UNIVERSAL SCHOLASTIC ACADEME

Sinisian East, Lemery, Batangas

Organization and Management

MODULE 3 : THE ORGANIZATION AND ITS ENVIRONMENT (Weeks 5 & 6)

I. INTRODUCTION

An organization and its environment exchange information between themselves. Organizations need
information about the external environment for planning, decision-making and control purposes. Hence, they
analyze the environment’s variables along with studying their behavior and changes. Further, the information
generated by this analysis helps the organization handle the problems of uncertainty and complexity of the
business environment. Therefore, firms try to gather information pertaining to market conditions, economic
activity, technological developments, demographic factors, socio-political changes, competition activities, etc.
The organization also transmits information to external agencies. It does so, either voluntarily or inadvertently.
Therefore, the exchange of information is an important interaction between an organization and its environment
forming the basis of their relationship.

The environment of a business has a great impact on the functioning of the firm. It offers opportunities and
threats along with limitations and pressures influencing the structure and functioning of the business.

II. OBJECTIVES

At the end of this module, you are expected to:

 Recognize the stages of development of organizations;
 Identify the government-required steps in starting a business; and
 Appreciate the importance of organization analysis and design in determining the
appropriate hierarchical structure of the company.

III. DISCUSSION

Nature of Organizations

Sole Proprietor – the owner holds the entire operation as his personal property, managing it on a day-to-
dau basis. Most businesses are this type. Sole prioprietorship are attractive to small investors because they are
relatively easy to start up. Also, the owner is entitled to all the profits that the sole proprietorship collects. On
the other hand, sole proprietorships can be risky because there is no separation between the owner and the
business.

Here are some more of the advantages:

1. Formation: less complicated in preparation of documents and cheaper compared to starting a formal
corporation. The proprietorship can be named after the owner, or a fictitious name can be used to
enhance the business.
2. Tax benefits: no requirement to file a separate business to report. one will list the business information
and figures within his/her individual tax return. The business will be taxed at the rates applied to
personal income, not corporate taxes.
3. Decision making: business decision remains the responsibility of the owner. The owner can also fully
transfer the sole prioprietorship at any time as he/she deems necessary.

Disadvantages:
1. Liability: the business owner will be held directly responsible for any losses, debts, or violations
coming form the business.
2. Taxes: while there are many tax benefits to sole prioprietorships, a main drawback is that the owner
must pay self-employment taxes.
3. Lack of “continuity”: the business may discontinue if the owner becomes deceased or incapacitated.
Since the buisiness and the owner are treated as one and the same, upon the owner’s death, the business
maybe liquidated and becomes part of the owner’s peronal estate, to be distributed to beneficiaries.
However, this can result in heavy tax consequences on beneficiaries due to inheritance taxes and estate
taxes.
 4. Difficulty in raising capital: generating the capital or the initial funds is usually provided by the owner.
sole prioprietorships do not issue stocks or othe money-generating invesments unlike corporation.

Partnership – a single business with two or more people sharing its ownership. Each partner contributes to
all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits
and losses of the business.

Since partnership is a type of business that requires more than one person in the decision-making process,
it’s important that potential business partners discuss a wide variety of issues up fornt and develop a legal
partnership agreement. This agreement should document how future business decisions will be made such as
how the business partenrs will devide profits, resolve differences in decision-making, change of ownership
(bring in new partners or buy out current partners), and how to dissolve the partnership.

Advantages:
1. Easy and Inexpensive: partnerships are generally an inexpensive and easily formed type of business
structure. The majority of time spent starting a partnership often focuses on developing the partnership
agreement between or among few people and its shared ownership will expresses.
2. Shared Financial Commitment: each business partner has equally invested in the success of the
business. Partnerships have the advantage of pooling resources to obtain significant capital. This could
beneficial in terms of securing credit, or by simply doubling your initial money or capital in the
business.
3. Complementary Skills: a good partnership should be able to utilize the strengths, resources, and
expertise of each partner.
4. Partnership Incentives for Employees: partnership have an employment advantage over other entities
if they offer employees the oppoetunity to become a partner. Partnership incentives often attract highly
motivated and qualified employees.

Partnership arrangements are mostly formed in law, auditing, and some consultancy frims.

