The Organizational Plan

Module Objectives

Students are able to…

• Identify and discuss the elements of the organizational plan.
• Prepare the organizational plan.
The Organizational Plan

What are the elements (main components) of an organizational plan?

1. Legal Structure of Business

2. Ownership
3. Organizational Structure & Key Management Personnel
4. Pre-Operating Activities
5. Pre-Operating Costs
6. Fixed Assets
7. Administrative Expenses
1. Legal Structure of Business

How will the business be organized?

Will it be sole proprietorship, partnership, corporation or cooperative?

Are there specific (compelling) reasons why this legal structure is being chosen? If so,
what are these?
1. Legal Structure of Business

SOLE PROPRIETORSHIP
• Business is owned (and usually managed) by one person, it is a single (sole)
proprietorship.
• Person is called a “single proprietor”.
• Very easy to form because only one owner decides when to engage in business.
• Owner’s legal liability is unlimited.
• Existence limited within the desire or death of the owner.
1. Legal Structure of Business

PARTNERSHIP
• Two or more persons bind themselves to contribute resources to a common fund in
their co-owned business for a profit.
• Owners are called “partners”.
• Resources contributed may be money, property or industry (or all).
• Due to mutual agency, any partner can bind the partnership into a contract
irrespective of the consent of the other partners as long as he is with authority and
is for the benefit of the partnership.
1. Legal Structure of Business

PARTNERSHIP
• Not considered a separate entity from the partners when it involves debts to third
party creditors.
• A mere change (due to withdrawal, admission, death, insolvency or insanity of any
one partner) in the parties of partnership agreement dissolves the partnership.
1. Legal Structure of Business

CORPORATION
• A more formal business organization than a partnership; formed by operation of the
law (The Corporation Code). Individuals forming a corporation are required to seek
approval from the government for its legal existence which starts when the SEC
approves and issues its certificate of incorporation.
• Composed of 5 or more owners generally called “incorporators” or “stockholders”.
• Has the power of succession  can continue to exist in spite of death, acceptance,
withdrawal, insolvency, or incapacity of any director, officer or stockholder.
1. Legal Structure of Business

CORPORATION
• Stockholders cannot bind the Corporation in contracts. Only the Board of Directors
and other authorized officers can bind the Corporation.
• Stockholders are not legally liable for the corporate unpaid indebtedness. They are
liable only to the extent of their subscription.
• Shall exist for a period not exceeding 50 years from date of incorporation unless
sooner dissolved or unless the said period is extended.
1. Legal Structure of Business

COOPERATIVE
• An autonomous and duly registered association of persons, with a common bond of
interest, who have voluntarily joined together to achieve their social, economic, and
cultural needs and aspirations by making equitable contributions to the capital
required, patronizing their products and services and accepting a fair share of the
risks and benefits of the undertaking in accordance with universally accepted
cooperative principles.
• Formed primarily to provide service to its owners called “members”.
• A formal organization of cooperative members that number at least 15; registered
with the Cooperative Development Authority.
2. Ownership

Show how much is owned by each of the owners of the firm.

Name Shareholdings % Share

200,000 20%
300,000 30%
500,000 50%
Total 1,000,000 100%
3. Organizational Structure & Key Personnel

How will the business be managed and operated?

There must be an organization structure:

• Structure of authority and responsibility (chain of command)
• Division of labor (job distribution)
• Definition of what each one must do in the business (job description).
3. Organizational Structure & Key Personnel

How will the organizational structure look like?

3. Organizational Structure & Key Personnel

How will the organizational structure look like?

Organizational Chart
3. Organizational Structure & Key Personnel

Job Description

Position : President
Reporting to : Chairman & Member of the Board of Directors
Tasks & Responsibilities:
• XXXXXXXXXXXXXXXX
• XXXXXXXXXXXXXXXX
• XXXXXXXXXXXXXXXX
3. Organizational Structure & Key Personnel

Job Description

Position : President
Reporting to : Chairman & Member of the Board of Directors
Tasks & Responsibilities:
• XXXXXXXXXXXXXXXX
• XXXXXXXXXXXXXXXX
• XXXXXXXXXXXXXXXX
3. Organizational Structure & Key Personnel

Key Personnel

Name Position
3. Organizational Structure & Key Personnel

What is the business experience and qualifications of the proponent?

Brief Background of Key Personnel

NAME, President
• XXXXXXXXX
• XXXXXXXXX

NAME, Vice President for Marketing

• XXXXXXXXX
• XXXXXXXXX
4. Pre-Operating Activities

What pre-operating activities must be undertaken before the business can operate?
These may include:
• Attendance to training programs (skills-related, management or entrepreneurship)
• Preparing the business plan
• Doing market survey
• Making trips to machinery and raw materials suppliers
• Registering the business
• Hiring a consultant

A GANTT chart is usually prepared to aid proponents.

4. Pre-Operating Activities

A GANTT chart of these activities (from inception to start of operations) may be

presented. Short descriptions of each of the activities should be presented.
Activity Mo.1 Mo.2 Mo.3 Mo.4 Mo.5 Mo.6
Do market research.
Prepare business plan.
Raise financing.
Formulate product taste.
Canvass materials/equipment.
Purchase kitchen/office equipment.
Hire/train production personnel.
Register/get business permits.
Dry-run.
Start of business operations.
5. Pre-Operating Costs

What pre-operating expenses will be incurred?

These may include:

• Worker training
• Market survey
• Testing
• Travel to source suppliers of raw materials and machinery
• Travel to negotiate with potential market outlets
6. Fixed Assets

What fixed assets will be required for the office?

Indicate here all other fixed assets needed for office or administrative aspects of the
business. These may include:
• Computers
• Typewriters
• Furniture & Fixtures
• Cabinets
• Aircondition units/fans
• Calculators
7. Administrative Expenses

What administrative cost will be incurred?

Some administrative activities have to be performed and costs have to be incurred to

support production and marketing activities. These may include:
• Salaries of: office secretary, bookkeeper, driver, security guard
• Depreciation of fixed assets, furniture and fixtures used in the office
• Utilities
• Communications