Principles of Management

1. IS 114- Principles of Management
Part I
THE PHILIPPINE
BUSINESS ENTERPRISE
Business - a social process which involves the assembly and utilization of resources to produce goods and services in
order to satisfy the needs of society.
BASIC RESOURCES OF BUSINESS
1. Men - the people who work in business enterprise
2. Money - funds needed in putting up the business enterprise
3. Machines - factor of production which is more efficient and economical to use
4. Materials - things needed in the creation of products
5. Methods - refer to technology or techniques of production
ECONOMIC SYSTEM MODELS
1. Capitalism - the factors of production and distribution are owned and managed by private individuals.
2. Communism - the factors of production and distribution are owned and managed by the State.
3. Socialism - it is where the major industries belong to the State while the minor industries to private individuals
BASIC MARKET MODELS
1. Pure competition - market situation where there is a large number of independent sellers offering identical
products.
2. Pure monopoly - refers to a market situation where there is only one producer or seller.
3. Monopolistic competition - pertains to a market situation where there is relatively large number of small
producers or suppliers selling similar but not identical products.
4. Oligopoly - market situation where there are few firms offering standardized or differentiated goods and services.
Business environment - refers to the factors that affect the efficiency of a business enterprise.
CLASSES OF BUSINESS ENVIRONMENT
a. Internal environment
Internal Forces Affecting Business
1. Management
2. Technology
3. Facilities
4. Financial incentives
b. External environment
External Forces Affecting Business
1. Peace and order
2. Transportation, telephone and electric facilities
3. Monetary and fiscal policies
4. Political, social and economic conditions

2. AREAS OF GOVERNMENT REGULATION ON BUSINESS ENTERPRISES
1. Occupational safety
2. Fair labor practices
3. Consumer protection
4. Pollution prevention
5. Economic security
MANNER OF IMPLEMENTING DEVELOPMENT ACTIVITIES
1. Devolution - the transfer of decision-making to the lowest units possible
2. Deregulation - the removal of red tape and competition with the private sector
3. Decentralization - the provision of resources and services to the countryside
4. Democratization - the provision of equal benefits to everyone
PRIORITY PROGRAMS
1. Attainment of national stability and unity
2. Economic recovery
3. Rapid development of the energy/power sector
4. Environment protection
5. Streamlining the bureaucracy
Part II
NATURE OF MANAGEMENT
DEFINITIONS OF MANAGEMENT
 The art of getting things done through people
 The attainment of the goals of the organization through cooperative efforts of its members
 The process of planning, organizing, leading and controlling productive resources such as people, money, machines,
materials and methods.
TYPES OF MANAGERS
1. First-level managers - supervises workers and employees
2. Middle managers - lead the activities of supervisors and in some cases, those of the workers.
3. Top managers - involved in the operations of the whole organization
FUNCTIONS OF MANAGEMENT
1. Planning - thinking ahead
2. Organizing - the function which involves the allocation of productive resources, and the setting up of the structure
of the organization.
3. Staffing - concerned with the evaluation, selection and development of employees to fit the needs of the
organizational structure.
4. Directing - motivating people to do their jobs toward the attainment of the goals of the organization.
5. Controlling - process of measuring and correcting actual performance against standards as established by the
organization

