Business Management Notes PDF 2024

Notes in Business Management Volume I 2024 Edition Chapter 1: Business in General 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. Business- produce goods and servi...

Notes in Business Management Volume I 2024 Edition Chapter 1: Business in General 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. Business- produce goods and services which consumers need Business Firm- produces goods and services from the factors of production provided by the society; has to purchase materials, components, or semi-finished goods from other producers Economics- study of how a society produces, distributes and uses its desired goods and services Factors of Production- economic resources to produce Elements of a Business System: 1. Land- natural resources and land itself 2. Labor- Physical and mental inputs of the people 3. Capital- money needed to start business operation 4. Entrepreneur- buys and organizes these factors; produce good and services that customers are willing to buy Profits- happens when the product of an entrepreneur becomes in demand and inherent in all business ventures. Profit- difference between income of entrepreneur and the expenses he incurred; important in business because it is the prime motivator Reasons why People Engage in Business: 1. Power 2. Profit 3. Service to the Community 4. Prestige 5. Livelihood 6. Social Approval  Abraham Maslow’s Hierarchy of Needs (Lowest to Highest): 1. Physiological Needs- essential for survival 2. Safety Needs- desire for protection against danger 3. Social Needs- need for belongingness 4. Self-Esteem Needs- self recognition or group satisfaction 5. Self-Actualization or Self-Fulfillment- realization of personal goal Kinds of Business: 1. Industries- conversion of raw materials into finished products and the application of labor upon raw materials; Examples are farming, fishing, and mining Manufacturing Industries- use materials and supplies turned out by extractive industries and change these raw material into various articles of materials; Examples are Nokia, Honda, Sony, Shell 2. Commerce- buying and selling good which moves from point of production to point of consumption; purchasing and reselling at a profit; Examples are SM, Rustan’s, and Robinsons 3. Service Enterprise- satisfaction of needs and wants of customers Divisions of Service Enterprise: 1. Public and Community Service- Meralco and Transport Services 2. Professional or Trade Service- law offices, cpa, repair shop Kinds of Economic System: 1. Capitalism- means of production are owned and operated by private individuals Privately-owned Capitals and Property Rights- privately invested with goal of personal gain 2. Socialism- ownership of production and capital by the government and of the giving of essential services 3. Communism- collective ownership by the government of consumption and production goods State- owns and controls all means of production *Very few countries have pure Capitalist and pure Communist economic system  Phase of Economic Development A. Means of Livelihood 1. Hunting and Fishing Phase – Ancestors obtained food by hunting and fishing. 2. Pastoral Phase – Presence of large number of livestock. 3. Handicraft Phase – Items or objects were made by skilled and trained manual laborers (sculptures, jewelry, furniture) 4. Agricultural Phase – Concept of land ownership. Began to work as a farmer or a fisherman. 5. Industrial Phase – Presence of manufacturing companies. Machineries were used. B. Extent of Economic Activity 1. Household Economy – The needs of the family were satisfied first through the contribution of the family members. 2. Village Economy – Economic and social relations spread among various families. 3. National Economy – Grouping of villages into bigger and broader social units. 4. International Economy - Country expands its economic relationship through international trade. C. Medium of Exchange 1. Barter Economy – Done during primitive era, exchange was done which was the direct exchange of goods for goods, services for services, goods for services or services for goods. 2. Money Economy – There came to circulate in the market certain objects, such as bars of metal, buttons, tools, and utensils which were stable in value, durable and generally accepted by the public. Money was used as the “medium of exchange”. 3. Money and Credit Economy – Due to increase in volume and frequency, it became imperative to allow others to purchase one’s goods or engage one’s service with payments to be paid at some future date. Credit – is the power to obtain economic goods and services in exchange for the promise to pay the agreed equivalent at some future date  Legal Forms of Business: SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION Organized and Managed by only one person Two or more persons contribute Artificial being created by operation of money, property, law Capital- comes from collective contribution Agreement is required to be in Has the rights to succession of family and friends writing if capital partnership is 3000 pesos or more Registered in one name only Limited or General Partnership Powers, attributes, and properties expressly authorized by law Differences between the 3 Legal Forms of Business: PROPERTIES SOLE PARTNERSHIP CORPORATION PROPRIETORSHIP EASE OF FORMATION VERY EASY EASY DIFFICULT MANAGEMENT PROFIT = INCOME PROFIT = INCOME OWNERSHIP AND INCENTIVES CONTROL MAY BE SEPARATE SPECIALIZATION VERY LIMITED