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Historical Development and Overview of Management

Reporters:
Elissa L. Importante Nochelle S. Urboda, REB Bon Carlo M. Melocoton, CPA

Types of Business Organization


Sole Proprietorship Partnerships

Corporations
Joint Stock Company Public Corporations Government Companies

When organizing a new business, one of the most important decisions to be made is choosing the structure of a business

Types of Business Organization


Sole Proprietorship
Partnerships Sole Proprietorship

Corporations
Joint Stock Company Public Corporations Government Companies

The individual entrepreneur supplies the entire capital, employs labor and machine Individual uses his own skill in the management of affairs and is solely responsible for the good or bad result of its operation and working

Types of Business Organization


Sole Proprietorship
Partnerships Sole Proprietorship
MERITS Easiest and least expensive from of ownership to organize Sole proprietor are in complete control, within the law, to make all decisions Sole proprietor receives all income generated by the business to keep or reinvest Profits from the business flowthrough directly to the owners personal tax return The business is easy to dissolve, if desired DEMERITS Unlimited liability and are legally responsible for all debts against the business Their business and personal assets are 100% at risk Are limited to using funds from personal savings Have a hard time attracting high-caliber employees Have a hard time to raise investment funds

Corporations
Joint Stock Company Public Corporations Government Companies

Types of Business Organization


Sole Proprietorship Partnerships

Partnerships
Corporations
Joint Stock Company Public Corporations Government Companies

Two or more persons come together and start a business with their own funds, the parties agree to share the profits as well as bear the losses in the agreed proportion.

Types of Business Organization


Sole Proprietorship Partnerships
MERITS DEMERITS

Partnerships
Corporations
Joint Stock Company Public Corporations Government Companies

Partnerships are relatively easy to establish, however time should be invested in developing the agreement
With more than one owner, the ability to raise funds may be increased The profits from the business flow directly through to the partners personal taxes Prospective employees may be attracted to the business if given the incentive to become a partner

Partners are jointly and individually liable for the actions of the other partners
Profits and decisions must be shared with others, disagreements can occur Some employee benefits are not deductible from business income on tax returns The partnerships have a limited life; it may end upon a partner withdrawal or death

Types of Business Organization


Sole Proprietorship Partnerships Corporations

Corporations
Joint Stock Company Public Corporations Government Companies

A corporation is considered by law to be unique entity, separate and apart from those who own it A corporation can be taxed, sued, or enter into contractual agreements

Types of Business Organization


Sole Proprietorship Partnerships
MERITS

Corporations
DEMERITS

Shareholders have limited liability for the corporations debts

The process of incorporation requires ,ore time and money than other organization forms

Corporations
Joint Stock Company Public Corporations Government Companies

Generally, shareholders can Corporations are monitored by only be held accountable for state and some local agencies their investment in stock of the company Corporations can raise additional funds through the sale of stock A corporation may deduct the cost of benefits it provides to officers and employees Incorporating may result in higher overall taxes Dividends paid to shareholders are not deductible from busn income, thus can be taxed twice

Types of Business Organization


Sole Proprietorship Partnerships Joint Stock Company

Corporations

Joint Stock Company


Public Corporations Government Companies

Capital is contributed by a large number of person in the form of shares of different values
Private Limited Company Public Limited Company

Types of Business Organization


Sole Proprietorship Partnerships Joint Stock Company
Private Limited Company - can be formed by 2 to 50 persons. In this, transfer of shares is limited to members only. The government does not interfere in the working of the company Public Limited Company - membership is open to general public. The minimum required number to form such company is 7, but there is no upper limit

Corporations

Joint Stock Company


Public Corporations Government Companies

Types of Business Organization


Sole Proprietorship Partnerships Joint Stock Company
MERITS The liability, being limited, of the shareholder bear no risk and therefore more persons are encourage to invest capital Because of large number of investors, the risk of loss is divided Joint stock companies are not affected by the death or the retirement of the shareholders DEMERITS It is difficult to preserve secrecy in these companies

Corporations

Joint Stock Company


Public Corporations Government Companies

It requires a large number of legal formalities to be observed Lack of personal interest

Types of Business Organization


Sole Proprietorship Partnerships Public Corporations

Corporations
Joint Stock Company

Public Corporations
Government Companies

Wholly owned by the Government. It is usually established by a Special Act of the parliament Special statute also prescribes its management pattern power duties and jurisdictions

Types of Business Organization


Sole Proprietorship Partnerships Public Corporations
MERITS These are expected to provide better working conditions to the employees and supported to be better managed DEMERITS Any alteration in the power & Constitution of Corporation requires an amendment in the particular Act, which is difficult and time consuming

Corporations
Joint Stock Company

Quick decisions can be possible, because of absence of bureaucratic control

Public Corporations
Government Companies

More flexibility as compared to Public corporations possess departmental organization monopoly & in the absence of competition, these are not Since the management is in interested in adopting new the hands of experienced & techniques & in making capable managers, these are managed more efficiently than improvements in their work that of government departments

