11

Organization and
Management
Quarter 1 – Module 4:
The Business Environment: Role
of Business in the Economy
 Quarter 1
Module 4, Week 4
The Business Environment: Role of Business in the
Economy
__________________________________________________________________________________

Content Standard : The learners understand the role of business in

the environment, and how the environment affects the
firm.
Performance : The learners shall be able to analyze the various groups
Standard within the economic environment and illustrate the role of
business in relation to the economy and how the economy
affects the firm through a concept map.
Competencies : Explain the role of business in relation to the economy
: Discuss the different phases of economic development
: Differentiate the various forms of business organization
: ABM_AOM11-Ic-d-7, ABM_AOM11-Ic-d-8, ABM_AOM11-Ic
d-9

What I Know

Multiple Choice: Write the letter of your answer on a separate sheet of paper.

1. The primary role of business to the economy is being the provider of

products and services to consumers.
A. False C. Maybe
B. True D. Not applicable

2. The business serves as a provider of funds to the government in the form

of taxes.
A. False C. Maybe
B. True D. Not applicable

3. Business firms also provides employment to the labor force.

A. False C. Maybe
B. True D. Not applicable

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4. Business ideas are catalysts of innovation to provide solutions to human
problems.
A. False C. Maybe
B. True D. Not applicable

5. The business sector helps hasten the economic recovery process of the
Philippines during financial turmoil or crackdown.
A. False C. Maybe
B. True D. Not applicable

6. ___________refers to the physical and mental input of the people who

produce the goods and services.
A. Land C. Capital
B. Labor D. Entrepreneur

7. _______________buys and organizes the other three factors of production

(land, labor, capital) to provide goods and services.
A. Land C. Capital
B. Labor D. Entrepreneur

8. This is an economic phase wherein companies are operating within a

global
economy. This has given rise to the establishment of regional economic
organizations that enable companies from different countries to engage in
free trade with each other.
A. Industrial Revolution C. Post Fordism
B. Globalization D. Agricultural

9. This is an economic phase wherein production and distribution became

mechanized since many businessmen saw the benefit of investing in
machines and equipment.
A. Industrial Revolution C. Post Fordism
B. Globalization D. Mercantilism

10. In this economic phase, countries accumulated wealth through trade

relations with other countries and colonies. Methods of production
remained unchanged, relying on methods and processes developed
during the Middle Ages.
A. Industrial Revolution C. Post Fordism
B. Globalization D. Mercantilism

11.It is a type of business operation engaged in the rendering of services.

A. Service C. Manufacturing
B. Merchandising D. Vulcanizing

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12.It is a type of business which involves in transforming raw materials into
finished products.
A. Service C. Manufacturing
B. Merchandising D. Farming

13.It is a type of business engaged in the buying and selling of goods

without altering the products with further product processes.
A. Service C. Manufacturing
B. Merchandising D. Vulcanizing

14.A business owned and managed by only one person

A. Partnership C. Manufacturing
B. Merchandising D. Sole proprietorship

15. A business organization owned and managed by two or more people who
agree to contribute money, property, and expertise in a common venture
with the intention of dividing the profits among themselves.
A. Partnership C. Manufacturing
B. Merchandising D. Sole proprietorship

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Lesson Roles of Business in Relation to
1
the Economy

What I Need to Know

This lesson is designed to help you understand the roles of business to the
other groups in the economic environment and how the environment affects the
firm.
So, are you now ready to further explore the business environment? Come on
and enjoy learning this module and feel free to go over the discussion and examples
if you have not yet mastered a concept.
At the end of this lesson you are expected to: (1) Examine the role of business
to the other group of the economy; and (2) Develop concepts of entrepreneurship to
better one’s economic status in life.

What’s In

Do the following task and write your thoughts on a separate sheet of paper.

