Chapter-1.pdf

MANAGEMENT for FILIPINOS DR. CONRADO E. INIGO, JR. Ph.D., DBE CONCEPT OF BUSINESS & DEVELOPMENT OF BUSINESS CULTURE  BUSINESS Any activity involved in the production and distribution of goods and services, aimed to meet the economic needs of consumers with an objective of...

MANAGEMENT for FILIPINOS DR. CONRADO E. INIGO, JR. Ph.D., DBE CONCEPT OF BUSINESS & DEVELOPMENT OF BUSINESS CULTURE  BUSINESS Any activity involved in the production and distribution of goods and services, aimed to meet the economic needs of consumers with an objective of eventually earning profit. ❖ The evolutionary growth of various activities developing from simple to complex RELATIONSHIP BETWEEN BUSINESS AND THE ECONOMY pays for the goods and services produces goods and services ECONOMY BUSINESS provides the factors of production pays for the factors of production RELATIONSHIP BETWEEN BUSINESS AND THE ECONOMY  INDUSTRY a group of business firms offering similar goods or services. CLASSIFICATIONS: i. Agricultural ii. Manufacturing iii. Trade iv. Construction v. Government ELEMENTS OF A BUSINESS SYSTEM LAND (Materials) CAPITAL BUSINESS LABOR (Money) (Manpower) ENTREPRISE ENTREPRENEUR (Management skill) THE PROFIT MOTIVE  PROFIT the difference between the income an entrepreneur receives from the sale of his goods and services and the expenses he incurs to produce them INCOME – EXPENSES = PROFIT RESPONSIBILITY OF A BUSINESS ENTREPRISE Owners Workers Business Customers Association BUSINESS Labor FIRM Suppliers Union Community Government WHY DO PEOPLE ENGAGE IN BUSINESS 5. SELF ACTUALIZATION NEEDS Realization of personal goal or ambition 4. SELF ESTEEM NEEDS Self-recognition or group satisfaction 3. LOVE AND BELONGING NEEDS Belongingness, affection, love & friendship 2. SAFETY AND SECURITY NEEDS Security, stability & protection from danger 1. PHYSIOLOGICAL NEEDS food, clothing, shelter, air & water Abraham W. Maslow KINDS OF BUSINESS Business activity may be divided into three kinds: i. Industry ii. Commerce iii. Services I. INDUSTRIES involve the conversion of raw materials into finished products or goods. industrial group can be divided into extractive industries: farming, fishing and mining. (e.g. Nokia, Honda, San Miguel, Shell, Purefoods etc.) KINDS OF BUSINESS II. COMMERCE involves the process of buying and selling where the goods are moved from the point of production to the point of consumption (e.g. SM, Rustans, National Bookstore, Webster, etc.) III. SERVICE ENTREPRISE primarily concerned with the satisfaction of the needs and wants of the consumers. Subdivided into: a. Public and community service (MERALCO, motion pictures) b. Professional or trade services (CPA, Lawyers, Consultant) KINDS OF ECONOMIC SYSTEM 1. CAPITALISM a system in which the means of production are owned and operated by private individuals. A system of economic organization wherein privately- owned capital, and property rights are privately invested with the ultimate aim of personal gain. 2. SOCIALISM ownership of production and capital by the government and the regulation by the society. KINDS OF ECONOMIC SYSTEM 3. COMMUNISM A utopian economic system that implies a classless society with no government as suggested by Karl Marx. Usually refers to the economic system in the People’s Republic of China – the state owns and controls all means of production CRITERIA IN CLASIFFYING PHASES OF ECONOMIC DEVELOPMENT A. MEANS OF LIVELIHOOD 1. Hunting and Fishing Phase Our ancestors did not breed nor domesticate animals. 2. Pastoral Phase creation of groups and the presence of a large number of livestock have made man settle in an area for a longer period of time. 3. Handicraft Phase a period of medieval guild or associations of artisan engaged in the same trade. Items or objects were made by skilled and trained manual laborers. 4. Agricultural Phase continuous process to supply food 5. Industrial Phase use of power and machines which led to mass production CRITERIA IN CLASIFFYING PHASES OF ECONOMIC DEVELOPMENT B. EXTENT OF ECONOMIC ACTIVITY 1. Household Economy needs of the family were satisfied largely by the efforts and contributions of all members of the family. 2. Village Economy an economic and social relations among various families 3. National Economy grouping villages into bigger and broader social units and develops economic activities on a nationwide scale. 