Division of work – dividing job into small and specialized tasks
2. Authority – the right to give order and power
3. Discipline – obedience, application and respect to superiors.
4. Unity of command – subordinate should receive order from only one boss or superior
5. Unity of direction –all works perform jointly to achieve common objective
6. Interest - Subordination of individual interest to common interest
7. Remuneration – incentives should be fair and adequate
8. Centralization – should have one central point in organization which exercise general direction
and control
9. Scalar chain – chain or line of command and communication from superior to subordinates
10. Order – provides jobs and materials in place or in proper order
11. Equity – creates loyalty and devotion among employees through fair disciplines and order
12. Stability of tenure personnel -
13. Espirit de corps
14. Initiative

NEO CLASSICAL THEORY OF MANAGEMENT

 Known as Behavioral Science Approach
 Gives importance to human and social aspects of the workers and his relation in the
organization.

ROBERT OWEN
-Propose legislative reforms to improve working conditions of labor
“Increased profitability for the firm and reduced hardships for workers
are the positive results of showing concern for workers”.
-Robert Owen
 MARY PARKER FOLLET
1868 - 1933
-A social worker
-“management is a continuous process”
-Inclusion of workers in decision making and the dynamism of management
-Good working relations and communication is the key to a harmonious
workplace

 Ways to deal with conflict

 Dominant – a victory of one party over the other
 Compromise – both sides giving up in order to have peace
 Integrative conflict resolution – both parties considering their preferences and work
together to find the best option that meets the needs of both groups.

CHESTER BARNARD
1886 - 1961
 Book “ The Functions of Executives”
 -establish & maintain an effective communication system
 -hire & retain effective personnel
 -motivate those personnel
 Acceptance theory of authority
 ELTON MAYO
1880 – 1948
Hawthorne studies (1924 – 1932) at Western Electric Company in
Chicago

4 Phase
 Illumination experiments (1924 – 1927)
 Relay Assembly room experiments (1927 – 1928)
 Mass interviewing program (1928 – 1930)
 Bank wiring room study (1931 – 1932)

 Examine the effects of lighting to workers fatigue & productivity

 Examine the behavior and attitude of workers at workplace under better working
conditions
 Determine the significance of informal groups and the social environment of the
workers as vital pressure to productivity
 Rate busters & Chiselers
Results:
 Employees are not motivated by only money like bonus schemes and incentives
 Social factors are accountable for deciding the level of output
 Workers behavior depends upon their mental levels and emotions. Workers began to
influence their group behavior towards management
 Employees do not like orders and command, preferred to maintain amicable
relationships with their co workers and want cooperative attitude from their superiors.
 Teamwork and group psychology increases productivity

DOUGLAS MCGREGOR
1906 – 1964
 Work attitudes and behavior “Theory X and Theory Y”
 ABRAHAM MASLOW
1908 – 1970
 Father of Modern Management Psychology

 MANAGEMENT SCIENCE THEORY

 The use of statistical model & systematic mathematical techniques
1. QUANTITATIVE MANAGEMENT
 Use of mathematical approaches (Linear and non linear programming, modeling and
queuing theory)
 Inventory management, sales revenue, capital investment & profitability
2. OPERATIONS MAMAGEMENT
 Beretta firearms & Gun barrels
 Engages supervising the daily operation of the company in producing goods &
services.
 Uses quantitative approach to increase productivity, improve quality & reduce
cost
 Quality control, forecasting, capacity planning, productivity measurement and
improvement, linear programming, scheduling systems, work design and
measurements, project management and cost benefit analysis.
3. TOTAL QUALITY MANAGEMENT
 Quality – how well a product or service function as it is supposed to be and how
close and reliable it conforms to the specification
 TQM – a continuous quality improvement of inputs process and outputs.
 Edward Deming – Quality Guru

