Republic of the Philippines

Department of Education
National Capital Region
DIVISION OF CITY SCHOOLS – MANILA
Manila Education Center Arroceros Forest Park
Antonio J. Villegas St. Ermita, Manila

Organization and Management

Quarter 1 Week 3 Module 3

Learning Competency:
Analyze the forms and economic
roles of business organizations.
 HOW TO USE THIS MODULE?
Before starting the module, I want you to set aside other tasks
that will disturb you while enjoying the lessons. Read the simple
instructions below to successfully enjoy the objectives of this kit.
Have fun!

1. Follow carefully all the contents and instructions indicated in

every page of this module.
2. Write on your notebook the concepts about the lessons. Writing
enhances learning, that is important to develop and keep in mind.
3. Perform all the provided activities in the module.
4. Let your facilitator/guardian assess your answers using the
answer key card.
5. Analyze conceptually the posttest and apply what you have
learned.
6. Enjoy studying!

PARTS OF THE MODULE

 Expectations - These are what you will be able to know after

completing the lessons in the module.


 Pre-test - This will measure your prior knowledge and the concepts to
be mastered throughout the lesson.

 Looking Back to your Lesson - This section will measure what
learnings and skills did you understand from the previous lesson.

 Brief Introduction- This section will give you an overview of the lesson.

 Activities - This is a set of activities you will perform with a partner.

 Remember - This section summarizes the concepts and applications of

the lessons.

 Check your Understanding - It will verify how you learned from the
lesson.

 Post-test - This will measure how much you have learned from the
entire module

1
 LESSON Forms of Business Organization
4

EXPECTATIONS

As we study and immerse ourselves in “Organization and Management” in the

process, it is necessary to discuss the different phases of economic and differentiate the
various forms of business organizations. The module is subjected to discuss Module 3 –
Forms of Business Organization.

After going through the module, you are expected to:

1. analyze the forms and economic roles of business organizations.

Let us start your journey in learning

thru a Pre-test.
PRETEST Good luck!

Fill in the Blank

Directions: Choose the CORRECT word from the table being described by the statement s
below and write your answer in the space provided before the number.

Partnership Single Proprietorship Corporation

Joint Venture Cooperative General Partnership

__________________ 1. is a type of partnership which divides responsibility for management

and liability, as well as the shares of profit of loss according to their internal agreement.
__________________ 2. is an organization established for the purpose of purchasing and
marketing the products of its member.
__________________ 3. is a juridical entity established under the Corporation Code and
registered with the SEC.
__________________ 4. is the simplest form of business and the easiest to register through
the Bureau of Trade Regulation and Consumer Protection (BTRCP).
__________________ 5. consists of two or more persons who bind themselves to contribute
money or industry to a common fund with the intention of dividing profits
among themselves.

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 LOOKING BACK TO YOUR LESSON
3

Matching-type

Directions: Match the column A to column B. Write your answer in the space provided
before the number

A B

____ 1. Philippine Cooperative Code of 2008 a. Cooperative

____ 2. The purpose of purchasing and marketing b. RA 9520
the products of its members c. Joint Venture
____ 3. Mixture of the features of a sole proprietorship d. Single Proprietorship
and a corporation. e. One Person Corporation
____ 4. Simplest form of business and the f. Transitional Society
easiest to register.
____ 5. Acts like a general partnership but is clearly
limited period of time.

Enjoy reading…..

BRIEF INTRODUCTION

After deciding to start a business (and the business to pursue), one of the important
issues is the form of business entity that will serve as the vehicle in pursuing the business.
You may say that the next important issue is the source of funding, which is correct, but
that issue will be discussed later. Right now, let’s focus on the forms of business.

The choice of the form of business or business organization depends on various factors.
In certain business, like banks, the law requires that the business entity must be a
corporation. A small business, like your friendly sari-sari store, is better off as a sole
proprietorship, although it could also be converted to another form of business if the
circumstances require that shift.

A. Partnership

Partnership consists of two or more persons who bind themselves to contribute money
or industry to a common fund, with the intention of dividing the profits among themselves.
The most common example of partnerships are professional partnerships, like in the case
of law firms and accounting firms. Just like a corporation, it is registered with the
Securities and Exchange Commission (SEC).