3. MANAGERIAL ROLES
1. Interpersonal roles
2. Informational roles
3. Decision-making roles
MANAGEMENT SKILLS
1. Technical skills - refer to the knowledge of and ability to use the processes, practices, procedures, techniques, and
tools of a specialized field.
2. Human skill - refers to human relations
3. Conceptual skill - the ability to understand the interrelationship and interdependence of the various parts of the
whole organization.
Part III
DEVELOPMENT OF MANAGEMENT THEORY
THEORIES OF MANAGEMENT
I. Classical Management Theory
A. Systematic management - attempts to build specific procedures and processes into operations to ensure
coordination of effort
B. Scientific management - arose from the need to increase productivity and to find ways to increase the
efficiency of workers.
Contributors to Scientific Management Theory
1. Frederick Taylor - introduced the differential rate system which encouraged employers to pay more
productive workers
2. Robert Owen - conceived of the manager’s role as one of reform.
3. Charles Babbage - an advocate of division of labor who believes that each operation should be analyzed so
that the various skills involved in the operation could be isolated.
4. Henry L. Gantt - originated a charting system for production scheduling
5. Frank and Lillian Gilbreth - conducted the studies on fatigue and motion
C. Administrative management - argued that management was a profession and could be taught.
Contributors to Administrative Management
1. Henry Fayol - identified the functions and principles of management
2. Chester Barnard - outlined the role of the senior executive
3. Mary Parker Follet - emphasizes the continually changing situations that managers face.
Basic Principles of Management
1. Division of labor - the process of distributing work into specialized tasks and assigning responsibilities to
specific individuals
2. Authority - the right to issue orders and the power to compel authority
3. Discipline - the need to respect and comply with the rules of the organization
4. Unity of command - means that each employee must receive instructions and orders from only 1 person to
avoid conflict and confusion of authority
5. Unity of direction - means that employees efforts should be focused on achieving organizational objectives

4. 6. Subordination of individual interests to general interests - means that the individual interests of
employees should not prevail over that of the whole organization
7. Remuneration of personnel - means to systematically reward efforts that support the organization’s
direction
8. Centralization - determining the relative importance of superior and subordinate roles
9. Scalar chain - the line of authority from top management down to the lowest level
10. Order - the assignment of workers in their most suitable jobs
11. Equity - the friendly and fair treatment to employees
12. Stability of tenure - the assurance that no one will be laid of or separated from his job without due process
13. Initiative - a personal responsible decision to think of new ideas
14. Esprit de corps - promote a unity of interests between employees and management
D. Human relations - the approach that is aimed at understanding how psychological and social processes interact
with the work situation to influence performance
E. Bureaucracy - the approach emphasizing a structured, formal network of relationships among specialized
positions in the organization
II. Contemporary Approaches
1. Quantitative management - the application of quantitative or mathematical approaches to the solutions of
management problems
2. Organizational behavior - studies and identifies management activities that promote employee effectiveness
through an understanding of the complex nature of individual, group and organizational processes
Types of Organizational Behavior Theory
a. Theory X - theory where managers assume that workers are lazy and irresponsible and require constant
supervision
b. Theory Y - theory where managers assume that employees want to work and can direct and control
themselves
3. Systems theory - takes a holistic view of the entire organizational system and stresses processes
Types of System Theory
a. Closed system - does not depend on interactions with external groups to sustain itself
b. Open system - dependent on inputs from the outside world such as raw materials, human resources and
capital
4. Contingency perspective theory- refutes the universal principles of management by stating that variety of
factors, both internal and external, affects the firms performance and that there is no “one best way” to manage
and organize because circumstances vary.

5. Part IV
BUSINESS
ORGANIZATIONS
REASONS FOR GOING INTO BUSINESS
1. Personal satisfaction
2. Family involvement
3. Independence and power
4. Social activities
5. Profit expectation
FORMS OF BUSINESS ORGANIZATIONS
A. Single/sole proprietorship - owned and usually managed by one person
Advantages of Single Proprietorship
1. It is easy to form and dissolve.
2. All profits belong to the business owner.
3. The owner is the boss.
4. Tax advantage and less governmental regulation
Disadvantages of Single Proprietorship
1. Unlimited liability
2. Lack of stability
3. Limited access to credit
B. Partnerships - an association of two or more persons who are co-owners of a business.
Classification of Partnership Based on Obligations
1. General partnership - partnership where all partners are liable for partnership debts to the extent of their
personal property after all the partnership assets have been exhausted.
2. Limited partnership - partnership where all partners are liable for partnership debts only to the extent of their
capital contributions.
Classes of Partners Based on their Contribution
1. Capitalist partner - partner who contributes money or property to the capital of the partnership.
2. Industrial partner - partner who contributes his work, labor or industry to the partnership.
3. Capitalist-industrial partner - one who contributes money or property as well as his work or industry to the
capital of the partnership.
Advantages of Partnership
1. It is easy to organize.
2. Availability of more capital and credit.
3. The partners get all the profits.
4. Better knowledge and skills.
Disadvantages of Partnership