1. In your previous module, we talk about the various forces/elements

influencing local and international business environment. Draw a
comprehensive diagram showing the elements within the micro and macro
environment of the business.
2. One of the forces in your diagram talks about customers. Put yourself at the
customers’ perspective and look back how easy or difficult it is to buy food and
other goods before the Covid19 pandemic. Tell us your personal experiences.
3. During the Covid19 pandemic and the subsequent quarantine periods, do
your favorite internet cafe open for business? Did the closing of businesses
affect you?
4. Have you observed that many parents are clamoring for income generating
activities like jobs or any side hustles to provide for the family now that
majority of the businesses are cutting costs by laying off manpower?
5. Where do you think the Philippine government will get money to fund all the
essential services needed to support us, citizens?

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What’s New

Figure 4.1 Different Groups in the Economy

Analyze figure 4.1 and reflect on the following:

(1) Which of the groups can be associated to business?

(2) Which of the groups can be associated to buyers?
(3) Which of the groups can be associated with regulators to protect
both the business from fraudulent buyers and the buyers from
unfair business operators?
(4) Where do you think these regulators get their funds to do the
projects associated with public service to protect and promote
economic prosperity?

Whatever your answers will be, take a closer look at the discussion that
follows and check whether you get it right.

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 What Is It

THE ROLE OF BUSINESSS IN THE ECONOMY

No economy can survive without a thriving business sector. It fuels the

economy of a country since business organizations engage in transactions that
maintain a smooth flow of trade relations among producers, service providers,
and households. These various transactions include manufacturing, distribution,
delivery, and selling of products as well as providing different kinds of services to
the consumers. These transactions stimulate the movement of money and
resources in and out of a country resulting in overall economic growth. A robust
economy with an active business sector attracts more investments from other
countries which encourage further economic growth.
A thriving economy provides a good environment for more start-up
businesses. They generate new products and services through innovation and
extensive research and development which eventually lead to further
improvements in the lives of the people. These improvements come in the form of
better job opportunities and increased assortment of products and services
available to consumers.

We can summarize the role of business in the economy as follows:

1. Provider of products and services to consumers.

2. Provider of economic opportunities to business operators.
3. Provider of funds to the government in the form of taxes.
4. Provider of employment to the labor force.
5. Supplier of products and services to other businesses.
6. Catalyst of innovation to provide solutions to human problems.
7. Introducer of entrepreneurial niche in the world market.
8. Facilitator of the smooth flow of money in the local market.
9. Helps hasten the economic recovery process of the Philippines
during financial turmoil or crackdown.
10. Assists the national government in its desire to have favorable
economic ratings in the world market.
If businesses stop operation, in consequence, many workers will lose their
jobs and businesses will be unable to pay for their factors of production. No
production and no job opportunities mean no sales that will lead to no tax
payment to the government.
In essence, Economics is the study of how a society produces and
distributes its desired goods and services. It deals with how society uses its
resources to produce goods and services.

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The Relationship Between Business and the Economy

The business firm produces goods and services from the factors of
production provided by the environment. Consumers, in turn, buy these goods
and services. Business firms thus contribute to the country’s economic growth.
One measure of economic growth is the Gross National Product (GNP), which is
defined as the total market value of goods and services produced by a country in
any given period (usually computed quarterly, semi-annually, annually)There are
three different approaches in computing GNP namely, (1)final expenditure
approach: An approach in computing GNP by summing up the total expenditure
of household, firm, government, and the rest of the world. (2)Factor income
approach: This approach uses data from income received by the household, firm,
government and external sector. (3)Value-Added approach: This approach sums
up the total value added or the additional value added contributed by different
sectors as the product goes through production. Let us have the staple food of
the country, rice, as an example. Before rice is sold in the market and reached to
our tables, it undergoes a process from grain to milled rice. In every process,
value is added to the product due to the expense incurred by the different sectors
in production. Computing GNP will be further discussed in your Applied
Economics subject in Grade 12. In this lesson we just need to learn how GNP
measures economic growth.
Consequently, to produce goods and services, the business firm must
purchase materials, components, or semi-finished goods from other producers,
thereby creating a demand for the outputs of other businesses. It must also pay
wages to its personnel. These wages form the income of the workers, who in turn
buy foods, clothes, and other goods and services. A business firm co-exists and
interrelates with other member groups in the economic system. Some business
firm manufacture the same products or substitutes for others. When we combine
this firms as a group, we call them an industry. Thus, we may define industry as
a group of business firms offering similar goods or services. Some examples are
electronics, car, chemicals, petroleum, banking and finance, shipping, aviation,
and construction industries.

