CHAPTER 6

Leading

management function, which involves influencing others to engage in the work behaviors necessary to
reach organizational goals.

Leader’s Bases for Power

THE POWER POSSESSED BY LEADERS MAY BE CLASSIFIED ACCORDING TO VARIOUS BASES. THEY ARE
AS FOLLOWS:

a. Legitimate power- a person who occupies a higher position has legitimate power over persons in
lower positions within the organization.

b. Reward Power – when a person has the ability to give rewards to anybody who follows order or
request, he is said to have reward power.

c. Coercive Power – when a person compels another to comply with orders through threats or
punishment, he is said to possess coercive power.

d. Referent Power – when a person can get compliance from another because latter would want to be
identified with the former, that person is said to have referent power.

e. Expert Power – expert provide specialized information regarding their specific lines of expertise.

Motivation

THE PROCESS BY WHICH A PERSON’S EFFORTS ARE ENERGIZED, DIRECTED AND SUSTAINED TOWARDS
ATTAINING A GOAL.

A. EARLY THEORIES OF MOTIVATION

MASLOW’S HIERARCHY OF NEEDS THEORY

states that there are 5 basic needs of man

MCGREGOR’S THEORY X AND THEORY Y.

•Theory X – states assumption that employees dislike work, lazy, avoid responsibility and must be
forced to perform.

•Theory Y – states the assumption that employees are creative, enjoy work,

seek responsibility and can exercise self-direction.

HERZBERG’S TWO FACTOR THEORY/MOTIVATION HYGIENE THEORY

intrinsic factors are related to job satisfaction and motivation whereas extrinsic factors are associated
with job dissatisfaction.

MCCLELLAND’S 3 NEEDS THEORY

states that 3 acquired needs namely: achievement, power and affiliation are major motives in work.

B. CONTEMPORARY THEORIES

Goal setting Theory says that individuals who set specific, difficult goals performed better than those
who set general, easy goals.

Reinforcement Theory states that behavior is a function of its consequences.

Leadership Theories

LEADERSHIP - the process of influencing and supporting others to work enthusiastically toward
achieving objectives.

Traits of Effective Leaders:

1. Personal Drive – persons with drive are those identified as willing to accept responsibility, possess
vigor, initiative, persistence, and health.

2. Desire to Lead – persons who appear to have all the qualifications for leadership, yet they cannot
become leaders because they lack one special requirement the desire to lead.

3. Personal Integrity – integrity includes honesty, honor, incorruptibility, rectitude, righteousness,

uprightness, and other similar virtues.

4. Self-Confidence – the activities of leaders require moves that will produce the needed outputs. For
the moves to be continuous and precise, self-confidence is necessary in leadership functions such as
conceptualizing, organizing, and implementing activities.

5. Analytical Ability – a leader with sufficient skill to determine the root cause of the problem may be
able to help the subordinate to improve his production.

6. Knowledge of the Company, Industry, and Technology – leader who is well informed about his
company, the industry where the company belongs and the technology utilized by the industry, will be
in a better position to provide directions to his unit.

7. Charisma – when a person has sufficient personal magnetism that motivates people to follow his
directives, this person is said to have charisma.

8. Creativity – ability of the manager to find new and better ways of accomplishing his work.

9. Flexibility – people differ in the way they do their work. One will adapt a method different from
another person’s method. A leader, who allows this situation as long as the required outputs are
produced, is said to be flexible.

Behavioral Approaches to Leadership Styles

1. WAYS LEADERS APPROACH PEOPLE.

In motivating people, leaders use a positive or negative approach.

2. WAYS LEADERS USE POWER

leader’s styles also vary according to how power is used. They consist of autocratic, participative and
free-rein.

•AUTOCRATIC LEADERS

leaders who make decisions without consulting subordinates are called autocratic leaders. Motivation
takes the front of threats, punishment, and intimidation of all kinds.

•PARTICIPATIVE LEADERS

when a leader openly invites his subordinates to participate or share in decision making, policy-making,
and operation methods, he is said to be a participative leader.