6. 1. Unlimited liability.
2. Lack of stability.
3. Management disagreement.
4. Idle investment
C. Corporation - artificial being created by operation of law, having the right of succession and the powers, attributes
and properties expressly authorized by law or incident to its existence.
Advantages of Corporation
1. Limited liability.
2. Easy to raise capital.
3. Perpetual existence
4. Specialized management
Disadvantages of Corporation
1. Difficult to organize.
2. Strictly regulated and supervised by the government.
3. Some corporations are socially irresponsible.
4. Formal and impersonal employer-employee relationship
D. Cooperative - a duly registered association of persons, with a common bond of interest, who have voluntarily joined
together to achieve a lawful common social or economic end
Types of Cooperative
1. Credit cooperative - promotes thrift among members and create funds in order to grant loans for productive
and provident purposes.
2. Consumers cooperative - procures and distributes commodities to its members and non-members.
3. Marketing cooperative - engages in the supply of production inputs to members and markets their products as
well.
4. Service cooperative - undertakes medical and dental care, hospitalization, light and power.
5. Multipurpose cooperative - combines two or more of the business activities of the different types of
cooperative.
ENTREPRENEURIAL SKILLS
1. Financial skills
2. Marketing skills
3. Managerial skills
4. Overall personal decision-making process

7. Part V
PLANNING AND DECISION-MAKING
Planning - the process of establishing objectives and appropriate courses of action before taking action.
TYPES OF PLANS
1. Strategic plan - plan that is focused on the entire business operations
2. Operating plan - provides the specifics as to how the strategic plan will be attained.
Main Types of Operating Plans
a. Single-use plan - applicable to activities that do not repeat.
Examples of Single-Use Plans
1. Program - a set of activities towards an objective
2. Budget - it provides funds indicating their sources and their corresponding expenditures
b. Ongoing plan - used for continuing situations, problems, and activities which are similar and consistent
Examples of Ongoing Plans
1. Policy - a guideline for making decisions
2. Procedure - step-by-step instructions for performing an activity or task
3. Rule - a specific plan for controlling human behavior at work.
PRINCIPLES OF PLANNING
1. Planning must be realistic.
2. Planning must be based on felt needs.
3. Planning must be flexible.
4. Planning must be democratic.
5. Planning must start with simple projects.
6. Planning must include social responsibility.
BASIC STEPS IN PLANNING
1. Establish objectives.
2. Evaluate the environment.
3. Determine the best alternative strategy.
4. Implement the action plan.
5. Evaluation of results.
PLANNING BARRIERS
1. Incompetence in planning.
2. Lack of dedication.
3. Incomplete and inaccurate information.
4. Short-sightedness.
5. Dependence on the planning department.

8. TYPES OF PLANNING TOOLS
1. Quantitative planning tools - numerical data in which sufficient information is available to determine relationships
between variables
2. Qualitative planning tools - do not use numbers like arithmetic or mathematics.
IMPORTA NCE OF BUSINESS PLANNING
1. Planning can eliminate business risks.
2. Planning can minimize costs of production.
3. Planning can detect the weaknesses of the business operations.
STEPS IN DECISION MAKING
1. Define the problem.
2. Gather data about the problem.
3. Organize and analyze the data.
4. Develop alternative solutions.
5. Analyze alternatives.
6. Select the best alternative.
7. Implement and monitor the decision.
Part VI
ORGANIZING
Organizing - the process of combining and coordinating productive resources in order to
accomplish efficiently and effectively the established objectives of the organization.
IMPORTANCE OF ORGANIZING
1. Clear and specific job description.
2. Existence of coordination.
3. Presence of formal structure.
STEPS IN ORGANIZING
1. Evaluate plans and objectives
2. Identify the various activities
3. Group similar or related activities
4. Assign activities with appropriate authority
5. Design a hierarchy of relationships