4. International Economy includes international trade and diplomatic cooperation. CRITERIA IN CLASIFFYING PHASES OF ECONOMIC DEVELOPMENT C. MEDIUM OF EXCHANGE 1. Barter Economy direct exchange of goods for goods, services for services, goods for services or services for goods. 2. Money Economy Money is anything which is characterized by its general acceptability, it redeemability in precious metal, or public acceptance in any institution using it 3. Money and Credit Economy Credit is the power to obtain economic goods and services in exchange for the promise to pay the agreed equivalent at some future time. LEGAL FORMS OF BUSINESS OWNERSHIP 1. Sole Proprietorship a form of business ownership organized and managed by only one person. 2. Partnership a business organization where two or more persons contribute money, property, or talent to carry on a business. a. Limited partner – limited liability b. General partner – unlimited liability 3. Corporation an artificial being created by the operation of law, having the rights of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. COMPARATIVE ATTRIBUTES OF BUSINESS OWNERSHIP ADVANTAGES DISADVANTAGES 1. Sole 1. Easy to set up/start 1. Demanding on owner’ Proprietorship 2. Decision making is left 2. Growth limited by owner’s financial entirely to owner means 2. Partnership 1. Relatively easy to set up 1. Dissolution of partnership by any personal rifts between partners 2. Checks and balances 2. Equal profit sharing despite unequal maintained with two parties attention and time given by partners around to business 3. Corporation 1. Maximum flexibility 1. Complicated setting-up process 2. Limited liability of individual 2. Limited influence on management share by individual stockholders 3. Greater room for professio- 3. Tendency to institutionalize nalism bureaucracy 4. Dissolution is least likely to occur 5. Can involve a wide range of people in business including employees 6. Reduced tax burden on owners START ANEW BUSINESS OR BUY AN EXISTING ONE? “IT DEPENDS” 1. Nature and kind of business trading = better buying a company restaurant = new marketing approach 2. Availability of opportunities for acquisition classified advertisement for opportunities such as banks and other financial institutions or companies being sold. 3. Personal biases your own satisfaction THE PROJECT FEASIBILITY STUDY Feasibility Study Sometimes called a project study, it evaluates the viability of a business undertaking. The objective is to guide the project promoters, business executives, and financial managers in determining the actions they must take on a project in order to bring about its successful operation. The preparation of study covers: 1. Collection of data 2. Analysis of the collected data 3. Formulation of recommendations based on the analysis VARIOUS ASPECTS OF PROJECT FEASIBILITY STUDY Marketing Aspect determine the quantity of the product that can be sold at a certain price given the competitive situation Organizational and Management Aspect determine the effectiveness of the organizational set-up and the qualifications of the individuals who will make up the organizations. Technical Aspect determine to what extent the project meets the technical soundness criteria. Financial Aspect determine cost, capital and earning performance Socio-Economic Aspect determine social and economic benefits THE ENTREPRENEUR AND THE MANAGER Entrepreneur Conceives an idea out of his own visualization then turn the idea to reality. Manager Usually employees in the business enterprise, though some may become shareholders or partners POSITIVE VALUES OF A FILIPINO ENTREPRENEUR 1. PAKIKIPAGKAPWA TAO covers concern for: hiya = loss of face pakikisama = togetherness pakikibagay = adjusting or adapting to other people malasakit = concern utang na loob = debt of gratitude amor propio = self esteem bayanihan = cooperative spirit a value favorable to entrepreneurship because it is against any form of exploitation. Entrepreneur does not cheat his customers POSITIVE VALUES OF A FILIPINO ENTREPRENEUR 2. BAHALA NA in situations where we are not sure of our ability to accomplish things, we let the fate decide the outcome and do the best we can believing that GOD has a compassion 3. PAKIKIPAGSAPALARAN risk-taking 4. GAYA-GAYA inclination to learn and adjust to new ways 5. UTANG NA LOOB, HIYA, AWA, BAYANIHAN support POSITIVE VALUES OF A FILIPINO ENTREPRENEUR 6. KASIPAGAN 7. PAGTITIPID 8. PAGTITIIS 9. PAGTITIMPI 10. KATAPATAN