LIMITED EXTENSIVE ACCESS TO CAPITAL LIMITED LIMITED EXTENSIVE LIABILITY UNLIMITED UNLIMITED LIMITED TO THE VALUE OF INVESTMENT CONTINUITY ENDS WITH DEATH OF MAY END WITH DEATH UNLIMITED PROPRIETOR OF PARTNER Other Specialized Forms of Business: 1. Cooperative- owned by members to provide goods and services that they all need 2. Franchise- written contract granting permission to operate a business Franchiser- company owning the product and granting rights to an owner Franchisee- company purchasing the rights  Start Business or Buy an Existing One Answers: 1. It depends on the nature and kind of business you have 2. It depends on the availability of opportunities for acquisition 3. It depends on your personal biases Entrepreneurs Most business firms are managed and owned by them. They start the business, risking time and capital, they make all management decisions. Way of life is a combination of creativity, challenge, hard work, and satisfaction Must conceive an idea out of his own visualization then turn the idea to reality. Puts in long and unremitting hours of work and takes financial risks. Requiring a lot of energy and self-discipline. Managers Professional experts in finance, marketing, personnel production, or data processing. Usually employees in the business enterprise. Main role is to maximize the use of resources, to make decisions, to generate profits, and to sustain the growth of the business. Successful Entrepreneur- attains a position of prestige in the community because of his many contributions to society Social and Economic Contributions of Entrepreneurship: 1. Entrepreneurship creates employment 2. Entrepreneurship improves the quality of life 3. Entrepreneurship contributes to more equitable distribution of income taxes 4. Entrepreneurship utilizes and mobilizes resources for greater national productivity 5. Entrepreneurship brings social benefits through the Government Business Registration Purposes: 1. To establish the legal personality of the business 2. To obtain a Permit to Operate (PTO) 3. To comply with the requirements of special regulatory or promotional programs of government  Two Government Agencies 1. Securities and Exchange Commission (SEC) – Registering partnerships and corporations 2. Bureau of Trade Regulation and Consumer Protection (BTRCP) – Single Proprietorship Two Key Agencies 1. Bureau of Internal Revenue – Revenue Collection 2. Social Security System – Promotion of Social Justice Normal Sequence 1. SEC and BTRCP 2. BIR 3. Local Government Unit 4. SSS Dept. of Trade and Industry (RA 3883) – No two businesses would have the same or similar names Positive Values of A Filipino Entrepreneur 1. Pakikipagkapwa Tao (Human Relations) – does not cheat to customer by overpricing etc. 2. Bahala Na (Let Fate Decide the Outcome) – pursue plans and project even seems unsure 3. Pakikipagsapalaran (Adventure) – do not surrender before uncertainty or challenge 4. Gaya-gaya (Imitations) – more creative and innovative 5. Utang na Loob, Hiya, Awa, Bayanihan (Debt of Gratitude, Loss of face, Compassion, Cooperative Spirit) – willing to assist us simply from goodwill. 6. Kasipagan (Industriousness) – dealing with Juan Tamad 7. Pagtitipid (Thrift) – Frugality, being wise spenders and savers. 8. Pagtitiis or Mapagtiis (Enduring) – not easily to give up 9. Pagtitimpi (Self-control) – capacity to bear emotional or physical stress. 10. Katapatan (Sincerity) or Kalinisan ng Loob (Purity of Heart) – honest in our dealings with others. International Business Environment- range from exporting goods to other nations to establishing manufacturing operations in other nations Principle of Competitive Advantage- training of goods and services across national boundaries result from this  Factors determining a Country’s Competitive Advantage: 1. Presence of Natural Resources 2. Adequate Quality and Quantity of Labor and Capital 3. Available Technology 4. Cost of these Resources Exporting- selling of good in another country Importing- purchase of good from another country Special Expects that will help in Internal Structure: 1. International Accounting 2. Finance 3. Marketing 4. Law Reasons for Import and Export: IMPORT EXPORT If the production process requires high volume to reduce The goods may be needed but not available in the cost per unit, the home market may be too small to importing country absorb the output. Output may be sold overseas. The demand for the firm’s product may be seasonal and Many foreign-made products have prestige value and are irregular. By expanding the firm’s market to other demanded by the home market countries, production costs may be lowered by more effective production scheduling Product Life Cycle – Creating new markets, where it Some foreign goods are less expensive due to lower re-enters the growth stage production costs. Selling its established goods in new overseas markets, organization is also able to increase profits Multinational Corporation (MNC)- any business that maintains a production, assembly, sales, or service presence in two or more countries Multinational Business Determinant: 1. percentage of total sales by majority-owned foreign affiliates 2. percentage of earnings due to foreign operations 3. percentage of new capital investment destined for overseas facilities.  