Organization And Management

Environmental Forces, Environmental Scanning, Local and International Business Environment of the
Firm!

Internal Environment- An organization’s internal environment consists of conditions and forces within
the organization

1. Owners- are those who have legal property rights to the business.

2. Board of directors- - is elected by the stockholders and in charge of overseeing the general
management of the firm to ensure that it is being run in a way that best serves the stockholders'
interest.

3. Manager/ Employee

-Employees are the workers who perform the day-to-day operation of the organization and ensure that
work is being accomplished to achieve the organization’s desired goal.

-Managers are responsible for combining and coordinating the resources of an organization including
the workers to ensure that organizations achieve their goals.

4. Culture-- refers to the values, beliefs, and behavior of the organization that ascertains the way in
which employees and management communicate and manage external affairs.

External Environment- which is also called the immediate operational environment, has a profound
impact on the operations of a firm.
Microenvironment

1. Suppliers- These are individuals and companies that provide organizations with the input resources
that are needed to produce services or products.

2. Distributors- -are organizations that help other organizations sell their goods and products.

3. Customers- They are individuals and groups that buy the goods and services of an organization

4. Competitors- are organizations that compete for the same Organization.

Microenvironment

1. Political/ Legal- is primarily concerned with complex laws, regulations, and government agencies and
their actions which affect all kinds of enterprises in varying degrees.

2. Economic- the economic system, the general business cycle, and the economic policies

3. Socio-cultural- The way of life of the people.

4. Technological- This comprises innovations and improvements in methods, machines, and materials.

Strength- includes the company’s attributes that give a competitive edge over others.

Weaknesses- are the attributes of a company that need to improve or change

Opportunities- are factors or events that give a positive impact if properly address

Threats- are external factors that may give a negative impact on the company.
Local and International Business

Any company that provides goods or services to a local population is considered a local business.

“Brick and mortar” is the common term used to reference a retailer or business that operates a
minimum of one physical location.

International Business- refers to the trade of goods, services, technology, capital, and/or knowledge
across national borders and at a global or transnational scale.

Stages of International Business

1. Outsourcing It means engaging in the international division of labor so that manufacturing can be
done in countries with the cheapest sources of labor and supplies. Ex. Google

2. Importing and Exporting

Exporting is the making of a product or service in the firm’s domestic marketplace and selling it
in another country.

Philippines top 5 export product

1. Electrical machinery, and other similar equipment

 2. Computer parts

3. Optical, technical, and medical apparatus

4. fruits and nuts that are widely exported in the Philippines are coconuts, banana, pineapple,
soursop (guyabano), papaya, guava, calamansi, tamarind, and peanuts, among others

5. Gems and other precious metals demand in pearls found in various seas of the Philippines.

Importing is bringing a good, service, or capital into the home country from abroad.

3. Licensing and Franchising

A company may prefer to arrange for a foreign company to manufacture or market its products
under a licensing agreement. Ex Nestle and Starbucks

4. Strategic Alliances

Involves two or more firms jointly cooperating for mutual gain. Ex Spotify and UBER

5. Joint Ventures

A specific type of strategic alliance I which partners agree to form a separate,

independent organization for some business purpose. Ex Volvo and UBER with a driverless car

6. Wholly Owned Affiliates (Build or buy)

It is estimated that one-third or multinational companies enter foreign markets through

wholly owned affiliates. Ex Honada motor in America is 100 % owned by HONDA MOTORS
JAPAN.

The International Economic Environment

1. Economic System-The key element is a freedom to choose.

2. Natural resources- A broad range of resources are available in different countries which help
promote economic activities

3. Infrastructure- consists of physical things such as roads, railways, schools, hospitals,

communication systems

Barriers to International Trade

1. Tariff- It is a tax collected on goods shipped across national boundaries.

2. Quota- It is a limit on the number or value of goods that can be traded.

3. Export restriction Agreement- are agreements reached by governments in which countries

voluntarily the volume or value of goods they export and import from one another.
 4. The Cultural Environment- is a concept in business that helps to understand the customs and
collective beliefs of a set of people or society based on their culture, religion, region, nationality,
language.

