• When one starts to organize a business enterprise,

it is presumed that he conducted a feasibility or

market study. That is, he knows his resources, the
needs of the community, the strengths if his
competitors, and so forth.
• However, what count most are the personal
characteristics of the entrepreneur. Handwork,
determination, creativity, enthusiasm and human
relations can make the difference between success
and failures.
 LEVI’S STORY
More than one hundred years ago, a young man from
Bavaria went to the United States as an immigrant. His
objective was to seek his fortune. Little success at first
encouraged him to return to his country. But he decided to try
prospecting for gold in California. At the time all roads led to
California. Likewise, luck was not for him as a gold prospector.
However, the young man recognized the needs of his
fellow gold prospectors for sturdy and durable work pants.
Exploiting his talent in tailoring and using his last money, he
put up his tailoring shop. Over the years his business
prospered.
Until it became transnational in operations.
The name of the young immigrant is Levi
Strauss.
He did not discover gold in California.
But just the same he acquired something worth
more than gold. The Levi Strauss and Company
has become the largest apparel company in the
world. Famous chain stores throughout the
world sell Levi’s jeans. Annual sales have been
recorded at $3 billion
 WHY DO YOU GO TO BUSINESS?
Here are the reasons why people go to business:
1. Personal satisfaction
2. Family involvement
3. Independence and power
4. Social activities.
5. Profit expectation
 CHECKLIST FOR GOING BUSINESS
1. About you
 -Why do you want to put up your own business?
 -Do you have experience in the business you like to start?
 -Did you work before as a manager?
 -Do you have business training?
 -Do you have money for your business?
2.About capital
 -Do you know how much money you need for your
business?
 -Do you know how much credit you can get from your suppliers?
 -Do you know where to borrow in case your funds are not
enough?
 -Do you have an estimate of your net income per year?
3. About a partner
 -Do you need a partner who has the money and
skills?
 -Do you know the positive and negative points in
choosing single proprietorship, partnership or
corporation?
 -Have you consulted an expert?
4. About your costumers
 -Who are your costumers?
 -Do people need a store like yours
 -Do people like to live in the place where you
intend to put up your business?
5. About you qualities
 -Are you a self-starter?
 -How do you feel about other people?
 -Can you lead others?
 -Can you make decisions?
 -Can you take responsibility?
 -Are you good in planning and organizing?
 -Can people trust what you say?
 -Are you hardworking?
 -Is your health good?
WHAT IS AN ORGANIZATION?
An organization is a group of two or
more persons who work together to attain a
common set of goals.
Organizing is a process of combining
and coordinating resources and activities in
order to accomplish efficiently and effectively
certain objectives. The best resources of the
organization are its employee – not money,
machines, materials or buildings.
 ORGANIZATIONAL STRUCTURE
Every organization has a structure which indicates positions and
relationship. There are shown by an organizational chart.

Manager-
Owner

Office Sales
Supervisor Supervisor

Accountant Clerk Messenger Salesman Salesman Salesman

CHOOSING THE FORM OF BUSINESS
ORGANIZATION
In n1979 two young engineers worked together on an idea
for a small computer for personal use. Steven Jobs, then 21 and
Stephen Wozniah, then 26, spent 6 months designing a model and
40 hours building it. Their idea became a reality. Soon they had an
order for 50 of their personal computers.
With such order, the two engineers were practically in
business. But they had no resources. To solve the problems, Jobs and
Wozniah became the workers. They used the garage of Jobs as their
production site. To finance their business, they sold s second-hand
Volkswagen van and a programmable calculator for $1,350.
 So, they were ready for starting their business. They named
their business enterprise Apple Computer. The following year,
1977, the enterprise became a corporation. In 1980 and 1981,
shares of common stock were sold to the public. In only six years,
Apple Computer grew from a two-man operation into an
international corporation with more than 4,000 employees and
with more than $1 billion annual sales.
FORMS OF BUSINESS
ORGANIZATION
There are three most common forms of business organization in a capitalist
economy. These are the sole or single proprietorship, partnership and corporation.
However, there are other forms of business organizations, such as the cooperative,
joint venture and syndicate.