Figure 4.2 The Relationship Between Business and the Economy

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 What’s More

Activity 4.1 Provide the role of business given the following scenario.
Write your answer in a separate sheet of paper.

Scenario Role of business

1. Economic crackdown due
to Covid19 pandemic
2. High unemployment rate
3. Demand for face shield
4. Shortage of IATF fund
5. Unfavorable economic
ratings in ASEAN

What I Have Learned

Activity 4.2 Do the following and write your answer in a separate sheet of
paper

A. Enumerate the roles of business in the economy.

B. Illustrate through a diagram the relationship between business
and the economy.

Lesson Phases of Economic

2
Development

What I Need to Know

This lesson discusses the transition of economic development from one phase
to another as it is usually gradual, and a country may find itself under economic
phases at different points of time.
At the end of this lesson you are expected to classify the phases of economic
development as to means of livelihood, extent of economic activity, and medium of
exchange.

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 What’s In

Cite situations where you can justify that business improved the lives of
people. Write your answer in a separate sheet of paper.

___________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

What’s New

Are you familiar with the terms etched in the maze block found in figure 4.3?
Which phase do you think comes first? In what phase do you think are we now?
Don’t worry if the terms are totally unfamiliar because we will discuss each of
them in the next part of the lesson.

Figure 4.3 Phases of Economic Development Maze Block

What is It

PHASES OF ECONOMIC DEVELOPMENT

The transition of economic development from one phase to another is

usually gradual, and a country may find itself under economic phases at
different points of time.
Since the development of a country’s economy from one phase to another is
not drastic, the various concepts used merely identify the more important
attributes of the people’s way of life in a certain period.

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 Economic development is only possible if a country has maximized the use
of its economic resources. These economic resources are called factors of
production, in the form of land, labor, capital, and the entrepreneur. Land
pertains to all-natural resources including timber, minerals, petroleum, and the
land itself. Labor refers to the physical and mental input of the people who
produce the goods and services. Capital includes every man-made good that are
used in the production process. The Entrepreneur or businessperson buys and
organizes the other three factors of production (land, labor, capital) to provide
goods and services. In return, he profits if his products are in demand and
inherent in all business ventures.
Since these resources differ greatly in quality and quantity, some countries
experienced drastic developments. As these resources become extensively scarce,
their proper allocation and utilization need extensive research and study.
We can classify the phases of economic development as to means of
livelihood, extent of economic activity, and medium of exchange.

A. Means of Livelihood

1. Hunting and Fishing Phase. Our ancestors obtained food by hunting

and fishing taken directly from the mountains, seas, and the bounties of
nature. They did not breed nor domesticate animals.
2. Pastoral Phase. The creation of groups and the presence of a large
number of livestock have made man settle in an area for a longer period of
time. This phase made it necessary for man to satisfy the needs of his
group during seasons of inclement weather and the realization of a greater
need for planning, saving, and setting aside of stocks.
3. Handicraft Phase. Items or objects were made by skilled and trained
manual laborers. It was the period of medieval guilds. Guilds were
association of artisans engaged in the same trade. They made excellent
workmanship of sculpture, tapestries, fine musical instruments, jewelries,
furniture, crystal, porcelain, and other wares which are still admired and
treasured to this day.
4. Agricultural Phase. Man’s need for a continuous supply of food led to
the development of agriculture and the concept of land ownership. Man
began to work as a farmer or a fisherman. In the Philippines, agriculture
is the primary industry because of vast agriculture land and the shortage
of foreign exchange needed to buy modern machineries and technology.
5. Mercantilism (1500 – 1780). The rise of major European colonial
powers such as Spain and Portugal brought about the emergence of the
mercantilist system of trade. In this economic phase, countries
accumulated wealth through trade relations with other countries and
colonies. Other empires like China and India were as active in global trade
and were restricted to trading within their regional markets. Methods of
production remained unchanged, relying on methods and process
developed during the Middle Ages.
6. Industrial Revolution (1780 – 1880). Production and distribution
became mechanized since many businessmen saw the benefit of investing

