Republic of the Philippines

UNIVERSITY OF EASTERN PHILIPPINES

University Town, Northern Samar
Website: http://uep.edu.ph Email: uepnsofficial@gmail.com

Chapte
r 3:
Learning Objectives:
Module
Analyze the forms and economic roles of business organizations

3
 ABM Grade 11: Organization and Management

Purpose of the Module:

The purpose of this module is to cater the needs of the students

despite this Covid-19 pandemic. The university has its own university portal
where students can access their learning modules and other materials
through the use of the online mode of learning. But because of the unstable
internet connection in the province teachers are opt to adopt the modular
mode of learning where learning materials are available for electronic copy
or printed copy.

Module Title and Description:

ABM: Organization and management (4 units)

This course is designed to familiarize the students with the basic

concepts, principles, and processes related to business organization, and
the functional areas of management. Particular emphasis will be given to
the study of management functions like planning, organizing, leading, and
controlling, and orient the students on the importance of these functions
and the role of each area in entrepreneurship.

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 objective 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 the most important information in the topic.

3. Perform diligently all the provided activities in the module.

4. Let your facilitator/guardian assess your answers using the

 ABM Grade 11: Organization and Management

Chapter Forms of Business Organization

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PRETEST

Matching Type
Directions: Choose the appropriate WORD in the Box and write the
CORRECT answer in the space provided before the number.
partnership Single Proprietorship

Joint Venture Corporation 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.

Looking back
to the lesson
 ABM Grade 11: Organization and Management

Matching Type

Directions: Match 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 the b. RA 9520

products of its members

3. Mixture of the features of a sole proprietorship and a C. Joint Venture

corporation.

4. Simplest form of business and the easiest to d. Single Proprietorship

register.

5. Acts like a general partnership but is clearly limited e. One Person

period of time. Corporation

f. Transitional Society

BRIEF Enjoy reading...

INTRODUCTI
ON
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
 ABM Grade 11: Organization and Management

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.
 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
 ABM Grade 11: Organization and Management

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 i

Advantages of a Sole Proprietorship

 Easiest and least expensive form of ownership to organize.

 Sole proprietors are in complete control, and within the parameters of the law,
may make decisions as they see fit.
 Profits from the business flow-through directly to the owner's personal tax return.
 The business is easy to dissolve, if desired
Disadvantages of a Sole Proprietorship

 Sole proprietors have unlimited liability and are legally responsible for all debts
against the business. Their business and personal assets are at risk.
 May be at a disadvantage in raising funds and are often limited to using funds
from personal savings or consumer loans.
 May have a hard time attracting high-calibre employees, or those that are
motivated by the opportunity to own a part of the business.
 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
 ABM Grade 11: Organization and Management

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

 Shareholders have limited liability for the corporation's debts or judgments

against the corporation.
 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.
 Corporations can raise additional funds through the sale of stock.
 A Corporation may deduct the cost of benefits it provides to officers and
employees.
 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

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

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;
 ABM Grade 11: Organization and Management

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 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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Activity 2: Independent Activity

Directions: Give your own description on the various forms of business organization 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

Check your understanding

Multiple Choice
 ABM Grade 11: Organization and Management

Directions: Read the questions carefully and encircle the letter of the correct answer.

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

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.
 ABM Grade 11: Organization and Management

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
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.
 ABM Grade 11: Organization and Management

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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