Chapter 2: Nature and Concept of Management Management “The force that runs an enterprise and is responsible for its success and failure.” Performance of conceiving and achieving desired results by means of group effort consisting of utilizing human talents and resources “Getting things done through people.” “Planning and Implementing.” “Satisfying the economic and social needs by being productive for the human being, for the economy, and for society.” Distinct process of planning, organizing, staffing, directing, and controlling (POSDICON), performed to determine and accomplish stated objectives by the use of human being and other business resources. 6 M’s of Management: 1. Men 2. Money 3. Materials 4. Machines 5. Methods 6. Market Stated Objectives End-Results: 1. Social Responsibility 2. Profit Universally Accepted Functions of Management: PLANNING ORGANIZING STAFFING DIRECTING CONTROLLING Formulation of Grouping together Filling and Motivation, Measuring and correcting objectives, programs, of people to attain keeping filled the leadership styles, the activities of policies, procedures, rules goals and positions approaches, and subordinates and the and regulations objectives communication. company Related to Establishing an Recruiting and Leadership Measures performance decision-making intentional selecting implies against goals, and plans to structure of roles candidates for Followership correct deviations and help for men to fill in position, assure the success of plans an enterprise compensation, and training Involves selecting the best course of action Ranging from the company purpose and objective to the most detailed individual action plan Forecasting- making decisions in advanced Further accomplish the objectives today Think before doing Management as Art and Science ART SCIENCE Accomplishment of objectives through the use of human Systematic body of knowledge efforts. Requires skill and careful study in the management of Gathers and analyzes facts and formulates general laws any endeavor or principles from these facts. Management- seeks to integrate into a unified, coordinated whole the essential factors that makes up an organization Essential Factors of an Organization: 1. Personnel 2. Finance 3. Production 4. Sales or Marketing 5. Purchasing 6. Procurement 7. Administration 8. Advertising Concept of Management- NOT new due to being practiced for thousand of years Principles- classical theories of management is built from this  14 Principles of Management by HENRI FAYOL: 1. Division of Work- assignment of specialized jobs to various departments and/or positions 2. Authority and Responsibility Authority- power or right entrusted to make the work possible Responsibility- duty or work assigned to a particular position 3. Unity of Command- ONE manager gives orders to employees 4. Subordination of Individual Interest to General Interest- interest of one employee should NOT prevail over business 5. Remuneration- should be fair and afford the maximum possible satisfaction to employees and employer; referred to as COMPENSATION 6. Centralization- extent to which authority is concentrated 7. Scalar Chain- chain of superiors 8. Stability of Tenure- employees should be given time to prove that they are worthy 9. Esprit De Corps- in union there is strength 10. Span of Control- specific and limited number of subordinates that a manager can effectively handle and control. 11. Simplicity- unnecessary elements SHALL BE eliminated 12. Unity of Direction- one boss and one plan for the group 13. Order- ensures a place for everything 14. Equity- results from kindness and justice 4 Principles of 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 done is in accordance with the principles of the science develop for the work. 4. Divide the work and the responsibility equally between the management and the workers. Management should take over from the workmen all work for which it is better fitted. Taylor’s scientific management stresses the following: 1. The need for developing the best way of performing each job, 2. Training and preparing workers to perform that job, and 3. Establishing harmonious cooperation between management and workers *Piece-Rate Incentive System and Time-And-Motion Study Frank and Lillian Gilbreth and Motion Study Emphasized the ideal motions required to perform a job in an optional fashion Developed the concept of the “therblig”, an elemental hand or arm motion 17 “therbligs suitable for a particular job. MOTION STUDY - detailed analysis of motions in an operation whose goal is To eliminate ineffective motions, to produce faster or more effective motions A. Effective therbligs - directly advance progress of work, may be shortened but difficult to eliminate completely 1. Reach (RE) - movement of empty hand to or from object 2. Move (M) - movement of loaded hand 3. Grasp (G) - closing fingers around an object, depends on type of grasp 4. Release (RL) - relinquish control of object 5. Pre-Position (PP) - positioning object in predetermined location for later use 6. Use (U) - manipulating tool for intended use 7. Assemble (A) - two mating parts brought together 8. Disassemble (DA) - opposite of assemble, mating parts separated B. Ineffective therbligs - do not advance progress of work, should be eliminated 1. Search (S) - eyes or hands groping for object 2. Select (SE) - choosing one item from several 3. Position (P) - orienting object during work 4. Inspect (I) - compare object with standard 5. Plan (PL) - pause to determine next action 6. Unavoidable delay (UD) - beyond operator's control 7. Avoidable delay (D) - operator responsible for idle time 8. Rest to overcome