IOP L2

• Organization is derived from the Greek word "organon," which means "tool" and refers to a group of people who work together in an organized way for a shared purpose
• Classical/Traditional Theory:

  • Emphasizes the organization over the employees
  • Views the organization as a machine with human beings as different components/parts

  1. Bureaucracy:

  • Introduced by Max Weber
  • Rigid and systematic structure with formal legitimate authority
  • Features formalization and specialization relevant with routine tasks

  2. Scientific Management:

  • Influenced by Frederick Winslow Taylor
  • Dehumanizes work in factories
  • Focuses on monetary rewards and breaking down each job into individual tasks
• Human Relations/Neo-classical Theory:

  • Recognizes the importance of individual or group behavior and emphasizes human relations
  • Based on the Hawthorne experiments

  3. Participative Management:

  • Permits workers to participate in the decision-making process
• Modern theories view the organization as a system that must adapt to changes in its environment

  4. Systems Theory:

  • Proponents were Karl Ludwig von Bertalanffy and Kenneth Boulding
  • Views a company as operating in a complex system where all parts go together

  5. Contingency Theory:

  • Considers situational differences and various management principles
  • Recognizes the crucial leadership role of the manager and focuses on adaptability
• Basic Structure of a Business Enterprise:

  1. Sole Proprietorship:

  • Business structure owned by one person
  • Subject to an 8% tax for self-employed individuals

  2. Partnership:

  • Composed of a minimum of two owners who share responsibilities and income
  • Registered with the SEC

  3. Corporation:

  • Minimum of five and maximum of 15 shareholders
  • Liability is equal to the amount of their shares
  • Treated as a legal entity apart from shareholders

  4. Limited Liability Company:

  • Domestic corporations have a different juridical character from stockholders
• • Stockholders are only liable up to the extent of their share capital
• Types of Organizational Structures:

  1. Traditional:

  • Power flows upward through the organization

  a. Tall (Centralized and Vertical):

  • Applicable for large organizations with multiple layers of authority

  b. Flat:

  • Fewer management levels with each level controlling a broad group

  2. Contemporary:

  • Does not have a hierarchical, top-down power arrangement

  a. Boundaryless (Decentralized/Circular chain of command):

  • Encourages integration of all stakeholders in the organization
• Organizational Chart:

  • Visual representation of a company's structure
  • Also called organigram or organizational breakdown structure
  • Shows the relationships and relative ranks of parts and positions/jobs
• Importance of Organizational Chart:

  • Depicts hierarchy, seniority, and lines of authority
  • Clarifies roles and responsibilities, removing ambiguity and improving communication
• Kinds of Organizational Chart:

  1. (Traditional) Hierarchical:

  • Pyramid-shaped chart, common organizational structure

  2. (Traditional) Flat/Horizontal:

  • Few or no levels of middle management between staff and executives

  3. (Contemporary) Matrix:

  • Reflects a company divided into teams by projects or project manager, but also reports to a functional manager
• Domestic corporations may be compared to _ or & a because of their similar control and characteristics as provided by the corporation codes of the philippines 


  limited liability company (LLC) or private limited company (PLC)