Advantages of a Partnership

 Partnerships are relatively easy to establish;
 however time should be invested in
developing the partnership agreement.
 
With more than one owner, the ability to raise funds may be increased.

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 Learning Module for Organization and Management
 
 The profits from the business flow directly through to the partners’ personal tax return.

 Prospective
 employees may be attracted to the business if given the incentive to become a
partner.
 
The business usually will benefit from partners who have complementary skills.

Disadvantages of a Partnership
  
Partners are jointly and individually liable for the actions of the other partners.
  
Profits must be shared with others.
  
Since decisions are shared, disagreements can occur.
  
Some employee benefits are not deductible from business income on tax returns.

The partnership
 may have a limited life; it may end upon the withdrawal or death of a
partner.

Types of Partnerships that should be considered:

1. General Partnership
Partners divide responsibility for management and liability, as well as the shares of
profit or loss according to their internal agreement. Equal shares are assumed
unless there is a written agreement that states differently.

2. Limited Partnership and Partnership with limited liability

“Limited” means that most of the partners have limited liability (to the extent of their
investment) as well as limited input regarding management decision, which generally
encourages investors for short term projects, or for investing in capital assets. This form
of ownership is not often used for operating retail or service businesses. Forming a
limited partnership is more complex and formal than that of a general partnership.

3. Joint Venture
Acts like a general partnership but is clearly for a limited period of time or a single
project. If the partners in a joint venture repeat the activity, they will be recognized
as an ongoing partnership and will have to file as such and distribute accumulated
partnership assets upon dissolution of the entity.

B. Sole proprietorship

Also referred to as “single proprietorship,” a sole proprietorship is the simplest form of

business and the easiest to register, through the Bureau of Trade Regulation and
Consumer Protection (BTRCP) of the Department of Trade and Industry (DTI). It is owned
by an individual who has full control/authority of its own and owns all the assets, as well
as personally answers all liabilities or losses. The fact that it is run by the individual means
that it is highly flexible and the owner retains absolute control over it.

Advantages of a Sole Proprietorship

a. Easiest and least expensive form of ownership to organize.
b. Sole proprietors are in complete control, and within the parameters of the law,
may make decisions as they see fit.
c. Profits from the business flow-through directly to the owner’s personal tax return.

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 Learning Module for Organization and
Management d. The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

a. Sole proprietors have unlimited liability and are legally responsible for all debts
against the business. Their business and personal assets are at risk.
b. May be at a disadvantage in raising funds and are often limited to using funds
from personal savings or consumer loans.
c. May have a hard time attracting high-calibre employees, or those that are
motivated by the opportunity to own a part of the business.
d. Some employee benefits such as medical insurance premiums are not directly
deductible from business income (only partially as an adjustment to income).

C. Sole Corporation

A mixture of the features of a sole proprietorship and a corporation is found in a new

entity authorized under the Revised Corporation Code — the One Person Corporation. An
OPC is registered in the same manner as other corporations with the SEC, except that it is
composed of only one person, just like a sole proprietorship. [See One Person Corporations
under the Revised Corporation Code]

D. Corporation

A corporation is a juridical entity established under the Corporation Code and

registered with the SEC. It must be created by or composed of at least 5 natural persons up
to a maximum of 15, technically called “incorporators” (the 5-person minimum has been
removed under the Revised Corporation Code). Juridical persons, like other corporations or
partnerships, cannot be incorporators, although they may subsequently purchase shares
and become corporate shareholders/stockholders.
.
Advantages of a Corporation

a. Shareholders have limited liability for the corporation’s debts or judgments

against the corporation.
b. Generally, shareholders can only be held accountable for their investment in
stock of the company. (Note however, that officers can be held personally liable
for their actions, such as the failure to withhold and pay employment taxes.
c. Corporations can raise additional funds through the sale of stock.
d. A Corporation may deduct the cost of benefits it provides to officers and employees.
e. Can elect S Corporation status if certain requirements are met. This election
enables company to be taxed similar to a partnership.

Disadvantages of a Corporation

a. The process of incorporation requires more time and money than other forms of
organization.
b. Corporations are monitored by federal, state and some local agencies, and as a
result may have more p
c. Paperwork to comply with regulations.
d. Incorporating may result in higher overall taxes. Dividends paid to shareholders
are not deductible from business income; thus this income can be taxed twice.