10
 in machines and equipment. Large factories were established and there
was also an increased in employment. Industrial cities emerged and trade
flourished. Transportation was improved with the construction of canals,
waterways, roads and railroads and these enabled the quick and easy
transport of raw materials and finished goods over long distances.
7. Fordism (1880 – 1970). This phase saw the rise of multinational
corporations through the pioneering work of Henry Ford of Ford Motor
Company. Ford introduced a standardized production process for his Ford
Model T Automobile which resulted in increased production and profit.
Ford’s innovation led to the introduction of the assembly line, a production
process where the assembly of an automobile is done, usually a moving
conveyor, with workers performing specific and repetitive tasks in a series.
Ford also introduced the electric motor in his factory which greatly
improved efficiency, leading to lower production costs. During this period,
the term “Fordize” became popular and this meant “to standardize a
product and manufacture it by mass means at a price so low that the
common man can afford to buy it.”
8. Post-Fordism (1970 – 2010). In this phase, production is no longer
confined to manufacturing plants and could be done anywhere in the
world through improvements in production methods and information
technology. Computer-controlled tools and efficient techniques customized
and tailored the production process to a location. The internet provided a
more convenient medium for communication among customers, suppliers,
investors, and employees, enabling easy access and purchase of products
as well as their quick delivery to customers.
9. Globalization (2010 – present). The current economic phase is the age of
globalization where companies are operating within a global marketplace
and economy. This has given rise to the establishment of regional
economic organizations that enable companies from different countries to
engage in free trade with each other. This period is also characterized by
stiff competition among companies and the constant need to maintain
quality in order to attract customers. Another important concern in this
period is sustainability, which refers to the conduct of business operations
with due regards to its effects on the environment.

B. Extent of Economic Activity

The second classification of economic development considers the extent of

economic activity of the various social units involved.

1. Household Economy. Since the family is the smallest and earliest social
unit, the first phase is the termed household economy. The needs of the
family were satisfied largely by the efforts and contributions of all
members of the family.
2. Village Economy. When several families organize a village, economic and
social relations spread among the various families resulting in the rise of
the village economy.

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 3. National Economy. This phase involves the grouping of villages into
bigger and broader social units. Consequently, nation building develops
economic activities on a nationwide scale.
4. International Economy. With better and modern means of
transportation and communication, a country expands its economic
relationship through international trade and diplomatic cooperation.

C. Medium of Exchange

1. Barter Economy. During the primitive era, exchange was done through
barter which was the direct exchange of goods for goods, service for service,
goods for service or service for goods. Money was not used, instead,
commodity is offered. If the commodity offered by the person was not
acceptable to another person, no exchange took place. Since barter
involved physical transfer of commodities with every transaction, it was
very inconvenient.
2. Money Economy. While barter was used, there came to circulate in the
market certain objects, such as bars of metals, buttons, tools, and utensils
which were stable in value, durable and generally accepted by the public.
Through time and evolution, money was used as a medium of exchange.
Money solve the problem of barter economy when such objects became
standardized in value and regular in appearance so that it became
identified and accepted by the public as a medium of exchange.
Consequently, a monetary system evolved.
Money is anything which is characterized by its general acceptability, its
redeemability in precious metals, or public acceptance in any institution
using it.
3. Money and Credit Economy. When transactions continued to increase in
volume and frequency, it became imperative to allow others to purchase
one’s goods or engage one’s service with payments to be paid at some
future date. This was proven when credit transactions in modern business
became far greater in volume than cash transactions. Credit is the power
to obtain economic goods and services in exchange for the promise to pay
the agreed equivalent at some future time. Credit supplements money as a
medium of exchange. Modern business operations have expanded through
the availment of credit facilities because the use of credit makes possible
the growth of production and of sales.