Single proprietorship. This is a form of business organization

that is owned and usually managed by one person. It is the oldest and simplest form
of business ownership. It is the easiest to start. They dominate the retailing,
agriculture and service industries.
The advantages of a single proprietorship are:
1. Ease and low cost of formation and dissolution.
2. Retention of all profits.
3. Independence and flexibility.
4. Tax advantage and less government regulation.
THE DISADVANTAGES ARE:

1. Unlimited liability.
2.Lack of stability.
3.Limited access to credit.
4.Limited business skills and knowledge.
Partnership.
It is an association of two or more persons
who act as co-owners of a business. Each partner
contributes money, property or service to their
organization. Most partnerships have two partners.
They are usually engaged in accounting, law,
advertising, real estate and retailing. There are two
types of partners: general partners and limited
partners. The liability of a general partner extends up
to his personal properties while a limited partner is
only liable to the extent of his contribution to
business.
THE ADVANTAGES OF PARTNERSHIP ARE:

1. Easy to organize.
2. Availability of more capital and credit.
3. Retention of profits.
4. Better business skills and knowledge.
THE DISADVANTAGES:
1. Unlimited liability.
2. Lack of stability
3. Management disagreement.
4. Idle investment.
Corporation.
It is an artificial being created by operation of law, having
the right of succession, and the powers, attributes and properties
expressed authorized by law or incident to its existence. United
States Chief Justice John Marshall defined corporation in his
famous 1819 decisions as “an artificial being invisible, tangible
and existing only in contemplation of the law.”
Stocks –
The shares or the certificates of ownership of a
corporation

Stockholders or Shareholders –
The owners of stocks

Two types of corporations:

Private or close corporation- The first one is owned
by few individuals, usually relatives and friends.
Open Corporation.- is owned by any individual who
buys shares of stock which are openly traded in the stock
markets.
 THE ADVANTAGES OF A CORPORATION
ARE:

1. Limited liability.
2. Easy to rise capital.
3. Perpetual life.
4. Specialized management.
THE DISADVANTAGES OF A CORPORATION ARE:
1. Difficult to a organize.
2. Strictly regulated and supervised by the government.
3. Some corporations are socially irresponsible.
4. Formal and impersonal employer-employee relationship.
THE COOPERATIVE: AN ENTERPRISE FOR THE POOR
The Cooperative Code defines a cooperative as duly
registered association of persons, with a common bond of
interest, who have voluntarily joined together to achieve a
lawful common social or economic end, making equitable
contributions to the capital required and accepting a fair share
of the risks and benefits of the undertaking in accordance with
the universally accepted principles of cooperation, which
include the following:
1. Open and voluntary membership
2. Democratic control
3. Limited interest on capital
4. Division of net surplus
5. Cooperative education
6. Cooperation with other cooperatives
OBJECTIVES OF COOPERATIVES
1. To encourage thrift and savings among the members;
2. To generate funds and extend credit to the members for productive and
provident purposes;
3. To encourage among members systematic production and marketing;
4. To provide goods and services and other requirements to the members;
5. To develop expertise and skills among its members;
6. To acquire lands and provide housing benefits for the members
7. To promote and advance the economic, social and educational status of the
members; and
8. To establish, own, lease or operate banks, cooperative wholesale and retail
complexes, insurance and agricultural/industrial processing enterprises, and
public markets.
TYPES OF COOPERATIVES
1. Credit cooperative. Promotes thrift among its members and create
funds in order to grant loans for productive and provident
purposes.
2. Consumers cooperative. Procures and distributes commodities to
its members and non-members.
3. Producers cooperative. Undertake joint production in agriculture
and industry.
4. Marketing cooperative. Engages in the supply of production inputs
to members and markets their products.
5. Service cooperative. Undertakes medical and dental care,
hospitalization, transportation, insurance, housing, labor, electric
light and power, communication and other services.
6. Multipurpose cooperative. Combines two or more of the business
activities of the different types of cooperative.
ORGANIZING A COOPERATIVE
For the membership, there should be a minimum of 15 person
natural persons. They should be citizens of the Philippines who are
residing or working in the intended area of operation of the
cooperative. However, before organizing a cooperative, the Core
Group(leader)should first study the following factors:
1. Felt need
2. Volume and business
3. Availability of qualified officers
4. Adequacy of facilities
5. Opportunity for growth
REQUIREMENTS FOR REGISTRATION
The board of directors with the assistance of the
members of the documents committee shall prepare all the
documents necessary for the registration of the cooperative.
Such documents shall be submitted to the cooperative
development authority;
-Four copies of economics survey with a general statement
describing the;
a. structure
b. purpose
c. economic feasibility
d. area of operation
e. size of membership
f. other pertinent data
-Four copies of articles or cooperation, together with bond
of accountable officers
-Four copies of bylaws
-registration fee payable to cooperative development
authority
The dimensions of organizational structure
1. Divide the work of the organization into separate parts.
Assign these parts to positions within the organization. This
is called job design.
2. Group the various positions into manageable units. This
is departmentalization of the organization.
3. Distribute the responsibility and authority within the
organization. The result is centralization of the
organization.
 4. Determine the number of subordinates who will report
to each manager. This is called span of management.
5. Distinguish between those positions with direct
authority and those that are support positions. This is the
chain of command.
Departmentalization
1. Function. All jobs that pertain to the same activity are
grouped.
2. Product. All activities related to a particular product or
product group are put together.
3. Location. Activities are grouped based on a particular
geographic are.
4. Customer. Grouping of activities in accordance to the
needs of various customers.
 DECENTRALIZATION OF AUTHORITY
Delegation –
When a part of a manager’s work and power is
assigned to a subordinate.

