BUSINESS

Any lawful economic activity concerned with the production or distribution of goods or services for profit.
An organization of the people with varied skills, w/c uses property, talents, to produce goods/ services, w/c can be sold to others for more
than their costs.
Development of Businesses
Capitalistic business
• Private Ownership of non- personal means of production.
• Production for private accounts
• Voluntary savings & the institution of bank credit
Socialistic Business
• Scarcity of produced goods
• Production is incentive dependent
Communistic Business
• Abundance of produced goods
• Work becomes natural
Totalitarian (result of Industrial Revolutions & acceptance of the Laissez- faire Theory)
• Free Enterprise
• Free Competition
KINDS OF BUSINESS
1. COMMERCE – business firms which are engaged in the buying and selling of goods and services are classified as those falling under
commerce.
2. INDUSTRY – are those which are mainly concerned with production.
a. Genetic Industries – those involved in agriculture, forestry, and fish culture.
b. Extracting Industries – involved in the extraction of goods from natural resources which include mining, lumbering, hunting and
fishing.
c. Manufacturing Industries – those which convert raw materials into finished products.
d. Construction Industries – consist of firms engaged in building infrastructures like airports, seaports, dams, and highways.
3. SERVICES – one which sells service to the buyer.
a. Recreation (e.g. movie houses, television & radio stations, theaters & etc.)
b. Personal (e.g. restaurants, barber shops, transportation, hotels etc.)
c. Finance (e.g. banks, insurance companies, financing institutions & etc.)
THE DECISION TO ENGAGE IN BUSINESS
1. Social approval
2. Profit
3. Service to the community and to employees
4. Personal satisfaction
5. Livelihood
6. Power
7. Protection
FACTORS TO CONSIDER UPON CHOOSING/ ESTABLISHING A BUSINESS
1. Available Funds
2. Special Aptitudes & Interest
3. Training, Education & Experience
4. Social Status of the Business
5. Competitive Situation
6. Location Factor & Social Values of the Particular Community
7. Present/ Potential Demand
8. Social Significance of Business

ENTREPRENEURS OPTIONS

Entrepreneurs may opt to set up a new business or become a franchisee of an existing business.

Decide to Engage in a Business

New Business Existing Business

Conceptualize Business Ideas as Assemble the Need Resources

Alternatives Options

Implement the Business

Establish Criterion for Selecting
Best Possible Alternative

Select the Best Alternative

Test the Alternative If not feasible

If feasible

Assemble the Need Resources

Implement the Business

CLASSIFICATION OF BUSINESS OWNERSHIP
1. Private Ownership – a privately owned business.
2. Public Ownership – businesses that are owned by the government.
3. Mixed Ownership – business that are partly owned by a private individual/s and partly owned by the government (e.g.
NAPOCOR, Former PAL and etc.)

OWNERSHIP AND STRUCTURAL FORMS OF BUSINESS

1. Sole Proprietorship – owned by one person who assumes entirely the risks and rewards in a business.
2. Partnership – Art. 1767 of the civil code defines partnership as an organization where two or more person bind themselves
to contribute money, property, or industry, to a common, fund with the intention of dividing the profits among themselves.
3. Cooperative Organization – is likely a partnership and corporation. The only difference is that it eliminate profit as the
controlling motivation and reduce certain economic evils.
- Profits are returned to the members not on the basis of ownership but on the basis of participation.
4. Corporations – is an artificial being created by operation of law having the right of succession and the powera, attributes
and properties, expressly authorized by law or incident to its existence.
5. Corporate Combination – a union of two or more corporation placed under the control/operation of one ownership
interest.

SINGLE PROPRIETORSHIP

ADVANTAGES:
1. It is easy to start and terminate; there is only one person who decides.
2. Control/management lies entirely in the hands of the owner.
3. Only a small amount of capital is required in starting.
4. Profits belongs entirely to the owner.
5. High credit standing.

DISADVANTAGES
1. Limited judgment and wisdom; “two heads are better than one”
2. Limited amount of capital; only one individual will contribute
3. Unlimited liability
4. Difficulties of management

PARTNERSHIP

ADVANTAGES

1. It could be easily formed as the single proprietorship.

2. There are more persons to conduct the business and handle its problems.
3. Has access to greater/better credit facilities.
4. Combined ability and resources of partners are source of strength.

DISADVANTAGES

1. Unlimited liability of partners

2. Disagreement between partners often lead to delay and difficulties which could endanger the enterprise.
3. Easy dissolution
4. Frozen investment

COOPERATIVE ORGANIZATION

KINDS OF COOPERATIVE
1. Consumer’s Cooperative – businesses that are owned by a cooperative which caters consumers products.
2. Producer’s Cooperative – businesses that are owned by a cooperative which caters producer’s products.
3. Marketing Cooperative – businesses that are owned a cooperative that involve in the buying and selling of their member’s
products.
4. Financing Cooperative – financing businesses that are owned by a cooperative which finance/lends money/capital for
organizing a business.

CORPORATIONS

NATURE AND CHARACTERISTICS

1. Artificial Being
2. Simple Structure
3. Wide Scope
4. Existence is practically permanent
5. Public Function

ADVANTAGES OF CORPORATION
1. Ease of acquiring large amount of capital
2. Flexible ownership
3. Limited liability of stockholders
4. More or less permanent existence
5. Legal Entity
 DISADVANTAGES OF CORPORATION
1. Organizational Expense
2. Government restriction and reports
3. Lack of personal interest
4. Lack of Secrecy

CORPORATE COMBINATION
❖ MERGER – integration of two or more corporation arises from absorption/salvation and elimination of
competitions/ rivalry.
❖ PUBLIC CORPORATION – publicly own corporation that caters for economic affairs of the country/state that arises
from the necessity of the industry/society.