CHAPTER 2 The Management Aspect The Management aspect is one of the important aspects in establishing a business. To achieve this, management must be able to plan all activities to become productive and competitive in the industry through human resource, financial capability, and new technologies. This includes a study of officers and key personnel, basic consideration in forming the organization, form of ownership, organizational chart and project schedule. The main objective of this plan is to determine the option effectiveness of the organization set-up. The objectives are as follows: 1. To know the project originators, investors and managers of the business and to determine how much is the capital contribution. 2. To discuss the activities to do and the time allotted to each. 3. To identify the type of ownership to be formed. 4. To enumerate the different positions, qualifications and its duties and responsibilities. 5. To adopt an organizational structure for the business. 6. To establish a detailed compensation scheme for the employees of the business. Project Originators, Investors and Managers This refers to the persons who are responsible for making the business run in a way that is appropriate to the plans to be established
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and carried out effectively. Based on the mutual agreement and consent of
each
proponent,
the
partnership
will
be
denominated
as
“____________.” The proponents are the promoters and managers of the business venture and agreed to make a general partnership, where each partner is subject to unlimited liability for the debts of the business. For the one who serves as the general manager of the business, the person elected for this position is ___________. The partners agreed to contribute capital in the form of cash. Moreover, the capital contribution amounting to ₱100,000 will be gleaned from the fellow partners of the partnership. The following persons are the originators of the business and each respective capital contributions are shown below: Table 2 Total Capital Contribution Type of Partners As to Liability
As to Contribution
Position in the Company
1. Surname, First name, M.I.
General
Capitalist
-
₱14,285.71
2.
General
Capitalist
-
₱14,285.71
3.
General
Capitalist
-
₱14,285.71
4.
General
Capitalist
-
₱14,285.71
5.
General
IndustrialCapitalist
General Manager
₱14,285.71
6.
General
Capitalist
-
₱14,285.71
7.
General
Capitalist
-
₱14,285.71
Names
Total
Capital Contribution
₱ 100,000.00
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Project Schedule Pre-Operating Schedule
Time Allotted
1. Conduct Feasibility Study
June 27, 2017 – October 2017
During this period, the proponents will conduct a study about the proposed product and will be able to investigate whether the business is viable or not. In order to examine the product’s viability, the proponents will gather data with the use of various instruments and techniques such as questionnaires, interviews and information from legit websites, books, journals and other sources of essential data with regards to the study. July 14, 2017 – October 2017
2. Putting up Equity
Capitalization is crucial in establishing a business as the business will not be materialized without it. Finances of the proposed business must be planned wisely during the period. The proponents will contribute equally and ample time is given in order to complete the amount needed for the operation of the business. The proponents agreed to contribute ₱14,285.71 at the end of the September. 3. Registration
November 1, 2017 – December 31, 2017
All the legal procedures and requirements for the start of the business must be accomplished during this period. Securing business permits from Municipal or City Government, Security and Exchange Commission (SEC), Bureau of Internal Revenue (BIR), Department of Trade and Industry (DTI), Department of Labor and Employment (DOLE),
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Social
Security
System
(SSS)
and
Philippine
Health
Insurance
Corporation (PhilHealth) must be completed. 4.
Plant Rental and Renovation
January 1 – 31, 2018
During this period, the proponents are going to locate the proposed business inside Centro Escolar University 9 Mendiola St, San Miguel, Manila, 1005 Metro Manila. The existing space inside the campus is widely available for storing, distributing and processing inventory and supplies mainly related for the production of output. The proponents assumed to spend in leasing the facility for a total cost of ₱3000 per month. Refurbishing the leased space will come up with putting up of tarpaulins and posters. 5. Canvassing and Acquiring of Equipment
February 1 – 28, 2018
For this duration, the proponents will start to canvass and acquire equipment that is needed for the manufacturing and distributing of the product. 6. Canvassing and Purchasing of Raw Materials
March 1 – 31, 2018
The proponents will examine properly the amounts of raw materials in order to acquire the ingredients at a lower cost. Searching for suppliers is also taken into consideration in order to avoid negative fluctuations of the prices of raw materials needed. 7. Hiring and Training of Employees
April 1 – 30, 2018
Selection of the qualified applicants will be done in this period. After being qualified, orientations will be given to employees to have knowledge
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regarding the business. Preparations such as the procedures and control in the manufacturing of the product, handling of cash and the right approach to customers will be taught to employees in order to build up their confidence and increase productivity that will help them sustain motivation in their current state, as well as in the future. There are also factors to consider that significantly influences the employees on how they will maintain a positive impression in the working environment by recognizing their hard works and advocating balance in life and work. Safety procedures will be extensively employed to assist the employees with working safely. 8. Promotional Campaign
May 1 – 31, 2018
Since the setting up of the business is nearly approaching, this is the best time to endorse the product. Having enough time to notify people about the product by giving leaflets or brochures, posting through social media platforms and blog sites, and informing the public verbally will make the business known. The goal of the proponents is to make the product well-known in order for people to recognize and buy the product. 9. Start of Normal Operation
June 2018 Onwards
After accomplishing all the necessary requirements, the business will start to operate. Continuous promoting of product is still needed and meeting the demands of the customers is to be obtained for the customers’ satisfaction.
