Grade

12

BUSINESS ETHICS AND SOCIAL

REPONSIBILITY
SECOND SEMESTER
QUARTER 1 – MODULE 1

Forms, Purposes and Role of

Business Organizations in
Socio-Economic Development

.
Lesson Forms, Purposes and Role of

1 Business Organizations in
Socio-Economic Development

After going through this module, you are expected to differentiate

the forms of business organizations in terms of their purpose and role
in socio-economic development (ABM_ESR12-IIIa-d-1.1;
ABM_ESR12-IIIa-d-1.2; ABM_ESR12-IIIa-d-
1.3).
Business has always been partnered with growth. Consequently,
many people plan of starting their own businesses with the hope of
making it big in the industry. But putting up a business, even a small
one, is not as simple as it sounds. It needs careful planning and study
as there are different forms of businesses one may venture into.
Therefore, it is of paramount importance to familiarize oneself with the
characteristics and nature of these kinds of business organizations and
how these contribute to socio-economic development.
Forms of Business Organizations

According to Investopedia, a business is “an organization or

enterprising entity engaged in commercial, industrial, or professional
activities.” While most people associate businesses with profits or those
known as profit organizations, there are also non-profit organizations
or those that are put up to advance charitable or social causes.
Moreover, the term "business" is also used in referring to the
“organized efforts and activities of individuals to produce and sell
goods and services for profit.”
 Business organizations vary in scale and are divided into the
following major forms:

Form Description
Sole Proprietorship It is owned by one person and in which there
is no legal distinction between the owner and
the business entity. It is considered as the
simplest and most common form of business
ownership and the easiest type of business to
establish and dismantle due to lack of
government regulation. The sole proprietor
receives all profits and has unlimited
responsibility for all losses and debts.

Partnership In this form, two or more persons pool labor

and capital, and share in profit, loss, and
liability.
Partnerships are of three types:
• General- partners share profits,
managerial responsibilities, and
liability for debts equally;
• Limited- two or more partners go into
business together, but one or more of
the partners are only liable up to the
amount of their investment; and
• Joint venture- is a general partnership
that remains valid until the completion
of a project or a certain period elapse.
All partners have an equal right to
control the business and share in profits
and losses.
Corporation A corporation, chartered by the state in
which it is headquartered, is considered by
law to be a unique entity, separate and apart
from those who own it. It can be taxed, sued
or enter into contractual agreements. Its
owners are called shareholders who, in turn,
elect a board of directors to oversee the
major policies and decisions. The
corporation has a life of its own and does not
dissolve when ownership changes.
Limited Liability It is a hybrid business structure which
Company combines the good features of a corporation
and those of a partnership (or sole
proprietorship). Unlike partnerships, LLC is
created formally as it involves the filing of
articles of organization to the state but the
process is easier compared to that of a
corporation. In terms of its characteristics,
LLC gives its owners limited liability for
debts and losses and lets them enjoy profits
without double taxation. However, its life is
relatively
shorter than that of a corporation because it
may face the possibility of bankruptcy or
dissolution once a member dies.
Cooperative A cooperative is a business organization
owned, controlled and run by and for a group
of people. It is composed of people (called
members) who also use its products or avail
of its services. Unlike the other forms of
business organizations, a cooperative is
service centered. Its purpose is to help its
members achieve their economic, social,
and/or cultural needs and aspirations.
Cooperatives may be incorporated or
unincorporated.
Role and Purposes of Business Organizations in Socio-Economic
Growth
The significant role of business organizations towards national
development cannot be undermined. Below are the common roles that
they play in society and economy.
1. Businesses create jobs for people, strengthening the economic
health of each community where a business is based.
2. Businesses bring technological change and innovation.
3. Different forms of business maintain healthy competition in the
market by offering diverse products or services to consumers.
4. Businesses improve the quality of life of small or big
entrepreneurs.
5. Business establishments serve as place for interaction between
and among people.
6. Businesses boost economic revenue which helps in social and
economic development of a country.
7. Business organizations contribute to the Gross Domestic Product
(GDP) of a country.

