Professional Documents
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The Role of Business in Social and Economic Development (Abm)
The Role of Business in Social and Economic Development (Abm)
What is Business?
A business is an organization or economic system where goods and services are exchanged for one
another or for money. Every business requires some form of investment and enough customers to
whom its output can be sold on a consistent basis to make a profit. Business can be privately owned,
not-for-profit, or state-owned.
1. Sole Proprietorship – also known as a sole trader, is owned by one person and operates for their
benefit. The owner may operate the business alone or with other people. A sole proprietor has
unlimited liability for all obligations incurred by costs or judgments against the business. All assets of
the business belong to a sole proprietor, including for example a computer infrastructure, any
inventory manufacturing equipment, and/or retail fixtures, as well as any real property owned by
the business. The vast majority of small business start out as sole proprietorships. These firms are
owned by one person, usually, the individual who has day-to-day responsibility for running the
business. Sole proprietorships own all the assets of the business and the profits generated by it.
They also assume complete responsibility for any of its liabilities or debts.
2. Partnership – is a business owned by two (2) or more people. In most forms of partnerships, each
partner has unlimited liability for the debts incurred by the business. In a partnership, the partners
should have a legal agreement that sets forth how decisions will be made, profits will be shared,
disputes will be resolved, how future partners will be admitted to the partnership when needed; Yes,
it is hard to think about a “break-up” when the business is a defined process, there will be even
greater problems. They also must decide up front how much time and capital each will contribute.
Advantages of a Partnership
• Partnership 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.
3. Corporation – The owners of a corporation have limited liability and the business has a separate
legal personality from its owners.
Corporations can be either government-owned or privately owned. They can organize either for
profit or as not-for-profit organizations. A privately owned, for-profit corporation is owned by its
shareholders, who elect a board of directors to direct the corporation and hire its managerial staff. A
privately owned, for-profit corporation can be either privately held by a small group of individuals, or
publicly held, with publicly traded shares listed on a stock exchange.
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 the stock of the
company.
• Corporations can raise additional funds through the sale of stock.
• A corporation may deduct the cost of benefits it provides to officers and employees. Disadvantages
of a Partnership
• The process of incorporation requires more time and money than other forms of organizations.
• Corporations are monitored by the government 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.
4. Cooperative – Often referred to as a “co-op”, a cooperative is a limited liability business that can
organize for-profit or non-profit. A cooperative differs from a corporation in that it has members, not
shareholders, and they share decision-making authority.
A cooperative is a business organization owned by a grouped of individuals and is operated for their
mutual benefit. The persons making up the group are called members. Cooperatives may be
incorporated or unincorporated.
1. Service Businesses – a service type of business provides intangible products (products with no
physical form). Service type firms offer professional skills, expertise, advice, and other similar
products. Examples of service business are schools, repair shops, hair salons, banks, accounting
firms, and law firms.
a. Service business - typically charge for labor or other services provided to government, to
consumers, or to other business. Interior decorators, consulting firms and entertainers are service
business.
b. Financial business – include banks and other companies that generate profits through investment
and management of capital.
c. Transportation business – deliver goods and individuals to their destinations for a fee.
d. Utilities – produce public services such as electricity or sewage treatment, usually under a
government.
2. Merchandising Businesses – this type of business buys products at wholesale price and sells the
same at retail price. They are known as “buy and sell” business. They make a profit by selling the
products at prices higher that their purchase costs. A merchandising business sells a product without
changing its form. Examples are grocery stores, convenience stores, distributors, and other resellers.
a. Retailers and distributors – act as middleman and get goods produced by manufacturers to the
intended consumers; they make their profits by marking up their prices. Most stores and catalog
companies are distributors or retailers.
4. Stewardship – was originally made up of the tasks of a domestic steward, from stig (house, hall)
and weird, (ward, guard, guardian, keeper). Stewardship, in the beginning, referred to the household
servant’s duties for bringing food and drink to the castle’s dining hall. Steward is a person employed
to manage another’s property.
In business, it has been used by the CEOs to denote the concept that “as a steward, you try to leave
the company in better shape for your successor than it was handed over to you by your
predecessor.”
Business practice is a method, procedure process, or rule employed or followed by a company in the
pursuit of its objectives. Business practice may also refer to these collectively.
A. Decorum – is a behavior that is socially correct, calm and polite.
• On Time and Promptness – the way to exhibit professionalism is to consistently be punctual.
• On Preparation – must be prepared to conduct a business at hand.
• On Attire and Appearance – good business etiquette includes dressing appropriately.
• On Basic Courtesy and Respect – consider the feelings of others and address conflicts in a
straightforward and impersonal manner.
• On Greetings – standard greetings are an exchange of handshakes and a smile.