Disadvantages:
1. Joint and Individual Liability: similar to sole prioprietorship, partnerships retain full, shared liability
among the owners. Partners are not only liable for their own actions, but also for the business debts and
decision made by other partners. In addition, the personal assets of all partners can be used to satisfy
the partnership’s debt.
2. Disagreements Among Partners: with multiple partners, in the business, there can be disagreements
like management style, salary schemes, etc. That is why it is important to consult each other on all
decision making havong to compromise and resolve disputes.
3. Shared Profits: because partnerships are jointly owned, each partner must share the successes and
profits of their business with the other partners. An unequal contribution of time, effort, or resources
can cause dispute among partners.

Corporation – often times, business owners opt to form corporations to protect themselves against financial
and legal liabilities. A corporation is a type of business that keeps the dealings, assets, and bank accounts
separate from his/her personal assets. This is especially true if a business owner needs more money to fund his
business expansion. If the owner wants to take a bank loan but his assets are not enough to mortgage. Besides, if
qualified to get a loan, he may not be able to pay the loan and he will lose his mortgaged properties if they are
foreclosed. In short, he wants to protect his own personal wealth. So, he may decide to look for investors.

The investors are only shareholders of the corporation. However, investors will elect a set of board of
directors responsible for the different policies and vision for the corporation. The board of directors will also
appoint corporate officers for day-to-day operations of the corporation. Usually a corporation has the following
key personnel: a president, a secretary, and a treasurer, although there can be other officers, such as vice
presidents.

Advantages:
1. Separate legal personality: a corporation, once registered with the Securities and Exchange
Commission and is issued a certificate, has acquired a legal personality separate and distinct from its
stockholders. It can sue and be sued. Shareholders of a corporation are not liable to obligations if the
corporation contracts into debts, negligence or wrongful acts of the corporation. The maximum lost of
money a shareholder can incur is just the amount of his/her investment in the corporation – the value of
his/her stock.
 2. Ease of raising funds: in a corporation, it is easy to raise additional funds since it has the option to sell
shares of the corporation.
3. Continuity: it can have a perpetual existence, which means it can outlive its owner because it is a
separate person in the eyes of the law. This means investors don’t have to worry about the untimely
demise of the owners. It also allows the corporation to plan for the long term.
4. Ease of transfer of ownership: it’s easy to transfer ownership interests in a corporation. The board of
directors can authorize the issue of shares of stock in exchange for investors’ capital infusion into the
company.
5. Credibility: a business with an incorporation or “Inc.” sign after its name often sounds more credible in
the business context. One most likely attracts more partners, customers, and attention from the
community.

Disadvantages:
1. More time and money spent in organizing: in a corporation, it will require more time and money than
forming other sole and partnership business type.
2. More paperwork: several documentations and paper works required by governmental agencies monitor
corporations. The state also requires the filing of annual reports. And they have to file corporate income
tax returns as well.
3. Higher tax: corporate profits may be subject to higher overall taxes since the government imposes taxes
on profits at the corporate level and again at the individual level, if such profits are distributed to the
shareholders.
4. More coslty: there are required number of board meetings and annual shareholder meetings/sessions.
All of these meetings/sessions will incur expenses. Most corporation will retain the services of an
attorney and accountant to help them with drafting legal documents and corporation filings and
maintaining compliance with complex corporation law and regulations.

Nature and Role of the Firm

A. Human Resource Management: Human Resource Management is the entire spectrum of management
of people that serves to maximize their performance in order to meet the organization’s strategic
objectivees. It covers, among others, the major functions of recruitment, selection and placement,
training and development, employee relations, and compensation and benefits administration.
B. Marketing Management: According to Business Case Studies, “Marketing is the management process
responsible for identifying, anticipating, and satisfying consumer requirements profitably.”
C. Operations Management: “Operations management involves overseeing, designing, controlling the
process of production, and redisigning business operations in the production of good and
services”(Source: eNotes). In a manufacturing setting, the company has to ensure the design of effective
and efficitient production process, timely acquisition of raw materials needed for production,
deployment or adequate number of trained workers, and the proper maintainance of equipment and other
resources required, in a service-oriented setting, on the other hand, the company has to ensure the
availability of trained and customer-oriented personnel, presence of customer service locations, and
excellent provisions of customer services.
D. Financial Management: “The goal of any finance function is to achieve three benefits: business
support service, lowest cost, and effective control of the environment.” Toward the end, the firm has to
ensure that it sets up effective and efficient internal process designed to achieve all these, while
maintaining the values of being vision-oriented, gortwth-focused, intuitive, and risk-taking (Source:
Role of Finance in a Business, by Dana Griffin, Demand Media).
E. Material and Procurement Management: it is the responsibility of the firm to ensure that it manages
the procurement process and the supply base effectively and efficiently. This includes buying high
quality products and services at the right price from the right, reliable source, based on the right
specifications, in the right quality for delivery, at the right time to the right customers.
F. Office Management: According to BusinessDictionary.com “Office management involves the design,
implemetation, evaluation, and maintenance of the process of work within an organization, in order to
maintain and improve efficiency and productivity.” It is the responsibility of the firm to monitor and
review systems that would yield expected outcomes like improved turnover, output, sales, etc. It is like
the backroom support that will ensure the effective discharge of functions of revenue generating units of
the organization.
G. Information and Communication Technology Management: This includes a related form of
communication or application that encompasses radio, television, cellular phones, computer and network
hardware and software, satellite system, and so on, as well as the various services and applications
associated with them such as videoconferencing and distance learning (Source: Marget Rouse,
 WhatIs.com). It is the responsibility of the firm to provide the necessary information and communication
facilities to all its business units in order to ensure that they are able to perform their functions more
effetively and efficiently.

