Advantage and Disadvantages of Business Organization

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 ADVANTAGES AND DISADVANTAGES OF A CORPORATION

 One of the advantage of a corporation is its limited liability to its shareholders. They can only
be held accountable for their individual investment of shares in the corporation. Another
advantage is that corporation can debut the benefits it provides to its employees and consider
them as expenses. It also has a general stability since the death or withdrawal of one
shareholder does not result in its dissolution.

 The process of forming the corporation or incorporation is more complicated than forming a
sole proprietorship and partnership. A corporation is closely monitored by the government
and other local agencies like SEC. Thus, more paperwork is required of a corporation to
comply with permits and other legal requirements.

 FOREIGN BUSINESS ORGANIZATIONS

 The Branch Office is organized to do the activities of the head office from the host country.
The minimum paid-up capital of a branch office is US$200,000. This can be lowered to
US$100,00 if advanced technology is involved or at least 50 employees are directly employed.
It is required to register with the SEC.

 The Representative Office is fully supported by the head office and does not obtain funds
from its main office overseas. It deals directly with the clients of the parent company and
engages in business activities such as communication, promotion of products, and quality
control of products for export. The initial minimum inward is US$30,000 for operating
expenses. It should be registered with the SEC.

 The Regional Headquarter only performs activities that primarily involve supervision,
communication, and coordination. It serves as a coordinating center to its subsidiaries,
affiliates, and branches in the region and acts as an administrative branch of a multinational
company. It does not derive income within the Philippines and does not participate in
managing a branch in the Philippines. A capital of US$50,000 is required as annual operating
expenses.

 The Regional Operating Headquarter performs the following services to its affiliates
subsidiaries, and branches in the Philippines: (1) administration and planning, (2) acquisition
of raw materials, (3) marketing (4) technical support and communications, and (5) research
and development. It derives its income from its activities in the country. The required capital
is US$200,000 as one-time payment.

 CLASSIFICATION OF BUSINESSES

1. Service Business is a type of business that provides labor and other services to customers.
Examples are transportation companies like airlines and shipping lines; professional services
like accounting, legal, engineering, and customer service; entertainment like amusement
parks and movie houses; hotels and restaurants; apartments banks and lending companies;
event planners; telecommunication services; medical services; media; and many others.

2. Merchandising Business a type of business that purchase products from other businesses like
manufacturers and sells them to costumers at a higher retail price. Examples are grocery
stores, supermarkets, car dealers, real estate dealers, and electronics stores.

3. Manufacturing Business is a type of business where raw materials are transformed into
finished goods through product-processing, labor, and other manufacturing processes.
Examples include manufacturers of soap and detergent, canned goods, automobiles, and
medical drugs.

There are other businesses that cannot be classified into any of the three types like agriculture,
aquaculture, and mining companies.

 ASSESS YOURSELF =)

 Directions: On a ½ crosswise, answer the following questions.

1. It is a company owned by one person who is usually hands-on in managing the day-
to-day activities.

2. What term refers to a government agency tasked with regulating and monitoring
business organizations and corporations?

3. This refers to the resources with economic value that are owned and controlled by the
business owners.

4. What form of a business organization that has a distinct personality separate from its
owners and has a minimum of five and a maximum of fifteen owners who are called
shareholders?

5. Directions: Write the Advantages and the Disadvantages


of a Corporation. This is worth for 10 points.

 ADVANTAGE

 DISADVANTAGE

 ANSWERS

1. It is a company owned by one person who is usually hands-on in managing the day-to-day activities.

2. What term refers to a government agency tasked with regulating and monitoring business
organizations and corporations?
3. This refers to the resources with economic value that are owned and controlled by the business
owners.

4. What form of a business organization that has a distinct personality separate from its owners and
has a minimum of five and a maximum of fifteen owners who are called shareholders?

 ADVANTAGES AND DISADVANTAGES OF A CORPORATION

 ADVANTAGE

 One of the advantage of a corporation is its limited liability to its shareholders. They can only
be held accountable for their individual investment of shares in the corporation. Another
advantage is that corporation can debut the benefits it provides to its employees and consider
them as expenses. It also has a general stability since the death or withdrawal of one
shareholder does not result in its dissolution.

 DISADVANTAGE

 The process of forming the corporation or incorporation is more complicated than forming a
sole proprietorship and partnership. A corporation is closely monitored by the government
and other local agencies like SEC. Thus, more paperwork is required of a corporation to
comply with permits and other legal requirements.

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