Phases of Economic Development

Economic Development- is a total process that includes not only economic growth or the increase in the
given amount of goods and services produced by the country’s economy, but also considers the social,
political, cultural, and spiritual aspects of the country’s growth.

Ecological Environment

Air

Water

Soil

Ecological Problem

• destruction of natural habitats,

• depletion of clean water resources,

• urban,

• industrial, and

• agricultural’ pollution

Economic Development Phases- are the distinct stages involved in the total process of economic
development in a particular country.

1. Economic Growth

2. Human Development Index

3. Availability of benefits

4. Social Improvements

Adam Smith- was the first “development economist. “The Wealth of Nation, which is published in 1776.

Inclusive Growth

➢ Large population
➢ Geographical Differences
➢ Social Complexity

I
Stages of Economic Development

1. Hunting Stage- The wants of the primitive man were simple and few.

2. Pastoral Stage- During this period, also man had no settled life. He had to move from place to place in
search of new pastures. During this stage, man lived the life of a shepherd

3. Agricultural Stage- During this stage, he learned the art of cultivating plants.

4. Commercial Stage- People learned that they could benefit from the division of labor. – from a barter
economy to the use of money.

5. Industrial Stage- People learned that they could benefit from the division of labor.

– from a barter economy to the use of money.

Forms of Business Organization

Organization is a collection of people working together to achieve a common purpose.

Business organization is a collection of people working together to achieve a common purpose in

relation to their organization’s mission, vision, goals, and objectives, sharing a common organizational
culture.

Organizational culture is the set of beliefs and values shared by organization members which guide
them as they work together to achieve their common purpose.

Types of Business Organization

1. Sole Proprietorship- - is a business owned by one person only

Advantages

➢ Creation is simple and low cost

➢ Owner gets all the profits

➢ Decision-making is the sole responsibility of the Owner.

Disadvantages

➢ owner is liable for all risks and losses

➢ limited capital and other resources

➢ solo owner must do long hours of work.

2. Partnership- is a business formed when two or more partners formally agree to be joint owners
of a business.

Advantages

➢ establishment is easy

➢ equal division of profits based on their agreement as partners

➢ availability of a pool of skills, knowledge, and talents

Disadvantages

➢ business control is limited since it must be shared with other partners.

➢ profits are shared

➢ wrong decisions made by a partner are binding to other partner/s

➢ a property becomes the joint property of both all partners

3. corporation- is a business entity involving five or more persons owning it.

Advantages

➢ less liability of stockholders

➢ capability to attract a larger amount of capital

➢ transfer of stock ownership is easier

Disadvantages

➢ major decisions cannot be done easily, even if urgent, without the approval of the board of
directors

➢ corporate and individual profits are taxed separately, resulting in double taxation and
additional expenses

➢ more rules and regulations must be complied with

Changing Forms of Business Organization

1. Simple Business Organization

-these refer to business organizations with few departments, centralized authority with
a wide span of control, and with few formal rules and regulations.
2. Functional Business Organization- these pertain to business organizations that group together.

3. Divisional Business Organization- these are business organizations made up of separate business
units that are semi-autonomous or semi-independent, with division head responsible for his or her
unit’s performance.

4. Profit Business Organization- these are business organizations designed for the purpose of achieving
their organization’s mission, vision, goals, and objectives and maintaining their organizational stability
through income generation and profit.

5. Non- Profits Business Organization- These are business organizations designed for the purpose of
achieving the organization’s mission, vision, goals, and objectives, providing service to clients without
expecting monetary gains or financial benefits for their endeavors. Ex HARIBON
6. Open/Flexible Business Organization- these are formed to meet today’s changing work
environment.

Other Forms of Organization

1. Team Structure- small but focused.

2. Matrix business organizations – those which assign experts or specialists. belonging to

different functional departments to work together on one or more projects.

3. Project business structure – a business organizational form with a flexible design, where the
employees continuously work on projects assigned to them.

4. Boundaryless business organization – there are no barriers to information flow and, therefore,
completion of work is fast

5. Virtual business organization – made up of a small group of full-time workers and outside
experts who are hired on a temporary basis to work on assigned projects. Members usually
communicate online.