4. MANAGEMENT INFORMATION SYSTEM

 Invention of the first printing press – the Gutenberg in the 14th century which
revolutionize the Information Technology
 typewriter (1980) & PC and word processing software
 ORGANIZATIONAL ENVIRONMENT THEORY
 set of uncontrollable forces and conditions that may affect the managers ability
to allocate resources.
 Study of external environment

 FUNCTIONS, ROLES & SKILLS OF A MANAGER

 MANAGER
 An individual answerable for the performance of the group members in the
workplace.
 The official authority to assign resources of the organization

 5 BASIC FUNCTIONS OF A MANAGER

“Tasks, Responsibilities, Practices”-Peter Drucker

 Set objectives and plan

 Organize the group
 Motivate and communicate
 Measure performance
 Develop people
  LEVEL OF MANAGEMENT

 First Line Manager – cater day to day operations of the organization, directly involved
w/ people who are directly responsible for producing the company’s goods and services.
(office manager, shift supervisor, department manager)

 Middle Manager – responsible for looking for the best way or organizing human and
other resources to accomplish organizational objectives. (general, plant, regional and
divisional manager)

 Top Manager – executives w/ cross departmental duties, responsible for the overall
direction of the organization. (CEO, COO, CFO)

 Team Leader – a new kind of management job with no formal supervisory function.
Facilitates the team activities towards the achievement of the objectives.

LEVEL OF MANAGEMENT & THEIR FUNCTIONS

 BASIC MANAGERIAL ROLES
 SKILLS OF A MANAGER

 TECHNICAL SKILLS – ability to apply proficiency or expertise to

perform particular tasks. Accountants, engineers, market researchers
and computer scientist possess technical skills. (Education, training
and job experience). It is most significant skills at lower levels of
management and for team leaders.

Note: as managers rise through the managerial ranks, technical skills

become less vital but still needed.

 HUMAN SKILLS – ability to soundly work in cooperation with others.

It emerge in the workplace as spirit of trust, enthusiasm and genuine
involvement in interpersonal relationships.

-Manager w/ good human skills has a high degree of self awareness,

capacity to understand or empathize with the feeling of others, good
listeners and communicators.
-Upper managers

 CONCEPTUAL SKILLS – the ability to see the total picture of the

organization, to know how the different parts affect each other and
how the company fits into or is affected by the external environment.
It calls to have analytical sense.

Analytical skills enables managers to break down problems into smaller

parts, to see relations among the parts and to distinguish the repercussions
of any one problem for others.

Senior management level

Managers must always be up to date for environmental changes.

 Environmental Change – rate at which company’s general and specific environment

changes.
 Stable Environment – rate of environment change is slow
 Dynamic Environment – rate of environment change is fast
Activities intended to obtain information about events and trends that take place outside and
inside the organization which can put pressure to management in making decision for the
organization.
 Internal Analysis – identifying strengths and weaknesses of the different functional areas
of an organization.
 External Analysis – the acquisition and use of information gleaned from sources external
to the company.

 Scanning – as a form of early warning tool that allows managers look into the future.

2 kinds of external environment

1. General environment
2. Task environment

✘Includes external factors tjhat usually affect all or most players in every industry.

✘PESTE – Political-Legal, Economic, Socio-cultural, Technology and Ecological environment.

✘Either directly or indirectly influence the organization but they cannot be controlled by it.

✘Political environment – portrays the practices and dealings of government bodies that can
govern and regulate the decisions and behavior of the firms.

✘Legal environment – identifies what organization can and cannot do at particular point in
time.

✘Local government have the possibility to influence business practices considerably.

POLITICAL – LEGAL FACTORS

1. unemployment laws
2. Health and safety
3. Product safety
4. Advertising regulations
5. Product labeling
6. Labor laws
7. Taxation policy
8. Trade regulations
9. Government stability
10. Deregulation of industries
11. Privatization of government organizations

Strategies to cope with the instability of Political-Legal Environment

 Negotiation - the process by which two or more individuals or groups with both
common and contradictory goals, present and talk about proposals in an effort to arrive
at an agreement

 Lobbying – process which aim to persuade government decision by providing

administrators with information on the projected consequences of legislation or
regulatory rulings.