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Activities
2017 Jun Jul Aug Sept Oct Nov Dec Jan
1. Feasibility Study 2. Putting up Equity 3. Registration 4. Location Rental and Renovation 5. Canvassing and Procurement of Equipment 6. Canvassing and Purchasing of Raw Materials 7. Hiring and Training of Employees 8. Promotional Campaign 9. Start of Normal Operation
Figure 1 Gantt Chart
Feb
2018 Mar Apr
May
Jun
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Form of Business Ownership Partnership is the proponents’ form of business ownership because each of the proponents will contribute in the business capital. Partnership means that the business is owned by two or more persons who contribute money or capital, talent or industry with the intention of dividing the profits among themselves. The proponents decided to utilize a partnership form of business organization because it is a good choice of legal structure for a new business. Being a partnership, the business owners necessarily share the profits, the liabilities and the decision making. Some of the significant characteristics of a partnership type of business in the Philippines are first is it has limited life which it may be dissolved or its operations terminated either by the acts of partners or by the operation of law and the second significant characteristic of partnership is that it is based on contracts because it is created by virtue of a contract entered into by the partners. While at times it is necessary that the contract be in writing and that its terms are specifically expressed. The following are the advantages of partnership form of business ownership:
Flexible Capital Sources
Ease of Formation
Shared Responsibility
Better Decision Making
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The following are the disadvantages of partnership form of business ownership:
Disagreements
Unlimited Liability
Taxation
Profit Sharing
Internal Organization This is a discussion that will be used for the proposed business and it includes Manpower requirements/ Job Analysis, Organizational Chart and Compensation Scheme. Manpower Requirements/ Job Analysis The Job Analysis deals with bringing together and evaluating the information about the content and requirements of individual regarding the specific job in terms of activities involved and attributes needed to perform the activities. The manpower is composed of the partners only from the partnership. Each should possess the qualification in order to undertake an effective and efficient arrangement of resources in the organization. The job analysis is performed by enumerating all positions needed for the business to operate: Job Title: General Manager Job Description:
Oversees key projects, processes and performance reports, data and analysis.
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Formulates
and
administers
firm’s
policies,
directing
and
coordinating all divisional unit activities.
Reviews the outcome of operations, value of costs and forecast of acquired data.
Oversees manufacturing flow of materials and labor productivity.
Job Specification:
Male or Female.
Must be 25 years old and above.
Possesses bachelor’s degree or master’s degree in business administration.
Must have at least two years of work experience in similar or related field.
Must be able to speak effectively in English language.
Must have sufficient computer skills and be able to use companyissued software programs.
Knowledgeable of office administration procedures and resource management disciplines.
Must be able to perform each essential duty and responsibility in a safe and satisfactory manner.
Job Title: Supervisor Job Description: Oversees the workflow of the business environment. Plans for the production schedule and coordinates with the supplier.
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Ensures that each job role performs such primary responsibilities and duties, in the course of accomplishing with the firm’s objectives.
Monitors employee productivity and provides constructive feedback and coaching.
Ensures adherence to legal and company policies and procedures and undertake disciplinary actions if the need arises.
Passes information to general manager either about the reward and promotion of employees based on performance or concerns in hiring and firing employees.
Job Specification:
Male or Female.
Must be 21 years old and above.
Possesses bachelor’s degree or master’s degree in business administration.