Types of Organization Structure

There are different types of organizational set-up or structure. These set-up or structure are designed to
accomplish different goals. The structure of an organization is a crucial part in the progress of an organization
since it can help or hinder the organization in the movement toward accomplishing these goals. Organizations,
large and small in scale, can achieve higher sales and other profits by properly matching their needs with the
structure they use to operqate.

They come in different shapes and sizes. They can be “tall,” those that have many tiers between the
common worker and the owner of the company, or they can be “flat,” meaning there are very few levels
between the common worker and the owner. A basic organization framework is called the line structure. A line
structure organization has only direct, vertical relationships between different levels in the firm. Take note that
there are line departments include production and marketing. In a line organization authority follows the chain
of command. Chart 1 shows a single line organizational structure.

Chart 1. Sample of Line Structure

CEO

Manager Manager
(Production) (Marketing)

Foreman Foreman Sales Officer Sales Officer

(Fabrication) (Assembly) (A) (B)

Workers Workers Salespersons Salespersons

Advantages:
1. Tends to simplify and clarify authority
2. Promotes responsibility and accountability relationships
3. Promotes fast decision-making
4. Precise and simple to understand
Disadvantages:
1. Neglects specialist in planning
2. Overload tasks on key personnel
3. It becomes more ineffective as the organization becomes bigger.
4. Managers become experts in too many fields or area.
5. Tendency to become overly dependent on the few key people who are performing numerous jobs.

Before we proceed further, we should distinguish between line and staff functions. A line function, as
discussed, is a position that has a direct chain of command that is responsible for the achievement of an
organization’s goals.

A staff function, on the other hand, is intended to provide expertise, advice, and support for the line
positions. An example of staff functions are HR, Quality Assurance, and Corporate Planning.
There are, however, several variations of organizational structures. The three common types are: functional,
divisional, and matrix structure.

Functional – it is a set up wherein each department of the organization is grouped according to its function
purpose. For example, there may be a marketing department, a sales department and a production department.
(See Cahrt 2) The functional structure works very well for small businesses in which each department can
support itself by relying on the talent and knowledge of its workers. However, one of the drawbacks in a
functional structure is the restriction in coordination and communication between and among other departments
by the boundaries of the organization in which having the various departments working separately and
independently.

Chart 2. Sample of Functional Chart

President/CEO

Marketing Sales Production

Department Department Department
Divisional
Divisional structure is another type of organization structure. This is typically used in larger companies or
organizations with several branches or outlets that operate in a wide geographic area or that have separate
smaller organizations within the umbrella group to cover different types of products or market areas. Study
Chart 3.
This type of structure provides significant benefit which addresses needs more rapidly and more
specifically; however, communication is inhibited because employees in different divisions are not working
together. Divisional structure could also be costly because of its size and scope.

Chart 3. Sample of Divisional Chart

XYZ
Company

Luzon Visayas Mindanao

Division Division Division
Matrix Structure
A matrix structure is a hybrid of two structures namely, divisional and functional structure. Typically used
in large multinational companies, the matrix structure allows for the benefits of functional and divisional
structures to exist in one organization. However, this can create power struggles because most areas of the
company will have a dual management – a functional manager and a product or divisional manager working at
the same level and covering some of the same managerial territory. Study Chart 4 as indicated.