 Alliance – shared attempt of two or more organizations, groups or individuals to realize

common goals on a particular matter

 Representation - process involves membership in an external organization that

provides the wellbeing of the member’s organization or group.

 Socialization – the practice by which people discover the values held by an organization
and the broader society.

 ECONOMIC FACTORS
Economics – study that centers on appreciating how people or countries manufacture, dispense
and use diverse goods and services.
2 major branches of economics
Microeconomics - deals into the behavior of people and organization in particular markets.
Macroeconomics – focuses on the operation of nation’s economy as a whole.

Economic Factors - refer to the character and direction of the economic system within which
firm operates.
The impact of economic factors varies among indutsries.
Economic Factors
1. Balance of payment
2. The state of the business cycle
3. Distribution of income within the population
4. Governmental monetary and fiscal policy
5. Interest rates
6. Levels of employment
7. Consumer price index
8. Trends in GDP
9. Changes in stock market evaluation
10. Inflation rate
11. Growth in spending power
12. Rate of people in a pensionable age
13. Price stability (inflation and deflation)
14. Currency exchange rates

✘Consist of the demographic characteristics, general behavior, attitudes, beliefs, customs,

lifestyles and values that describe the society in which the firm operates.

✘Demographic characteristics – age, gender, income, family size, ethnicity, sexual orientation,
religion and socio-economic class among others

Socio-cultural Factors
1. Change in population demographics
2. Rising educational levels
3. Enhance number of older citizens
4. Enlarge number of dual income parents
5. More number of single parents
6. More women in the workforce
7. Increase in temporary workers
8. Greater concern of wellness and fitness
9. Better concern for environment
10. Postponement of family formation

TECHNOLOGICAL FACTORS

✘Technology – the knowledge, tool and techniques used to transform inputs into outputs.
✘Changing technology

✗influence the demand for a firms products and services, its production processes and raw
materials.

✗Generate new opportunities for the firm, or pressure the survival of a product, firm or
industry
Technological Factors
1. E-commerce
2. Social media
3. Level of automation
4. Nanotechnology or the science of unimaginable small electronics
5. Convergence of personal computer and telephone technologies
6. Internet’s becoming the backbone of information-intensive industries.
7. Emergence of biotechnology as a key component of the economy
ECOLOGICAL FACTORS

✘Ecological factors – concern in environmental issues such as the natural environment, global
warming and sustainable economic growth.

✘Natural environment and business worlds are inextricably linked.

✘Three bottom line (TBL) approach –(Profit, people and planet) aims to quantify the financial,
social and environmental performance of the corporation over a period of time.

Ecological Factors
1. Waste disposal
2. Energy consumption
3. Pollution monitoring
4. Weather and climate

 SPECIFIC ENVIRONMENT

✘Forces and conditions unique to specific firm’s industry and directly influence the ability of
the organization’s ability to obtain inputs and dispose outputs.

✗Suppliers, distributors, customers, competitors, advocacy groups and industry regulation are
part of this environment.

✘Suppliers - individuals and companies that provide an organization with input resources

✘Distributors – business that assist other organizations to trade their goods and services
✘Customer - Individuals and groups that purchase products and services

✘Competitors – businesses in the same industry that produce and sell the same goods and
services to a specific organization’s goods and services.

✘Advocacy group – groups of concerned people who assemble together to endeavor in

influencing trade practices of particular industries, businesses and professions.

✘Industry regulation – consist of policies and rules that oversee the business practices and
procedures of particular industries, businesses and professions.
THE SWOT ANALYSIS

✘Organizational Strategies – ways by which companies achieve their missions and goals

✘SWOT developed by Ken Andrews.

✘An evaluation of strengths and weaknesses is an audit of company’s internal capabilities for
which it has more control than outside factors.

