Management 101

Business Organization & Management

 REFERENCES

• Basic Text: Cassidy, Carlene M. & Kreitner, Robert R. (2013).

Principles of Management. 12th Philippine Edition, Cengage Learning

Other References:

• Bruno Dyck & Mitchell J. Neubert, (2012)

Management, Philippine Edition, Cengage Learning
• Griffin, Ricky W. (2011) Management: Principles and Practices,
Tenth Edition, South-Western, Cengage Learning
• Certo, Samuel C. & Certo, S. Trevis (2009) Modern Management:
Concepts & Skills, 11th Edition Pearson Educstion Inc.
• Robbins, Stephen P. & Coulter, Mary (2009) Management 10th
Edition, Prentice Hall, Pearson
• Dubrin, Andrew J. (2012) Essentials of Management 9th Edition,
South-Western, Cengage Learning

2
Types of Business Organizations
Objectives

1. Understand the meaning of an Organization

2. To know the characteristics common to all
organizations.
3. Identify and distinguish the two types of
organizations
4. Identify the advantages and disadvantages of the
different types of Private Organizations.
 What is an Organization?

Organization - A goal-directed, deliberately-

structured group of people working together to
achieve results.
Characteristics Common to all Organizations

1. Coordination of effort. Two heads are better than one.

Individuals who join together and coordinate their mental and
physical effort can accomplish great and exciting things.
2. Common Goal or Purpose. Coordination of effort cannot take
place unless those who have joined together agree to strive for
something of mutual interest that gives the organization focus
and its members a rallying point.
3. Division of Labor. By systematically dividing complex tasks into
specialized jobs, an organization can use its human resources
efficiently. (Job specialization)
4. Hierarchy of Authority. Someone should be given the authority
to see that the intended goals are carried out effectively and
efficiently. (Chain of command)
 Types of Business Organizations
Public Organizations:
1. National Government as a corporate body.
• Legal Basis: 1987 Phil Constitution, Art 6-9;
• EO 292, Administrative Code of the Philippines
2. Local Government or Municipal Corporation including the
autonomous regions in Muslim Mindanao and the Cordilleras.
• Legal basis: 1987 Phil. Constitution, Art 10;
• RA 7160, Local Government Code of the Phil
3. Government Owned/Controlled Corporation (GO/CC). Also called
Public Corporations or Public Enterprises.
• Legal Basis: 1987 Phil Constitution, Art 12, Sec 16;
• EO 292, Administrative Code of the Philippines
 Government Owned – 100% owned by the Government with its
own charter.
 Controlled Corporation – 51% - 99% owned by the government,
the rest by the private sector.
 Types of Business Organizations
Private Organizations:

1. Single or Sole Proprietorship

• Legal Basis: RA 3883, Business Name Law
2. Partnership
• Legal Basis: RA 386, Civil Code of the Philippines
3. Corporation
• Legal Basis: 1987 Phil Constitution, Art 12, Sec 16;
• Batas Pambansa Blg 68, Corporation Code of the
Philippines
4. Cooperatives
• Legal Basis: 1987 Phil Constitution, Art 12, Sec 15;
• RA 9520, Cooperative Code of 2008
• RA 6939, Creation of Cooperative Development Authority
 Types of Business Organizations
Private Organizations:

1. Single or Sole Proprietorship – a business owned by one

person. The owner may operate on his own or may employ others.

Advantages:
• It is easy to start and to terminate.
• Control or management lies entirely in the hands of the owner.
• Small amount of capital is required in starting.
• Profits belong entirely to the owner.

Disadvantages:
• Limited Judgment and wisdom.
• Limited amount of capital.
• Unlimited Liability – the owners personal assets can be used to
pay for any debts of the business.
• Difficulties of management.
 Types of Business Organizations
2. Partnership – when two or more people operate for the common goal of
making profit.

Types of Partnership
• General Partnership – the control of the business is held jointly by the
partners. The power of control or management is held equally divided
as well as equal share in profits or losses. All partners have unlimited
liability.
• Limited Partnership – evolves to avoid the unlimited liability of all the
general partners in a general partnership. There are two kinds of
partners in a limited partnership, namely the general partners and the
special or limited partners.
One or more of the partners in a limited partnership must be general
partners, who have unlimited liability. They manage the operations of
the partnership. The limited partners have only limited liability, which
is up to the extent of their investment. They take no active part in the
management of the partnership. They only contribute capital which
must be paid actually in cash or property. A limited partner cannot
contribute services to the partnership.
 Types of Business Organizations

Partnership cont…
Advantages:
• Relatively easy to start.
• There are more persons to conduct the business and to handle
its problems.
• The combined ability and resources of partners are a source of
strength.
• Capital can be increased easily without legal procedures.
• Shared responsibilities and financial commitment.

Disadvantages:
• Unlimited liability for general partners.
• Lack of continuity and easy dissolution. Death, insanity or
insolvency of a partner automatically dissolves the partnership.
• Difficulty raising additional capital.
• Prone to possible conflicts between partners.
 Types of Business Organizations
3. Corporation – is a profit, limited liability entity that has a separate
legal personality from its members (Juridical personality). It is owned
by multiple shareholders and overseen by a board of directors, which
hires the business managerial staff.
Advantages:
• It is a legal entity separate from its owners and act as a legal unit.
• Limited liability.
• Ownership is transferable.
• Specialized management.
• Credit is strengthened by such continuity of existence.
• Relatively easy to raise capital via issuance of shares of stocks.
Disadvantages:
• Greater degree of governmental control and supervision.
• Most expensive and complicated to form and organize.
• Extensive record keeping necessary.
 Types of Business Organizations

4. Cooperative – often referred to as a “co-op business or co-op”, a

for-profit, limited liability organization owned and operated by
members who share decision-making authority. Cooperatives are
fundamental to the ideology of economic democracy.
Advantages:
• Owned and controlled by members.
• Democratic control (one member, 1 vote).
• Limited Liability.
Disadvantage:
• There is difficulty when personal interest arises.
NAME: MGNT 101 / PRELIM QUIZ#01
COURSE/YR/SEC: DATE:

Choose the correct answer from the table below.

1. A goal directed, structured group of people working together to achieve results
2. Also called the Municipal Corporation
3. The owners of a Corporation
4. Also called Public Corporations or Public Enterprises
5. A type of private organization that is owned by a single individual
6. When two or more people operate for a common goal of making profit
7. When the owners personal assets can be used to pay for any debts incurred by the
business
8. The biggest type of organization that has a legal personality separate from its owners
9. These private organizations are fundamental to the ideology of economic democracy
10. The highest or the supreme law of the Philippines

Local Government Cooperatives Corporation

Shareholders or Stockholders Unlimited Liability Hierarchy of Authority
1987 Philippine Constitution GO/CC Partnership
Single or Sole Proprietorship Coordination of effort Organization

14