Professional Documents
Culture Documents
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Learning Competencies
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Internal users - those who are involved in planning,
organizing and running the business. They need
more detailed information on a timely basis in order
to support their decisions.
Examples: managers, employees and owners.
External users
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Business organizations come in different types
Service Business Merchandising Business Manufacturing Business
A service type of This type of business buys Unlike a merchandising
business provides products at wholesale price and business, a manufacturing
intangible products sells the same at retail price. business buys products
(products with no known as "buy and sell" with the intention of using
physical form). Service businesses. They make profit by them as materials in
type firms offer selling the products at prices making a new product.
professional skills, higher than their purchase costs. Thus, there is a
expertise, advice, and A merchandising business sells a transformation of the
other similar products. product without changing its products purchased.
form..
Hybrid Business
Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines
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ingredients in making a fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills customer orders (service).
Service Business
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Merchandising
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Manufacturing
Business
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1. Provides services to customers
2. Sells goods to customers
3. Raw materials are available
4. Goods to be sold are purchased from a supplier
5. Goods to be sold are produced by the company itself
6. Supplies are used, no goods to be sold
7. Bakery
8. Barber shop
9. Insurance
10. Abenson appliances
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1. Provides services to customers
2. Sells goods to customers
3. Raw materials are available
4. Goods to be sold are purchased from a supplier
5. Goods to be sold are produced by the company itself
6. Supplies are used, no goods to be sold
7. Bakery
8. Barber shop
9. Cellphone store
10. Abenson appliances
Key Answers
(1) service (2) either merchandising or manufacturing (3) manufacturing (4)
merchandising (5) manufacturing (6) service (7)
manufacturing (8) service (9) merchandising (10) merchandising
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Forms of Business
Organizations
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These are the basic forms of business
ownership:
1. Sole or Single Proprietorship
2. Partnership
3. Corporation
4. Limited Liability Company
5. Cooperative
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Sole or Single Proprietorship
- is a business owned by only one person.
- It is easy to set-up and is the least costly
among all forms of ownership.
- owner faces unlimited liability; meaning, the
creditors of the business may go after the
personal assets of the owner if the business
cannot pay them.
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Partnership
- is a business owned by two or more persons
who contribute resources into the entity. The
partners divide the profits of the business among
themselves.
In general partnerships, all partners have unlimited
liability. In limited partnerships, creditors cannot go
after the personal assets of the limited partners.
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3. Corporation
- is a business organization that has a separate legal
personality from its owners. Ownership in a stock
corporation is represented by shares of stock.
The owners (stockholders) enjoy limited liability but have limited
involvement in the company's operations. The board of
directors, an elected group from the stockholders, controls the
activities of the corporation.
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4.Limited Liability Company
Limited liability companies (LLCs) in the USA, are hybrid
forms of business that have characteristics of both a
corporation and a partnership. An LLC is not incorporated;
hence, it is not considered a corporation. But, the owners
enjoy limited liability like in a corporation. An LLC may
elect to be taxed as a sole proprietorship, a partnership, or
a corporation..
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5. Cooperatives
- is a business organization owned by a group of
individuals and is operated for their mutual benefit. The
persons making up the group are called members.
Cooperatives may be incorporated or unincorporated.
Some examples of cooperatives are: water and electricity
(utility) cooperatives, cooperative banking, credit unions,
and housing cooperatives.
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- a form of business is owned by one person; the
simplest, and the most common form of business
organization
Sole/single - it is not separate from the owner. The business and
the owner are inseparable
proprietorship
advantages of sole/single proprietorship.
• The owner keeps all the profits.
• The owner makes all the decisions.
• It is easy to form and operate.
disadvantages of sole/single proprietorship.
• The life of the business is limited to the life of the
owner. Once the owner dies,the business will cease
to operate under the name of the proprietor.
• The amount of capital is limited only by the wealth of
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the proprietor.
- A form of business owned by two or more persons
- the details of the arrangement between the partners
Partnerships are outlined in a written document called articles of
partnership
- profits are divided among partners based on their
agreed sharing
- the owner is called a partner.
advantages of a partnership
• Higher capital because two or more persons will
contribute to the common fund.
• It is easy to operate like a sole/single proprietorship
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Disadvantages of a partnership
• The profits are divided among the partners.
Partnerships • A partner can be held liable for the acts of the other
partners.
• In a lawsuit, the personal properties of the partners
can be held beyond their contributions and may be
used to answer for any liability of the partnership.
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A corporation is a business organized as a separate
legal entity (artificial person) under the corporation
Corporation law with ownership divided into transferable shares
of stocks
• Emphasize that it is the law (Corporation Code of
the Philippines) that creates a corporation.
• The corporation begins its existence from the date
the Articles of Incorporation is approved by the
Securities and Exchange Commission (SEC).
• SEC (Securities and Exchange Commission) is the
government agency primarily tasked to regulate
private corporations in
the Philippines.
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The owners are called stockholders or shareholders.
• The word ‘Corporation/Incorporation/Corp./Inc.’
appears in the name of the entity.
• The voting rights of a shareholder is generally based
on the percentage of ownership.
• The management of the business is delegated by
the shareholders to the Board of Directors
• The ownership is divided into shares and the value
of one share may be denominated at a smaller
amount, for example at
PHP10 per share.
• The proof of ownership is evidenced by a stock
certificate.
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