Business Ethics

and Social
Responsibility
 Market Buying Goods and
Strategy services

Making
Selling BUSINESS money

Assets Producing Liabilities

Forms, Purposes and
Role of Business
Organizations in
Socio-Economic
Development
 What is business?
➢The term business refers to an
organization or enterprising entity
engaged in commercial, industrial, or
professional activities. The purpose of a
business is to organize some sort of
economic production of goods or
services.
 Business
➢According to Investopedia, a
business is “an organization or
enterprising entity engaged in
commercial, industrial, or
professional activities.”
 Business
➢also used in referring to the
“organized efforts and activities of
individuals to produce and sell goods
and services for profit.”
 Business
➢an organization or economic system
where goods and services are
exchanged for one another or for
money.
 Business
While most people associate
businesses with profits or those
known as profit organizations, there
are also non-profit organizations or
those that are put up to advance
charitable or social causes.
Business organizations vary
in scale and are divided into
the following major forms:
 Sole Proprietorship
➢ also known as a sole trader, is
owned by one person and operates
for their benefit. The owner may
operate the business alone or with
other people.
 Sole Proprietorship
•A sole proprietor has unlimited
liability for all obligations incurred by
costs or judgments against the
business. All assets of the business
belong to a sole proprietor.
 Advantages of Sole
Proprietorship
1. Easiest and least expensive form of
ownership to organize.
2. Sole proprietors are in complete
control, and within the parameters of
the law, may make decisions as they see
fit.
 Advantages of Sole
Proprietorship
3. Profits from the business flow-
through directly to the owner’s personal
tax return.
4. The business is easy to dissolve if
desired.
 Disadvantages of Sole
Proprietorship
1. Sole proprietors have unlimited
liability and are legally responsible for
all debts against the business. Their
business and personal assets are at
risks.
 Disadvantages of Sole
Proprietorship
2. May be at a disadvantage in raising
funds and are often limited to using
funds from personal savings or
consumer loans.
 Disadvantages of Sole
Proprietorship
3. May have a hard time attracting
high-caliber employees, or those that
are motivated by the opportunity to
own a part of the business.
 Disadvantages of Sole
Proprietorship
4. Some employee benefits such as
owner’s medical insurance premiums
are not directly deductible from
business income (only partially as an
adjustment to income).
 Partnership
➢ business owned by two (2) or
more people. In most forms of
partnerships, each partner has
unlimited liability for the debts
incurred by the business.
 Partnership
•In a partnership, the partners should
have a legal agreement that sets forth
how decisions will be made, profits will
be shared, disputes will be resolved,
how future partners will be admitted to
the partnership when needed.
Advantages of Partnership
1.Partnership are relatively easy to
establish; however, time should be
invested in developing the partnership
agreement.
2.With more than one owner, the ability
to raise funds may be increased.
Advantages of Partnership
3.The profits from the business flow directly
through to the partners’ personal tax return.
4. Prospective employees may be attracted to the
business if given the incentive to become a
partner.
5.The business usually will benefit from partners
who have complementary skills.
Disadvantages of Partnership
1. Partners are jointly and individually
liable for the actions of the other
partners.
2. Profits must be shared with others.
3. Since decisions are shared,
disagreements can occur.
Disadvantages of Partnership
4. Some employee benefits are not
deductible from business income on tax
returns.
5. The partnership may have a limited
life; it may end upon the withdrawal or
death of a partner.
 Corporation
•The owners of a corporation have
limited liability and the business has a
separate legal personality from its
owners.
 Corporation
Corporations can be either:
➢government-owned or
➢privately owned.
They can organize either for profit or as not-
for-profit organizations.
 Corporation
Privately owned, for-profit
corporation is owned by its
shareholders, who elect a board of
directors to direct the corporation and
hire its managerial staff. can be either:
 Corporation
Privately owned, for profit
corporation can be either privately
held by a small group of individuals,
or publicly held, with publicly
traded shares listed on a stock
exchange.
 Cooperative
➢a business organization owned by a
grouped of individuals and is operated for
their mutual benefit. The persons making
up the group are called MEMBERS.
➢Cooperatives may be incorporated or
unincorporated.
Advantages of Cooperative
1. Generally inexpensive to register.
2. A cooperative organization is owned and
controlled by members.
3. Members have an equal vote at general
meetings regardless of their level of
investment or involvement. One member, one
vote.
Advantages of Cooperative
4. All members must be active in the co-
operative.
5.This type of organization has a limited
liability.
6. Profit distribution (surplus earnings) to
members is carried on in proportion to the use
of service; surplus may be allocated in shares
or cash.
Disadvantages of Cooperative
1. A cooperative organization entails
longer decision-making process.
2. It requires members to participate for
success.
3. It has less incentive, and there’s also a
possibility of development of conflict
between members.
4. As co-cooperatives are formed to
provide a service to members rather than
a return on investment, it may be difficult
to attract potential members seeking a
financial return.The primary goal of a cooperative is to meet the needs and interests of its members
5. There is usually limited distribution of
profits to members and some co-
cooperatives may prohibit the distribution of
any surplus.
6. Members providing greater involvement
or investment than others will still only
get one vote.
7. Extension record keeping is necessary in
this form of organization.
Role and Purposes of
Business Organizations in
Socio-Economic
Growthmankind.”
• - Neil Armstrong
 Role and Purposes of
Business Organizations
1. Businesses create jobs for people,
strengthening the economic health of
each community where a business is
based.
2. Businesses bring technological
change and innovation.
 Role and Purposes of
Business Organizations
3. Different forms of business maintain
healthy competition in the market by
offering diverse products or services to
consumers.
4. Businesses improve the quality of life of
small or big entrepreneurs.
 Role and Purposes of
Business Organizations
5. Business establishments serve as
place for interaction between and
among people.
6. Businesses boost economic revenue
which helps in social and economic
development of a country.
 Role and Purposes of
Business Organizations
7. Business organizations contribute to
the Gross Domestic Product (GDP) of a
country.