Business Ethics and

Social Responsibility: The

Nature and Forms of Business
Organizations
 MELC

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.
PRETEST
 TRUE OR FALSE

•1. Business is a passive process.

•2. Tax preparation is more difficult in a
sole proprietorship than in a corporation.
•3. A corporation is a separate entity
distinct from all the owners.
 TRUE OR FALSE

•4. Your liability as a shareholder is only

limited to the amount of your investment.
•5. A partnership may generate funds
through selling shares of stocks.
•6. A corporation may be owned by one
person.
 TRUE OR FALSE

•7. Handling money for a sole

proprietorship is easier than partnership.
•8. Book stores and sari-sari stores fall
under the service businesses category.
•9. Manufacturing businesses include
baked goods and cosmetics.
 TRUE OR FALSE

•10. The sole proprietor can pass the business

down to his/her heir.
•11. A sole proprietorship needs higher start-
up costs.
•12. Partnership business lacks formality
compared with managing a limited
•company or corporation.
 TRUE OR FALSE

• 13. Profit is the difference between the amount

received and the amount spent on
•something purchased, produced, or manufactured.
• 14. Merchandising businesses turn basic inputs
into products which are sold
•to consumers.
• 15. In a sole proprietorship, the owner decides
alone.
YOU ENGAGE INTO THIS IF YOU
WANT PROFITS.
THIS REFERS TO TWO OR MORE PEOPLE
WHO WORK TOGETHER OR DO
BUSINESS TOGETHER.
 3. IT IS AN ORGANIZATION ENJOYING
THE RIGHTS AND DUTIES AS THAT OF AN
INDIVIDUAL.
4. THIS IS WHAT MOST BUSINESSES
AIM FOR.
 GUIDE QUESTIONS

•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?
 GUIDE QUESTIONS

•Have you experienced being a

seller? What
item/product/service did you
sell? Can you still recall that
experience?
5. THIS IS ANOTHER TERM FOR THE
OWNER OF A BUSINESS.
 BUSINESS
• A 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.
 BUSINESS

• It involves significant operations such as

buying, assembling, distributing, advertising,
selling, and accounting.
 PROFIT
• The term profit refers to the difference
between the amount received and the
amount spent on something purchased,
produced, or manufactured.
 3 TYPES OF BUSINESS
ORGANIZATIONS
• Service businesses provide services to
customers rather than products.
Examples: computer repair, laundry
services, tutoring, delivery services,
wellness (such as gym or spa), etc.
 3 TYPES OF BUSINESS
ORGANIZATIONS

• Merchandising businesses sell to

customers products they buy from
other businesses. Examples: sari-sari
stores, bookstores, department stores,
groceries, supermarkets, etc.
 3 TYPES OF BUSINESS
ORGANIZATIONS

• 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
 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. Simply file an
individual income tax return including losses and
profits to your business. Your personal and business
income is considered the same and the tax
implications for self-employed individuals would
apply.
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.
 PARTNERSHIP
• It is a business relationship between two or
more people. It refers to an arrangement
where individuals share a business venture's
profits and liabilities. The partners give
feedback on how to use the capital and
other critical strategic decisions that may
provide different perspectives.
 ADVANTAGES:
• a. Partnership business lacks formality as compared with
managing a limited company or corporation.
• b. It is easy to start. The partnership may be created either
verbally or in writing.
• c. You share the burden. You have companion and
support.
• d. Every partner would add his/her own expertise, skills,
experience, and connections to the business, thus giving it a
greater chance of success.
• e. There is better decision-making. Two heads are better
than one.
 ADVANTAGES:
• f. There is privacy. The business deals may be kept
confidential by the partners.
• g. The partners own and control the business.
• h. The more partners there are, the more funds are
available in the company, which can be used for
possible expansion. Its borrowing capacity is also likely
to be higher.
• i. There is an easy access to profits in a business
partnership. The partners just have to divide the profits.
 DISADVANTAGES:
• a. The business does not have any independent legal status.
• b. The business has no separate legal personality, so the partners are
personally liable for the debts and losses incurred.
• 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 because there is a need for consultation
among partners.
• 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. Thus, they are subject to income tax in the financial year
in which they are made.
• j. There are limits on business development like unlimited liability, lack of
funding opportunities, and a lack of commercial status, etc.
 CORPORATION
It 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. 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, so income gets taxed
twice.
• b. The management team of a corporation
can operate the business without any real
oversight from the owners.
 • Below are sentences that characterize the forms of business.
Classify them by writing each sentence to the proper column.
Number one was given as an example. Write your answers from
numbers 2-10 on a separate sheet of paper.

1.It is a business relationship between two or

more people.
2. It is operated and owned by one person.
3. It is an independent entity.
4. The individuals agree to share profits and
liabilities.
5. It can sell shares of stocks.
 • Below are sentences that characterize the forms of business.
Classify them by writing each sentence to the proper column.
Number one was given as an example. Write your answers from
numbers 2-10 on a separate sheet of paper.

6. There is sharing of burden.

7. There could be difficulty in raising capital.
8. The decisions are made by a person
alone.
9. It files taxes separately from its owners.
10.The owner controls fully the financial and
operational matters
 TRUE OR FALSE ASSESSMENT
• 1. A corporation is a separate entity distinct from all the
owners.
• 2. Tax preparation is more difficult in sole
proprietorship.
• 3. Business is a passive process.
• 4. A partnership may generate funds through selling
shares of stocks.
• 5. The liability of a shareholder is only limited to the
amount of his/her investment.