G12

Capsulized Self-Learning
Empowerment Toolkit

Schools Division Office of Zamboanga City

Region IX, Zamboanga Peninsula
Zamboanga City

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 CapSLET
BUSINESS ETHICS AND SOCIAL
RESPONSIBILITY

IMPORTANT: Do not write on this material. Write your answers on the Learner’s Activity
and Assessment Sheets provided separately.

CONTENT STANDARD:
Nature and Forms of Business Organizations

CHECKPOINT: What are the different forms of business organizations, its

purpose and role in the socio-economic development?

Great day learners!

Can you imagine, how would life be without the things you need or enjoy the
most, like foods, shelter and clothings?

If there are no cloths available in the malls, you

would have to sew your own clothes to cover
yourself.

If there are no shoes, you would have to make your own shoes. to
protect your feet so that you can comfortably walk from your house
to school.

If farmers did not sell their crops, you would have to toil the land,
plant your crops, and harvest them so you would have food to eat.

If there are no construction companies, you would have to build your

own shelter/house to protect you from rain and from the heat of the
sun, or worst prepare your own construction materials to have a
decent shelter.

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These are just some of the things that business organizations do to make your life
easier.

Purpose of Business Organizations

Business organization is an entity that aims to earn profit by

providing products to satisfy the needs of the market. It exist to serve
consumers’ needs. When people patronize their products and
services they make profits. Business organization are an important
component of modern society because they contribute to the
economy’s growth, provide products for consumption,
and offer employment to people. Most of the business
organizations are operated to make profit by providing
commodities or services. It is the basic purpose of a
business organization

Products can be tangible or physical objects like goods

or commodities; such as cars, pens, shoes etc. It can also
be intangible or non-physical things; services, such as
haircut, legal advice, janitorial services etc..

Profit is the amount of money a business takes in after the expenses needed to
operate the business (e.g. salaries, cost of raw materials, etc.) have been deducted
from revenue.
Revenue is the total amount of money a business earns during a given period of time
by offering products to the market.

Organization can be For-profit and Non-profit organization.

For-profit organizations have the right to keep and use their profit
as they choose so long as it is within legal limits. Simply, because
profit is the reward for the risks they take in making and selling their
products.

Non-profit organizations (NPOs) are formed for a specific purpose

(e.g. to assist victims of domestic violence, promote animal welfare, or care for the
elderly) to serve the common good of the public. These organizations do not have the
fundamental purpose of earning profits, but they may initiate activities that can help
them raise funds for their advocacy.

Forms of Business Organizations

Business organizations have different forms, depending on the type

of ownership. These are sole proprietorship, partnership and
corporation.

1. Sole Proprietorship is owned and operated by one individual.

The owner has the full authority on the business and owns all assets and profits but,
at the same time, is personally liable for all the obligations and losses. Sole
proprietorship is the simplest form of business organization and is the easiest and least

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costly to organize. The net income is treated as the personal income of the sole owner
and is taxed accordingly. If business condition becomes unprofitable the sole proprietor
has the advantage of immediate cessation of the operation.

A sole proprietor can venture into different types of businesses. Here are some
options:

• Online Store
It is easy to build network online as long as you have good products and know how
to take advantage of social media. Almost anything can be sold online, from trinkets
to baby products to musical instruments to furnitures.

• Food Cart Franchise

Franchising is often convenient for a first-time business owner because the
franchisor lays out everything for the franchisee, which includes the name of the
business, food cart design, inventory, marketing, operations trainings and others.
Food carts can be placed in malls, trains/bus/public transport stations, and other
areas with high foot traffic.

• Freelance Work
In this type of business maintaining a positive word of mouth is the key to long-term
success. If you are a good writer, illustrator photographer, graphic artist, or makeup
artist, or if you possess other talents that you can share with other people this type
of business fits you.