• On Formal and Informal Address – start out by addressing a new business acquaintance by his or
her family name.
• On Speaking in Meetings – keep the meeting organized by only speaking when you have the floor.
• On Listening – listen attentively to the meeting and take notes.
• On Cell Phones and Laptops – turn off your cellphone or set your phone to vibrate if you are
expecting an urgent call prior to the start of the meeting. Lower the screen of your laptop so that
you do not obstruct anyone’s view.
• On Appropriate Communication – when calling or receiving a call, you should always identify
yourself and your department, and speak in a polite and considerate manner.
• On Building Relationships – show others that you value their work by taking the time to visit and
talk with them.
B. Protocol – means the unwritten rules or guidelines that are peculiar to every culture or
organizations, and are supposed to be observed by all parties in the conduct of business,
entertaining, negotiating, politics, etc.
• The Basics of Protocol – the purpose of business protocol is to encourage all employees in a
company to act in a uniform manner.
• Training in Protocol – etiquette expert notes that an increasingly diverse workforce requires such
training to help people from all walks of life communicate with each other and work together.
• Benefits of Protocol – business protocol may unite employees under common goals and ensure
that tasks are executed to the preferences of the company’s owner.
• Examples of Protocols in Philippine Business – is spite of the mixture of cultural influences and its
usual tolerance, Philippine society remains very attached to traditional Asian values.
Filipino Family-Modeled Businesses – The family is always of vital importance in the Philippines;
not surprisingly, most business organizations are modeled on the Filipino family. The boss and
subordinate often exist in a bata relationship, basically like that between parent and child (bata
literally meaning “child”).
Business is Personal – the Philippine business environment is highly personalized and it is good to
deal with business matters on a face-to-face basis.
Status Consciousness– Filipinos are very status-conscious, and the use of formal titles is an
important way of showing respect to your business partners and colleagues. You should present and
receive business cards with both hands. Include your title and position on the card to make clear the
influence and status you may have.
Politeness and Ambiguity – given the culture value of pakikisama and the importance of
maintaining social harmony, disagreement or interpersonal tension of any sort is distasteful.
C. Policies – defines the scope or spheres within which decisions can be taken by the subordinates in
an organization. Features of Business Policy
• Specific – policy should be specific/definite. If it is uncertain, then the implementation will become
difficult.
• Clear – policy must be unambiguous. It should avoid the use of jargons and connotations. There
should be no misunderstanding in following the policy.
• Reliable/Uniform – policy must be uniform enough so that it can be efficiently followed by the
subordinates.
• Appropriate – policy should be to the present organizational goal.
• Simple – a policy should be simple and easily understood by all in the organization.
• Inclusive/Comprehensive – to have a wide scope, a policy must be comprehensive.
• Flexible – policy should be flexible in operation/application.
• Stable – policy should be stable else it will lead to indecisiveness and uncertainty in minds of those
who consider it for guidance.
D. Advertising – is how a company encourages people to buy their products, services, or ideas. An
advertisement (or “ad” for short) is anything that draws good attention towards these things.
Newspaper Directories Magazine Outdoor and Transit Radio Direct Mail, Catalogs, and Leaflets
Television Online
E. Marketing – refers to the process of product development as well as sales, promotion and
distribution. The whole concept of marketing revolves around the customer. In marketing, the needs
of the customer come first.
F. Bookkeeping – accounting, simply put, is keeping track of money. The most basic activity in
accounting is bookkeeping. Bookkeeping is the process of recording all financial transactions to keep
track of the cash flow.
G. Reportorial Requirements – business reporting or enterprise reporting is the public reporting of
operating and financial data by a business enterprise. There are so many kinds of reports, but what
are usually required by governments and regulating agencies are the Annual Report and Financial
Statement.
• Annual Report – is a comprehensive report on a company’s activities throughout the preceding
year. Annual reports are intended to give shareholders and other interested people information
about the company’s activities and financial performance. Annual report usually includes: General
Corporate Information Accounting Policies Balance Sheet Cash Flow Statement Non-
audited Information Profit and Loss Account Notes to the Financial Statements Chairperson’s
Statements Director’s Report Operating and Financial Review Other Features Auditor’s
report
• Financial Statement – or financial report is a formal record of the financial activities and position
of a business, person, or other entity. Relevant financial information is presented in a structured
manner and in a form easy to understand. They typically include basic financial statements,
accompanied by a management discussion and analysis: A balance sheet, an income statement and
statement of changes in equity.
H. Documentation – refers to the process and items which serve as evidence for the validity or truth
of a certain claim or statement. It is necessary for the conduct of any business, transaction, or
project. It serves as a record of every official action taken and may come in very handy in the future,
should a chronological account of events be necessary for legal or business purposes.