Lesson 1: Forms of Business in Social and • No corporate income taxes

Economic Development
• Sole Proprietorship Disadvantages:
• Partnership • Unlimited liability
• Corporation • Limited life
• Cooperative • Difficult for an individual to raise money
for capital
Business Definition
• is an organization that uses economic EXAMPLES
resources or inputs to provide goods or • Bookkeeping
services to customers in exchange for • Home healthcare
money or other goods and services. • Financial Planner
• Landscaper
Life Cycle of a Business • Computer Repair Services
-Introduction • Catering Company
-Growth - Incremental Production • Housecleaning Services
- Maturity • Freelance Writer
-Declining • Tutoring
• Virtual Assistance
4Ps.
-Process Partnership
-Price
-Place • is a business owned by two or more
-Promotion persons who bind themselves to
contribute money or industry to a
3Ps common fund with the intention of
-Product dividing the profits between themselves.
- People - • It could be as small as mom and pop
- Physical Evidence type operations, or as big as some of
the large legal or accounting firms that
1Ps may have dozens of partners.
-Production/Productivity • Is a juridical entity and registered with
the Securities and Exchange
Commission (SEC).
Sole Proprietorship
Types of Partnership
• also known as “single proprietorship” is
a business owned by only one person • General Partnership – all partners have
who has complete control and authority unrestricted liability for the debts and
of its own. It owns all the assets and obligation of the partnership.
personally answer all liabilities or losses. • Limited Partnership – one or more
• It is the simplest, easy to set-up and general partners have unlimited liability,
register through the Bureau of Trade so creditors cannot target their personal
Regulation and Consumer Protection assets. Limited partners have liability
(BTRCP) of the Department of Trade only up to the amount of their capital
and Industry (DTI) contributions.
• It is the least costly among all forms of
ownership. Advantages:
• It is usually adopted by small business • Synergy resulting from two or more
entities. individuals combining strengths
• Easy to form but requires developing a
Advantages: partnership agreement
• Ease of formation and dissolution • Subject to fewer regulations compared
• Low startup costs and low operational to corporations
overhead • Stronger potential of access to greater
• Typically, subject to fewer regulations amounts of capital
 • No corporate income taxes
Cooperative
Disadvantages: • Is a duly registered business
• Unlimited liability where general organization owned by a group of
partners are individually responsible for individuals and is operated for their
the obligations of the business mutual benefit. The person making up
• Limited life with the withdrawal or death the group are called members who have
of a partner as reasons to end voluntarily joined together to achive a
partnership lawful common social or economic end.
• Real possibility of disputes or conflicts They made equitable contributions to
between partners that may lead to the capital required and accept a fair
dissolve the partnership. share of the risks and benefits of the
undertaking in accordance with
Corporation universally accepted cooperative
principle.
• Is a business organization that has a
separate legal personality from its Advantages:
owners. It is a juridical entity created • Formation and registration is very
under the Corporation Code and simple with only 10 adults needed
registered with the SEC. it should be • The membership of cooperative society
established by or composed of at least 5 is open to everybody regardless of
natural persons and not exceeding 15 religion, sex or color
persons, technically called • Liabilities of the members of the society
“incorporators.” is limited to the extent of capital
contributed by them
Advantages: • Members are provided with better good
• Unlimited commercial life because and services at reasonable prices
corporation is an entity of its own and • Portion of the surplus is spent for the
does not dissolve when ownership welfare of the members
changes • Government extends many subsidies to
• Greater flexibility in raising capital strengthen their financial stability and
through the sale of stock sustainable growth in future
• Ease of transferring ownership by • Managed by the elected members from
selling stock and among themselves
• Limited liability • Cannot be dissolved by the death
insolvency, lunacy, permanent
Disadvantages: incapability of the members
• Regulatory restrictions which can be • The operation is economical due to the
costly eliminations of middlemen.
• Higher organizational and operational
cost Disadvantages:
• Double taxation referring to income • Financial strength depends on the
taxes that are paid twice on the same capital contributed by its members
source of earned income • Managed by the members only who
most of the time do not possess any
Examples: managerial and special skills
• United laboratories • Maintain no secrecy in business
• Jollibee foods corporation because the affairs of the society is
• Sm group companies openly discussed in the meeting
• San Miguel corp. • Sell their products to outsiders only in
• Ayala corp. cash
• Phil. Long distance Telephone company • Excessive state regulation interference
• Filinvest development corp. with the flexibility of its operation
• Lopez group of companies • Members may not feel enthusiastic
• Metropolitan bank and Trust company or because the law governing the
Metrobank
 cooperatives put some restriction on the and other similar activities to reach out