The latter involves the granting of responsibility,

authority and accountable.
 Responsibility -is a duty to do the job.
 Authority -is the power to do the job.
 Accountability -is an obligation to do the job.
 DECENTRALIZATION OF AUTHORITY
There is decentralization of authority when authority
is widely spread in the lower levels of the organization. In
the hand, if authority is concentrated at the upper levels,
there is centralization of authority. There are several factors
which require decentralization of the enterprise. One is the
external environment of the enterprise. If it is complex and
unpredictable, lower management should be allowed to
make the decisions. Another is if the decisions are not risky,
then it can be delegated to the lower levels of management.
Also, if the lower level-management is competent in
decision-making skills, top management is encouraged to
decentralize authority.
 LINE AND STAFF
AUTHORITY
Authority passes from the highest level to the lowest
level. This is called line of authority .The vice president
report directly to the vice president. The supervisors
report directly to the managers. There is a direct
responsibility in line authority.
In the case of staff authority, it is not part of the
chain of command. Its job is to provide support, advice
and expertise to line authority. They have no
accountability. For example, the presidential adviser or
assistant is a staff position.
LINE AND STAFF POSITIONS
President

Consultant

Vice
President

Legal
adviser

Marketing Production Finance

Manager Manager Manager

Line authority
------- Staff authority
 ENTREPRENEURIAL CONSIDERATION
1. Financial. The entrepreneur must be knowledge about the
financial aspect of business decisions.
2. Marketing. The entrepreneur must be well versed on the
4Ps of marketing: product, price, place, and promotion.
3. Managerial skills. The entrepreneur must be able to
identify the strengths and weaknesses of his personnel.
4. Overall personal decision-making process. The
entrepreneur should have a thorough evaluation of what
is to be attained by going into business, and what human
and financial resources are available and necessary.
 PUT UP A NEW ENTERPRISE OR BUY?
Here are some advantages of buying an established
business.
1. It saves time, cost and effort of looking for a location.
2. It has existing customers.
3. Uncertainties regarding physical facilities, inventory
requirements and personnel needs are reduced.
4. It may be available at a bargain price or cheap price
due to quick sale.
 On the other hand, buying an existing business enterprise
has some disadvantages such as:

1. Location may no longer be convenient to customers caused

by parking problems, deterioration of neighborhood,
changed in pedestrian and traffic flows, among other things.
2. Present owner/business may have a bad image in the
community.
3. Physical facilities may be outmoded which require expensive
repairs or renovations.
4. Inventory may be obsolete and of poor quality.
5. The price of the existing business may be too high.
EVALUATING AN EXISTING ENTERPRISE
1. Reasons for selling
- Retirement
- Opportunities somewhere
- Illness - Going abroad
- Employment - Financial problems
2. Earning power
- Profitability of firm
- Financial statement for the last five years
3. Other factor
- Demand for the firm’s product/services
- Number of competitors
- Future trend of the industry
- Present location of the business
STEP IN STARTING A NEW BUSINESS
1. Plan the business
2. Select the appropriate form of business organization
3. Scout for reasonable credit/financing
4. Choose a good location
5. Secure licenses/permits for the business operation
6. Set up records for financial, physical and personnel
resources
7. Insure the business if necessary
8. Promote the business
9. Manage the business
10.Do your social responsibility
THE END