•FREE-RAIN LEADERS

leaders who set objective and allow employees or subordinates relative freedom to do whatever it takes
to accomplish those objectives.

Behavioral Approaches to Leadership Styles

3. LEADERS ORIENTATION TOWARDS TASK AND PEOPLE

leadership may be classified according to how leaders view task and people. A leader may either be:

•Employee oriented – when a leader considers employees as human being intrinsic importance and
with individuals and personal needs to satisfy.

•Task oriented – when a leader places stress on production and the technical aspects of the job and the
employees are viewed as the means of getting the work done.

CONTINGENCY APPROACHES TO LEADERSHIP STYLE

The contingency approach refers to that effort to determine through research which managerial
practices and techniques are appropriate in specific situations. The following are the contingency
approaches:

1.FIEDLER’S CONTINGENCY MODEL.

Fred Fiedler believes that leadership is effective when the leader’s style is appropriate to the situation.
The situational characteristic is determined by three principal factors:

1. THE RELATION BETWEEN LEADER AND FOLLOWER

2. THE STRUCTURE OF THE TASK

3. THE POWER INHERENT IN THE LEADER’S POSITION

THE SITUATIONAL CHARACTERISTICS VARY FROM ORGANIZATION. TO BE EFFECTIVE,

ACCORDING TO FIEDLER, THE SITUATION MUST FIT THE LEADER. IF THIS IS NOT SO, ANY
OF THE FOLLOWING MAY BE TRIED:
- Change the leader’s traits or behavior

- Select leaders who have traits or behavior fitting the situation

 - Move leaders around in the organization until they are in positions that fit them

- Change the situation

2.HERSEY AND BLANCHARD SITUATIONAL LEADERSHIP MODEL.

The situational leadership model develop by Hersey and Blanchard suggest that most important factor
affecting the selection of a leader’s style is the development (or maturity) level of the subordinate.

• DIRECTING – IS FOR PEOPLE WHO LACK COMPETENCE BUT ARE ENTHUSIASTIC AND
COMMITTED. THEY NEED DIRECTION AND SUPERVISION TO GET THEM STARTED.

• COACHING – IS FOR PEOPLE WHO HAVE SOME COMPETENCE BUT LACK COMMITMENT.
THEY NEED DIRECTION AND SUPERVISION BECAUSE THEY ARE STILL RELATIVELY
INEXPERIENCED.

• SUPPORTING – IS FOR PEOPLE WHO HAVE COMPETENCE BUT LACK CONFIDENCE OR

MOTIVATION.

• DELEGATING – IS FOR PEOPLE WHO HAVE BOTH COMPETENCE AND COMMITMENT.

The Path-Goal Process

THE LEADERSHIP STYLES, WHICH MAY BE USED BY PATH-GOAL PROPONENTS, ARE AS FOLLOWS:

DIRECTIVE LEADERSHIP

when the leader focuses on clear task assignments, standards of successful performance, and work
schedules.

SUPPORTIVE LEADERSHIP

when subordinates are treated as equals in a friendly manner while striving to improve their well-being.

PARTICIPATIVE LEADERSHIP

when the leader consults with subordinates to seek their suggestions and then seriously consider those
suggestions when making decisions.

ACHIEVEMENT – ORIENTED LEADERSHIP

when the leader sets challenging goals emphasizes excellence, and seeks continuous improvement while
maintaining a high degree of confidence that subordinates will meet challenges in a responsible manner.

4. VROOM’S DECISION-MAKING MODEL

Vroom’s model of leadership is one that prescribes the proper leadership style for various situations,
focusing on the appropriate degrees of delegation of decision-making authority.

COMMUNICATION
ALWAYS REMEMBER!

EFFECTIVE COMMUNICATION IS SIGNIFICANT FOR MANAGERS IN THE ORGANIZATIONS SO AS TO

PERFORM THE BASIC FUNCTIONS OF MANAGEMENT, I.E., PLANNING, ORGANIZING, LEADING AND
CONTROLLING.

