BUSINESS ORGANIZATION 5 FEATURES OF A BUSINESS

1. Profit-Oriented: Main goal is to earn profit.

 Introduction: The Current Economic Climate 2. Goods and Services: Offers tangible
in the Philippines products or services.
 2025 Overview: The Philippine economy is 3. Legal Entity: Can be a sole proprietorship,
experiencing moderate GDP growth (5.5%– partnership, corporation, or cooperative.
6%) due to consumer spending, infrastructure, 4. Customer-Centric: Focuses on meeting
and tourism. customer demands.
 Opportunities: Favorable for new and 5. Risk and Investment: Involves financial risks
existing businesses. and requires capital.
 Challenges: Rising inflation, fluctuating costs,
and changing consumer preferences require WHAT IS AN ORGANIZATION?
adaptability. - A structured group working together to
 Key Considerations: Legal, financial, and achieve specific goals, which can be profit or
operational factors are crucial for business non-profit.
success.
 Business Priorities: Efficiency, compliance, 2 FEATURES OF AN ORGANIZATION
and innovation are essential for sustainability 1. Goal-Oriented: Aims to achieve objectives
and profitability. (profit or social impact).
2. Structured System: Has hierarchy, roles,
HOW TO START A BUSINESS IN THE and responsibilities.
PHILIPPINES
1. Business Registration - Register with 3 TYPES OF ORGANIZATIONS
DTI (sole proprietorship) or SEC 1. Business Organizations: Profit-driven
(corporations, partnerships). (companies, enterprises).
2. Licensing and Permits - Obtain 2. Non-Profit Organizations: Service-driven
barangay clearance, mayor’s permit, and (charities, NGOs).
BIR registration. 3. Government Organizations: Public service-
3. Financial Planning - Estimate start-up driven (government agencies).
costs, create a business plan, secure
capital (loans, investors). BUSINESS ORGANIZATION
4. Market Research - Identify customer - A structured entity formed to engage in
needs, study competitors, analyze commercial, industrial, or professional activities
industry trends. for profit, coordinating resources and managing
operations.
HOW TO ORGANIZE A BUSINESS (TO-DO
LIST) 5 FEATURES OF A BUSINESS
ORGANIZATION
1. Defining Roles and Responsibilities: 1. Profit-Driven: Main goal is income
Assign clear tasks to avoid overlaps and generation.
boost productivity. 2. Legal Structure: Formally registered by law
2. Creating Standard Operating (sole proprietorship, partnership, corporation,
Procedures (SOPs): Establish consistent cooperative).
processes for customer service, financial 3. Hierarchy and Structure: Defined roles and
transactions, and inventory management. departments for efficient management.
3. Financial Management: Set up 4. Resource Management: Manages financial,
accounting systems for income, expenses, human, and physical resources.
and taxes. 5. Sustainability and Growth: Expands
4. Marketing and Promotion: Build an operations, attracts investors, increases
online presence and use social media for market share.
customer attraction.
5. Compliance and Ethics: Adhere to labor FUNCTIONS OF ORGANIZATION
laws, tax regulations, and ethical 1. Planning: Setting objectives, developing
practices. strategies, outlining actions.
2. Organizing: Structuring the organization,
WHAT IS A BUSINESS? defining roles, delegating tasks.
- An entity or enterprise engaged in 3. Leading (Directing): Motivating and guiding
commercial, industrial, or professional employees, requiring leadership skills.
activities for profit, producing goods or 4.Controlling: Monitoring performance,
providing services to meet customer needs. identifying deviations, taking corrective actions.
7 CHARACTERISTICS OF ORGANIZATION  Advantages: Easy/low-cost formation, all
1. Goal-Oriented: Operates with specific profits retained, independence, tax
objectives. advantages.
2. Structured Hierarchy: Defined authority and  Disadvantages: Unlimited liability, lack of
responsibility. stability, limited credit, limited skills.
3. Division of Labor: Tasks divided by skills
and expertise. 2. Partnership - Two or more co-owners.
