Starting and
Organizing the
Enterprise
Does the idea fire your motivation and is it adequate enough
to keep you going for next one to two years?
Is it a viable business proposition in your area?
Does it match the needs of your clientele, local or otherwise?
Check it out with basic market research
Test it out in the market
Consult with experts
Look out for competition in the field
Is it a sunrise industry?
Evaluate your business opportunity
Project conceptualization
A Model of Opportunity Recognition Process
Education
Experience
Personal
experiences
Prior knowledge of
markets and
customer problems
Entrepreneurial
alertness
Work
experiences
Networks
Outcome:
Successful
opportunity
recognition
It is thinking ahead of objectives, strategies,
financing, production, marketing, profit prospects,
and growth responsibilities.
However, business planning should be realistic.
Business planning involves the attainment of goals,
and the way to accomplish such goals.
Principles of Planning
Planning must be realistic.
Planning must be based on felt needs.
Planning must be flexible.
Planning must start with simple projects
Unplanned stage. At the start of the
business, the owner-manager is busy looking
for funds, customers, materials and
equipment. He has no time for planning. His
entire attention is devoted to the daily
operations of his business in his intense desire
to survive.
Budgeting-System stage. Eventually, the
owner-manager realizes the need to develop
and use a budgeting system. Estimated
incomes
from
sales
and
expected
expenditures are made. This is done to
facilitate the orderly functions of the growing
enterprise.
Annual planning stage. The owner-manager drafts
an annual plan. He can use either the top-down
planning or the bottom-up planning. In top-down
approach, the owner-manager provides the goals
and let the employees comply with them. In case the
bottom-up approach, he encourages his employees
to participate in planning the goals and strategies of
the enterprise. The first approach in planning is
autocratic while the other one is democratic.
Strategic planning stage. As the business enterprise
becomes bigger, a long-range planning is needed.
This is a three-or five-year plan. Such plan has
flexibility to be able to adjust to changing conditions.
An executive of the Xerox Corporation claims that
some of their plans are being revised every day of
the year. At this stage, planning develops into a
more strategic character.
The plan should state clearly its objectives.
The plan should provide measures for a satisfactory accomplishment of
the objectives in terms of quantity, quality, time and cost.
The plan should state the policies which should guide the people in
attaining the objectives.
The plan should indicate what department or unit will be involved in
accomplishing the objectives.
The plan should indicate the time which should be allowed for each
activity.
The plan should specify the required resources and their corresponding
costs.
The plan should designate the officers who will be held accountable for
the accomplishment of the objectives.
Evaluate your personal resources and interests, and
the resources of the community.
Analyze your market.
Choose a proper business location.
Prepare a financial plan.
Prepare a production plan.
Prepare an organizational plan.
Prepare a management plan.
An organization is a group of two or more persons
who work together to attain a common set of goals.
Organizing is a process of combining and
coordinating resources and activities in order to
accomplish efficiently and effectively certain objectives.
1. Single Proprietorship
This is a form of business organization that is owned and usually
managed by one person. It is the oldest and simplest form of business
ownership. It is also the easiest to start.
Advantages
Ease and low cost of formation and dissolution.
Retention of all profits.
Independence and flexibility.
Tax advantage and less government regulation.
Disadvantage
Unlimited liability.
Lack of stability.
Limited access to credit.
Limited business skills and knowledge.
2. Partnership
It is an association of two or more persons who act as co-owners of a business. Each partner
contributes money, property or service to their organization. There are two types of partners:
general partners and limited partners. The liability of a general partner extends up to his personal
properties while a limited partner is only liable to the extent of his contribution to business. In our
country, we have also the capitalist partner and industrial partner. The former contributes money
while the latter provides service or management.
ADVANTAGES
Easy to organize.
Availability of more capital and credit.
Retention of profits.
Better business skills and knowledge.
DISADVANTAGES
Unlimited liability.
Lack of stability.
Management disagreement.
Idle investment.
3. CORPORATION
It is an artificial being created by operation of law, having right of succession, and the
powers, attributes and properties expressedly authorized by law or incident to its existence.
The shares or certificates of ownership of a corporation are called stocks. The owners of stocks are
called stockholders or shareholders. There are two types of corporations: private or close
corporation and open corporation. The first one is owned by a few individuals, usually relatives and
friends. The other one is owned by any individual who buys shares of stock which are openly traded
in the stock markets.
ADVANTAGES
Limited liability.
Easy to raise capital.
Perpetual life.
Specialized management.
DISADVANTAGES
Difficult to organize.
Strictly regulated and supervised by the government.
Some corporations are socially irresponsible.
Formal and impersonal employer-employee relationship.
Organizational Structure
Formal system of
relationships showing
resources.
task and reporting
how workers use
Formal way employee responsibilities are assigned
Organization Hierarchy of authority
Specific rules and regulations for work
Standardized training
Division of work
Organizational design
The process by which managers create a
specific type of organizational structure and
culture so that a company can operate in the
most efficient and effective way
Factors Affecting Organizational Structure
Organizational environment
Strategy
Technology
Human Resources
The way an organization’s structure works
depends on the choices managers make
about:
1. How to group tasks into individual jobs
2. How to group jobs into functions and
divisions
3. How to allocate authority and coordinate
functions and divisions
10-22
Keys To Organization
Clear line of authority and responsibility
Responsibility coupled with authority
Report to one supervisor
Accountability moves upward
Delegate authority to the lowest practical level
Line personnel separated from staff personnel
Simple yet flexible structure
10-23
Four Options For Departmentalization
1. Functional: arrange according to function such as
production, marketing, research
2. Product: divide according to type of product sold
3. Geographic: divide according to region
4. Customer: divide according to the relationship with
the customer such as wholesale, retail or direct sale
10-24
Maraming salamat po!!!
SWOT ANALYSIS
STRENGTHS OF A PRODUCT OR SERVICE
 cheap and abundant raw materials
 sufficient funds
 availability of technology
 presence of skilled workers
 management and technical expertise
of the entrepreneur
 good quality or service
 ease of production
WEAKNESSES OF A PRODUCT OR SERVICE
 high price
 poor quality/service
 weak management
 lack of skilled workers
 irregular supply
 unattractive design
 high costs of production
OPPORTUNITIES OF A PRODUCT OR
SERVICE
 big demand for the product or
service
 favorable government policy or
support
 scarcity of the product or service
 poor quality of existing product
 absence of product or service
 possibilities of good profits
THREATS
 shortage of raw materials at a
given time
 entry of many competitors
 increasing costs of production
 expectation of unfavorable
government laws, such as taxes
 deteriorating peace and order
 emergence of unfair demands of
workers through labor union activities