Activity 1. Understanding the Forms of Business Organizations

Every form of business organization has its own share of
advantages and disadvantages. In the table below, write at least one
advantage and one disadvantage for each form of business organization
based from your understanding of their nature.
Forms of Business Advantage/s Disadvantage/s
Organization
1. Sole Proprietorship
2. Partnership
3. Corporation
4.Limited Liability
Company
5. Cooperative
Activity 2. Classifying Business Organizations
List down at least five business establishments, small or big,
which are near your area or you visited sometime in the past. Then,
classify each based on the four forms of business organizations
discussed. If possible, identify the owner/s of the chosen business
organizations.

1. Name of Business Organization: _____________________

Owner/s of Business Organization: ___________________
Form of Business Organization: _____________________
2. Name of Business Organization: ____________________

Owner/s of Business Organization: __________________

Form of Business Organization: ____________________
3. Name of Business Organization: ____________________
Owner/s of Business Organization: ___________________
Form of Business Organization: _____________________
4. Name of Business Organization: ________________
Owner/s of Business Organization: _________________
Form of Business Organization: __________________
5. Name of Business Organization: ____________________
Owner/s of Business Organization: __________________
Form of Business Organization: ____________________
ASSESSMENT

SUBJECT: Business Ethics and Social Responsibility

2ND QUARTER 1, Module 1, Worksheet No. 1

Most Essential Learning Competency: Differentiate the forms of

business organizations in terms of their purpose and role in
socio-economic development

I. True or False. Directions: Identify whether each statement

is TRUE or FALSE. Then, write the correct answer on the
provided space.
______1. Partnership is the most popular form of business
ownership.
______2. A sole proprietor owns all the profit of his/her business.
______3. Among the forms of business, partnerships are the
easiest to dissolve if
desired.
______4. Putting up a corporation is expensive.
______5.Most small businesses begin as sole proprietorships.

II. Multiple Choices. Directions: Read each item carefully.

Then, write the letter of the correct answer on the provided
space.
______1. Which is the easiest form of business to establish?
a. Sole Proprietorship
b. Partnership

c. Corporation
d. Limited Liability Company
______2. The following are true about business organizations
EXCEPT:

a. They create employment.

b. They improve people’s standard of living.
c. They impede technological advancement.
d. They offer products or services.
______3. Partnership that gives partners limited liability for debts
based on their percentage of ownership is called
______________.

a. General partnership
b. Limited Partnership
c. Joint venture
d. Ongoing Partnership
______4. Which type of business partnership holds both owners
fully liable for business debts?
a. general partnership
b. limited partnership
c. joint partnership
d. ongoing partnership
______5. Which is a disadvantage of sole proprietorship?

a. Each partner is fully liable for debts.

b. Dividends are paid to shareholders.
c. Owner is 100% liable for business debts.
d. Business ends upon withdrawal of partner.
III. Performance Task. Directions: On a short bond paper, draw a poster that
shows the role of businesses to social and economic development in your respective
community.
RUBRIC
Criteria 1 2 3 4 5 Score
Relevanc The output Few parts of Some parts Most parts All parts of
e to the barely the of the of the the output
topic shows output output output effectively
discussion show show show a show a
and discussion discussion discussion clear
understand and and and discussion
ing of the understand understand understand and deep
topic. ing of the ing of the ing of the understandi
topic. topic. topic. ng of the
topic.
Creativity Sense of A sense of A sense of A sense of Great
creativity is creativity is creativity is creativity is sense of
barely displayed displayed displayed creativity is
displayed in a few in some in most displayed
in the parts of the parts of the parts of the in all parts
output. output. output. output. of the
output.
Total /10

References
•
https://www.accountingverse.com/accounting-basics/types-of-businesses.html
•
https://bizfluent.com/info-7745795-roles-business-organizations-economic
development.html
• https://www.slideshare.net/barneyn/what-role-does-business-play-in-society
• https://www.rifkindpatrick.com/Blog/2015/November/The-4-Major-
BusinessOrganization-Forms.aspx
• https://www.baltimoresourcelink.com/startup/register-license-
yourbusiness/forms-of-business-organization
• https://www.investopedia.com/terms/l/llc.asphttps://www.investopedia.com/ter
ms/b/business.asp
• http://sfp.ucdavis.edu/cooperatives/what_is/
• https://www.ica.coop/en/cooperatives/what-is-a-cooperative
• https://ncdc.unl.edu/what-cooperative
Answer Key (Activities)
Activity 1
Answers may vary.
Activity 2
Answers may vary