Unlike the other structures, it does not follow the traditional hierarchical model. Instead, all employees
(represented by the green boxes) have dual reporting relationships. Typically, there is a functional reporting line
(shown in blue) as well as a product-based reporting line (shown in yellow). When studying a matrix structure
organization chart, the solid lines represent strong and direct reporting relationships; on the contrary, dotted
lines indicate that the relationship is secondary or not as strong as that on the solid lines.

Chart 4. Sample of Matrix Structure

One advantage point of the matrix structure is the flexibility and the balanced decision-making (as there are
two chains of command instead of just one). However, its advantage would be complexity which can lead to
confusion among employees. The conflicting orders from multiple sources may lead to confusion and increase
ineffectiveness and conflict. Some staff specialists or personnel may exert direct authority over the line
personnel, rather than exert advice authority.
Informal Organizational Strucutre
Before we leave this topic on organizational structure, one must bear in mind that there are two broader
organizational structure identified as: the formal and the informal organization.

The formal organization, as discussed and illustrated earlier, are usually represented with organizational
charts and with position description. There is a clear reporting relationship that the manager is aware of. On the
other hand, the informal organization is a set of evolving relationships and patterns of human interaction within
an organization that actually do exist but are not officially prescribe. Alongside with this informal organization
are the informal leaders whos sometimes exert influence to organizational behavior.

Organization Design Principles

Now that we have given you the different types of organization charts, showing that advantages and
disadvantages of each, let’s take a look at some Organization Design Principles.
Firstly, let us be realistic to recognize that there is never a single best structure for any company or
function. Any structure is no silver bullet. There will never be “perfect” structure. All structures carry a
significant strengths and weaknesses, advantages and disadvantages, and all companies have different
capabilities and strategic positions.
Organizational design is a process of aligning an organization’s structure based on its vision and
mission. It is a careful study at the complex relationship between tasks, workflows, responsibilities and
authorities, and making sure these all support the objectives of the organizational strategy and mandate.
Good organizational design helps communications smoothly transition from one departmetn to another. It
creates an environment where people can work effectively and efficiently. It fosters productivity leading to
innovation. It is tailored to deliver the company’s competitive strategy. The design can be evaluated by specific
criteria, such as technology, corporate culture, etc.
Beyond solid and broken lines, shifting lines and boxes in an organizational chart, one has to consider the
company’s fundamental building blocks, namely:
 Recognize how people in the company make decisions
 Determine how people adopt new behaviors
 Create how people are rewarded based on performance
 Agree on what are the commitments
 Manage information and utilize effectively
 Sense of responsibility is allocated and connected with one another.
Under these considerations, therefore, the structure can never be permanent. It is subject to review and
change, if necessary. Changes may be triggered by heightened competition, changes in customer behavior,
people movements, restructuring, re-engineering, streamlining, reorganization, and other reasons.

Organization Analysis and Design (OAD)

Organization analysis and design includes careful examination of detail staffing levels and hierarchy, spans
of control, and repetitions of roles in the context of the businesses stratey. This implies that all work is not
created equal – there are some tasks that are more strategically important to a company than others.
It is important to understand that even if a company creates an elegant and elaborate organization design
but fails to recruit the right composition of talent and skill; it would be meaningless. In an organizational
diagnostic study, its states on the focus on the ability of the current talent to do the critical work and the effect
of the current structure (job design) on engaging that talent.
An organization is a dynamic and constantly changing force; hence, organization structure should be
flexible and ready to adopt and respond to new and emrging needs and to the requirements of the present as well
as to the future conditions and demands of business.
According to the “The Organization of the Future,” a book by the Drucker Foundation of New York,
claims that, “Redesigns have a poor track record. Many of companies that restructure will restructure again a
few years later. Some of these repeated redesigns are the result of external change; the first restructuring loses
its relevance and power.”
Organization Analysis and Design (OAD) is undertaken in the context of changing situations and
conditions. Each study is done with specific objectives such as:
 To develop a structure by which the objectives and policies of the company can best be realized and
the supporting plans implemented;
 To develop a structure that is responsive to environmental conditions (competition, regulations, and
technology)
 To develop a structure that clearly delineates duties, responsibilities, and working relationships of
people.
We study organization structure for the main reason that is innate to an organization as skeleton is to the
human body. If the structure is weak, disjointed, and poorly developed, then no amount of planning will change
the “qualitative to quantitative.” All the planning for development will be in vain, for the plans will remain just
as they are – mere plans.
In a “Professional Practice Manual on Organization Studies,” authorized by Zorilla, he defined the scope,
approach and methodology involved in the conduct of an OAD.