COMMUNICATION HELPS MANAGERS TO PERFORM THEIR JOBS AND RESPONSIBILITIES.

Five Types of Communication

• VERBAL COMMUNICATION.

• Non-Verbal Communication.

• Written Communication.

• Listening.

• Visual Communication.

VERBAL COMMUNICATION

VERBAL COMMUNICATION OCCURS WHEN WE ENGAGE IN SPEAKING WITH OTHERS. IT CAN BE FACE-
TO-FACE, OVER THE TELEPHONE, VIA SKYPE OR ZOOM, ETC. SOME VERBAL ENGAGEMENTS ARE
INFORMAL, SUCH AS CHATTING WITH A FRIEND OVER COFFEE OR IN THE OFFICE KITCHEN, WHILE
OTHERS ARE MORE FORMAL, SUCH AS A SCHEDULED MEETING. REGARDLESS OF THE TYPE, IT IS NOT
JUST ABOUT THE WORDS, IT IS ALSO ABOUT THE CALIBRE AND COMPLEXITY OF THOSE WORDS, HOW
WE STRING THOSE WORDS TOGETHER TO CREATE AN OVERARCHING MESSAGE, AS WELL AS THE
INTONATION (PITCH, TONE, CADENCE, ETC.) USED WHILE SPEAKING. AND WHEN OCCURRING FACE-TO-
FACE, WHILE THE WORDS ARE IMPORTANT, THEY CANNOT BE SEPARATED FROM NON-VERBAL
COMMUNICATION.

NON-VERBAL COMMUNICATION

WHAT WE DO WHILE WE SPEAK OFTEN SAYS MORE THAN THE ACTUAL WORDS. NON-VERBAL
COMMUNICATION INCLUDES FACIAL EXPRESSIONS, POSTURE, EYE CONTACT, HAND MOVEMENTS, AND
TOUCH. FOR EXAMPLE, IF YOU’RE ENGAGED IN A CONVERSATION WITH YOUR BOSS ABOUT YOUR COST-
SAVING IDEA, IT IS IMPORTANT TO PAY ATTENTION TO BOTH THE THEIR WORDS AND THEIR NON-
VERBAL COMMUNICATION. YOUR BOSS MIGHT BE IN AGREEMENT WITH YOUR IDEA VERBALLY, BUT
THEIR NONVERBAL CUES: AVOIDING EYE CONTACT, SIGHING, SCRUNCHED UP FACE, ETC. INDICATE
SOMETHING DIFFERENT.

WRITTEN COMMUNICATION

Whether it is an email, a memo, a report, a Facebook post, a Tweet, a contract, etc. all forms of written
communication have the same goal to disseminate information in a clear and concise manner – though
that objective is often not achieved. In fact, poor writing skills often lead to confusion and
embarrassment, and even potential legal jeopardy. One important thing to remember about written
communication, especially in the digital age, is the message lives on, perhaps in perpetuity. Thus, there
are two things to remember: first, write well – poorly constructed sentences and careless errors make
you look bad; and second, ensure the content of the message is something you want to promote or be
associated with for the long haul.

LISTENING

THE ACT OF LISTENING DOES NOT OFTEN MAKE ITS WAY ONTO THE LIST OF TYPES OF
COMMUNICATION. ACTIVE LISTENING, HOWEVER, IS PERHAPS ONE OF THE MOST IMPORTANT TYPES OF
COMMUNICATION BECAUSE IF WE CANNOT LISTEN TO THE PERSON SITTING ACROSS FROM US, WE
CANNOT EFFECTIVELY ENGAGE WITH THEM. THINK ABOUT A NEGOTIATION – PART OF THE PROCESS IS
TO ASSESS WHAT THE OPPOSITION WANTS AND NEEDS. WITHOUT LISTENING, IT IS IMPOSSIBLE TO
ASSESS THAT, WHICH MAKES IT DIFFICULT TO ACHIEVE A WIN/WIN OUTCOME.

