Module 5

Management Study

Overview

Discusses the Management Aspect of the Feasibility Study its importance and
contents..

Module Objectives

At the end of this module, the students are expected to be able to:

1. Select the best among the different types of business ownership for the project.
2. Create an Organizational Chart for the project
3. Write a good job description for a particular position/personnel
4. Structure the compensation and benefits of the employes

Course Materials

Management l Aspect

Deciding on the appropriate form of business ownership is significant in determining how the
startup business shall be organized, how the money that will flow in and out of the business will
be handled, and how the business must be taxed.

When making a decision about the type of business to form, you have to evaluate the following
criteria:
 Legal liability – the extent the owner needs to be protected from legal liability.
 Tax implications - opportunities to minimize taxation
 Cost of formation – the total amount needed in order to proceed with the project
 Flexibility – considers unique needs of the business as well as the personnel and
owners.

Likewise, it is also important for a new business to be take extra care in identifying the key
personnel that would make up the dream team. It is vital for a new business to employ people
with diverse set of skills to succeed.

Forms of Business Ownership

The table below will show the different types of business organization, its definition, advantages
and disadvantages which may help you decide what form of ownership to adopt.

Table 11 – Types of Business Ownership

Form Definition Advantages Disadvantages
Sole or A business owned and  Simplicity of  The owner’s
Single operated by one organization possible lack of
Proprietorshi individual  The owner’s freedom ability to manage
p to make all decisions  Limited
Best for owners with  The owner’s opportunities on the
no or few employees, enjoyment of all the part of the
 small type of business profits earned employees
with little assets to  Minimum legal  The owner’s
protect. Example are restrictions possible difficulty in
merchandising  Ease of raising capital
businesses discontinuance  The proprietor’s
 Tax advantages unlimited liability.
Partnership A business owned by  As the sayieast ng  Since there are
two or more individuals goes, “two heads are more than one
who jointly agreed to better than one” the persons managing
contribute capital to a skills and talents of the business, there
common business and two or more is always the
divide profits among individuals can be possibility of
themselves. combined, providing conflicts between
more ideas and inputs partners.
Owners are called on business and  It has limited life. A
Partners management mere change in
strategies. ownership will
Best for businesses  Ease of organization dissolve the
that will be owned and  Has a greater business.
operated by several capability to raised  All partners can
individuals. It is a capital than single serve as agent to
common structure for proprietorship the business, and
a real estate industry, any unscrupulous
or for the practice of and wrongful act of
common profession any partner can bind
the business.
 General partners
are liable to
business debts to
the extent of his
personal assets
Corporation An artificial being  Pooling of capital from  More complicated to
created by law, having many investors organize
the right of succession  Shareholders are not  Subject to heavy
and the powers, personally liable for taxation
attributes and the debts of the  Majority
properties expressly corporation. shareholders have a
authorized by law or  Ease of transferring dominant voice in
incident to its ownership the management of
existence.  Perpetual life (50 yrs) the business.
Owners are called  Applicability to all  Bound by
shareholders sizes of firms government
regulations
Best for businesses  Maybe expensive to
that need liability organize
protection and
flexibility to grow into a
big organization. It is
common for
manufacturers..
 Cooperative A business owned by  Easy to form  Limited resources
members and  Limited liability  Lack of secrecy
operated for the  Service motive  Cash trading
benefit of the  Democratic  Excessive
members. Income are management government
divided through intervention
patronage refund

Best for people with

limited capital and
could avail benefits
from their investment.

The Organizational Chart

An organizational chart is a diagram that visualizes the vertical structure of an

organization. It shows the connections and relative ranks of its parts and positions/job.
It is also concerned with relationship among tasks and the authority to do the tasks.

Sample of an Organizational Chart

1. Line Organizational Structure – the simplest type of organizational structure. Its

authority flows from top to bottom. The chain of command and each department head
has control over their departments. The self contained department structure can be
seen as its main characteristic. Independent decisions can be taken by line officers
because of its unified structure. The main advantage of a line organizational structure
can be identified as the effective communication that brings stability to the organization

Manager

Production Admin.
Supervisor Supervisor

Line Line Accounting

Leader Leader HR Head
Head

Workers Workers Staff Staff

Boxes in the organizational chart represents position

Line represent flow of authority.
Manpower and Skills Requirements

Manpower is the necessary workers the business must employ in order to start and
maintain the operation. Together with the number of workers required is the necessary
qualification for every position.
Present this section in tabular form. Below is an example of the table presentation:

Table 12: Summary of Manpower & Skills Requirements

No. Position Qualification Job Description Salary
1 Manager Owner of the company  Oversee the whole
operation of the
company
 In-charge in marketing
the product P30,000
 In-charge in looking for
the source of RM
 Hires employees

1 Production  A graduate of BSIE  Sets monthly

Supervisor  Preferably male objectives of the
 30 – 35 yrs old department and
 With minimum of 2 yrs communicate it with
supervisory experience the workers under him.
in the production of the  Organize workflow by
same line of business assigning P25,000
responsibilities to the
employees
 Oversee the production
process
 Coach and guide the
workers

1 Administrative  A BSA graduate  Will act as the point of

Supervisor  Preferably female contact for all
 28 – 35 yrs. Old employees
 With a minimum of 3  Provides administrative
yrs supervisory support and managing
experience. queries
 Can work with  Prepare reports such P25,000
minimum supervision as financial reports &
 Can handle stress budgets
 Supervise the
administrative side of
the business

2 Line Leader  At least high school  Conduct time and P10,000

 graduate motion study
 Male or Female  Checks and monitor
 Able to work under the work of the workers
pressure under him

15 workers  At least high school  In-charge in the

graduate production of goods P400/day

Project Implementation and Time Table

Once the project is determined to be feasible, and economically viable, design its implementation
activities with the use of a GANTT Chart. This will help us know the following:

1. Your project’s total pre-operating time frame until the start of the normal operations.
2. The proper scheduling of all your pre-operating activities so you can arrive at the
smoothest flow of work;
3. Your target start-up and completion dates for all your pre-operating activities
4. Your pre-operating financial requirements clearly detailed by activity; and
5. Your pre-operating activity bottlenecks for proper consideration and timely solutions.

Example of a GANTT CHART

ACTIVITY DURATION (Unit of Time)

1 2 3 4 5 6 7 8 n
Project conceptualization & identification
Preparation of Project Feasibility Study
Negotiation/Approval & Release of
finances from project
proponents/financiers
Legal registration with:
a. Dept. of Trade & Industry
b. SEC (if Corporation/Partnership)
c. Municipal Government
d. BIR
e. Other Regulatory Bodies
Acquisition of Land
Construction of the Building or Building
Improvements
Acquisition & Installation of Machineries
& Equipment
Acquisition of Raw Materials
Hiring of workers
Training of workers (if needed
Dry Run of Operation
Start of Normal Operation