Must have at least two years of work experience in similar or related field.
Must have an excellent communication and interpersonal skills.
Familiarity with company policies and legal guidelines of the related field.
Proper knowledge in logistical details focusing on efficiency and he/she can derive solutions out of analyses.
Displays a pleasing personality and empathetic towards fellow
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workers. Job Title: Sales Assistant Job Description:
Maintains
relationships
with
clients
by
providing
support,
information, and guidance.
Sells products by establishing contact and develops relationships with prospects and recommending solutions.
Prepares reports and proposals by collecting, analyzing, and summarizing information.
Participates in team effort by accomplishing related results.
Benchmarks a pleasing personality and state-of-the-art practices.
Listens to customer requirements and presents relevant information appropriately.
Identifies business opportunities by identifying prospects and evaluating their position in the industry.
Job Specification:
Male or Female.
Must be at least 18 years old.
Possesses bachelor’s degree in business administration and any other degree subject is acceptable particularly relevant to technical or medical sales.
Must have relevant experience gained in any commercial area involving contact with customers or the general public.
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Knowledgeable in the aspects of information technology, market trends and commercial environment.
Job Title: Production Worker Job Description:
Controls the functioning of machinery and equipment.
Cleans and maintains work areas and machinery.
Measures and quantifies the set of raw materials needed for production.
Reports machinery and equipment faults to maintenance staff.
Stores goods and feeds raw materials in the factory and warehouse.
Packs finished goods to be provided for customers
Carries out basic quality and testing checks.
Executes work assignments and procedures.
Job Specification:
Male or Female.
Must be at least 18 years old.
Any degree subject is acceptable even without high school diploma, although high school graduates are more preferred.
Considers work ethics and organizational skills.
Must be able to work briskly and efficiently.
Must be able to concentrate on doing repetitive tasks.
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Organizational Chart The organizational chart is a graphical formation that displays the important details in the organizational structure including the major functions and their respective relationships among positions according to authority and responsibility. This refers to the diagram showing the key functions of the line and staff organizational structure.
General Manager
Supervisor
Production Worker
Sales Assistant
Figure 2 Organizational Chart Compensation Scheme This includes the position of the employees, basic monthly salary, basic annual salary, total annual salary, the necessary monthly deductions such as SSS, Philhealth, Pag-IBIG contributions and their respective annual contributions, 13th month pay and computed withholding taxes.
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Table 3 Compensation Scheme for the First Year of Operation
Position
General Manager
Basic Monthly Pay
Basic Annual pay
Withholding Tax
SSS Contribution
Philhealth Contribution
Pag-IBIG Contribution
EE
ER
EE
ER
EE
ER
Monthly Contributions
Annual Contributions
13th Month Pay
Total Annual Pay
₱15,600.00
₱182,200.00
1,500.07
563.20
1,141.80
187.50
187.50
156.00
312.00
1641.30
19,695.60
15,600.00
₱220,995.53
Supervisor
14,400.00
172,800.00
1419.17
526.80
1,068.20
175.00
175.00
144.00
288.00
845.80
10,149.60
14,400.00
195,930.43
Sales Assistant
12,000.00
144,000.00
967.13
436.00
884.00
150.00
150.00
120.00
240.00
706.00
8,472.00
12,000.00
163,504.87
Production Worker
11,784.00
141,408.00
926.86
436.00
884.00
137.50
137.50
117.84
235.00
691.34
8,296.08
11,784.00
160,561.22
Total
₱53,784.00
₱640,408.00
₱740,992.05
Table 4 Projected Compensation Scheme Position/ Job Title
Year 1
Year 2
Year 3
Year 4
Year 5
₱182,200.00
₱185,844.00
₱189,560.88
₱193,352.10
₱197,219.14
Supervisor
172,800.00
176,256.00
179,781.12
183,376.74
187,044.28
Sales Assistant
144,000.00
146,880.00
149,817.60
152,813.95
155,870.23
Production Worker
141,408.00
144,236.16
147,120.88
150,063.30
153,064.57
₱640,408.00
₱653,256.16
₱666,280.48
₱679,606.09
₱693,198.22
General Manager
Total
Table 4 exhibits the projection for the compensation increased of 2% annually for five years, due to inflation, economic changes and other factors that mean the need for increase in salaries.