9. APPROACHES TO ORGANIZING
1. Functional approach - the most common and basic approach to organizing.
FUNCTIONAL ORGANIZATIONAL STRUCTURE
2. Geographic approach - approach which is applicable to big organizations and giant business
enterprises like the multinational corporations.
GEOGRAPHIC ORGANIZATIONAL STRUCTURE
3. Product approach - applicable for products which require unique strategy, production process
or distribution system
PRODUCT ORGANIZATIONAL STRUCTURE
PRESIDENT
VP VP VP VP
Finance Prod'n HR PR
VP
MKTG
PRESIDENT
VP VP VP
Luzon Visayas Mindanao
PRESIDENT
VP-Industrial VP-Consumer VP-Military
Products Products Products

10. 4. Customer approach - pertains to people with different demands, preferences, or needs.
CUSTOMER ORGANIZATIONAL STRUCTURE
5. Matrix approach - combines the functional organizational structure with a project team
structure in which an employee has two bosses.
MATRIX ORGANIZATIONAL STRUCTURE
PRINCIPAL ORGANIZATIONAL CONCEPTS
A. Authority - the right to give orders and make decisions
Types of Authority
1. Line authority - direct supervisory relationship between superior and subordinate
2. Staff authority - provides advice or technical assistance to top management or line
managers
3. Functional authority - authority delegated to the members of the staff department to
control the activities of the other departments that are related to specific staff responsibilities.
PRESIDENT
VP
Marketing
Manager Manager VP
Books Toys Sch Supplies
PRESIDENT
Consultant
VP VP VP VP
R & D Eng'g. Production Admin
Proj. Mgr. R & D Eng'g. Production Admin
Guam Staff Staff Staff Staff
Proj. Mgr. R & D Eng'g. Production Admin
Saipan Staff Staff Staff Staff
Proj. Mgr. R & D Eng'g. Production Admin
Subic Staff Staff Staff Staff

11. B. Delegation - the assignment of formal authority from a superior to a subordinate.
Principles of Effective Delegation
1. Scalar principle - it is a clear line of authority from the top level to the bottom of the
organization.
2. Unity of command - means that each employee of an organization should report only to one
supervisor.
C. Span of control - refers to the number of subordinates a manager should direct.
D. Centralization - the extent of the authority in an organization
Informal organization - group of individuals which has emerged out of personal and group needs
of members
CLASSIFICATION OF INFORMAL ORGANIZATION
1. Horizontal groups - composed of employees in the same department, or across department
lines which operate at the same organizational level
2. Vertical groups - composed of employees from the different levels of the organization
3. Mixed groups - combination of employees from the different levels of the organization and from
the different work areas.
FUNCTIONS OF THE INFORMAL ORGANIZATION
1. Reinforce and sustain the cultural and social values of the members
2. Provide members the opportunities to satisfy their psychological needs
3. Generate a faster system of communication for the members
4. Influence operation of the formal organization
Part VII
DIRECTING
Motivation - refers to those factors that are responsible for stimulating proper responses towards the accomplishment of
established goals.
MOTIVATIONAL MODELS
1. Traditional model - Views that the managers job is to see to it that workers perform repetitive tasks in the most
efficient way.
2. Human relations model - views that social needs and the feeling of importance are the factors that motivate
people
3. Human resources model - views that employees are motivated not only by money, or the desire for satisfaction,
but also by the need for achievement and meaningful work

12. MOTIVATION THEORIES
1. Abraham Maslow’s Hierarchy of Needs
a. Basic physical/physiological needs
b. Safety and security
c. Belonging and social needs
d. Esteem and status
e. Self-actualization and fulfillment
2. Fredereick Herzberg’s Two-Factor Theory
a. Motivation Factors - factors which lead to job satisfaction
b. Hygienic Factors - factors which produce job satisfaction
3. David McClelland’s Need Achievement Theory
McClelland's Key Motives
a. Achievement motive - the desire to succeed relative to some standard of excellence or in competitive
situations
b. Affiliation motive - a person’s desire to develop and maintain close, mutually satisfying interpersonal
relationships with others.
c. Power motive - an individual’s desire to influence and control others and the social environment
4. Expectancy Theory
5. Reinforcement Theory
6. Equity Theory
Leadership - power to influence the behaviors of people to perform activities that are required to accomplish goals
LEADERSHIP ROLE OF MANAGERS
1. Educator
2. Counselor
3. Judge
4. Spokesperson
THEORIES OF LEADERSHIP
1. Situational leadership theory - leadership style that depends on motivation, ability and experience of the
subordinates.
2. Contingency theory - assumes that it is not easy for managers to be flexible in their styles of management,
3. Path-goal theory - theory based on the expectancy model in which an individual is motivated by expectation of
rewards.
LEADERSHIP STYLES
1. Autocratic leaders - leaders who impose their authority and decision-making power on their subordinates
2. Participative leaders - type of leaders where members of the group are allowed to participate in planning,
decision-making and implementation.
3. Free-rein leaders - type of leaders who allows the members of the group to make their plans, and to establish their
own goals.