2. Partnership is owned by two or more persons who bind themselves to contribute,

money, property, or industry to a common fund with the intention of dividing the profits
and sharing the liabilities among themselves. The partnership is dissolved upon the
death of a partner or when a partner chooses to leave. The most common partnerships
are professional partnerships such as Law firms and Accounting firms. Partnership is
easy to form, the only requirement before partnership commences operation is for
partners to agree on basic aspects of the business like the nature of the business,
location, capitalization, and so on. A written agreement called Contract of
Partnership is drawn to formalize what has been agreed upon. The income of the
partnership is not taxed separately. Any profit derived by the partners are treated and
taxed as their individual income.

Partnership may either be general partnerships or limited partnerships.

• General partnerships- where the partners have unlimited liability for the debts and
obligations of the business.

• Limited partnerships- where one or more general partners have unlimited liability
and the limited partners have liability only up to the amount of their capital
contributions.

3. Corporation is owned by 5 to 15 persons, who are called incorporators, hold at

least one share and are bound by the Articles of Incorporation filed with the SEC. The
paid-up capital (total amount of capital received by a company from its shareholders in
exchange for shares of stocks) of a Philippine corporation must not be less than
P5,000.00. The liability of the shareholders is limited to the amount of their
shareholdings. The stockholder may sell or donate his share to another person, thus
the corporation may change ownership as often as it could without actually dissolving
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corporation. The profits derived by the stockholders are taxed twice by the government.
First, when the corporation realizes profits. Second, when individual stakeholders
declare the dividends they receive from the corporation as part of their personal
income.

A corporation can be stock or nonstock.

• Stock corporation has a capital stock divided into shares and is authorized to
distribute to the shareholders dividends or allotments of the
surplus profits on the basis of the shares held.

• Nonstock corporation is one where no part of its income is

distributable as dividends to its members, trustees, or officers.
Any profit that a nonstock corporation earns is used to further
promote the purpose of the organization. These corporations may be formed for
charity, religious, educational, professional or other similar purposes.

Among the forms of business organizations, corporations have the most number of
advantages among which are as follows:
• Unlimited life. A corporation has unlimited life, as it may exist well beyond the
lifespan of the original owners.
• Credibility. Suppliers, investors, and financial institutions may see a business more
credible if it is corporation.
• Ease of transferring ownership. Corporations can easily transfer ownership should
the original owners decide to sell it by transferring the company’s stock certificate
to another shareholder.
• Protecting personal assets. Owners of a corporation are liable for business losses
and debts up to the equivalent of their investment in the corporation.

Roles of the Business Organizations in the Society

Providing Goods and Services

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Creating Employment Opportunities. Business organizations, whether big or small, create
employment opportunities. When consumers patronize the products of businesses, these
companies commit to providing better goods and services, for customers continue patronizing
their products. As the companies grow, they hire more people in order to keep up with the
demands in the market.

public image can affect the company’s market share, investor confidence,

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Directions:

Directions:
Write a reflection paper about business organizations’ purpose and role in

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 .
16. Business is terminated upon the death of a member or a member decided to
withdraw investment.
FORMS OF BUSINESS ORGANIZATION

𝟏𝟔

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 Key Points

✓ s make people’s life easier by

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They exist to serve consumers’

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 BOOK:
Jonalyn C. Baquillas Business Ethics and Social Responsibility
DIWA Learning Systems Inc.
4/F SEDCCO 1 Bldg.
120 Thailand corner Legaspi streets
Legaspi Village, 1229 Makati City, Philippines

Helena Ma. F. Cabrera, PhD

Anthony DC. Altajeros, PhD
Riaz Benjamin
Clarence Darro B, Del Castillo
Organization and Management
Department of Education
Republic of the Philippines

Roberto G. Medina
Organization and Management
Rex Bookstore
856 Nicanor Reyes, Sr. Street
1977 C.M. Recto Avenue
Manila, Philippines
www.respublishing.com.ph
:

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 Learner’s Name: ______________________________________

CapSLET

Directions

Directions:

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Write a reflection paper about business organizations’ purpose and role in socio

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Directions:

FORMS OF BUSINESS ORGANIZATION

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 –

They exist to serve consumers’ needs and in return make profits.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”