The Business

Firm
The Business Firm
These are the entities that employ factors of
production (resources) and produces goods
and services to be sold to the consumer other
firms of government.
Forms Of Business Firms

•Sole Proprietorship

•Partnership

•Cooperative

•Corporation
Sole Proprietorship
> It is a form of business organization
owned and controlled by a single individual.
Advantages of Sole Proprietorship

•The single proprietorship is the boss.

•Capital requirements is very small.
•Lesser business documents are required.
•Conflicts and quarrels are minimized.
Disadvantages of Sole Proprietorship
•Engages himself in borrowing and mortgaging his
properties.
•Inability in transforming his small scale business
into large scale.
•Lack of managerial ability.
Partnership
>A partnership is a formal arrangement
by two or more parties to manage and
operate a business and share its profits.
There are several types of  partnership
arrangements. 
Advantages of Partnership
•The owners may transfer their shares of stock to
new owners without affecting the life of the
corporation.
•Stockholders cannot be personally liable for any
debts of the corporation.
•A corporation may spread its responsibilities over
many persons hired by the corporations.
Disadvantages of Partnership

•Engagements himself in borrowing and

mortgaging his properties.
•Inability transforming his small scale
business into large scale.
•Lack of managerial ability
Cooperative
>It is a business voluntary organize by its members
in order to operate.
>It is the only one organization composed
primarily of small producers and consumers who
voluntarily join together to form business which
they themselves own,control and patronize.
Basic Cooperative principles

•Open and voluntary membership

•Democratic control
•Limited returns on capital
•Patronage refund
Failures of Cooperative

•Failure of the Board of Directors and members to provide

adequate capital.
•Incompetent management
•Lack of proper understanding of the aims of the
cooperatives
•The inability to meet competition happens when a very
small amount of capital outlay is provided in the business.
Corporation
A corporation is a business entity that is owned by
its shareholder(s), who elect a board of directors to
oversee the organization's activities. The
corporation is liable for the actions and finances of
the business.
Similarities of Cooperative and Corporation

•Factors of production are privately

owned,controlled and manage.
•Both depend on business efficiency to survive in a
corporate market.
•Their activities and operations are both regulated
and supervised by the government.
•Both enjoy a reasonable degree of economic
freedom.
Financing Corporate Activities
Ways of Corporation where they can increase their profits

•Selling Bonds (sometimes referred to as

issuing debt)
•Issue (sell) additional shares of stock.
Bond
It is a statement that promises to pay back a certain
fixed sum of money at specific point of time.

Share of Stock
It is a certification of the assets of a corporation that give
the purchaser a share of the ownership of the corporation.
Non-profit Organization

Public Corporation
It is created for the purpose connected with the
administration of the government.

Non-stock Corporation

Their objective is to promote public welfare most of them

are the religious,social,scientific,civic and political
organizations and societies.
Ethical Standards in Business
•If the business firms obey the golden rules, then there would
be no need for a body of laws that will attempt to keep all
rules and regulations within bounds.
•Ethical rules have suppressed the ethical psychology of
business because of the economic influence which lies in a
capitalistic society’s motive of acquiring profits.
Ethics and Capitalism
•The theory on the acquisition of gains puts the objective
of the firm which is to “satisfy consumers“ as the
secondary objective.

A person under the capitalist state of economy

recognizes the role of morality and he is ready to put
into practice the acceptable norms of the society.No
ethical standard shall seek to correct bad practices.
Thank You!