VISUAL COMMUNICATION

WE ARE A VISUAL SOCIETY. THINK ABOUT IT, TELEVISIONS ARE RUNNING 24/7, FACEBOOK IS VISUAL
WITH MEMES, VIDEOS, IMAGES, ETC., INSTAGRAM IS AN IMAGE-ONLY PLATFORM, AND ADVERTISERS
USE IMAGERY TO SELL PRODUCTS AND IDEAS. THINK ABOUT FROM A PERSONAL PERSPECTIVE – THE
IMAGES WE POST ON SOCIAL MEDIA ARE MEANT TO CONVEY MEANING – TO COMMUNICATE A
MESSAGE. IN SOME CASES THAT MESSAGE MIGHT BE, LOOK AT ME, I’M IN ITALY OR I JUST WON AN
AWARD. OTHERS ARE CAREFULLY CURATED TO TUG ON OUR HEARTSTRINGS – INJURED ANIMALS,
CRYING CHILDREN ETC.

MANAGEMENT OF CHANGE AND DIVERSITY

DIVERSITY AND CHANGE MANAGEMENT GIVES YOU KNOWLEDGE ABOUT WORK IN DYNAMIC
ORGANIZATIONS IN A GLOBAL ENVIRONMENT CHARACTERIZED BY DIVERSITY, STRATEGIC COMPLEXITY,
AND CONSTANT CHANGE.THIS INCLUDES WORK IN DIVERSE TEAMS, MANAGEMENT OF CHALLENGING
PROJECTS AND MANAGING ORGANIZATIONAL CHANGE.

FILIPINO AND FOREIGN CULTURES

FILIPINO OWNED ORGANIZATIONS EXHIBIT A DIFFERENT ORGANIZATIONAL CULTURES AS COMPARED

TO THEIR FOREIGN COUNTERPARTS. FILIPINO AND FOREIGN CULTURE IN ORGANIZATION EXCERT BIG
INFLUENCE ON HOW MANAGERS DO THEIR FUNCTIONS AND HOW THEUR SUBORDINATES RESPOND TO
RULES AND REGULATIONS AND LEADERSHIP STYLES. ORGANIZATIONAL CULTURE IS A CRITICAL FACTOR
IN NUMEROUS ORGANIZATIONAL AND ENDEAVORS.

Chapter 7. Controlling
1. definitions

Controlling – refers to the process of ascertaining whether organizational objectives have been
achieved; if not, to determine why not; and determining what activities should be taken to
achieve objectives better in the future.

Steps in Controlling

a) Establishing performance objectives and standards. – for effective controlling, what has to be
achieved must first be determined. Typical examples of objectives and standards are as follows:
 a. Sales target – are expressed in quantity or monetary terms.
b. Production target – are expressed in quantity and quality
c. Worker attendance – is expressed in terms of rate of absences
d. Safety records – are expressed in number of accidents for given periods
e. Supplies used – are expressed in quantity or monetary terms for given periods.

b) Measuring actual performance – there is a need to measure actual performance so that when
shortcomings occur, adjustments could be made. Adjustment will depend on the actual findings.
c) Comparing actual performance to objectives and standards – once actual performance has
been determined, this will be compared with what the organization seeks to achieve.
d) Taking necessary action – the purpose of comparing actual performance with the desired result
is to provide management with the opportunity to take corrective action when necessary.

Types of Control and their Relation to Operations

a. Concurrent Control – when operations are already ongoing and measures to detect variances
are made, concurrent control is said to be undertaken.
b. Feedback Control – when information is gathered about a completed activity for purpose of
evaluating and deriving required steps for improving the activity, feedback control is
undertaken.