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 Learning Module for Organization and Management

E. Cooperative

A cooperative is an organization established for the purpose of purchasing and

marketing the products of its members, i.e., shareholders, and/or procuring supplies for
resale to the members, whose profits are distributed to the members (in the form of
patronage dividends), not on the basis of the members' equity

According to REPUBLIC ACT 9520 also known as "Philippine Cooperative Code of

2008".

The primary objective of every cooperative is to help improve the quality of life of its
members. Towards this end, the cooperative shall aim to:

a. Provide goods and services to its members to enable them to attain increased
income, savings, investments, productivity, and purchasing power, and promote
among themselves equitable distribution of net surplus through maximum
utilization of economies of scale, cost-sharing and risk-sharing;
b. Provide optimum social and economic benefits to its members;
c. Teach them efficient ways of doing things in a cooperative manner;
d. Propagate cooperative practices and new ideas in business and management;
e. Allow the lower income and less privileged groups to increase their ownership in
the wealth of the nation; and
f. Cooperate with the government, other cooperatives and people-oriented
organizations to further the attainment of any of the foregoing objectives.

ACTIVITIES

Activity 1: Independent Activity

In 5 to 8 sentences, discuss in a yellow paper how learning this lesson can improve your
relationship with the people around you, your parents, guardians, or family. Ask an elder at
home to comment on your answers.

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
_________________________________________________________________________________________

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 Learning Module for Organization and Management
Activity 2: Independent Activity

Directions: Give your own descriptions on the various forms of business organizations in 3
to 5 sentences only. Write your answer in the space provided in bullet form.

To discuss Answer
1. Sole proprietorship

2. Partnership

3. Corporation

4. Cooperative

REMEMBER 9


 Walk Whitman Rostow, also known as W.W. Rostow was an economist in the Lyndon B. Johnson 
administration from 1966-1969. He also published articles and developed models on economic development.

The Five Stages of Economic Development model is developed by Walt Withman Rostow. The five
 stages  2) Preconditions for Take-off, 3) Take-Off, 4) Drive to maturity, and 5)
are 1) Traditional Society,
Age of Mass Consumption.

 Partnership consist of two or more persons who bind themselves to contribute money or industry to a common
fund, with the intention of dividing the profits among themselves.

  Partnership, 2) Limited Partnership and Partnership with limited
Types of partnership are 1) General
liability, and 3) Joint Venture.

Sole proprietorship is the simplest form of business and the easiest to register, through the Bureau of
Trade Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry (DTI). It is
owned by an individual who has full control/authority of its own and owns all the assets, as well as
  answers all liabilities or losses.
personally
 Corporation is a juridical entity established under the Corporation Code and registered with the SEC.

Cooperative is an organization established for the purpose of purchasing and marketing the products or its
members, i.e., shareholders, and/or procuring supplies for resale to the members, whose profits  are
distributed to the members (in the form of patronage dividends), not on the basis of the members’ equity.

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 Learning Module for Organization and Management

CHECK YOUR UNDERSTANDING

Multiple Choice
Directions: Read the questions carefully and encircle the letter of the correct answer. Write
your answer in a yellow paper.

1. Which of the following is a form of business which has unlimited liability. Creditors may
proceed not only against the assets and property of the business, but also after the
personal properties of the owner.
a. Corporation b, Sole Corporation
c. Partnership d. Sole proprietorship

2. Philippine Cooperative Code of 2008 is under of what Republic Act?

a. RA 9521 b. RA 9520
c. RA 9522 d. RA 9250

3. When the preconditions for take-off are met, a society can take off.
a. Drive to Maturity b. Take-off
c. Traditional Society d. None of the above

4. It acts as a general partnership but is clearly for a limited period or a single project.
Which of the following is CORRECT answer?
a. General Partnership b. Limited Partnership
c. Joint Venture d. None of the above

5. In which a type of partnership that divides responsibility for management and liability, as
well as the shares of profit or loss according to their internal agreement.

a. General Partnership b. Limited Partnership c. Joint Venture

d. None of the above

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 Learning Module for Organization and Management

POST-TEST

MULTIPLE CHOICE: Choose the letter of the correct answer. Write your answer in the
space provided.
____1. The followings are the disadvantages of Corporation except ONE.
a. Incorporation requires more time and money that other forms of organization.
b. Monitored by federal, state and some local agencies.
c. May result in higher overall taxes.
d. May deduct the cost of benefits it provides to offices and employees.