13. Part VIII
CONTROLLING
Control - systematic effort to set performance standards with planning objectives
Management control - the process of assuring that actual activities conform to planned activities.
BASIC STEPS IN CONTROL PROCESS
1. Establish standards of performance
2. Measure performance
3. Take corrective action
TYPES OF CONTROL
1. Pre-action controls - those that require the proper allocation or budgeting of productive resources prior to the
activity.
2. Steering control - intended to detect deviations from the established standards or objectives.
3. Screening control - provide the conditions to be met before operations continue.
4. Post-action controls - measure the results of a completed activity
FEATURES OF AN EFFECTIVE CONTROL SYSTEM
1. Accurate and adequate
2. Timely and relevant
3. Economically and organizationally realistic
4. Objective, measurable and comprehensible
5. Flexible and acceptable
FINA NCIAL CONTROLS
1. Financial statements - compact reports that summarize the financial position of a firm as of a given date, or the
result of the financial operation over a given period.
Compositions of a Financial Statement
a. Balance Sheet - financial statement that shows the financial position of the firm as of the specified date.
b. Income Statement - financial statement that shows the result of the financial operations over a given period
2. Ratio analysis - provide information needed to measure progress towards objectives, and to evaluate the financial
performance or condition of the organization
3. Break-even analysis - shows the relationship between total revenue and total cost
4. Budgets - statement of sources of funds and the corresponding planned activities to be funded in a given specific
period
5. Audit - formal investigation which are intended to verify if records, reports, statements and other relevant
information are correct.

14. PRODUCTION CONTROLS
1. Gantt chart - developed for planning and controlling time schedule of projects
2. Network techniques - apply to projects whose activities are interrelated
Major Network Techniques
a. Program Evaluation Review Technique [PERT] - uses estimates of the time required to
complete tasks
b. Critical Path Method [CPM] - used to schedule and control projects whose task completion
times can be fairly predicted with precision
3. Quality control - control used to correct defects or deviations early in each stage of production
Methods Used for Quality Control
a. Inspection products are checked to determine conformity to standards
b. Testing materials are tested on the basis of their strength, durability and sustainability
c. Sampling techniques - only a percentage number of products are checked
GENERAL MANAGEMENT CONTROL
1. Management Information System - a computer based system useful for effective planning,
decision-making and control
2. Inventory Control System - ensures the orderly flow of supplies, raw materials or finished
products in an office, factory or shop.
ACTIVITIES UNDERTAKEN OCTOBER NOVEMBER DECEMBER
wk 1 wk 2 wk 3 wk 4 wk 1 wk 2 wk 3 wk 4 wk 1 wk 2 wk 3 wk 4
PRE-OPERATING
Licensing
Building Inspection
Renovation
Purchase of Office Equipment
Inauguration/Blessing and
Start of Business Operation