Nature and Scope of Organization Analysis and Design (OAD)

Organization analysis generally involves the design of an organization structure including the delineation
of the levels of authority and responsibility and the definition of the functions and interrelationships of
organizational units and/or positions. Organization structure is usually graphically presented in a basic
organization chart, a functional chart, and a detailed position chart. The recommended organization is based on
sound concepts and principles relevant to the unit under study.
In order to design a structure that is highly adaptive and flexible to the demands of a dynamic organization,
the design must consider a number of factors:
 Internal company factors such as corporate objectives, philosophy, strategy, policies, and
procedures;
 Leadership style, individual goals and objectives of top management; and
 External factors such as developments in the industy, gowernment policies, and laws regulating
company operations, foreign markets, and relationships with other entities.

Stages of Development of Organizations

Organizations, like human beings, pass throughseveral stages of development. A human being’s life cycle
comprises of four stages of development: childhood, adolescence, maturity, and old age. Similarly, an
organization passes through several stages. Even the best managed companies pass through stages of
organizational development, including periods of chaos. Chaos in this context is absolutely necessary for the
growth and survival of a company. Otherwise, the alternative could be stagnation.

Author Renee O’Farrel identifies three stages:

 Chaos
The chaos stage of organizational development has rightly been called the “firefighting” stage because
everyone always seems to be putting out fires. Operations tend to be extremely problem-focused; people
react to situations rather than enact them, an issue that keeps focus in the short term. Typically good
intentions float around but not enough commitment, follow-through or know-how for staff to unite and
take action. There tend to be informal routines and processes; procedures and accountability may not
always be clear.
 Stability
At the firm stabilizes its operations, goals and direction become more consistent. Policies and
procedures become more defined and a structure starts to emerge. This stage of organizational
development is all about predictability and control. Compliance is king. Innovation may be stifled at this
stage, but the staff start to buy in to the company more and slowly become more unified. Employee
satisfaction tends to increase as expectations and procedures are clarified and streamlined.
 High Performance
Once things start moving smoothly, employees take ownership for their success and failures, and
performance is consistent. Their focus shifts from stability to performance. Instead of constantly
solving problems or policing porcedures, staff can focus more on the mission of the company, with an
eye on innovation and increasing efficiency. The goals of the company begin to take on a longer-term
outlook. Instead of focusing on this month’s sales, the focus widens to take in the quarter, the year and,
eventually, several years out.

Dr. Roger K. Allen, an author and educator, in an article in Center for Organization Design explains the three
stages of organizational development by his diagram.
 Stage III: High Performance (Outstanding, Sustainable Results)
 Clear statement of mission that creates a sense of esprit de crop
 Well-defined values which result in distinctive culture. Respect for people that is deeply ingrained is part
of the culture.
 Good communication
 High and active involvement and empowerment of people. Design (work flow, structure, systems)
supports mission and values
Stage II: Stability (Back to the Basics)
 Clarity of goals and direction
 Consistency in priorities
 Well-defined policies and responsibilities (technical and personnel)
 Agreement on roles and responsibilities
 Basic management processes rewarded and practiced (goal-setting, performance reviews, etc.)
Stage I: Chaos (Fire-Fighting Mentality)
 Crisis/Short-term focus
 Lack of clear direction and goals
 Shifting priorities
 Unclear policies and procedures
 “Us” vs. “them” attitude
 Blame and lack of ownership
 Alienated workforce

Every business organization goes through the stage of chaos. The trick is to provide an environment out of
chaos that favors stability. There is no simple formula. Real organizational development requires commitment
and hardwork. Also, initiatives to eliminate waste, improve quality, provide better customer service, people
empowerment, continued improvement, can lead to a foundation of organizational stability and eventually high
performance.

Starting a Business
This module will not be complete without giving the reader the basic process of starting a business. Almost
all big businesses start small. SM, the shopping mall giant began with a small shoe store in Carriendo Street,
Quiapo, Manial. About 99.58 percent of the business in the Philippines that contributes 32% of the country’s
Gross Domestic Product (GDP) and accounts for 61 percent of the local workforce belong to the Micro, Small,
Medium-size Enterprises (MSMEs).
So, how does a young entrepreneur start a business? R.A. 9178, otherwise known as the Barangay Micro
Business Enterprises (BMBEs) Act of 2002 or BMBE law encourages everyone to put up a business.

