Republic of the Philippines

Department of Education
REGION VI- WESTERN VISAYAS
DIVISION OF ESCALANTE CITY
ESCALANTE NATIONAL HIGH SCHOOL

LEARNING ACTIVITY SHEET

ORGANIZATION AND MANAGEMENT
The Firm and Its Environment
Quarter 1 Week 4

I. Learning Competency
• Analyze the forms and economic roles of business organizations.

II. Background Informaion for Learners

After deciding to start a business (and the business to pursue), one of the important
issues is the form of business entity that will serve as the vehicle in pursuing the business.
You may say that the next important issue is the source of funding, which is correct, but
that issue will be discussed later. Right now, lets focus on the forms of business.
The choice of the form of business or business organization depends on various factors. In
certain business, like banks, the law requires that the business entity must be a corporation.
A small business, like your friendly sari-sari store, is better off as a sole proprietorship,
although it could also be converted to another form of business if the circumstances require
that shift.

A. Partnership
Partnership consists of two or more persons who bind themselves to contribute money or
industry to a common fund, with the intention of dividing the profits among themselves.
The most common example of partnerships are professional partnerships, like in the case of
law firms and accounting firms. Just like a corporation, it is registered with the Securities
and Exchange Commission (SEC).
 Advantages of a Partnership
❖ Partnerships are relatively easy to establish; however time should be invested in
developing the partnership agreement.
❖ With more than one owner, the ability to raise funds may be increased.
❖ The profits from the business flow directly through to the partners’ personal tax
return.
❖ Prospective employees may be attracted to the business if given the incentive to
become a partner.
❖ The business usually will benefit from partners who have complementary skills.

Disadvantages of a Partnership
❖ Partners are jointly and individually liable for the actions of the other partners.
❖ Profits must be shared with others.
❖ Since decisions are shared, disagreements can occur.
❖ Some employee benefits are not deductible from business income on tax returns.
❖ The partnership may have a limited life; it may end upon the withdrawal or death
of a partner.

Types of Partnerships that should be considered:

1. General Partnership
Partners divide responsibility for management and liability, as well as the shares of profit or loss
according to their internal agreement. Equal shares are assumed unless there is a written agreement
that states differently.

2. Limited Partnership and Partnership with limited liability

“Limited” means that most of the partners have limited liability (to the extent of their investment) as
well as limited input regarding management decision, which generally encourages investors for short
term projects, or for investing in capital assets. This form of ownership is not often used for operating
retail or service businesses. Forming a limited partnership is more complex and formal than that of a
general partnership.

3. Joint Venture
Acts like a general partnership but is clearly for a limited period of time or a single project. If the
partners in a joint venture repeat the activity, they will be recognized as an ongoing partnership and
will have to file as such and distribute accumulated partnership assets upon dissolution of the entity.

B. Sole proprietorship
Also referred to as “single proprietorship,” a sole proprietorship is the simplest form of business and
the easiest to register, through the Bureau of Trade Regulation and Consumer Protection (BTRCP) of
the Department of Trade and Industry (DTI). It is owned by an individual who has full control/authority
of its own and owns all the assets, as well as personally answers all liabilities or losses. The fact that it
is run by the individual means that it is highly flexible and the owner retains absolute control over it.

Advantages of a Sole Proprietorship

a. Easiest and least expensive form of ownership to organize.
b. Sole proprietors are in complete control, and within the parameters of the law, may make
decisions as they see fit.
c. Profits from the business flow-through directly to the owner’s personal tax return.
d. The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

a. Sole proprietors have unlimited liability and are legally responsible for all debts against the
business. Their business and personal assets are at risk.
b. May be at a disadvantage in raising funds and are often limited to using funds from personal
savings or consumer loans.
c. May have a hard time attracting high-calibre employees, or those that are motivated by the
opportunity to own a part of the business.
d. Some employee benefits such as medical insurance premiums are not directly deductible
from business income (only partially as an adjustment to income).

C. Sole Corporation
A mixture of the features of a sole proprietorship and a corporation is found in a new entity
authorized under the Revised Corporation Code — the One Person Corporation. An OPC is registered in
the same manner as other corporations with the SEC, except that it is composed of only one person,
just like a sole proprietorship. [See One Person Corporations under the Revised Corporation Code]

D. Corporation
A corporation is a juridical entity established under the Corporation Code and registered with
the SEC. It must be created by or composed of at least 5 natural persons up to a maximum of 15,
technically called “incorporators” (the 5-person minimum has been removed under the Revised
Corporation Code). Juridical persons, like other corporations or partnerships, cannot be incorporators,
although they may subsequently purchase shares and become corporate shareholders/stockholders.