Components of organizational control system

To effectively control activities, organizations adapt control systems consisting of the following
components:

 Strategic plan – this provides the basic control mechanism for the organization. When there are
indications, that activities undertaken do not facilitate the accomplishments of strategic goals,
these activities are set aside, modified or expanded.
 Long – range financial plans – the planning horizon differs from company to company. Most
firms will be satisfied with a one-year plan. Engineering firms, however, will require longer-term
financial plans.
 The operating budget – this indicates the expenditures, revenues, or profits planned for some
future period regarding operations.
 Performance appraisal – this measures employee performance. As such, it provides employee
with a guide on how they could do their jobs better in the future.
 Statistical reports – these are those that contain data on various developments within the firm.
Among the information which may be found in a statistical reports are the following:
o Labor efficiency rates
o Quality control rejects
o Accounts receivable
o Accounts payable
o Sales report
 o Accident report
o Power consumption reports
2. The link between planning and controlling
 Meaning:
o Planning – is the basic function of every enterprise as in planning we decide what is to
be done, how it is to be done, when it is to be done and by whom it must be done.
Planning bridges the gap between where we are standing today and where we want to
reach.
o Controlling – keeping a check that everything is in accordance with plan and if there is
any deviation, taking preventive measures to stop that deviation. The meaning of
controlling makes it clear that controlling function is undertaken for right and timely
implementation of plans.
 Planning and controlling are interdependent and interlinked:
o The controlling function compares actual performance with the planned performance
and if there is no planned performance then controlling manager will not be able to
know whether the actual performance is O.K or not.
 Planning and controlling are both backward looking as well as forward looking:
o Controlling is backward looking because like a postmortem of past activities the
manager looks back to previous year’s performance to find out its deviation from
standard planning is also backward looking because planning is guided by past
experiences and feedback report of controlling function.

3. Control Methods and Systems

Management control systems – tools to aid management for steering an organization toward its
strategic objectives and competitive advantage.

According to Simons (1995), Management control systems are formal, informal-based routines
and procedures managers use to maintain alter patterns in organizational activities.

Anthony and Young (1999) showed management control system as a black box. The term black
box is used to describe an operation whose exact nature cannot be observed.

Management Control System

According to Maciariello et al. (1994), management control is concerned with coordination,

resource allocation, motivation and performance measurement.

Alif Aiqal (2007) defined Management Control as the process by which managers influence other
members of the organization to implement the organization’s strategies.

4. Management accounting and management accounting system

Anthony & Young (1999) showed that management accounting has three major subdivisions:
  Full cost accounting
 Differential accounting
 Management control or responsibility accounting

Chenhall (2003) mentioned that the terms management accounting (MA), management
accounting system (MAS), management control systems (MCS), and organizational controls (OC)
are sometimes used interchangeably.

Management control system techniques

According to Horngren et al. (2005), management control system is an integrated technique for
collecting and using information to motivate employee behavior and to evaluate performance.
Management control system use many techniques such as:

 Activity – based costing

 Balance scorecard
 Benchmarking and Benchtrending
 Budgeting
 Capital Budgeting
 JIT (Just in Time)
 Kaizen (continuous Improvement)
 Program management techniques
 Target costing
 Total quality management (TQM)

5. Role of budgets in planning and control

Types of budgets

 Master budget
o Operating budgets
o Financial budgets
Time frame
 Annual period
 Multi-year rolling budget
Gathering information
 Forecasting sales
 Forecasting other variables

Chapter 8. Introduction to the different functional areas of management

1. Human Resource Management- As a practice, businesses and organizations depend on

three key resources: physical resources, such as materials and equipment; financial
resources, including cash, credit, and debt; and people. There can be no doubt that
 people play a vital role in an organization or business as a resource. Having a thorough
strategy, a marketable product or service, and efficient processes are all important. But
all of this depends on the ability of the people within the organization to execute
strategies, plans, and processes to make a business successful. Every part of the
business boils down to people. And by managing people, organizations can be more
profitable, lead more effectively, create brand loyalty and do better work.