fatigue (R) - appears periodically, not every cycle 9. Hold (H) - one hand support object while other does useful work Chapter 3: Planning Planning- is the determination of the course of action to achieve the desired results Benefits of Planning: 1. Stress Reduction- time management and time allocation 2. Success Rate of Business Increases- measure and predict challenges to ensure success 3. Resources of the Company will be Distributed More Evenly- even allocation of resources of company 4. Teamwork Makes the Dream Work- work together toward goals 5. Acts as Motivation- push harder and be more goal-driven  6. Decision Making Growth- decide on goals and how to achieve this 7. Proper Designation of Tasks- properly assign tasks to employees based on strenghts Types of Planning: STRATEGIC PLANNING INTERMEDIATE PLANNING OPERATIONAL PLANNING Big picture plan for the future, Breaks down the big goals into Business outlines the steps, resources, focusing on long-term goals and the smaller steps and actions required to achieve short overall direction of the organization term goals and day-to-day operations. Covers several years Figure out what needs to be done in Detailed activities necessary to ensure the next one to three years to meet that the strategic goals of an the long-term goals organization are met efficiently 7 Elements of Strategic Planning: 1. Vision Statement 2. Mission Statement 3. Core Values 4. SWOT Analysis 5. Action Plan 6. Yearly Objective 7. Long Term Goal Types of Operational Planning: 1. Single Use Plans 2. Ongoing (Stading) Plans 3. Contingency Plans Social Objectives- non-profit objectives of the company in their operation in the social environment Company Social Objectives: 1. Employee and other stakeholders: Provide health benefits, job security and good working conditions. Recognize employees with good performance Pay just and proper wages on times Recognize employee’s potentials for promotion Provide training and development interventions. 2. The community and social Institutions: Participle in civic and community projects Protect the environment against pollution and other hazards Conserve community resources and energy Develop a system of proper waste disposal Support government project and activities Procedures- prescribes the method or manner by which it is to be done; purpose is simplify so that work is done uniformly Features of a good procedure: 1. It analyses and study the work being described 2. It results in job simplification. 3. It eliminates overlapping and duplication. 4. It ensures high level of uniform performance when properly established. 5. It assures the production of quality products 6. It provides a standard system of appraisal on employee performance 7. It reduces the burden of decision making as standards are all set. 8. It lessens the tim of managers in training and job coaching. 9. It ensures close coordination and develops work efficiency. 10. Works are carried out uniformly in all levels of the operating depertment. Company Policy- sets the objective in motion; principle and rule for action Company Policy as a Rule for Action- specifies any continuing decision that is relatively permanent unless revised and charged by top management  Purpose of policy: 1. Policy is a guide in making decision on repetitive situation. 2. It ensures uniform and consistent actions 3. Problems are solved in definite manner without much consultation with top management Budgets- estimate of how much money is required activities to take off Program- sequential line of activities to implement policies and designed plans; step by step approach to guide the necessary action toward the predetermined goals. Programs SHOULD BE: 1. It must be closely related to corporate and operational 2. It Is combined with schedule to provide a synchronixed chronological sequence of activities 3. It much pride a budgetary allocations so that timely accomplishment are assured. 4. It may be prepared in narrative or tabular form describing specific activies at designated timeframe. 5. Short term programs may be prepared for specific project while long term programs may be for a five year period subject to annual audit Effective Ways of Planning: 1. Set Clear Objectives- define Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) Goals 2. Conduct SWOT Analysis- assess the strengths, weaknesses, opportunities, and threats 3. Engage Stakeholders- involve relevant parties 4. Prioritize Tasks- tasks SHOULD BE based on importance and urgency 5. Develop Action Plans- outlines steps, responsibilities, and timelines 6. Allocate Resources Wisely- have necessary resources to execute the plan effectively 7. Monitor Progress- Key Performance Indicators (KPIs)- tracks progresses 8. Be Flexible- open to revisions 9. Communicate Clearly- understandability of plan 10. Evaluate and Learn- assess the results Common Planning Mistakes to AVOID: 1. Overplanning 2. Underplanning 3. Lack of Clarity 4. Ignoring Feedback 5. Procrastination Planning- furnishes direction and decreases the danger of risk by making predictions. Significant Advantages of Planning: 1. Planning provides direction- objectives are certainly asserted 2. Planning decreases the chances of risk- look forward and predict changes 3. Planning decreases overlapping and wasteful activities- avoid chaos and confusion 4. Planning encourages innovative ideas- leads all planned actions to growth of business 5. Planning aids decision making- pick most viable plan