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 What’s More

Activity 4.3 Identify the factors of production appropriate to each

situation below. Write your answer on a separate sheet of
paper.
1. As the eldest child in the family with her father working abroad, Vira
was assigned by her mother to be the holder of their household
quarantine pass. She is tasked to run errands outside of their home.
Vira observed that her neighborhood faces difficulty in buying
necessities and paying utilities due to the strict quarantine protocols. In
a matter of thorough thinking, vera proposes to her mother to do
“courier service” business within the neighborhood. Services that she
thinks include: Purchase and delivery of food, utility payments and
garbage collection. Her mother was delighted and supported Vira to buy
and organize the things she needs to start her business. What factor of
production Vira is?
2. Vira needs a 10 square meter of space to house her delivery car and
parcels. What factor of production the 10 square meter space is?
3. Vira’s uncle has a Suzuki multicab which he does not use. Her instinct
says, the car will be a big help in her soon business. She negotiated him
to pay the car on credit in 12 equal monthly payments which would
start a month after her first month of operation. Under what factor of
production the Suzuki multicab is?
4. Her cousins Coby and Sarsy who just lost their jobs heard about the
courier service business. They submit themselves to help in whatever
amount Vira can afford to pay them. Vira admittedly needs help to
efficiently deliver the services she will promise to her soon clients. What
factors of production would Coby and Sarsy be?

What I Have Learned

Activity 4.4 Arrange the phases of economic development in the box

according to its corresponding classification by copying and filling up the
tabular format on a separate sheet of paper. Bear in mind that “phases” is
a sequence of events.

Handicraft Phase Household Economy

Money and Credit Economy. Industrial Revolution
International Economy National Economy
Hunting and Fishing Phase Post-Fordism
International Economy Barter Economy
Village Economy Globalization
Fordism Agricultural Phase
Mercantilism Money economy

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 Phases of Economic Development Tabular Format:

Classification Phases of Economic Development

A. Means of Livelihood 1.
2.
3.
4.
5.
6.
7.
8.
9.
B. Extent of Economic
Activity
1.
2.
3.
4.
C. Medium of Exchange
1.
2.
3.

Lesson Various Forms of Business

3
Organization

What I Need to Know

At the end of this lesson you are expected to be able to: (1) differentiate the
various forms of business organizations; and, (2) recognize the nature of business
activities performed by business firms.

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 What’s In

Did you remember Vira and her Courier Business in Activity 4.3? Let us take
a little review and reflect on her case using the guide questions below. Write your
answer on a separate sheet of paper.
1. What are the factors of production did she need for her to be able to start
operation?
2. What role did her business do to her cousins?
3. How do you think her entrepreneurial idea will help her neighbors?
4. Did it ever occur in your mind what is the nature of business activity will
she going to register in getting her business permit?
5. What form of business ownership is ideal for her and her business?

What’s New

One of the most difficult questions which anyone starting a business must ask
himself is: Which is the best form of ownership for me to organize? Each of the
several legal forms of business ownership has its peculiarities and, because of this,
the future of an undertaking may very well depend on the appropriateness of the
form selected for carrying it out.
Business organizations can be classified according to its nature of activities
which refers to the main activities during the normal course of doing business and
form of organization which refers to the category of business according to the
number of owners.

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 What is It

A. BUSINESS CLASSIFICATION AS TO NATURE OF ACTIVITY

NATURE OF
DESCRIPTION
ACTIVITIES

- It is a type of business operation engaged in the

rendering of services.
- Earning is based on the skill or quality of service it
offered.
- No physical product
1. Service

Examples: Vulcanizing shops, beauty salons,

Dental Clinics,
Law firms,
Business Process Outsourcing

- It is a type of business engaged in the buying and

2. Merchandising/ selling of goods without altering the products with
Trading further product processes.

Examples: 7Eleven, Metro Retail, Sari-sari Stores

-It involves transforming raw materials into

finished products
3. Manufacturing
Examples: A.D. Gothong, Virginia Foods, Universal
Robina, Dedon Furnitures, San Miguel Brewery,
Nestle, Unilever

