Grade 11

Organization and Management

Week 4 – Module 4
The Firm and Its Environment

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 Chapter 2

THE FIRM
AND
ITS ENVIRONMENT

for Grade 11
Organization and Management

SELF-LEARNING KIT

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 First Semester
Module No. 4
LESSON 2

Forms and Economic Roles of Business Organizations, and

Phases of Economic Development and Its Impact to Business Environment

OBJECTIVES
1. Explain the role of business in relation to the economy;
2. Discuss the different phases of economic development; and
3. Differentiate the various forms of business organizations

LEARNING COMPETENCY
1. Analyze the forms and economic roles of business organizations; and
2. Differentiate the phases of economic development and its impact to business
environment

I. TRY ME!
Let us go back in time. Do a recall on who were you and who are you now. You
may express your thoughts in words or through a drawing and the like. Have your
answers illustrated in the boxes?
This was me 10 years This was me 5 years This is me, now.
ago. ago.

Were there changes as you age? If yes, what were they? ______________________
_________________________________________________________
_________________________________________________________
Were you happy about the changes? Explain your answer. ___________________
_________________________________________________________
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II. LESSON PROPER

Phases of Economic Development

Although material wealth accumulation is among the concerns of genuine

economic development, its greater concern is the total improvement of the quality of
people’s lives. This, in turn, is related to sustainable economic development issues in
a country which greatly influences business management.
Sustainable economic development ensures that the present needs of a particular
generation are fully met without endangering the ability of future generations to also
fully meet their own needs. Business managers must be conscious of their decisions
to avoid the abuse of ecological elements -- air, water, ans soil -- as this will threaten
sustainable economic development.
Different countries have different management strategies to encourage ecological
respect and prevent damage to the environment. Common environmental and
ecological problems that have to be dealt with by business managers include
destruction of natural habitats, depletion of clean water resources, urban, industrial,
and agricultural pollution, and many more.
In September 2000, world leaders gathered for the Millennium Summit, and thus
adopted the United Nations Millennium Declaration. By doing so, they had committed
their nations to a global partnership toward the reduction of extreme poverty and the
pursuit of the Millennium Development Goals (MDG).

Figure 2.3

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 United Nations Development Programme (UNDP) reported that in 2012, almost all
countries improved their human development status. This figure identifies the 40
countries from the south with notable improvements since 1990.
Note: Countries above the 45 degree line had a higher HDI value in 2012 than in
1990. Black and gray markers indicate countries with significantly larger than predicted
increases in HDI value between 1990 and 2012 given their HDI value in 1990. These
countries were identified based on residuals obtained from a regression of the change
in log of HDI between 2012 and 1990 on the log of HDI in 1990. Countries that are
labeled are a selected group of rapid HDI improvers.
Source: HDRO calculations
The MDGs, according to the UN, are “the world’s time-bound and quantified
targets for addressing extreme poverty in its many dimensions -- income poverty,
hunger, disease, lack of adequate shelter, and exclusion -- while promoting gender
equality, education, and environmental stability.” The deadline for the fulfillment of the
MDGs was set for 2015. The following are the MDGs:
1. Eradicate extreme hunger and poverty
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, Malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

Meanwhile, the National Economic and Development Authority (NEDA) has laid
out the Philippine Development Plan (PDP) 2011-2016, which “adopts a framework of
inclusive growth, which is high growth that is sustained, generates mass employment,
and reduces poverty.” The PDP is focused on the following areas:
1. Pursuit of Inclusive Growth
2. Macroeconomic Policy
3. Competitive Industry and Services Sectors
4. Competitive and Sustainable Agriculture and Fisheries Sector
5. Accelerating Infrastructure Development
6. Resilient and Inclusive Financial Sector
7. Good Governance and the Rule of Law
8. Social Development
9. Peace and Security
10. Conservation, Protection, and Rehabilitation of the Environment and Natural
Resources

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 It is evident from the PDP focused areas that they cover not only the economic
and industrial goals of the Philippines but also the social, environmental, and peace
and security aspects.
The MDGs and the PDP can help guide the management of business in the
Philippine setting. In particular, the PDP must be taken into consideration in order to
deem management as appropriate or country specific.
Another potential means for growth and development is the planned integration of
the 10 Southeast Asian nations in 2015 which include the Philippines. The Association
of Southeast Asian Nations (ASEAN) Economic Community (AEC) could help the
Philippines achieve its goal of inclusive growth that creates jobs and reduces poverty.