Advantages of a Corporation
a. Shareholders have limited liability for the corporation’s debts or judgments against the
corporation.
b. Generally, shareholders can only be held accountable for their investment in stock of the
company. (Note however, that officers can be held personally liable for their actions, such as
the failure to withhold and pay employment taxes.
c. Corporations can raise additional funds through the sale of stock.
d. A Corporation may deduct the cost of benefits it provides to officers and employees.

Disadvantages of a Corporation
a. The process of incorporation requires more time and money than other forms of
organization.
 b. Corporations are monitored by federal, state and some local agencies, and as a result may
have more Paperwork to comply with regulations.
c. Incorporating may result in higher overall taxes. Dividends paid to shareholders are not
deductible from business income; thus this income can be taxed twice.

E. Cooperative
A cooperative is an organization established for the purpose of purchasing and marketing the
products of its members, i.e., shareholders, and/or procuring supplies for resale to the members,
whose profits are distributed to the members (in the form of patronage dividends), not on the basis of
the members' equity
According to REPUBLIC ACT 9520 also known as "Philippine Cooperative Code of 2008".

The primary objective of every cooperative is to help improve the quality of life of its members.
Towards this end, the cooperative shall aim to:

a. Provide goods and services to its members to enable them to attain increased income, savings,
investments, productivity, and purchasing power, and promote among themselves equitable
distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-
sharing;
b. Provide optimum social and economic benefits to its members;
c. Teach them efficient ways of doing things in a cooperative manner;
d. Propagate cooperative practices and new ideas in business and management;
e. Allow the lower income and less privileged groups to increase their ownership in the wealth of the
nation; and
f. Cooperate with the government, other cooperatives and people-oriented organizations to further
the attainment of any of the foregoing objectives.

ACTIVITIES
AActivity 1: Independent Activity
In 5 to 8 sentences, discuss in a yellow paper how learning this lesson can improve your relationship
with the people around you, your parents, guardians, or family. Ask an elder at home to comment on
your answers.
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ctivity 1: Independent Activity
In 5 to 8 sentences, discuss in a yellow paper how learning this lesson can improve
your relationship
Activity 2: Independent Activity

Directions: Give your own descriptions on the various forms of business organizations in 3 to 5
sentences only. Write your answer in the space provided in bullet form er at home to comment on y

To discuss AnAnswer

1. Sole Proprietorship

2. Partnership

3. Corporation

4. Cooperative
wers.

CHECK YOUR UNDERSTANDING

Multiple Choice
Directions: Read the questions carefully and encircle the letter of the correct answer. Write your
answer in a yellow paper. ________
1. Which of the following is a form of business which has unlimited liability. Creditors may proceed not only
against the assets and property of the business, but also after the personal properties of the owner.
a. Corporation b. Sole Corporation
c. Partnership d. Sole Proprietorship

2. The PhilippineCoopertive Code of 2008 is under what Republic Act?

a. RA 9521 b. RA 9520
c. RA 9522 d. RA 9250

3. When the preconditions fo take-off are met, a society can take-off.

a. Drive to Maturity b. Take-off
c. Traditional Society d. None of the above

4. It acts as a general partnership but is clearly for a limited period or a single project. Which of the following is
CORRECT answer?
a. General Partnership b. Limited Partnership
c. Joint Venture d. None of the above

5. In which a type of partnership that divides responsibility for management and liability, as
well as the shares of profit or loss according to their internal agreement.
a. General Partnership b. Limited Partnership
c. Joint Venture d. None of the above
ASSESSMENT
MULTIPLE CHOICE: Choose the letter of the correct answer. Write your answer in the space provided.
____1. The followings are the disadvantages of Corporation except ONE.
a. Incorporation requires more time and money that other forms of organization.
b. Monitored by federal, state and some local agencies.
c. May result in higher overall taxes.
d. May deduct the cost of benefits it provides to offices and employees.

____2. Which of the following is advantage of Corporation?

a. Can raise additional funds through the sale of stock.
b. Requires more time and money than other forms of organization.
c. Processes of paperwork to comply with the regulation.
d. All of the above

____3. Which of the following is CORRECT about Sole Proprietorship?

a. Not easiest and highly expensive form of ownership to organize.
b. The business is easy to dissolve, if desired.
c. Cannot control within the parameters of the law.
d. Profits from the business are divided into the employees.

____4. The following are the advantages of partnership except ONE.

a. The Business usually will benefit from partners who have complementary skills.
b. With more than one owner, the ability to raise funds may be increased.
c. Partners are jointly and individually liable for the actions of the other partners.
d. Prospective employees may be attracted to the business if given the incentive to become partner.