rate of return to its intended beneficiaries
• Different opinions and disputes may • Agrarian Reform Cooperative - is one
paralyses that effectiveness of the organized by marginal farmers majority
management of which are agrarian reform
beneficiaries for the purpose of
Examples: developing an appropriate system of
Philippines Code of 2008, Republic Act No. land tenure, land development, land
9520 consolidation or land management in
• Credit Cooperative - is one that areas covered by agrarian reform
promotes and undertakes savings and • Cooperative Bank - is one organized
lending services among its members. It for the primary purpose of providing a
generates a common pool of funds in wide range of financial services to
order to provide financial assistance to cooperatives and their members
its members for productive and • Dairy Cooperative - is one whose
provident purposes members are engaged in the production
• Consumers cooperative - is one of the of fresh milk which may be processed
primary purpose of which is to procure and/or marketed as dairy products
and distribute commodities to members • Education Cooperative - is one
and non-members organized for the primary purpose of
• Producers Cooperative - is one that owning and operating licensed
undertakes joint production whether educational institutions notwithstanding
agricultural or industrial. It is formed and the provisions of Republic Act No. 9155,
operated by its members to undertake otherwise known as the Governance of
the production and processing of raw Basic Education Act of 2001
materials or goods produced by its • Electric Cooperative - is one organized
members into finished or processed for the primary purposed of undertaking
products for sale by the cooperative to power generations, utilizing renewable
its members and non-members. Any energy sources, including hybrid
end product or its derivative arising from systems, acquisition and operation of
the raw materials produced by its subtransmission or distribution to its
members, sold in the name and for the household members.
account of the cooperative, shall be • Financial Cooperative - is one
deemed a product of the cooperative organized for the primary purpose of
and its members engaging in savings and credit services
• Marketing Cooperative - is one which and other financial services
engages in the supply of production • Fishermen Cooperative - is one
inputs to members and markets their organized by marginalized fishermen in
products localities whose products are marketed
• Service Cooperative- is one which either as fresh or processed products
engages in medical and dental care, • Insurance Cooperative - is one
hospitalization, transportation, engaged in the business of insuring life
insurance, housing, labor, electric light and poverty of cooperatives and their
and power, communication, professional members
and other services • Transport Cooperative - is one which
• Multi-purpose cooperative - is one includes land and sea transportation,
which combines two (2) or more of the limited to small vessels, as defined or
business activities of these different classified under the Philippine maritime
types of cooperative laws, organized under the provisions of
• Advocacy Cooperative - is a primary this Code
cooperative which promotes and • Health Services Cooperative - is one
advocates cooperativism among its organized for the primary purpose of
members and the public through providing medical, dental and other
socially-oriented projects, education and health services
training, research and communication, • Housing Cooperative - is one
organized to assist or provide access to
 housing for the benefit of its regular Manufacturing Goods - raw materials,
members who actively participate in the machineries
savings program for housing. It is co-
owned and controlled by its member Stakeholders - employees, customers
• Waters Cooperative - is one organized
to own, operate and manage waters Stockholders - one who buy the part of a
systems for the provision and business/ board of directors
distribution of potable water for its
members and their households Dog eat Dog - Direct COmpetition
• Workers cooperative - is one
Bench Marking - you collect all data of other
organized by workers, including the self-
company and compare it to your company
employed, who are at same time the
members and owners of the enterprise.
Its principal purpose is to provide
employment and business opportunities
to its members and manage it in
accordance with cooperative principles

Business Organizations and Socio-Economic

Development
Socio-economic Development – is the process
of social and economic development in a
society. It is calculated with indicators, such as:
1. Gross Domestic Product (GDP)
2. Life Expectancy
3. Literacy
4. Employment rates

GDP – is the sum of gross value added by all

resident producers in the economy plus any
product taxes and minus any subsidized not
included in the value of the products. It is
calculated without making deductions for
depreciation of fabricated assets or for depletion
and degradation of natural resources.

Life Expectancy – is the statistical measure of

how long an organism may live, based on the
year of their birth, their current age and other
demographic factors including sex.

Literacy rate – is simply the total percentage of

the population aged 15 and above who can read
and write a short, simple statement on their
everyday life.

Employment rate - is a measure of the number

of people who are both jobless and looking for a
job.

Royalty - if you will be the one who endorse the

product , you have a share from it.