A Summary Report about

Theories, Forms of Business Ownership

And Planning

In
Management I

I. Theories

Theory X & Y: Managerial Assumptions

1. Theory X (Authoritarian Management Style)

Theory X represented the more widely held assumptions about people in

organizations, and that these assumptions guided not only in styles of
supervision but such things as organization structures, procedures, and
programs in organizations as well.

Theory X tended to produce strict and controlling types of supervision

2. Theory Y (Participative Management Style)

Theory Y tended to be associated with more developmental and participative

supervisory styles.

McGregor further considered these assumptions about people to be self

fulfilling in the sense that they led to practices which would tend to produce
the very behaviors among those managed which would confirm either set of
assumptions.

Quantitative Management Theory

Focuses on improving managerial decision making by applying: Statistics, optimization
models, information models and computer simulations.

Elements
1. Management Science
2. Operations Management
3. Management Information System

Contemporary Theories

Systems Theory perceives or treats an organization as an open system that interacts

with its environment by way of input, throughputs and outputs.

Contingency Theory a viewpoint that argues that there is no best way to organize a
corporation, to lead a company, or to make decisions.

Theory Z (Japanese Management Style) managers must be more supportive and trusting
of their employees, in order to receive the benefit of increased participation in the
decisions of the company.

II. Forms of Business Ownership

1. Sole Proprietorship owned by one person and the owner personally manage his business.
Examples: Retailers, Vendors, Barbers, Repair shops

ADVANTAGES

DISADVANTAGES

Owner acquires all the profit

Unlimited Liability

Easy to organize

Limited Financial Resources

Ownership flexibility

Lack of Stability
Management Deficiency

2. Partnership

General Partner the liability extends up to his personal properties.

Limited Partner only liable to the extent of his contribution to the business.

ADVANTAGES
Better management

DISADVANTAGES
Unlimited Liability
Lack of Stability
Management Disagreement

3. Corporation The shared or certificates of ownership of a corporation are called stocks. The
owners of stocks are called stockholders.

ADVANTAGES

DISADVANTAGES

Limited Financial Risk

Tax

Limited Liability

Difficult to organize: Legal restrictions

Stability
Specialized Management

III. Planning

Planning - The process of setting the objectives to be accomplished by an organization during a

future time period and deciding on the methods of reaching them.

Plan Is the statement of a recommended course of action resulting from the evaluation of
relevant information and the assessment of probable future developments.

Decision Making Is the process of choosing the best between or among alternatives.

Timeframes of Planning:
1. Long range planning covers 5 years or more.
Examples: expansion, development of top managers

2. Intermediate range planning covers a period from 1 year to 5 years.

Examples: inventory, hiring and layoff

3. Short-range planning covers a period of time of one year or less.

Examples: daily, weekly or monthly plan and job assignments

Basic Steps in Planning

1. Establish the goals
2. Define the present situation
3. Determine aids and barriers
4. Develop a set of action programs

General Approaches to Formal Planning

1. Bottom-up approach In this approach, Planning is initiated at the lowest level in the
organization.

2. Top-down approach In this approach, Planning efforts begin with the board of directors and
top executives of the firm.

3. Interactive approach In this approach, a compromise between the bottom-up and the topdown methods, corporate executives and lower-level managers develop plan in consultation

with each other, making a link between wider corporate objectives and the managers detailed
knowledge of specific situations.

4. Dual approach All units form plans to suit their particular situation and these plans are
regularly viewed by corporate management.