____5. It means that most of the partners have limited liability, as well as limited input
regarding management decision.
a. Abundant
b. Unlimited
c. Single
d. Limited

____6. Which of the following are disadvantages of Sole Proprietorship?

a. Have limited liability and are legally responsible for all debts against the business.
b. Some employees benefits such as owner’s medical insurance premiums are not directly deductible from
business income
c. Have a hard time attracting high-caliber employees
d. All of the above

____7. It is registered in the same manner as other corporations with the SEC, except that
it is composed of only one person, just like a sole proprietorship.
a. One Person Corporation
b. Partnership
c. Double Person Corporation
d. Cooperative
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____8. Republic Act 9520 also known as:
a. Philippine Cooperative Code of 2008
b. Philippine Cooperative Code of 2009
c. Philippine Corporation Code of 2008
d. Philippine Corporation Code of 2009

____9. The following are the objectives and Goals of a Cooperative except ONE.
a. Provide good and services to its members to enable them to attain increase income, savings, investments and
purchasing power.
b. Allow the higher income and higher privileged group to increase their ownership in the wealth of the nations.
c. Teach them efficient ways of doing things in a cooperative manner.
d. Provide optimum social and economic benefits to its members.

____10. SEC stands for:

a. Securities and Exchange Corporation
b. Security and Exchange Commission
c. Securities and Exchange Commission
d. Security and Exchange Corporation
_____

REFLECTIVE LEARNING SHEET:

Reflective Question: If you want to open a business, what are the possible things you will consider responding
to the COVID-19 pandemic? Cite at least two and explain. Write your answer in the space provided.
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6
REFERENCE

Books
Darr, K. (2013). Introduction to Management and Leadership Concepts, Principles and Practices, Jones and
Bartlett Learning, Retrieved from: https://www.google.com.et
Mintzberg, H. (1989). MINTZBERG ON MANAGEMENT. Reprinted by permission of Free Press, a division of Simon
& Schuster, Inc.
Robbins, S., Robbins, S. P. and Coulter, M. (2012). Management -11th ed, Pearson. Retrieved from:
www.pearsonhighered.com
Websites
Smyth, D. (2019). The Roles of Business Organizations in Economic Development. Retrieved
from:https://bizfluent.com/info-7745795-roles-business-organizations-economic-development.html
https://www.managementstudyhq.com/functions-of-management.html
https://www.slideshare.net/LalaineCazar/nature-and-concept-of-management?from_action=save
https://www.wisdomjobs.com/e-university/principles-of-management-and-organisational-behaviour-tutorial-
366/evolution-of-management-thought-12679.html
https://www.mindtools.com/pages/article/management-roles.htm

Answer key:

Activities
Activity 1: Independent Activity
Sample suggested answer: This topic helps me to appreciate the roles played by every institution in the
community, big or small organization-public or private. It can create an impact on the business and to
the people in it, including but not limited to the owners, management, staff, and the community itself.
This way, I realize that my parents, siblings, and other family members are essential too. Their
presence helps us do better with what we do in school and the community.
Activity 2: Independent Activity
Rubrics:
To Discuss Answer

1. Sole Proprietorship is a type of enterprise that is owned and run by

one person and in which there is no legal
distinction between the owner and the business
entity. A sole trader does not necessarily work alone-it
is possible for the sole trader to employ other people.

is an arrangement where parties, known

as business partners, agree to cooperate to
advance their mutual interests. The partners in a
partnership may be
individuals, businesses, interest-
based organizations, schools, governments or
combinations. Organizations may partner to
2. Partnership increase the likelihood of each achieving their
mission and to amplify their reach. A partnership
may result in issuing and holding equity or may
be only governed by a contract.
3. Corporation is a legal entity that is separate and distinct from
its owners. Corporations enjoy most of the rights
and responsibilities that individuals
possess: they can enter contracts, loan and
borrow money, sue and be sued, hire employees,
own assets, and pay taxes. Some refer to it as
a "legal person."
 4. Cooperative is a business owned and operated by those who
use its services. Although cooperatives are for-
profit businesses, they do not exist to maximize
profit. The goal of a cooperative is to fill a mutual
need of the members that own the business.

Rubrics:
4 Expert – Piece is extraordinary, and very informative and well organized
3 Accomplished – Piece has an interesting style, and somewhat informative and organized.
2 Capable – Piece has little style, gives some new information but poorly organized.
1 Beginner - Piece has no style and, and gives no new information and very poorly organized

Check your understanding

1. D
2. A
3. B
4. C
5. A
Assessment
1. B
2. D
3. B
4. C
5. D
6. D
7. A
8. A
9. B
10. C

Prepared by:

AIDEN C. FOJAS
TeacherI
Escalante National High School