____2. Which of the following is advantage of Corporation?

a. Can raise additional funds through the sale of stock.
b. Requires more time and money than other forms of organization.
c. Processes of paperwork to comply with the regulation.
d. All of the above

____3. Which of the following is CORRECT about Sole Proprietorship?

a. Not easiest and highly expensive form of ownership to organize.
b. The business is easy to dissolve, if desired.
c. Cannot control within the parameters of the law.
d. Profits from the business are divided into the employees.

____4. The following are the advantages of partnership except ONE.

a. The Business usually will benefit from partners who have complementary skills.
b. With more than one owner, the ability to raise funds may be increased.
c. Partners are jointly and individually liable for the actions of the other partners.
d. Prospective employees may be attracted to the business if given the incentive
to become partner.

____5. It means that most of the partners have limited liability, as well as limited input
regarding management decision.
a. Abundant
b. Unlimited
c. Single
d. Limited

____6. Which of the following are disadvantages of Sole Proprietorship?

a. Have limited liability and are legally responsible for all debts against the
business.
b. Some employees benefits such as owner’s medical insurance premiums are
not directly deductible from business income
c. Have a hard time attracting high-caliber employees
d. All of the above

____7. It is registered in the same manner as other corporations with the SEC, except that
it is composed of only one person, just like a sole proprietorship.
a. One Person Corporation
b. Partnership
c. Double Person Corporation
d. Cooperative

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 Learning Module for Organization and Management

____8. Republic Act 9520 also known as:

a. Philippine Cooperative Code of 2008
b. Philippine Cooperative Code of 2009
c. Philippine Corporation Code of 2008
d. Philippine Corporation Code of 2009

____9. The following are the objectives and Goals of a Cooperative except ONE.
a. Provide good and services to its members to enable them to attain increase
income, savings, investments and purchasing power.
b. Allow the higher income and higher privileged group to increase their
ownership in the wealth of the nations.
c. Teach them efficient ways of doing things in a cooperative manner.
d. Provide optimum social and economic benefits to its members.

____10. SEC stands for:

a. Securities and Exchange Corporation
b. Security and Exchange Commission
c. Securities and Exchange Commission
d. Security and Exchange Corporation

REFLECTIVE LEARNING SHEETS

Reflective Question: If you have an existing sari-sari store, what are the possible things
you will consider in terms of business registration based on the topic discussed to respond
to the COVID-19 pandemic? Cite at least two and explain. Write your answer in the space
provided.

__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
_________________________________________________________________________________________

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 Learning Module for Organization and Management

REFERENCES

Books
Darr, K. (2013). Introduction to Management and Leadership Concepts, Principles and Practices, Jones and
Bartlett Learning, Retrieved from: https://www.google.com.et
Mintzberg, H. (1989). MINTZBERG ON MANAGEMENT. Reprinted by permission of Free Press, a division of
Simon & Schuster, Inc.
Robbins, S., Robbins, S. P. and Coulter, M. (2012). Management -11th ed, Pearson. Retrieved from:
www.pearsonhighered.com

Websites
Smyth, D. (2019). The Roles of Business Organizations in Economic Development. Retrieved
from:https://bizfluent.com/info-7745795-roles-business-organizations-economic-development.html
https://www.managementstudyhq.com/functions-of-management.html
https://www.slideshare.net/LalaineCazar/nature-and-concept-of-
management?from_action=save
https://www.wisdomjobs.com/e-university/principles-of-management-and-organisational-behaviour-tutorial-
366/evolution-of-management-thought-12679.html
https://www.mindtools.com/pages/article/management-roles.htm
https://study.com/academy/lesson/five-stages-of-economic-development.html
https://pnl-law.com/blog/forms-of-business-sole-proprietorship-partnership-corporation/
https://www.cda.gov.ph/resources/issuances/philippine-cooperative-code-of-2008/republic-
act-9520
https://bizfluent.com/info-7745795-roles-business-organizations-economic-
development.html
https://www.freepik.com/free-vector/team-leader-managing-
project_5562411.htm#page=1&query=manager in business management position=4
https://www.freepik.com/free-vector/urban-buildings-with-cityscape-
scenery_4794860.htm#page=1&query= BUSINESS ENVIRONMENT position=33
https://www.freepik.com/premium-vector/business-people-communicating-office-
banner_5523082.htm#page=1&query= BUSINESS ENVIRONMENT position=22
https://www.freepik.com/free-vector/scrum-team-discussing-
tasks_4950291.htm#page=1&query=ROLE OF BUSINESS position=6
https://www.freepik.com/free-vector/professional-group-working-
project_4950283.htm#page=1&query=ROLE OF BUSINESS position=11
https://www.investopedia.com/terms/c/corporation.asp
https://u.osu.edu/coopmastery/legal/alternative-business-structures/