Main Activities of HRM

In order to achieve the above objectives, human resource management undertakes the following
activities:

 Human resource planning – determining the number and kinds of personnel required to fill
various positions in the organization.
 Recruitment, selection and placement of personnel – employment function
 Training and development of employees for their efficient performance and growth.
 Appraisal of performance of employees and taking corrective steps such as transfer from
one job to another.
 Motivation of workforce by providing financial incentives and avenues of promotion
 Remuneration of employees. The employees must be given sufficient wages and fringe
benefits to achieve higher standard of living and to motivate them to show higher
productivity.
 Social security and welfare of employees.

Functions of human resource management

The main functions of human resource management are classified into two categories:

 Managerial Functions
o Planning – pertains to the steps taken in determining in advance personnel
requirements personnel programmes, policies etc.
o After determining how many and what type of people are required, a personnel
manager has to devise ways and means to motivate them.
o Organization: under organization, the human resource manager has to organize the
operative functions by designing structure of relationship among jobs, personnel and
physical factors in such a way so as to have maximum contribution towards.
Organizational objectives, in this way a personnel manager performs following
functions:
 Preparation of task force
 Allocation of work to individuals
 Integration of the efforts of the task force
 Coordination of work of individual with that of the department
o Directing – concerned with initiation of organized action and stimulating the people to
work.
 o Controlling – it provides basic data for establishing standards, makes job analysis and
performance appraisal, etc.
 Operative Functions
o Procurement of personnel – concerned with the obtaining of the proper kind and
number of personnel necessary to accomplish organization goals.
o Developing personnel – it has to do with the increase through training, skill that is
necessary for proper job performance.
o Compensation to personnel – means determination of adequate and equitable
remuneration of personnel for their contribution to organization objectives.
o Maintain Good Industrial Relation – Human Resource Management covers a wide field.
It is intended to reduce stifies, promote industrial peace, provide fair deal to workers
and establish industrial democracy.
o Record keeping – the personnel manager collects and maintains information concerned
with the staff of the organization.
o Personnel Planning and Evaluation – under this system different type of activities are
evaluated such as evaluation performance.
2. Marketing Management

Marketing – the total of activities involved in the transfer of goods from the producer or seller to the
consumer or buyer, including advertising, shipping, storing and selling.

Marketing management has the direct responsibility to find out areas where the company’s products
and services fail to fulfill consumer needs and expectations and to initiate vigorously marketing
programs to provide desired satisfactions explicitly demanded by consumerism. Marketing
management’s nature and objectives will have become vastly more consumer-oriented and much less
product and/or corporation-oriented for the maximum long-range benefits of the corporation itself.

The Marketing Mix or the “4P’s” are:

 Product
 Place
 Promotion
 Price

The concept of the “4Ps” has been replaced by the concept of the “7PS” they are

 Product
 Price
 Place
 Promotion
 People
 Positioning
 Packaging

Marketing Management Process:

 Analyzing marketing opportunities
o Defining the market
o Consumer assessment
o Environmental assessment
o Company resource assessment
o Demand analysis and sales forecast
 Identifying Market Segments and Selecting Target Market
 Developing marketing strategies
o Positioning
o Develop new product, test and launch
o Modification in the stages of product life cycle
o Strategy choice depends on the strategy pursued by the firm
o Consider changing global opportunities and challenges
 Planning marketing programs
o Transforming strategy into programs
o Managing product lines, brands and packaging
o Managing Service Business
o Designing Pricing Strategies and Programs
o Selecting and Managing Marketing Channels
o Managing Retailing, Wholesaling, and Physical-Distribution Systems
o Designing Communication and Promotion Mix Strategies
o Designing Effective Advertising Programs
o Designing Direct-Marketing, Sales-Promotion, and Public-Relations Program
o Managing the Sales force
 Managing marketing efforts
o Organizing resources
o Implementation
o Control – Annual control, Profitability control, Strategic control

3. Operation Management – an area of management concerned with designing and

controlling the process of production and redesigning business operations in the
production of goods or services.

4. Financial Management – refers to the efficient and effective management of money

(funds) in such a manner as to accomplish the objectives of the organization.