4. Coordination and Cooperation:  Types:
Departments work in harmony.  General Partner: Liability extends to personal
5. Continuity and Stability: Designed for long- property.
term operation.  Limited Partner: Liable up to contribution.
6. Authority and Responsibility: Managers  Capitalist Partner: Contributes money.
make decisions; employees fulfill roles.  Industrial Partner: Provides
7. Adaptability and Flexibility: Can adjust to service/management.
market changes and new technologies.
 Advantages: Easy to organize, more
BASIC PRINCIPLES OF MANAGEMENT AND capital/credit, profit retention, better skills.
ORGANIZATION Disadvantages: Unlimited liability,
Management Principles (Henri Fayol) instability, management disagreements, idle
1. Division of Labor: Specialized roles enhance investment.
efficiency.
2. Authority: Managers have power to give 3. Corporation - Artificial being created by law,
orders and make decisions. with succession rights and legal powers.
3. Discipline: Adherence to rules and  Types:
standards.  Private/Close Corporation: Owned by
4. Unity of Command: One superior per few, usually relatives/friends.
employee prevents confusion.  Open Corporation: Shares traded in stock
5. Unity of Direction: One leader/plan per market.
objective.
6. Subordination of Individual Interest:  Advantages: Limited liability, easy capital
Organization’s interest over individual’s. raising, perpetual life, specialized
7. Remuneration: Fair compensation motivates management.
employees.  Disadvantages: Difficult to organize,
8. Centralization: Balance of decision-making highly regulated, potential social
power. irresponsibility, formal relationships.
9. Scalar Chain: Clear line of authority from top
to bottom. 4. Cooperative - Registered association with a
10. Order: Proper arrangement of common bond, voluntarily joined for a lawful
people/materials/procedures. social/economic end.
11. Equity: Fair treatment of employees.  Principles: Open/voluntary membership,
12. Stability of Tenure: Job security for democratic control, limited capital interest,
employees. division of net surplus, cooperative
13. Initiative: Encourage new ideas and education, cooperation with other
innovation. cooperatives.
14. Esprit de Corps: Team spirit and unity.  Objectives: Encourage savings, generate
funds, systematic production/marketing,
PRINCIPLES OF ORGANIZATION provide goods/services, develop expertise,
1. Principle of Objectives: Clear, measurable advance member status, operate
goals. cooperative businesses.
2. Principle of Analysis: Regular performance  Types:
evaluation (SWOT). 1. Credit Cooperatives - creates funds in
3. Principle of Simplicity: Simple, clear order to grant loans
structures. 2. Consumers Cooperatives – procures
4. Principle of Functionalization: Group similar & distributes commodities to its
tasks into departments. members & non-members .
3. Producers Cooperatives - undertake
FORMS OF BUSINESS ORGANIZATION joint production in agriculture &
1. Sole Proprietorship - Oldest, simplest form, industry.
owned by one person.
 4. Marketing Cooperatives - engages in 3. Percentage Tax – 3% if annual sales are
the supply production inputs to below ₱3 million
members & markets their products. 4. Employee Taxes – Employers must withhold
5. Service Cooperatives -undertakes and remit taxes from employees’ salaries
medical & dental care, hospitalization,
insurance LABOR AND EMPLOYMENT LAWS (UNDER
6. Multipurpose Cooperatives - THE LABOR CODE)
combines two or more of business 1. Minimum Wage Compliance – Varies per
activities of the different cooperative. region
2. Employee Benefits – Includes SSS,
ORGANIZING A COOPERATIVE PhilHealth, and Pag-IBIG
Minimum Requirements: At least 15 Filipino 3. Working Hours and Overtime – Standard: 8
citizens who reside or work in the intended area hours/day; overtime pay is required for extra
of operation. hours
4. Contractual and Regular Employees – Over
IMPORTANCE OF BUSINESS 6 months of work = regular employee status
ORGANIZATIONS
1. Efficiency and Coordination CONSUMER PROTECTION AND FAIR TRADE
 Clear roles and structured processes help (RA 7394)
businesses run smoothly. 1. Consumer Act of the Philippines – Ensures
 Coordination among teams increases consumer rights and fair practices
productivity. 2. Truthful Advertising – No false or
2. Legal and Financial Protection misleading ads
 Some structures (e.g., corporations) 3. Product Labeling and Standards – Accurate