✘Exploring opportunities and threats is a part of environmental analysis that must look outside
of the organization over which it has lesser control

LOCAL AND INTERNATIONAL BUSINESS ENVIRONMENT

The Philippine Business Environment

✓ Ranked 10th out of 189 economies in doing business 2014

✓ Implemented positive reforms that made easier to deal with construction, permits, get
credit an pay taxes.

✓ Improved credit information

✓ Data privacy act

➢ Top 3 business environment constraints experienced by private sector – Enterprise

survey data in 2009.
Practices of informal sector
Access to finance
Tax rates
Among 87 countries covered by the World Bank Group investing across sectors indicators, the
Philippine imposes FOREIGN EQUITY OWNERSHIP RESTRICTIONS on most sectors than most
other countries.
• Ex. 17 procedures and 80 days to establish a foreign-owned limited liability company in
Manila
Philippine Constitution prohibits foreign companies from buying land.
Foreign companies must get approval from the Board of Investment for long term leases.
THE ROLE OF BUSINESS TO THE ECONOMY
▪ Act as vehicle for economic progress.
▪ Increase the standard of living
▪ MSME’s – micro, small and medium enterprises

Hofstede’s Cultural Typology

✖Power Distance – the degree of inequality among people which the population of a country
consider normal

✖Individualism / Collectivism- degree to which people in a country prefers to act as individuals

or as members of a group.

✖Masculinity vs. Feminity – the degree to which values like assertiveness, performance
success and competitiveness are used to guide decisions versus values like the quality of life,
warm personal relationships, service and solidarity.

✖Uncertainty Avoidance - degree to which citizens of a country prefer structured over

unstructured situations, rigidity of procedures or willingness to accept risk and potential failure.

✖Long-term Orientation – extent to which decisions is based on long term orientation versus
short term orientation, past versus present versus future, and punctuality.

PHASES OF ECONOMIC DEVELOPMENT

PHASE I – SUBSISTENCE ECONOMY

Extremely low literacy rates

✓ High infant death rates

✓ Widespread hunger

PHASE II – COMMERCIAL ECONOMY

An economy where the output is more than needed to consume in order to survive.
Farmers has little surplus of wealth for use in health and education of their family with
additional crop production.
• Citizens and government can make investments
• Have sufficient amount of money to pay for vaccines to cure illnesses.
• Presence of hospital and medicines that made its population healthier.
PHASE II – COMMERCIAL ECONOMY
• Population is more productive
• Enough money for their children education.
• Investment in transportation infrastructure exist (cemented roads and ports).

PHASE III – EMERGING MARKET ECONOMY

A nations economy that is making headway toward becoming advanced.

• With sophisticated infrastructure (cemented roads and ports and electrical lines to
distribute electricity all over the country.
• Primary education has almost rising literacy rates and secondary education is extensive
• Has universal basic health services
• Has remarkable money for human health and education.
• Highly developed and progressively richer
• With a broad choice of goods for sale to nearby countries.

PHASE IV – TECHNOLOGY BASED ECONOMY

An economy that commercializes inventions leading to creation of new business enterprises.

Ex. Canada, United States, Western Europe, Japan and South Korea.
• Huge fraction of population is college-educated
• High-skilled jobs in areas
• Health care run by the government

PHASE IV – TECHNOLOGY BASED ECONOMY

• Long life spans with an average of 80 years.
• Has sophisticated network of physical road and rail network such as highways
• Has highly developed technological infrastructure.

DEFINITION AND NATURE OF PLANNING

 Planning
A complex, comprehensive intellectual management process focuses on proper selection of
goals and objectives and developing a course of action on the tasks and resources to be
employed to achieve these goals and objectives for future organizational performance.