15. Part IX
STAFFING
Staffing - management function which is composed of a series of steps that intend to provide the organization with the
right people in the right jobs
STEPS IN THE STAFFING PROCESS
1. Human resource planning - primarily concerned with the future demand for and supply of personnel requirements
2. Recruitment - its aim is to get many job applicants, for the organization to choose the most qualified ones.
3. Selection - choosing the most suitable job applicant
Steps in Selecting Applicants
1. Completion of application form
2. Preliminary interview
3. Testing / examination
4. In-depth interview
5. Background investigation
6. Physical examination
4. Orientation - the purpose is to provide the new employee with information about his job, history of the
organization, policies, work rules, vision and mission of the organization and employees benefits.
5. Training and development - its objective is to improve present and future job performance.
6. Performance appraisal - refers to a system of measuring and evaluating the traits, behavior and effectiveness of
an employee on the job.
Types of Performance Appraisal
a. Informal performance appraisal - the monitoring by the supervisor of the employee’s day to day activities.
b. Formal performance appraisal - structured and systematic process of rating performance of subordinates
7. Transfer, promotion and demotion
Transfer - defined as the movement of employees from one job to another on the same level in the organization
with more or less the same pay, privileges, duties and responsibilities.
Promotion - refer to the upward movement of employees in an organization from lower level jobs to higher level
jobs involving increases in duties and responsibilities, higher pay and privileges
Demotion - refer to the movement of people to a less important job from a higher level job in the organization
which may or may not involve a reduction in pay, status or privileges.

16. 8. Separation - the termination of employee as a result of resignation, lay-off or discharge
Types of Separation
a. Resignation - a formal statement or document stating that one has relinquished his post without resistance
b. Lay-off - the act of dismissing employees
c. Discharge - to remove from office
d. Retirement - form of voluntary separation
Part X
ROLE OF COMMUNICATION IN MANAGEMENT
Communication - the transfer of information and understanding from one person to another
through meaningful symbols.
BASIC COMMUNICATION PROCESS
ELEMENTS OF
COMMUNICA TION
1. Sender - the source of information and the initiator of the communication process
2. Message - the verbal symbols and nonverbal cues representing the information that the sender wants to convey
to the receiver.
3. Receiver - the person who receives and decodes the sender’s message
4. Feedback - the receiver’s response to the sender’s message
TYPES OF COMMUNICATION
SENDER MESSAGE RECEIVER
REACTION/
FEEDBACK

17. 1. Non-verbal communication - refers to information without the use of words
2. Verbal communication - pertains to information with the use of words
RESPONSIBILITIES OF THE SENDER
1. Knowing the purpose of communicating.
2. Knowing the receiver.
3. Choosing the appropriate medium.
4. Selecting the proper time of communicating.
RESPONSIBILITIES OF THE RECEIVER
1. To listen to the sender or concentrate on the message.
2. To respect and understand the sender.
3. To suggest the proper medium.
4. To react to the message.
BARRIERS TO EFFECTIVE COMMUNICATION
1. Individual variations in perception.
2. Differences in language.
3. Presence of noise.
4. Emotional reactions.
5. Verbal communication inconsistent with non-verbal communication
6. Credibility of the sender.
FACTORS IN ORGANIZATIONAL COMMUNICA TION
1. Formal channels of communication.
2. Authority structure.
3. Job specification.
4. Information ownership.
TYPES OF ORGA NIZA TIONAL COMMUNICATION
1. Vertical communication - refers to the downward and upward communication in an organization
2. Lateral communication - takes place between and among departments in an organization.

18. Part XI
MANAGING CHANGE
AND CONFLICT
Change - a variation or alteration in the existing environment
EXTERNAL FORCES AFFECTING CHANGE
1. Technology
2. Competition
3. Government policies
4. Price level
5. Employment rate
6. Economic development
7. Government infrastructure
8. Social values
9. Cultural changes
10. Interest rates
INTERNAL FORCES AFFECTING CHANGE
1. Top management policies
2. Pay system
3. Communication procedure
4. Technology of the organization
5. Attitudes of employees
6. Employee appraisal method
7. Work schedules
8. Training programs
FACTORS IN THE SUCCESS OF MANAGING CHANGE
1. Trust
2. Organizational learning
3. Adaptiveness
PHASES OF SUCCESSFUL ORGA NIZA TIONAL CHANGE
1. Pressure and arousal
2. Intervention and reorientation
3. Diagnosis and recognition
4. Invention and commitment
5. Experimentation and research
6. Reinforcement and acceptance
REASONS WHY PEOPLE RESIST CHANGE
1. They are not sure about the causes and effects of change.
2. They are not willing to give up existing benefits.
3. They are aware of the weaknesses of the proposed change.
APPROACHES TO PLANNED CHANGE
1. People approach
2. Structural approach
3. Technological approach
Organizational Conflict - disagreement between two or more members of the organization, or groups arising from the
fact they must share scarce resources or work activities and/or from the fact that they have different status, goals or
perceptions.

