BUSINESS ETHICS

AND SOCIAL
RESPONSIBILITY
THE NATURE
AND FORMS OF
BUSINESS
ORGANIZATIONS
OBJECTIVES:
1. define business;
2. explain why people engage in business;
3. give the advantages and disadvantages of each form of
business organizations;
4. create their own business and logo; and
5. classify the given characteristics of organizations.
DIRECTIONS: ANSWER THE FOLLOWING
QUESTIONS ON A SEPARATE SHEET OF
PAPER.
1. You are all aware of online selling, right? What/Who are the
most popular online selling platforms/individuals? Do you think
they earn big amount of money from online transactions?
2. Have you experienced being a seller? What
item/product/service did you sell? Can you still recall that
experience?
WHAT IS BUSINESS?
• business is an active process which is an integral part of
human society.
• It is an organization where economic resources or inputs, such
as materials and services, are brought together and distributed
to deliver or to give consumers goods, products, or outputs.
• It involves significant operations such as buying, assembling,
distributing, advertising, selling, and accounting.
WHAT IS PROFIT?
•Profit refers to the difference between the
amount received and the amount spent on
something purchased, produced, or
manufactured.
•Most businesses aim to earn profit.
THREE TYPES OF BUSINESS
ORGANIZATIONS ARE GENERALLY
OPERATED FOR PROFIT
1. Service businesses.
2. Merchandising businesses.
3. Manufacturing businesses.
THREE TYPES OF BUSINESS ORGANIZATIONS ARE GENERALLY OPERATED FOR
PROFIT

Service businesses provide services to

customers rather than products.
Examples: computer repair, laundry services,
tutoring, delivery services, wellness (such as
gym or spa), etc.
THREE TYPES OF BUSINESS ORGANIZATIONS ARE GENERALLY OPERATED FOR
PROFIT

Merchandising businesses sell to

customers products they buy from other
businesses.
Examples: sari-sari stores, bookstores,
department stores, groceries,
supermarkets, etc.
THREE TYPES OF BUSINESS ORGANIZATIONS ARE GENERALLY OPERATED FOR
PROFIT

Manufacturing businesses turn basic

inputs into products which are sold to
consumers.
Examples: shoe manufacturing, baked
goods, candle manufacturing, cosmetics
manufacturing, wine production, etc.
 FORMS OF BUSINESS
ORGANIZATIONS
1. Sole Proprietorship- It is a one-person
business. The owner has full control over
the finances and operations and decides
alone.
ADVANTAGES:

a. Tax preparation is faster.

b. Sole proprietorship has lower start-up costs.
c. Handling money for the business is easier.
d. Sole proprietorships have the least government rules
and regulations that affect them.
e. The sole proprietor can own the business for as long as
he/she wants, and when he/she wants to move out,
he/she can cash in and sell the business.
f. Even in common practice, the sole proprietor can pass
the business down to his/her heir
DISADVANTAGES:

a. The sole proprietor is personally liable

for all debts and actions of the enterprise.
b. There is lack of financial control
because of looser structure of sole
proprietorship.
c. There could be difficulty in raising
capital.
 FORMS OF BUSINESS ORGANIZATIONS

2. Partnership- It is a business relationship

between two or more people.
It is an arrangement where individuals share a business
venture's profits and liabilities.
The partners give feedback on how to use the capital,
critical strategic decisions that may provide different
perspectives.
ADVANTAGES:

a. Partnership business lacks formality.

b. It is easy to start.
c. You share the burden.
d. Every partner would add his/her own
expertise, skills, experience, and
connections to the business.
ADVANTAGES:

e. There is better decision-making.

f. There is privacy.
g. The partners own and control the business.
h. Its borrowing capacity is also likely higher.
i. There is an easy access to profits.
DISADVANTAGES:

a. The business does not have any independent legal

status.
b. The business has no separate legal personality
c. The partnership business often seems to lack the sense
of prestige more closely associated with a corporation.
d. A partnership will often find it more difficult to raise
money than a corporation.
e. There is a potential of differences and conflicts.
 DISADVANTAGES:

f. Decision-making can be slower.

g. The profit must be shared among the partners.
h. It may require a lot of time and energy thus may affect
life-work balance.
i.The profits earned by the partnership will be translated
to income on the individual partners.
j. There are limits on business development like unlimited
liability, lack of funding opportunities, and a lack of
commercial status, etc.
 FORMS OF BUSINESS ORGANIZATIONS

3.Corporation is an entity created by

law that is independent and distinct from
its owners and relies on the corporate laws
of the state in which it is incorporated to
continue its existence.
 FORMS OF BUSINESS ORGANIZATIONS

Corporations have an advantage in

generating money for the company.
It can raise funds by selling shares of
stocks. It files taxes separately from its
owners.
ADVANTAGES:

a. The liability of the shareholders of a corporation is

limited up to the amount of their investments.
b. A publicly held corporation may sell shares or issue
bonds to raise substantial amounts.
c. It is easy for a shareholder to sell shares in a
corporation.
d. A corporation’s life has no limit, ownership can pass
through many generations.
DISADVANTAGES:

a. The corporation pays taxes on its

income depending on its type and the
shareholders pay dividend taxes.
b. The management team of a corporation
can operate the business without any real
oversight from the owners.
DIRECTIONS: SHARE YOUR INSIGHTS ON THE
SITUATION BELOW. WRITE YOUR ANSWERS ON
A SEPARATE SHEET OF PAPER.
• A rich relative of yours tells you that he/she is willing
to lend you one million pesos without any interest and
ask you to start a business. What kind of enterprise do
you prefer? Describe it briefly.
• ____________________________________________
____________________________________
DIRECTIONS: CREATE YOUR BUSINESS LOGO. USE
A SEPARATE SHEET OF PAPER FOR YOUR
DRAWING.
THANK
YOU!!!