provide limited liability, protecting owners' information and safety compliance
assets. 4. Consumer Rights – Right to safety,
3. Growth and Expansion information, and fair compensation
 Organized businesses can grow, attract
investors, and enter new markets. DATA PRIVACY AND CYBERSECURITY (RA
4. Job Creation 10173)
 Business organizations provide  Data Protection – Prevent unauthorized
employment and support economic growth. access to personal data
 Consent – Data use must be approved by the
LEGAL REGULATIONS IN THE PHILIPPINE customer
BUSINESS  Penalties – Non-compliance can lead to fines
 Businesses in the Philippines must follow or imprisonment
legal rules to ensure fairness, protect
consumers, and maintain good governance. ETHICAL PRACTICES IN THE PHILIPPINE
BUSINESS
BUSINESS REGISTRATION AND LICENSING
1. Securities and Exchange Commission What is Business Ethics?
(SEC) – Registers corporations and - Business ethics refers to principles and values
partnerships that promote fairness, transparency, and
2. Department of Trade and Industry (DTI) integrity in business actions.
– Registers sole proprietorships
3. Barangay and Mayor's Permits – 5 Ethical Principles
Needed for local operations 1. Honesty and Integrity - Truthful advertising,
4. Bureau of Internal Revenue (BIR) – fair pricing, and transparent financial reporting
Provides Tax Identification Number (TIN) 2. Corporate Social Responsibility (CSR) -
and handles taxation Giving back to the community through
5. Philippine Economic Zone Authority environmental action, support programs, and
(PEZA) – For businesses in ecozones employee care
eligible for tax incentives 3. Fair Labor Practices - Equal treatment, fair
wages, and safe working conditions
TAXATION LAWS (UNDER NIRC) 4. Ethical Leadership - Leaders must act fairly,
1. Corporate Income Tax – 25% of net taxable take responsibility, and be transparent
income (domestic corporations) 5. Customer-Centric Practices - Respect data
2. Value-Added Tax (VAT) – 12% if annual privacy, ensure quality, and resolve
sales exceed ₱3 million complaints fairly
 NATURE AND SCOPE OF BUSINESS 9. Goods and Services (Consumer and
Producer) – Items for consumption or use in
INTRODUCTION production.
 Business Organization: An entity carrying 10. Satisfy Human Wants – Meets needs and
on commercial activities to provide goods or desires of people.
services and fulfill customer needs. 11. Social Obligations – Responsibility toward
Key features: formal structure, resource society and environment.
use, objective achievement, direction, and
legal compliance. Human Occupation
- Work (paid/unpaid) within social and physical
MEANING OF BUSINESS context. Emphasizes meaningful engagement
Derived from "busy"; refers to human activities for well-being and satisfaction.
producing wealth through continuous, regular
production and distribution of goods and services. Profession
- A career requiring training, ethical conduct,
DEFINITION OF BUSINESS and specialized knowledge. Governed by a
 Stephenson – purchase and sale of goods code of ethics and public
for profit and acquiring wealth through accountability.
satisfaction of human wants.
 Dicksee – earning profit for the benefit of Employment
those on whose behalf the activity is - A work agreement where an employee
conducted. performs tasks for compensation, aligned with
 Lewis Henry – human activity producing or employer's goals. Can be formal or informal
acquiring wealth through buying and selling of (contract, interview).
goods
 C.F. Abbot – Business without profit is not EFFECTIVE BUSINESS TRAITS
business 1. Profitability - the ability to make a profit in the
 L.H. Hanery – may be defined human activity face of competition.
producing or acquiring wealth through buying 2. Human Resources - Effective businesses
and selling of goods manage their human resources efficiently.
 Dictionary – all of those activities connected 3. Customer Relations - must devote resources
with the production and exchange of goods or to customer relations and develop a policy for
services handling complaints, soliciting customer
feedback and addressing public-relations
CONCEPTS OF BUSINESS issues.