Hereunder is the Process Flow that serves as a guide to registering a business.

 Source: DTI
In case the flow chart is not readable to some, I’m repeating hereunder in clearer form the steps to be taken
by anyone who wants to start a business.
Step 1
 For single proprietorship, register with the Department of Trade and Industry (DTI) for business
name
 For Partnership or Corporation, register with the Securities and Exchange Commission (SEC) for
Certificate of Partnership or Corporation.
 For cooperatives, register with the Cooperative Development Authority (CDA)
Step 2
 Apply for business permit and license from the city/municipality where the business is to be located
Get sector specific clearances. For example
- Travel Agency – Department of Tourism
- Food and Cosmetics – Food and Drug Administration (FDA)
- Pawnshop – Bangko Sentral ng Pilipinas (BSP)
- Learning Centers – Department of Education (DepEd)
- Wood carfts/furniture – Department of Environment and Natural Resources (DENR)
Step 3
 Register with Bureau of Internal Revenue (BIR) District Office where the business is to be lacated
for Authority to Print Invoice and Book of Journal.
Step 4
 Other registration requirements
Register your business with the following offices for compliance to good employer-employee
relationships, incentives, and benefits, and social, community, and environmental responsibilities
- Social Security System (SSS)
- Department of Labor and Employment (DOLE)
- PhilHealth
- Pag-Ibig
- Department of Environment and Natural Resources (DENR)
Step 5
Start the business
The BMBE Law exempts MSMEs from income tax for income arising from operations of the enterprise.
The Local Government Unit (LGU) are also encouraged either to reduce the amount of local taxes, fees, and
charges for MSMEs or exempt them form these taxes, fees, and charges.
Furthermore, MSMEs are exempted form the coverage of the Minimum Wage Law although their
employees are covered by the Social Security Law and the health care benefits of PhilHealth.
Government financial institutions such as, Land Bank of the Philippines (LBP), Development Bank of the
Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the People’s Credit
and Finance Corporation (PCFC) shall set up a special credit window that will service the financial needs of
MSMEs registered under the law.
The Government Service Insurance System (GSIS) and Social Security System (SSS) shall likewise set up a
special credit window that will serve the financing needs of their respective members who wish to establish a
small business.

IV. REFERENCES

Payos, R.P., Espinosa, E.G., & Zorilla, O.S. (2016). Organization and Mangement. Manila: REX
Priniting Comapany, INC.
 Prepared by:

Mr. CHARLIEMAR S. AGUELO

SHS Instructor

UNIVERSAL SCHOLASTIC ACADEME

Sinisian East, Lemery, Batangas

Name: Score:
Section:

Organization and Management

Activity Sheet
Module 3
Task 1
Read the paragraph and answer the given question. (10 points)
 Mrs. Wid in her plan for expansion by putting up a branch of her grocery near Calaca, has decided to take
the third option: incorporating under the business name, “Bonado Groceries, Inc.” She figures that she needs a
subscribed and paid up capital of ₱100 million to be submitted to the Securities and Exchange Commission
(SEC). She has only ₱50 million cash in the bank. She invited two close friends to chip in the balance of ₱50
million to make up for the balance. Mrs. Wid wants to be elected as president and her sister as treasurer of the
company. Her two friends world be elected vice-presidents and corporate secretary, respectively.
While Mrs. Wid, her husband and son, the manager of the planned branch of the grocery store, would
control the day to day operations of the company, she does not feel comfortable with the 50-50 sharing of the
capital. What if relations with her two friends turn sour in the future? Aggressive and ambitious that Mrs. Wid
is, what worries her is if she further expands the gorcery business in the future and the two friends do not agree,
there would be a deadlock in the voting. Her two friends could be a bar to her future exapnsion plans. Mrs. Wid
decided to go on a 51-49 percent sharing in the stockholdings of the planned company. 51 percent is to be
owned and controlled by him. She needs therefore ₱2 million more for her paid up capital to assure of the
company. Her problem is, where would she get that much money fast? Which sources of funds could Mrs. Wid
availd of on credit?

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Task 2
On your own words, explain Center for Organization Design. (5 points)

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N.B. You may write your answer at the back if needed. 