Topic: Forms of Business Ownership a.

Close or limited corporation;

usually family corporations; limited
Course & Section: ESC 21 B1 to family members or close family
friends; do not sell stocks
b. Stock operation; organized by
Sole proprietorship some persons; ownership is
dependent on capital; they elect
→ state of owning a business or property
officers of the corporation, and
 Type of business organization owed and their votes depend on amount of
operated by one person ownership
 Advantages: c. Public stock operation: like stock
o Ease and low cost of formation corporation but can sell stocks to
investors
o Secrecy
 Advantages of Corporation
o Distribution and use of profits
o Limited liability
o Control of business
o Ease of expansion
o Government regulation
o Ease of transferring ownership
o Taxation
o Relative long life
o Closing of business
o Ability to hire that specializes
 Disadvantages:
management
o Possible owner’s lack of ability and
 Disadvantages
experience
o More expensive; complicated to
o Difficulty of attracting and keeping
organize
quality employees
o Double taxation
o Difficulty of raising capital
o More extensive government restrictions
o Limited life of the firm
and reporting requirements
o Unlimited liability of the owner
o Employees lack personal identification
with and commitment to corporate goals

Partnership

 Form of organization where 2 or more persons Incorporation

are co-owners; organization is not incorporated
Articles of incorporation contain the following:
 Advantages:
o Ease of formation 1. Name of the corporation
o Pooling of knowledge and skills 2. Specific purpose or purposes
o Availability of more funds 3. Principal office
o Ability to attract and keep quality 4. Term of existence
employees 5. Names, nationalities, addresses of incorporators
o Tax advantage 6. Amount of authorized capital
7. Other matters
 Disadvantages
o Unlimited liability
o Limited life
o Potential conflicts of partners Joint venture. The partnership of corporation to
o Difficulty in dissolving the partnership undertake large project, i.e., a Filipino company can
have a joint venture with a foreign company to undertake
a big infrastructure project.

Corporation

 Enterprise organized under the laws of a country
 It is called juridical person as it can exercise
business acts of human person
 Can be organized by at least 5 persons; owners
are issued stock certificate to show ownership
 Classes of business corporation
Other forms of business organization
 Cooperatives. Organization composed of
individuals or businesses that have banded
together to reap the benefits under the
Cooperative Law of the Philippines; benefits
such as sharing profits, tax free income, and
others

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  Types of cooperatives
1. Credit unions
2. Producers’ coops
3. Marketing coops
4. Consumer’s coops
5. Service coops
6. Multi-purpose coops
End of term project: Simple business proposal
1. With your caselet study partner, organize a
company.
2. Following what has been discussed:
a. Agree on what kind of business you will
put up
b. What would be the name of the company
c. What will be your business objective or
purpose
d. Where will the business be located
e. Who are the owners or incorporations
3. Keep a record of your agreements because you
will add as we go on
4. After the last topic on management, finalize all
matters added and submit a bound copy of the
business proposal
5. The business proposal will be graded and will
form 15% of your final grade.
Awareness of the problem
 Decision maker becomes aware about the
problem to be solved
 To postpone dealing with problems can cause
bigger problems
 There is a problem when there is a difference
between the actual and desired situation
Diagnose and state the problem
 The decision maker understands and analyzes
the problem and attempts to describe the
objectives to be achieved
 Able to identify the real problem – problem is
half-solved
 Knowing the problem makes it easier to solve
the problem; as well as knowing the source
Analyze the environment
 The objective of environmental analysis is to
determine constraints which may be internal or
external
 Internal environment consists of aspects that will
affect decision such as budgets, personnel,
facilities, and others
 External environment consists of government
regulations, clients, competition, economic
conditions.
Develop alternatives
 Involves collection of data regarding the problem
and formulation of alternate course of action that
can be followed to solve the problem
 Information about the problem is vital in looking
for a solution
 Make a list of alternative solutions and
determine the viability of each solution
Evaluate the alternatives
 Involves evaluation of various alternatives based
on feasibility of an action, market and business
situation, resources, time period, etc.
 Criteria should be set in evaluating alternatives:
vision-mission, objectives, target, budget, capex,
and others.
Select the best alternative
 Course of action that is most suitable, feasible
and profitable is selected
 Significant consequences must be identified
 Alternatives can be ranked from best to worst on
basis of factors
Implement and verify decision
 Involves implementing decision and making sure
it meets the expected outcome; follow up
strategies are prepared
 Changes occur when decisions affect people
 Resources must be made available
Various techniques of decision making
 Group discussion
 Brainstorming
 Delphi technique
 Marginal analysis
 Cost-benefit analysis
 Ratio analysis
 Financial analysis
 Break-even analysis
 Operation research
 Pareto analysis
Importance of decision making
 Optimum and efficient utilization of resources
 Aids in problem solving and facing business
challenges
 Helps in business growth and achieving
objectives
 Facilitates effective management and innovation
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  Motivates employees and improves overall
business performance

Feedback

 Decision making is continuous

 Feedback from all parties involved is taken for
implementing of decision
 It may reveal another problem created due to
implementation or hindering effective
implementation which calls a new decision

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