19. SOURCES OF ORGANIZATIONAL CONFLICTS
1. Sharing of resources
2. Differences in goals
3. Differences in perceptions or values
4. Work activities
5. Ambiguous communications
VIEWS ON CONFLICT
1. Traditional view - conflict is not harmful and is not necessary
2. Behavioral view - conflict is inherent in an organization because members have individual differences in attitudes,
values, perceptions, goals
3. Interactionist view - conflict is necessary and beneficial to the organization
STRATEGIES FOR MANAGING CONFLICT
1. Stimulate conflict
2. Reduce conflict
3. Resolve conflict
How to Resolve Conflict?
a. Arbitration - allows parties in disagreement to submit to the judgment of a third party
b. Compromise - persuade each party to meet halfway
c. Consensus - aimed at conflicting parties who meet and discuss their differences together and find the best
solution to the problem
d. Confrontation - results when disagreeing parties state their respective views directly at each other

20. Part XII
ENTREPRENEURSHIP
Entrepreneurship - the capacity for innovation, investment and expansion in new markets, products and techniques
WHO IS THE ENTREPRENEUR?
 He is the innovator seeking out new business relationships, new products to make, new techniques of production,
new methods of marketing, new markets.
 He is the thinker and the doer, the organizer who puts men, money and machines together in productive and
profitable relationship.
 He is the self-evident job creator who makes decisions, takes risks and accepts responsibility.
QUALITIES OF ENTREPRENEURS
1. Reasonable risk-takers
2. Self-confident
3. Hardworking
4. Innovative
5. Leadership
6. Positive thinkers
7. Decision-makers
CONCEPT OF THE FILIPINO ENTREPRENEUR
1. Self-reliant
2. Risk-taker
3. Industrious
4. Humble
5. Helpful
6. Creative
7. Happy
DETERMINA NTS OF SUCCESSFUL ENTREPRENEURSHIP
1. Ability to conceptualize and plan.
2. Ability to manage others.
3. Ability to manage time and to learn.
4. Ability to adapt to change.
CONTRIBUTIONS OF ENTREPRENEURS
1. Develop new markets
2. Discover new sources of materials
3. Mobilize capital resources
4. Introduce new technologies, new industries and new products
5. Create employment
GOVERNMENT ASSISTANCE TO ENTREPRENEURS
1. Peace and order
2. Political stability
3. Price stability
4. Taxes
5. Infrastructures
6. Education and training
7. Public administration
8. Production and technology
9. Marketing assistance
10. Financial assistance

21. Part XIII
SMALL BUSINESS
Business - an organized effort of individuals to produce and sell goods and services to satisfy the needs of
society.
KINDS OF SMALL BUSINESS
1. Micro business - very small business where the owner is the principal worker
2. Bigger small business - business where the owner mainly directs the work of the employees.
COMMON FEATURES OF A SMALL BUSINESS
1. Privately owned
2. Has few or no layers of management
3. Generally, it has insufficient resources to dominate its field of business
CHARACTERISTICS OF A SMALL BUSINESS
1. Labor intensive
2. Efficient in a specialized skill or service
3. Successful in small, isolated or overlooked markets.
4. Often operates in unstable markets
5. Close to the markets
6. Ownership and management are generally under the same person
7. Capital comes from the owner or small group
8. Small area of operation
9. The size of the business enterprise is small in relation to the industry
ADVANTAGES OF SMALL BUSINESS
1. Personalized relationship with employees and customers.
2. Flexibility in management.
3. Government incentives
4. Simple record keeping
5. Independence.
DISADVANTAGES OF SMALL BUSINESS
1. Difficulty of raising capital.
2. Risk of failure.
3. Limited management skills
4. Lack of opportunities for employees.