1. Traditional Concept: Profit-focused via 4. Effective Marketing - Marketing campaigns
product production/marketing (goods, position businesses and attract customers
services, ideas) and profits.
2. Modern Concept: Focus on consumer
satisfaction with social responsibility. Views DIVISION OF BUSINESS
business as a socio-economic institution. A business can be divided into units or segments
(by product, region, customer). Each division is a
FEATURES/NATURE OF BUSINESS distinct operational part of the business.
1. Exchange of Goods and Services – Trading
products or services between parties.  Product – Organized by different types of
2. Numerous Transactions – Repeated products.
business activities, not a one-time action.  Geography – Divided based on regional
3. Profit Motive – The goal is to earn income or locations.
surplus.  Market – Structured by types of customers or
4. Business Skills – Requires expertise in markets served.
planning, decision-making, and management.  Hybrid – Combination of two or more bases
5. Risks and Uncertainties – Possible loss due (product, market, region).
to unforeseen events.
6. Buyer and Seller – At least two parties
involved in transaction.
7. Production – Creation of goods or services.
8. Marketing and Distribution – Promoting and
delivering products to consumers.
 INDUSTRY ESSENTIALS FOR SUCCESSFUL BUSINESS
Involves production processes using raw 1. Clear Objectives – Well-defined business
materials to create goods/services. goals.
2. Planning – Strategy formulation for future
 Primary: Extraction – Industries like farming, actions.
fishing, mining. 3. Research – Gathering information to support
 Secondary: Manufacturing – Processing raw decisions.
materials into finished goods. 4. Location & Size – Choosing suitable place
 Tertiary: Services – Service-based industries and scale of operation.
like transport, banking, education. 5. Sound Organization – Structuring roles and
responsibilities.
COMMERCE 6. Adequate Finance – Managing funds and
Large-scale buying/selling activities that facilitate investments.
distribution and availability of goods. 7. Effective Management – Directing resources
efficiently.
 Trade – Buying and selling of goods. 8. Effective Distribution – Delivery of
 Auxiliaries to Trade – Services supporting goods/services to customers.
trade (e.g., banking, insurance, warehousing). 9. Maintenance of Better Employee
Relationship – Maintaining positive
OBJECTIVES OF BUSINESS SYSTEM employer-employee relationships.
1. Meet customer needs
2. Cutdown operation costs QUALITIES OF A GOOD BUSINESSMAN
3. Increase savings 1. Visionary - Has a clear long-term goal and
4. Speed up the execution of results direction.
5. Handle data efficiently 2. Innovative - Embraces new ideas,
6. Establish desirable distribution of data technologies, and creative problem-solving.
7. Define proper business activities 3. Tech-Savvy - Uses digital tools and platforms
8. Eliminate conflict/unnecessary services to run the business efficiently.
4. Customer-Centric - Understands and values
BUSINESS SYSTEM customer needs.
- A framework of policies, people, equipment, 5. Adaptable - Flexible with changing market
and software coordinating business trends, competition, and challenges.
operations. 6. Ethical and Responsible - Practices
1. Payroll Business System – Managing honesty, integrity, and fairness.
employee salaries and wages. 7. Good Communicator - Can clearly express
2. Personnel Business System – Human ideas to customers, employees, and partners.
resources and staff management. 8. Financially Literate - Understands basic
3. Accounts Receivable System – Money accounting, budgeting, and cash flow
owed to a business by customers. management.
4. Accounts Payable System – Money a 9. Leadership Skills - Inspires and motivates a
business owes to suppliers. team.
5. Inventory System – Stock of goods held 10. Persistent and Resilient - Doesn’t give up
for sale or production. easily; learns from failure.

OBJECTIVES OF BUSINESS
1. Economic Objectives: Profit, Customer
Creation, Innovation, Resource Use
2. Social Objectives: Quality, Fair Practices,
Welfare
3. Human Objectives: Employee Welfare,
Satisfaction, Skill Development
4. NationalObjectives: Jobs, Justice, Tax
Contribution, Exports
5. Global: Living Standards, Global Trade,
Competitiveness