Types of Business Organization


Sole Proprietorship Partnerships Government Companies

Corporations
Joint Stock Company Public Corporations

Share capital is held by the government or partly by government and partly by one or more state government Managed by the elected board of directors which may include private individuals

Government Companies

Types of Business Organization


Sole Proprietorship Partnerships Government Companies
MERITS DEMERITS

It is easy to form

Corporations
Joint Stock Company Public Corporations
The directors of a government company are free to take decisions & are not bound by certain rigid rules and regulation

Misuse of excessive freedom cannot be ruled out


The directors are appointed by the government so they spend more time in pleasing their political masters & top government officials, which results in inefficient management

Government Companies

Classification of Environmental Factors


MACRO Environment

EXTERNAL

MICRO Environment

INTERNAL Environment

On the basis of the extent of intimacy with the firm, the environmental factors may be classified into different types namely internal and external

Classification of Environmental Factors


MACRO Environment INTERNAL ENVIRONMENTAL FACTORS - has a direct impact on the business - generally controllable because the company has control over these factors - these factors are as follows: a. Resources - these can be tangible, intangible and human resources b. Capabilities - firms capacity for undertaking a particular productive activity c. Culture - specific collection of values and norms that are shared by people and groups in an organization

EXTERNAL

MICRO Environment

INTERNAL Environment

Classification of Environmental Factors


MACRO Environment EXTERNAL ENVIRONMENT FACTORS - indirect influence on the business - uncontrollable by the business - two types of this factor are as follows 1. MICRO ENVIRONMENTAL FACTORS External factors close to the company that have a direct impact on the organizations process 2. MACRO ENVIRONMENTAL FACTORS Consists of non specific aspects in the organizations surroundings that have potential to affect the organizations strategies

EXTERNAL

MICRO Environment

INTERNAL Environment

Classification of Environmental Factors


MICRO ENVIRONMENTAL FACTORS MACRO Environment a. Shareholders Any person or company that owns at least one share in a company b. Suppliers Individual or an organization involved in the process of making a product or service available for use or consumption by a customer c. Distributor Entity that buys non-competing products, warehouse them and resells them to retailers or direct end user d. Customers A person, company, or other entity that buys goods and services produced by other person, company or other entity

EXTERNAL

MICRO Environment

INTERNAL Environment

Classification of Environmental Factors


MICRO ENVIRONMENTAL FACTORS MACRO Environment e. Competitors A company in the same industry or a similar industry which offers a similar product or services f. Media Positive or adverse media attention on an organizations product or service can in some cases make or break an organization

EXTERNAL

MICRO Environment

INTERNAL Environment

Classification of Environmental Factors


MACRO ENVIRONMENTAL FACTORS MACRO Environment a. Political Factors Include government regulations and legal issues and define both formal and informal rules under which the firm must operate tax policy; employment laws; environmental regulations, trade restrictions and tariffs; political stability b. Economic Factors Affects the purchasing power of potential customers and the firms cost of capital economic growth; interest rates; exchange rates; inflation rate

EXTERNAL

MICRO Environment

INTERNAL Environment

Classification of Environmental Factors


MACRO ENVIRONMENTAL FACTORS MACRO Environment c. Social Factors Include demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets health consciousness; population growth rate; age distribution; career attitudes; emphasis on safety d. Technological Factors This can lower barriers to entry, reduce minimum efficient production levels and influence outsourcing decisions R&D activity; technology changes technology incentives; automation

EXTERNAL

MICRO Environment

INTERNAL Environment

Trends and Challenges of Management in Global Scenario


The management functions are planning, organizing, directing, and controlling are just as relevant to international managers as to domestic managers. International managers need to
Have a clear view of where they want their firm to be in the future Organize to implement their plans Motivate those who work to them Develop appropriate control mechanisms

Trends and Challenges of Management in Global Scenario


Planning in a Global Scenario to effectively plan and make decisions in a global economy, managers must have the following
Broad-based understanding of both environmental issues and competitive issues Need to understand local market conditions and technological factor that will affect their operations At the corporate level, executives need a great deal information to function effectively Variety of strategic decisions about their organizations

Trends and Challenges of Management in Global Scenario


Organizing in a Global Scenario
Managers in international business must also attend to a variety of organizing issues The firm has made the decision to give local managers a great deal of responsibility for how they run their business Managers in an international business must address the basic issues of organization, structure and design, managing change, and dealing with human resources

Trends and Challenges of Management in Global Scenario


Directing in a Global Scenario
Individual managers must be prepared to deal with cultural and other factors as they interact people from different cultural backgrounds Managers must understand How cultural factors affect individuals How motivational processes vary across cultures How the role of leadership changes in different cultures How communication varies across cultures How interpersonal and group processes depend on cultural background

Trends and Challenges of Management in Global Scenario


Controlling in a Global Scenario
Managers in international organizations must also be concerned with control Distances, time zone differences, and cultural factors also play a role in control Basic control issues for the international manager revolve around operations management productivity, quality, technology and information system

They say that dedicating is one of the most beautiful acts of love one can perform.
I would argue that it is even more beautiful to dedicate this to you without saying my name

Historical Development and Overview of Management

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