Acknowledgements
Development Team of the Module

Writers: Mamerto T. Goneda, MSIT

Jupiter Q. Whiteside, MBA
Farida F. Tallud, DBM
Editor: Isabel A. Gumaru, DBA
Evaluator: Ellaine I. Dela Cruz, DBA
Validators & Reviewer:
Remylinda T. Soriano, EPS, Math
Angelita Z. Modesto, PSDS
George B. Borromeo, PSDS
Management Team:
Maria Magdalena M. Lim – Schools Division Superintendent – Manila
Aida H. Rondilla – Chief Education Supervisor
Lucky S. Carpio – EPS in Charge of LRMS
Lady Hannah C. Gillo, Librarian II - LRMS

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 Learning Module for Organization and
Management
ANSWER KEY

PRETEST
1. General Partnership
2. Cooperative
3. Corporation
4. Single Proprietorship
5. Partnership

Activities
Activity 1: Independent Activity
Sample suggested answer: This topic helps me to appreciate the roles played
by every institution in the community, big or small organization-public or private. It
can create an impact on the business and to the people in it, including but not
limited to the owners, management, staff, and the community itself. This way, I
realize that my parents, siblings, and other family members are essential too. Their
presence helps us do better with what we do in school and the community.
Rubrics:
4 Expert – Piece is extraordinary, and very informative and well organized
3 Accomplished – Piece has an interesting style, and somewhat informative
and organized.
2 Capable – Piece has little style, gives some new information but poorly organized.
1 Beginner - Piece has no style and, and gives no new information and very
poorly organized

Activity 2: Independent Activity

Rubrics:
To discuss Answer
1. Sole proprietorship
is a type of enterprise that is owned and run by
one person and in which there is no legal
distinction between the owner and the business
entity. A sole trader does not necessarily work

'alone'—it is possible for the sole trader to employ

other people.
e sole trader receives all profits (subject to taxation
specific to the business) and has unlimited
responsibility for all losses and debts. Every asset
of the business is owned by the proprietor and all
debts of the business are the proprietor's. It is a
"sole" proprietorship in contrast
with partnerships (which have at least two
owners). A sole proprietor may use a trade
name or business name other than their or its
legal name. They may have to legally trademark
their business name if it differs from their own
legal name, the process varying depending upon
country of residence.12
 2. Partnership is an arrangement where parties, known
as business partners, agree to cooperate to
advance their mutual interests. The partners in a
partnership may be
individuals, businesses, interest-
based organizations, schools, governments or
combinations. Organizations may partner to
increase the likelihood of each achieving their
mission and to amplify their reach. A partnership
may result in issuing and holding equity or may
be only governed by a contract.

3. Corporation is a legal entity that is separate and distinct from

its owners. Corporations enjoy most of the rights
and responsibilities that individuals
possess: they can enter contracts, loan and
borrow money, sue and be sued, hire employees,
own assets, and pay taxes. Some refer to it as
a "legal person."
4. Cooperative is a business owned and operated by those who
use its services. Although cooperatives are for-
profit businesses, they do not exist to maximize
profit. The goal of a cooperative is to fill a mutual
need of the members that own the business.

4 Expert – Piece is extraordinary, and very informative and well organized

3 Accomplished – Piece has an interesting style, and somewhat informative
and organized.
2 Capable – Piece has little style, gives some new information but poorly
organized. 1 Beginner - Piece has no style and, and gives no new information and
very poorly organized

Check your Understanding

Multiple Choice
1. D
2. A
3. B
4. C
5. A

Post-test
.
1. B
2. D
3. B
4. C
5. D
6. D
7. A
8. A
9. B
10. C 13