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B. BUSINESS CLASSIFICATION AS TO FORM OF ORGANIZATION
FORMS OF
BUSINESS OWNERSHIP ADVANTAGES DISADVANTAGES
ORGANIZATION
1. Minimal costs 1. Resources are
and limited as the capital
requirements in is provided only by
the formation the owner
2. Owner can 2. The liability of the
withdraw the owner is unlimited
assets and as he/she is
profits of the accountable to all
business creditors of the
1.Sole A business owned anytime at business
proprietorship and managed by his/her 3. Infusion of
only one person. discretion knowledge in the
3. Decision making management of the
is solely in the business is limited to
hands of the one person only,
owner which is the owner
4. The duration of
the life of the
business solely
depends on its
owner
1. The partners are
liable for the actions
of each partner
1. Minimal costs
because of mutual
and
agency.
requirements in
A form of 2. A general partner
the formation.
business has unlimited
2. There are more
organization liability if the other
funds
owned and partners are limited
contributed from
managed by two partners or are
the investment of
or more people insolvent.
the partners.
who agree to (insolvency means
2. Partnership 3. There is infusion
contribute money, unable to pay long
of more
property, and term obligations)
knowledge,
expertise in a 3. Disagreements
experience, and
common venture between or among
skills from two
with the intention partners can lead to
or more
of dividing the the withdrawal of
partners.
profits among one or more partners
There can be
themselves. 4. The death,
division of labor
retirement,
between or
withdrawal, or
among partners.
incapacity of a
partner results in
the dissolution of the

17
 partnership

FORMS OF
BUSINESS OWNERSHIP ADVANTAGES DISADVANTAGES
ORGANIZATION
A form of 1. Stockholders 1. A corporation entails
business only have many requirements
organization limited liability and is more costly
managed by an as their liability than a partnership.
elected board of extends only up 2. The government
directors. The to the amount exercises strict
investors are of their capital control over
called investment. corporations and
stockholders and 2. A corporation imposed high taxes.
the unit of has continuous 3. Shareholders have
ownership is existence as its little or no
called shares of life is indefinite. participation in the
stocks 3. There is more management of the
infusion of corporation.
Section 10 of funds from the 4. Distribution of net
R.A. 11232 of stockholders or income depends
2019 otherwise investors. upon the declaration
known as The 4. Shares of of dividends by the
Revised stocks can be board of directors.
Corporation transferred 5. In large
Code of the without the corporations, there
Philippines consent of other is formal or
3. Corporation
amends the Old shareholders. impersonal
Corporation Code 5. Management of relationship between
that instead of the the corporation employees and
minimum 5 is vested upon management due to
persons to its board of the big number of
organize a directors. employees. Hence,
corporation, it is chances of creating a
now reduced to personal and
one (1) but not friendly atmosphere
more than in the corporate
fifteen(15) setting are minimal.
incorporators.
A corporation with
a single (1)
stockholder is
considered a
One Person
Corporation as
described in Title
XIII, Chapter III of
this Code.”
Incorporators are
the founders of

18
 the corporation or
the original
owners.
FORMS OF
BUSINESS
OWNERSHIP ADVANTAGES DISADVANTAGES
ORGANIZATION
1. The prices of 1. There is limited
A duly registered products offered capital due to
association of to consumers underprivileged
persons, with a are lower due to members.
common bond of direct purchases 2. The cooperative is
interest, who have of cooperative strictly for members
voluntarily joined members from only and shares
together to achieve producers or cannot be
a lawful common manufacturers. transferred to non-
social or economic members.
end, making
equitable 2. Cooperatives are 3. Lack of efficient
4.Cooperative contributions to managed by the management as it is
the capital members managed only by its
required and themselves; members.
accepting a fair thus, saving on
share of the risks management
and benefits of the costs which
undertaking in leads to lower
accordance with prices for the
the universally benefit of the
accepted consumers.
cooperative 3. Dividends are
principles. non-taxable

What’s More

Activity 4.5 CASE ANALYSIS.

INTSRUCTION: Observe around your neighborhood, and look for a store, a laundry
shop, a bakery, or any business that operates near you. Analyze your chosen
business by copying the tabular format found bellow and completing the required
information by replacing the sample answers with the information of the business
you choose to analyze. Ask the help of an adult and follow the quarantine protocols
when going outside. Write your answers in a 1 whole long sized bond paper.
Observe 1” margin all sides. Use the sample answers provided in the table as your
guide.