According to NEDA, inclusive growth means, first of all, growth that is rapid enough
to matter, given the country’s large population, geographical differences, and social
complexity. It is sustained growth that creates jobs, draws the majority into the
economic and social mainstream, and continuously reduces mass poverty.”

According to a joint study by the International Labor Organization (ILO) and the
Asian Development Bank (ADB) titled “ASEAN Community 2015: Managing
Integration for Better Jobs and Shared Prosperity,” released in October 2014, the
success of the AEC lies in decisive actions taken by member states regarding policy
recommendations, strengthening regional cooperation that may bring about structural
changes, improvement of business and job opportunities and job quality,
enhancement of skills boosting productivity, better wages, and management of labor
migration. These may ensure that the benefits of equitable growth and development
are shared among member countries and sectors.
Since the AEC is envisioned to become a single common market and production
base for a estimated 600 million people of different nationalities, it means freer flow of
goods, services, investments, and labor. The study concluded that “new opportunities
for growth and prosperity may emerge, but the challenge is to ensure that growth is
inclusive and prosperity is shared.”
Obviously, managers of businesses here in the Philippines must be concerned
about the findings of the study, as these are new challenges for them. The
improvement of management style, and the skills training and education of their
human resources are needed in order to cope with the possible changes that will be
brought about by the ASEAN integration in 2015.
A. Self-check
Answer briefly and comprehensively.
1. What are the phases of economic development? Why is it important to understand
the specific steps related to these?

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Answer:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. What do you think are the adverse effects when sustainable economic development
practices in a country are not implemented?
Answer:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

Forms of Business Organizations

The form of a business organization may depend on its purpose, nature of
operations, and resources. However, a business organization’s form may change with
the changing times and the demands they present.

Changing Forms of Business Organizations

Change is constant and organizations continue to undergo various changes to
ensure effectiveness, efficiency, and relevance in the world of business.
Business organizations may be traditional (simple, functional, divisional, profit, or
nonprofit) or open/flexible in form according to Robbins and Coulter (2009).
Simple business organizations - These refer to business organizations with few
departments, centralized authority with a wide span of control, and with few formal
rules and regulations.
These are easy to manage because of their simple form. However, change of form
follows as the company expands its operations.
Functional business organizations - These pertain to business organizations
that group together those with similar or related specialized duties that introduce the
concept of delegation of authority to functional managers like the personnel manager,
sales manager, or financial manager but allow CEOs to retain authority for strategic
decisions.

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 Divisional business organizations - These pertain to business organizations
made up of separate business units that are semi-autonomous or semi-independent,
with a division head responsible for his or her unit’s performance.
In other words, each division has its own functional organization and its own
general manager; however, the central headquarters management maintains
responsibility for the delineation of organizational goals of the individual divisions.
Profit business organizations - 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-making
activities. Immediate revenues or cost factors account for their success or failure.
Nonprofit organizations - These are business organizations designed for the
purpose of achieving their organization’s mission, vision, goals, and objectives,
providing service to clients without expecting monetary gains or financial benefits for
their endeavors. Their success or failure may be measured by the high or low
evaluation scores they obtain.
Open/Flexible business organizations - These are formed to meet today’s
changing work environment

Figure 2.4
Starting out a s simple shoe
store in the 1950s, Shoe Mart
(SM) has evolved into one of
the largest supermall chains
in the country today. Among
its supermalls in SM Mall of
Asia in Pasay City, one of the
biggest malls in the
Philippines.

