Business Organization

Business

Any activity involved in the production and distribution of goods and services, aimed to meet the economic needs of consumer with an objective of eventually earning profit

Primary Goal of a Business

aimed to meet the economic needs of consumer

Relationship between business and the economy

Business firms contribute to the country’s economic growth, one measure of economic growth is the Gross National Product (GNP)

Gross National Product

Total market value of goods and services produced by a country in a given period

Industry

Some business firm manufacture the same product, when combined these firm as a group, they are called

Industry

Group of business firms offering similar goods or services

Agriculture

The science and practice of farming, including cultivation of the soil for growing crops and rearing animals for food, fiber, and other products.

Manufacturing

Production of goods using labor and machines.

Trade

The process of buying and selling goods and services

Construction

The process of creating and building structures, including residential, commercial, and industrial projects, typically involving specialized labor and materials.

Government sectors

Branches of government responsible for public administration and services.

Economics

study of how a society produces and distributes desired goods and services. It deals with how society uses its resources to produce goods and services.

Factors of production

1. Land

2. Labor

3. Capital

4. Entrepreneur

Factors of production

The economic resources to produce are called

Profit

The entrepreneur buys and organizes these factors to provide goods and services. In return, he

Profit

The difference between the income an entrepreneur receives from the sale of his goods and services and the expense he incurs to produce

Responsibility of a Business Enterprise

Business company must follow all government rules and regulations

Why People engage in business

Businessmen want to earn profit, serve the community and achieve prestige because of certain stimuli. 

Abraham W. Maslow

These factors are postulated

Physiological or biological needs

Essential for survival

Safety need

Security, stability, protection against danger 

Social need

Need for group belongingness, affection, love

Ego or self esteem need

Need self recognition or group satisfaction

Self fulfillment need

Need for realization of personal goal

Kind of Business

1. Industry

2. Commerce

3. Services

Industries

Conversion of raw materials into finished products or goods

1. Farming

2. Fishing

3. Mining

Industrial group

Commerce

Process of buying and selling where goods are moved from the point of production to the point of consumption

Service Enterprises

Concerted with the satisfaction of the needs and wants of the consumers

Public and Community service

MERALCO,Motion pictures

Professional or trade service

CPA, Lawyers

Sole Proprietorship

A form of business organized by only one person

Partnership

A business organization where two or more person contribute money, property, or talent, to carry on business

Corporation

An artificial being created by the operation of law

Significance of Studying Management

It helps the business to achieve its goals efficiently and effectively, thus improving its decision making skills for employees and managers.

Definition of Management

Management is a distinct process of planning, organizing, staffing, directing, and controlling, that is performed to determine and accomplish stated objectives by the use of human beings and other business resources. 

Universally Accepted Function of Management

Planning

Organizing

Staffing

Directing

Controlling

Planning

Formulation of objectives, program, policies, procedures, rules and regulation, in order to achieve the goals of business

Organizing

Grouping together of people, establishing relationships among them, and defining the authority and responsibility that the personnel have to use in the company’s material resources to achieve its goal and objectives. 

Staffing

Involve in filling and keeping the position provided filled. This includes recruiting and selecting candidates for positions that can accomplish their tasks effectively and efficiently. 

Directing

It has to do with the predominantly interpersonal aspect of managing. Leadership implies followers and people tend to follow the man who means satisfying their own needs, wishes, and desires.

Directing

This motivates and guides the employees to achieve their goals and objectives.

Controlling

A process of measuring and correcting the activities of subordinates and the company itself to assure conformity to plans.

Controlling

 It measures performance against goals and plan and finds the constraint and corrects the actions eventually to help assure the success of plans. 

Management as a Science and an Art

This requires skill and study in management.  It has a systematic body of knowledge. Management seeks to integrate into a unified, coordinated whole the essential factors that make up an organization.

Evolution of Management Theories

1. The Classical or Traditional school

2. The human relations School

3. The management Science of Quantitative school

4. Modern Management

Principles of Management by Henri Fayol

Division of Work

Authority and Responsibility

Unity of Command

Remuneration

Centralization

Scalar Chain

Stability of Tenure

Esprit de Corps

Span of Control

Simplicity

Unity of Direction
Order

Equity

Division of Work

Specialized jobs to various departments or positions. People learn the task more easily and perform it effectively. (Increase efficiency and productivity) 

Authority and Responsibility

He sees authority as the power or the right entrusted to make the work possible. (Managers must have the right to give orders, but also bear responsibility.) 

Unity of Command

Employees should receive orders from one manager only.

Subordination of Individual interest to General interest

The interest of one employee should not prevail over the interest of the business 

Remuneration

Payment should be fair and afford the maximum possible satisfaction to employee

Centralization

The degree to which authority is concentrated or dispersed in management.

Scalar Chain

Chain of superior (Highest to the lowest rank) Top management is president)

Stability of Tenure

Unnecessary labor turnover should be the cause and effect of bad management. (Reduce employee turnover; keep workers long enough for efficiency)

Esprit de Corps

explain that “Union there is strength”. Need for teamwork and importance of communication. 

Span of Control

Specific and limited number of subordinates that a manager can handle and control. 

Simplicity

Unnecessary elements should be eliminated from all activities.

Unity of Direction

One boss and one plan for a group of activities having same objectives

Order

ensure a place of everything

Equity

results from kindness and justice

Scientific Management by Frederick Taylor

1. Develop a science for each element of a man’s work, to replace the old rule of thumb method

2. Scientifically select and then train the worker

3. Heartily cooperate with the men to ensure that all the work is done is in accordance with principle of science develop for the work

4. Divide the work and the responsibility equally between management and the worker. The worker should be assigned to which work they fitted better. 

First Principle of Frederick Taylor

Develop a science for each element of a man’s work, to replace the old rule of thumb method

Second Principle of Frederick Taylor

Scientifically select and then train the worker

Third Principle of Frederick Taylor

Heartily cooperate with the men to ensure that all the work is done is in accordance with principle of science develop for the work

Fourth Principle of Frederick Taylor

Divide the work and the responsibility equally between management and the worker. The worker should be assigned to which work they fitted better.