Essential Characteristics of Planning

1. Planning is crucial
2. An intellectual process
3. A continuous function
4. Planning is flexible
5. For all managerial functions
6. Planning contributes to the objectives
7. Future is always full of uncertainties
8. Better utilization of resources
9. Increases organizational effectiveness
10. Reduces the cost of performance
11. Helps in coordination
12. Delegation is facilitated

Importance of Planning
1. Planning provides direction
2. Planning reduces risks of uncertainty
3. Planning reduces overlapping and wasteful activities
4. Planning promotes innovative ideas
5. Planning facilitates decision making
6. Planning establishes standard of controlling

Steps involved in Planning

1. Defining the current situations
2. Establishing goals and objectives
3. Establishment of planning premises
4. Determining alternative courses of action
5. Evaluating all alternatives
6. Choosing a course of action
7. Devising supporting plans
8. Establishing succession of activities
9. Feedback

FORMS OF BUSINESS ORGANIZATION

WHAT IS A BUSINESS ORGANIZATION?
An act of grouping activities into effective cooperation for definite objective.

SOLE PROPRIETORSHIP
• Unlimited liability
• One man control
• Single Ownership

Advantages
1. Simplicity of starting and ending the business
2. Being your personal boss
3. Delight of ownership
4. Leaving an inheritance
5. It is subject to less regulations
6. No exceptional taxes
Disadvantages
1. Indefinite liability
2. Restricted financial resources
3. Management difficulties
4. Great time commitment
5. Few fringe benefits
6. Limited growth
7. Limited life span

PARTNERSHIP
1. General Partnership – all owners share in operating the firm and in assuming liability for the
debts of the business
General partner- an owner who has unlimited liability and active in managing the business

2. Limited Partnership – has one or more general partners and one or more limited partners
who have limited liability to the extent of their investment.
Limited partner – an owner who makes investments in the business but does not actively
participate in its management and his liability for losses does not extend up to his contribution
in the business.
Limited liability Partnership – all of the partners have limited liability of the business debts and
has no general partners.

Advantages
1. Greater financial resources
2. Joint management and pooled skills and knowledge
3. Longer survival
4. No special taxes
Disadvantages
1. Unlimited liability
2. Disagreements among partners
3. Distribution of profits
4. Complexity in termination

Partnership agreement
A written legal contract between business partners. It establishes the condition of the business.
It Guards partners/shareholders in the occurrence of disagreement or closure of the business.
Agreement must be crafted with the aid of lawyer.
Key areas covered in a partnership agreement
1. Basics
2. Responsibilities, performance and remuneration
3. Contributions
4. Withdrawal of partners/ admission of new partners
5. Buy-out procedures
6. Dispute resolution
7. Financial arrangements
8. Method for dissolving the partnership
9. Valuation

CORPORATION

✓ owned by multiple shareholders

✓ overseen by a board of directors elected by the shareholders

✓ separated from the personality of the owners

✓ no shareholder of a corporation is personally liable for the debts, obligations or acts of

the

➢ The shareholder gain from the profit through dividend or appreciation of the stocks but
are not responsible for the company’s debts.

➢ A corporation is defined by the terms “limited”, “Ltd.”, “Incorporated”, “Inc.”,

“Corporation”, or “Corp.”.

Advantages
1. Ability to put up money for investment
2. No difficulty of ownership change
3. Limited liability
4. Continuous life
5. No difficulty in attracting proficient employees
6. Ownership separate from management
Disadvantages
1. High initial cost
2. Double taxation
3. So much paperwork
4. Size
5. Difficulty in termination
6. Probable conflict of stockholders with board of directors
Types of Corporations
1. Business Corporation
2. Close Corporation
3. Controlled Corporation
4. Cooperative Corporation
5. Non-profit Corporation
6. Professional Corporation
7. Public Corporation
8. S Corporation

COOPERATIVES
An autonomous association of persons, organized and controlled by its members, who
voluntarily pool resources to provide themselves and their patrons with goods and services, or
other benefits.
Provides:
1. Democratic control based on one member one vote
2. Open and voluntary membership
3. Patronage dividends

Advantages
1. Economical to form
2. Active members
3. Equal voting right
4. Members can be below 18
5. No accountability on debts by members
6. Controlled by members
Disadvantages
1. Only service provisions
2. Minimum membership
3. Limited distribution of surplus
4. One vote per member
5. Involvement if required
6. Continues education