activities which affect the growth of business organizations as a result of prosperity or
BUSINESS ORGANIZATION AND BUSINESS CYCLE
BUSINESS ORGANIZATION – is an association of individuals, firms or any group who wants to engage in
business to gain profit. BO’s come in various forms - single (sole) proprietorship, a partnership, a
corporation or cooperative.
o SINGLE PROPRIETORSHIP - a business organization where there is only one owner or proprietor.
The oldest and simplest form of business organization. The following are guidelines for those
interested in setting up a single proprietorship:
1. Register the business name with the Department of Trade and Industry (DTI)
2. Pay the municipal licenses to the local government.
3. Apply for a VAT (Value-Added Tax) or Non-Vat number
4. 4. Register, with the Bureau of Internal Revenue (BIR), the books of account and the
official receipts to be used.
o PARTNERSHIP – defined as an association of two or more persons who bind themselves to put up
business and contribute money, property, or industry to a common fund. Profit will be shared
among the members based on its capital share. The basic requirement for the creation of
partnership is a contract agreement between or among the partners.
o CORPORATION – is an artificial being created by operation of law, having the right of succession
and the powers and properties expressly authorized by law or incident to its existence. It is
operated based on its charter granted by the state.
- As an artificial being, a corporation has legal personality or a juridical person with personality
separate from its individual stockholders or members. It has the power to transact business
such as acquire and possess property of all kinds, enter into contracts of any kind and bring
civil or criminal actions like a natural person does. A corporation’s personality starts on the
date of the issuance of Certificate of Incorporation by the Securities and Exchange
Commission (SEC) under its official seal.
Nature and Components of Corporation
- Stock corporation – is profit-motivate organization where its capital stock is divided into
shares and its earnings may be distributed to shareholders as dividend.
- Non-Stock Corporation – is non –profit organization where there is no dividend distributed
to its members, trustees or officers. Any income derived from its operation may be used for
the furtherance of the purpose for which the corporation was organized.
- Corporations should have at least five (5) but not more than fifteen (15) members, all of
legal age, a majority of whom are residents of the Philippines. Maybe private or public and
each member must subscribe to at least one share. Its organization facilitates the raising of a
large amount of capital, allowing it to operate in a big scale. Usually have along existence.
BUSINESS CYCLE
- Refers to a long period of changes in business transactions which reflects the changes in
economic activities for a given year. This further refers to the rise and fall of business
depression of one’s economy.
- Refers to the fluctuations in total national output, income and employment.
- Usually occurs when economic activity speeds up and won.
- It is also the study of patterns of output growth in a capitalist economy which shows
expansion and contribution in real GNP
- Gregorio S. Miranda describes a business cycle as a series of changes in business acting,
commonly characterized by period of alternating prosperity and depression.
o Recession – is the period in which the real GNP declines for at least two consecutive
quarters. It begins at a peak and end at a trough.
o Depression occurs when recession becomes severe
o Trough is the lowest level of the business cycle, where expansion starts or recovery
period starts.
Phases of a Business Cycle
- Major cycle refers to the wide oscillation of business activity. Ti includes pronounced
prosperity in one hand and a severe depression in the other
1. Expansion Phase –characterized by prosperity. And at a later phase this expansion will become a
“boom” or there is “big bang” in business conditions.
2. Peak Phase – the business condition is at its highest level. The expansion, in all aspects of
business transactions, begins to fall off. The economic activity, characterized by more
production, more demands, more employment and more income, will slow down. This will
results in retrenchment or employee reduction, more inventories of goods unsold and less
income which will, in turn, result in business contraction.
3. Recession Phase – this is when business conditions continuously fall off or go down in its level of
transaction. This results in less production, buildup of inventories, bankruptcies and rising
unemployment. During this phase, many business establishments experience deficits leading
some to close hops”. If the situation becomes severs, it is considered as depression.
4. Trough Phase – after the bad experience of a depression in the economy, business activities will
now start to move up. This is now the recovery periods, form depression back to prosperity.
ESSAY QUESTION:
1. What form of business organization would you like to establish if given the chance to do so?
Why?
PREPARED BY:
ELLEN NICY ROA