5. Information and Communications Management – the discipline whereby all of the

information and communications technology resources of a firm are managed in
accordance with its needs and priorities.
HOW TO REGISTER A BUSINESS IN THE PHILIPPINES | Sole Proprietorship, Partnership or Corporation?

THREE MAJOR PARTS OF REGISTRATION

1. Business Name Registration

2. Mayor’s Permit or business permit
3. BIR Permit

DIFFERENCE BETWEEN BUSINESS NAME AND BRAND NAME

Business name – trade name or what you register for you to be able to register you business

Brand name- this is different , register it with IPO / intellectual property office [ not requirement]

EXAMPLE : BUSINESS NAME : SUBO MERCADO FOOD BAZAAR INC.

BRAND NAME : SUBO MERCADO

BUSINESS STRUCTURE :

Sole Prioprietoship- simple and least formal type of business structure

REGISTER - DTI

- Control - High
- Paper work - easy
- Exposure -High

EASIEST TO APPLY AMONG THREE , BUT IN TERMS OF LIABILITY AND EXPOSURE IT HAS THE HIGHEST
RISK, AYOU ARE YOUR BUSINESS

Whatever your business owes and your business cannot pay that loan you will need to pay for those
liabilities and loans , in investment opportunities you have lower advantage is not as attractive as the
other

Partnership- under the SEC [ SECURITIES EXCHANGE COMMISSION] atleast two people is the in between
of the sole proprietoship and corporation

- Foreign ownership of up to Fourty percent

- Has it’s own juridical personality- it means the business is like a person created by law it has its
own identity , it’s in a way treated separate from the individual partners
- LESSER CONTROL
- For the paper work -medium
- EXPOSURE - MEDIUM
- Liability – two types : general liability and limited liability
 Yung main partner has general liability yung iba namang magpartner is limited liability which is
limited to the capital that they put up and peronal asset is mostly safe
- Investment -medium

CORPORATION – MINIMUM OF 5 PEOPLE and under pa rin ng SEC, it’s similar to partnership in the way
that Foreign ownership of up to Fourty percent

- Has it’s own juridical personality

- Control- Low
- Paper Work- Hard
- EXPOSURE AND LIABILITY – lowest exposure
- Lahat ng asset ng individual and shareholder safe
- Most ideal sa mga big companies

TWO TYPES :

STOCK AND NON – STOCK

Stock – you issue shares or stocks to your investors and if there are extra profit then you can divide

ILANG DAYS MAGREGISTER PARA DI MAPENALTY ?

Thirty days

Chapter 9. Special Topics in Management

6. Small Business Management and Entrepreneurship-

A. Entrepreneurship is at the heart of every business. Every large company started out as a small
business, led by an entrepreneur. As our economy becomes more volatile, having the skills and
knowledge to start a new business may mean the difference between prosperity and poverty.
B. Entrepreneurial skills are also in demand in established companies. Every business, large or
small, must be entrepreneurial just to survive. Innovative thinking has replaced "do it our way"
as the rallying cry of the corporation. Students who learn to think independently flourish in
chaotic environments and to keep cool under pressure are in high demand.
C. The Entrepreneurship Sequence is designed to build entrepreneurial skills step by step.
Professors, not graduate students, teach classes. We embody a “hands-on” philosophy of
teaching, putting our students into real-life entrepreneurial situations. Our program is rigorous,
challenging, and most of all, fun.

7. FAMILY BUSINESS ENTERPRISE

Found virtually in every sector of the world’s economies, family enterprises are the most common form
of business entity in the world. Yet, their ownership, management, and family composition create a
complexity that requires special knowledge and skills in order to understand them and to advise them
effectively. Indeed, perhaps one of the most discussed issues in the field today is how to define a family
enterprise. There is no one definition for family enterprise, but there are a few working definitions that
have evolved over the years. Learn more about these definitions and much more in Family Enterprise:
Understanding Families in Business and Families of Wealth, Wiley, 2013.