Example:
(1.) NAME OF BUSINESS : Chika Lang Bakeshop
(2.) Form of business organization : Sole Proprietorship

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(3.) Nature of Activity : Manufacturing
Factors of production (8.) What are their (9) Who are their
products or services customers?
they offer?
(4.) ENTREPRENEUR: Answer: Answer:
How many owners do Bread  Households within
the business have? Cakes the locality
Answer: 1 owner cookies
(5.) CAPITAL:  Online customers
What are the tools and for special
machines the use to occasions
produce bread?
Answer: Oven, mixer,  resellers
flour
(6.) LABOR:
Who are the people
making the breads?
Answer: Bakers
(7.) LAND: (10.) Write down the actual advantages and the
How many square disadvantages of the “business case” you chose in
meters of land Chika terms of form of ownership.
Lang Bakery occupies?
Answer: An estimate of
60 square meters Advantages: (write as many as you can)

Disadvantages: (Write as many as you can)

What I Have Learned

Activity 4.6 Fill in the table with the appropriate business type according to its
corresponding classification. Write your answer on a separate sheet of paper.

NATURE OF ACTIVITIES FORMS OF OWNERSHIP

1.________________________ 1.___________________________
2.________________________ 2.___________________________
3.________________________ 3.___________________________
4.___________________________

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 Activity 4.7 Provide two advantages and disadvantages for each form of
business organization.

Form of
Business Advantages Disadvantages
Organization
1. Sole 1.____________________ 1.____________________
Proprietorshi 2.____________________ 2.____________________
p
2. Partnership 1.____________________ 1.____________________
2.____________________ 2.____________________
3. Corporation 1.____________________ 1.____________________
2.____________________ 2.____________________
4. Cooperative 1.____________________ 1.____________________
2.____________________ 2.____________________

What I Can Do

Activity 4.8 Classify the following businesses by filling out the table as to its form
of organization on the first column and nature of activity on the succeeding
column. Write your answer on a separate sheet of paper.

Form of Business
Business Name Nature of Activity
Organization
Example: Cebu Pacific Air Corporation Service

1. Vallacar Transit, Inc. (Ceres

Bus Lines)
2. Kings Frozen Products Corp.
3. Auxilio Sari-Sari Store
(owned by Auxilio brothers)
4. Metro Retail Inc.
5. Smile Dental Clinic
(Owned by two Dentists)
6. International Pharmaceutical
Inc. (IPI)
7. Gothong Southern Shipping
Corporation
8. Bong Vulcanizing Shop
(owned by Bong To)
9. Diaz, Murillo, Dalupan
Accounting Firm
10.CFI Coop

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NOTE:
(Business naming for corporation may be attached with initials like “Corp.” “Co”. or
“Inc.”)

Assessment

Multiple Choice: Write the letter of your answer on a separate sheet of paper.

1. What type of business activity is being performed by Grab Food?

A. Service C. Manufacturing
B. Merchandising D. Mining

2. What type of business activity is being performed by a banana cue

vendor?
A. Service C. Manufacturing
B. Merchandising D. Construction

3. What type of business activity is being performed by a fish vendor?

A. Service C. manufacturing
B. Merchandising D. Construction

4. A business owned and managed by only one person.

A. Partnership C. manufacturing
B. Merchandising D. Sole proprietorship

5. A business organization owned and managed by two or more people who

agree to contribute money, property, and expertise in a common venture
with the intention of dividing the profits among themselves.
A. Partnership C. manufacturing
B. Merchandising D. sole proprietorship

6. The primary role of business to the economy is NOT being the provider of
products and services to consumers.
A. False C. Maybe
B. True D. Not applicable

7. The business serves as a provider of funds to the government in the form

of taxes.
A. False C. Maybe
B. True D. Not applicable

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8. Business firms also provides of employment to the labor force.
A. False C. Maybe
B. True D. Not applicable

9. Business ideas are catalyst of innovation to provide solutions to human

problems.
A. False C. Maybe
B. True D. Not applicable

10. The business sector helps hasten the economic recovery process of the
Philippines during financial turmoil or crackdown.
A. False C. Maybe
B. True D. Not applicable
11. A cashier in SM is under what factor of production?
A. Land C. Capital
B. Labor D. Entrepreneur