Business organizations affect and are affected by the environment; therefore,

change becomes inevitable. Other forms of business organizations:

Team structures - where the organization as a whole is made up of work teams

(small, but focused) that work together to achieve the organization’s purpose; popular
in collectivist culture

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 Matrix business organizations - those which assign experts or specialists
belonging to different functional departments to work together on one or more projects;
exhibit dual reporting relationships in which managers’ report to two superiors -- the
functional manager and the divisional manager
Project business structure - a business organization form with a flexible design,
where the employees continuously work on projects assigned to them; projects may
be short-term or long-term and members disband when the project is completed
Boundaryless business organization - a business organization whose design
eliminates vertical, horizontal, or external boundaries, and is described to be flexible
and unstructured; there are no barriers to information flow and, therefore, completion
of work is fast
Virtual business organization - made up of a small group of full-time workers
outside experts who are hired on a temporary basis to work on assigned projects;
members usually communicate online
Other basic forms of business that are legal in the Philippines are: single
proprietorship, partnership, corporation, and cooperative; these are defined and
discussed on the table below.

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 Different organizations have different preferences as to the business form that is
appropriate for their needs and the purpose of their existence. Managers, therefore,
must be creative in finding ways to structure or design and organize work in their
respective firms.

B. Self-check
Answer briefly and comprehensively.
1. What is a business organization?
Answer:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. What is the difference between a profit and nonprofit business organization? Which,
in your opinion, is easier to manager? Explain your answer.
Answer:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

C. Integration
At the end of Chapter 2 (The Firm and Its Environment), write two or three
sentences to complete the following:
I realized that _____________________________________________________

_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________

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III. ASSESS WHAT YOU HAVE LEARNED
A. Fill in the blanks.
Fill in the blanks with the correct answer. Answer may be one of the following:
Simple, Functional, Divisional, Profit, Non-profit, Open/Flexible, Boundaryless or
Virtual Business Organization. (8 points)

1. _______________ business organizations maintain their stability through income

generation.
2. _______________ business organizations are made up of semi-autonomous units.
3. _______________ business organizations are formed to meet today’s changing
work environment.
4. _______________ business organization is easy to manage because it has few
departments, centralized authority, and few rules and regulations.
5. _______________ business organization groups together those with similar or
related specialized duties.
6. _______________ business organization assigns experts belonging to different
departments to work together on one or more projects.
7. The _______________ business organization’s design is flexible and unstructured.
8. The _______________ business organization’s members are physically dispersed
and who, oftentimes, communicate electronically through computers.

B. Think about Me!

What are the contributions of business organizations to the economy (community,
households, government, etc.)? Answer briefly and comprehensively in one sentence
only for each circle. Rubric categories: Clarity of ideas and Correctness (2x4= 8 pts)

1.

4. 2.
Economic
Roles of
Business
Organizations

3.

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C. Completion.
Since you were a little child up until now, how do you see the evolution of the
phases of economic development? Cite at least three examples for your answers.
Complete the table below to show your answers.

Rubric categories: (2x6= 12 points)

Clarity of ideas
Correctness/ Appropriateness of answers

For example: In communication, …

1. Telephone to 2. Keypad phones to 3. Smart phones

Answer:

The Developments you have How did it affect the business

witnessed environment (external/internal)?
1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

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 GLOSSARY

Business organization - 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

Economic development - is a total process which 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

Economic development phases - are the distinct stages involved in the total process
of economic development in a particular country. These include economic growth,
improvement of the Human Development Index (HDI), availability of benefits provided
by science and technology, and the societal improvement of the opportunities and
general welfare of its members.

Economic growth - increase in the given amount of goods and services produced by
the country’s earning

Organization - a collection of people working together to achieve a common purpose

Organizational culture - the set of beliefs and values shared by organization

members which guide them as they work together to achieve their common purpose

REFERENCES
Cabrera, H. M. F., Altarejos, A. DC. & Benjamin R. (2016). Organization and
Management Teacher’s Manual for Senior High School. Quezon City: Vibal
Group Inc.
Cabrera, H. M. F., Altarejos, A. DC. & Benjamin R. (2016). Organization and
Management Textbook for Senior High School. Quezon City: Vibal Group Inc.

Prepared by:
Charmine I. Sayawan
Teacher

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