Definition 1
Family Firms are those in which multiple members of the same family are involved as major owners or
managers, either contemporaneously or over time (Miller, Le-Breton Miller, Lester, Canella, “Are Family
Firms Really Superior Performers,” Journal of Corporate Finance, Vol. 13, Issue 5, 2007).

Definition 2
Family firms are those in which the family controls the business through involvement in ownership and
management positions. Family involvement in ownership (FIO) and family involvement in management
(FIM) is measured as the percentage of equity held by family members and the percentage of a firm’s
managers who are also family members (Sciascia and Mazzola, Family Business Review, Vol. 21, Issue 4,
2008).

Definition 3
A family enterprise is an economic venture (enterprise group) in which two or more members of a family
(family group) have an interest in ownership (owners) and a commitment to the continuation of the
enterprise.

Definition 4
The family business is a business governed and/or managed with the intention to shape and/or pursue
the vision of the business held by a dominant coalition controlled by members of the same family or a
small number of families in a manner that is potentially sustainable across generations of the family or
families.

Definition 5
A firm of any size is a family business if:

1. The majority of decision-making rights are in the possession of the natural person(s) who established
the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the
firm, or in the possession of their spouses, parents, child, or children’s direct heirs.

2. The majority of decision-making rights are indirect or direct.

3. At least one representative of the family or kin is formally involved in the governance of the firm.

4. Listed companies meet the definition of family enterprise if the person who established or acquired
the firm (share capital) or their families or descendants possess 25 percent of the decision-making rights
mandated by their share of capital (European Union definition 2009).
 

8. Starting a Business: Legal Forms and Requirements

Whether the type of enterprise you want to run in the Philippines is a sole proprietorship, a partnership,
or a corporation, the basic legal requirements of starting a business in the Philippines are the following: 
 
1. Register the business with the corresponding department or agency
Sole proprietorships must be registered with the Department of Trade and Industry (DTI). Partnerships
and corporations, on the other hand, must be registered with the Securities and Exchange Commission
(SEC). The name of the business is also included in the registration. 
 
2. Obtain a business permit
Head to the local government unit of the place you intend to operate your business in. Secure a business
or mayor’s permit. Each municipality has its own specific requirements and procedures for the
registration of businesses, so be sure to check the individual websites of these areas for more
information. 
 
Many of the basic requirements include:
DTI or SEC registration form
Barangay clearance
Zoning clearance
Sketch of the location
Land title or contract of lease
Community tax certificate
Public liability insurance
Occupancy permit
Sanitary permit
Environmental permit
Fire permit
Other additional documents or permits
 
3. Register with the Bureau of Internal Revenue (BIR)
After obtaining the necessary documents and permits, register the business with the Bureau of Internal
Revenue (BIR). Business owners need to get a Taxpayer Identification Number (TIN) from the Revenue
District Office (RDO) within the registered location of the business.
 
There are two kinds BIR forms you can fill out depending on the type of business you’re starting. These
forms are:
Form 1901 for people who are self-employed, single proprietors, or professionals
Form 1903 for partnerships and corporations
 
4. Registering with the SSS, PhilHealth, and Pag-IBIG Fund
If you hire employees, register them with the necessary government programs. The Social Security
System (SSS) is a social insurance program that collects the monthly contribution of employees, along
with the share of their employer. The SSS gives employees health and retirement benefits from their
monthly contributions, along with a variety of small loans. An SSS membership is mandatory for all
employees who are 60 years old and below.
 
The Philippine Health Insurance Corporation (PhilHealth) is another government agency that requires
monthly contributions from the employee and the employer.
 
The Home Development Mutual Fund (Pag-IBIG Fund) provides a variety of housing loans to employees.
Monthly contributions are deducted from the salary of the employee.
 
5. Additional requirements:
Aside from the requirements mentioned above, there are also other special requirements that
businesses need. These requirements depend on the nature of the business and their corresponding
industry. If you intend to open a school or offer training or education programs, register with the
Department of Education (DepEd). For businesses that sell food products, register with the Bureau of
Food and Drugs (BFAD).