12.Bunny Pages, the founder of Pages Holdings (Thirsty, Lantaw, Tops of

Cebu and many other businesses) is under what factor of production?
A. Land C. Capital
B. Labor D. Entrepreneur

13.An economic phase wherein companies are operating within a global

and economy. This has given rise to the establishment of regional
economic organizations that enable companies from different countries to
engage in free trade with each other.
A. Industrial Revolution C. Post Fordism
B. Globalization D. Agricultural

14.An economic phase wherein production and distribution became

mechanized since many businessmen saw the benefit of investing in
machines and equipment.
A. Industrial Revolution C. Post Fordism
B. Globalization D. Mercantilism

15. In this economic phase, countries accumulated wealth through trade

relations with other countries and colonies. Methods of production
remained unchanged, relying on methods and process developed during
the Middle Ages.
A. Industrial Revolution C. Post Fordism
B. Globalization D. Mercantilism

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Answer Key

Activity ANSWERS
4.1 1. Helps hasten the economic recovery process of the
Philippines due to Covid19 pandemic.
2. Provider of employment to the labor market.
3. Provider of product to the consumer.
4. Provider of fund to the government in the form of taxes.
5. Assists the national government in its desire to have
favorable economic ratings in the ASEAN Market.

4.2 A.
1. Provider of products and services to consumers.
2. Provider of economic opportunities to business
operators.
3. Provider of funds to the government in the form of taxes.
4. Provider of employment to the labor force.
5. Supplier of products and services to other businesses.
6. Catalyst of innovation to provide solutions to human
problems.
7. Introducer of entrepreneurial niche in the world market.
8. Facilitator of the smooth flow of money in the local
market.
9. Helps hasten the economic recovery process of the
Philippines during financial turmoil or crackdown.
10. Assists the national government in its desire to have
favorable economic ratings in the world market.

B.

4.3
1. Entrepreneur
2. Land
3. Capital
4. Labor

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4.4 A. Means of Livelihood
1. Hunting and fishing phase
2. Pastoral phase
3. Handicraft phase
4. Agricultural phase
5. Mercantilism
6. Industrial revolution
7. Fordism
8. Post-fordism
9. Globalization

B. Extent of economic activity

1. Household economy
2. Village economy
3. National economy
4. International economy

C. Medium of exchange
1. Barter economy
2. Money economy
3. Money and credit economy

4.5 Case analysis answer may vary depending on students’

output.

4.6 NATURE OF FORM OF

ACTIVITY OWNERSHIP

1. Service 1.Sole
proprietorship
2. Manufacturin 2.Partnership
g
3. Merchandisin 3.Corporation
g
4.Cooperative

4.7 Students answer may vary.

4.8 FORM OF OWNERSHIP NATURE OF ACTIVITY

1.Corporation Service
2.Corporation Manufacturing
3.Partnership Merchandising
4.Corporation Merchandising
5.Partnership Service
6.Corporation Manufacturing
7.Corporation Service
8.Sole proprietorship Service
9.Partnership Service
10.Cooperative Service

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References

Books:
Zarate, C.A. (2016). Organization and Management. Quezon City, Philippines.
C & E Publishing, Inc. (pages 64,65,66)
Iñigo, C.E., Jr. (2014). Management for Filipinos. Sampaloc, Manila
Philippines. Gemini Phils. Graphic Arts Corp. (pages 5,6 and 12,13,14)
Ong, F.L. (2016). Fundamentals of Accountancy, Business and Management1.
Quezon City Philippines. C & E Publishing Inc. (pages 13,14,15,16)
Aduana, N.L. (2017). Entrepreneurship in the Philippine Setting. Quezon City
Philippines. C & E Publishing Inc. (page42)
Medina, R.G. (2010). Entrepreneurship and Small Business Management.
Sampaloc, Manila, Philippines. Rex Bookstore, Inc. (page 17)

PDF:
Organization and Management Teacher’s Guide,CG: Department of
Education, 2016
Organization and Management MELC: Department of Education,2020

Online Sources(figure):
www.economics help.org/blog/glossary/the-role-of-firms-in-the-economy/

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