CHAPTER 5:

TYPES OF BUSINESS
ACCORDING TO ACTIVITI
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REMINDERS

• Please maintain social distancing.

• Do not take off your mask.
• If you have question, kindly raise your hands.
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Recap!
Forms of business organization
⊸ sole proprietorship
⊸ partnership
⊸ corporation
⊸ cooperatives
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1.
In your notes, give at least 5 local examples of business
inside the province of Bulacan and provide what is the
nature or activities of their operation.
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Objectives!
a. Compare and contrast the types of business according to
activities;
b. Identify the advantages and disadvantages and business
requirements of each type; and
c. Make a list of businesses in their community according to their
activities.
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Business

is an organization that converts

inputs or resources such as
materials, labor and overhead
into outputs which are usually
either goods or services.
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Three major types of business

according to its activities.

⊸ Service
⊸ Merchandising
⊸ Manufacturing
 SERVICE
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COMPANIES
Are firms that generally use their employees to provide intangible products
or services to customers.

⊸ Professional skills
⊸ Advice
⊸ Expertise
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The primary source of revenues of service

companies is the performance of service,
often referred as service revenues.

⊸ Law firms providing legal

advices.
⊸ School, which teachers
educate its students.
⊸ Banks, accounting firms
and hospitals.
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OPERATING CYCLE

Serivice Merchandising Manufacturing

is the time takes for a company to create products, sell

these products and collect cash payments from customers.
 SERVICE COMPANY
OPERATING CYCLE OF
Cash on hand

Pays
Receive
employees
payment from
and other
customer
expenses.

Performs
services.
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Advantages
Absence of Does not require  has the potential
inventory or production of providing you
tangible goods facilities and with good
held by frees cash for revenue.
company. other important
matters.
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Disadvantages
inability to Additional  
standardize expenses for
services employee’s
trainings.
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MERCHANDISING
COMPANIES
-companies that sells tangible products.

-buys finished or almost finished goods from their suppliers and resells the
same to customers.
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The primary source of revenues of

merchandising companies is the sale of
goods or merchandise, often referred as
sales revenue or sales.

⊸ In merchandising, there
are two types of
companies – retailers and
wholesalers.
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Retail
sells goods directly to customers

Wholesale
sells goods to retailers
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 COMPANY
MERCHANDISING
OPERATING CYCLE OF
Cash on
hand

Receives
payment Buys
from goods
customers

Stores
Sells
goods as
inventory
inventory
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Advantages
More sales Ability to  variety of
expand the products attract
business customers
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Disadvantages
Longer Holding an Additional
 add
operating cycle inventory expenses for
storage rooms
and equipment
to preserve the
quality of the
products.
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MANUFACTURING
COMPANIES
- are relatively complicated organizations than service and
merchandising companies. As the name, manufacturers create
their own products. They use raw materials, components or
parts which are processed using machines, computers and labor
to produces finished goods.
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MANUFACTURING
COMPANIES
- Manufacturers typically employs large- scale production which
is done in manufacturing plants. Similar to merchandising
companies, they earn revenues primarily from the sale of
manufactured products. The products of manufacturing
companies can be sold directly to consumers, retailers and other
manufacturers.
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Similar to merchandising companies, they earn

revenues primarily from the sale of manufactured
products which also called sales revenue or sales.

⊸ In merchandising, there
are two types of
companies – retailers and
wholesalers.
 COMPANY
MANUFACTURING
OPERATING CYCLE OF
Cash on
hand

Receives Pays input

payments (materials,
from labor and
customers overhead)

Converts
Sells inputs into
inventory finished
goods

Stores
finihsed
goods as
inventory
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Advantages
More sales Quality control  prevent spoilage
ensure quality of or low quality
the products. product due to
multiple quality
inspections.
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Disadvantages
Longest employs large- financing
 add their
operating cycle scale quality control
production. procedures to
requires large avoid failure
sum of money. costs.
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Identify the name of the company and determine what

type of business it is according to its activities.
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Seatwork:

Directions: Place a T on the line if you think the statement is TRUE. Place

a F on the line if you think the statement is false and and write
the word that made it incorrect. Each item will be 2 points.

_____1. Service companies has the longest period of operating cycle.

_____2. There are two types of merchandising companies—retails and wholesale.
_____3. Manufactures buys their products.
_____4. Operating cycle is the time it takes for a company to create products, sell
the products and collect payments.
_____5. Manufacturing company doesn’t need any labor or services from any
person.
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Assignment:

Conduct research on different businesses

in your community and identify their
business type. Choose at least one
company from each business type and
describe its different activities.
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THANK YOU AND

BE SAFE!