Name: LABE, WENNONAH VALLERIE Code/Subject: ACCBP100- 433

Prof. YOLANDA BARCELONA Date: September 03, 2021

Let’s Analyze

Activity 1. Please explain your answers thoroughly. Kindly observe a minimum of five (5)
sentences per paragraph

1. There are three (3) forms of business organization: Sole Proprietorship, Partnership and
Corporation. If you are to start your own business, which form of business organization
would you choose? Why did you choose this form or business organization? How did you
come up with your answer?

Creating a business is one way to make a living. So as early as now, I am thinking of

what form of business organization I should open. For me, a partnership is what I think
would be best because I have my friend or relative with whom I can be a partner. I am not
thinking of expanding it yet, however, my mission is to provide for the needs of the locals in
our province because it is away from the city. It was hard to acquire resources since it is
located in a remote area. Lastly, I wanted to be a buyer of copra so that they no longer need
to have 4-hour travel to sell it.  

2. Among the major decisions involved in finance function (investing, financing, dividend
and risk management), which is the most essential? Please expound your answer.

In connection to my future plans in the first item, investing decision is most

important. It is a given that we already have the capital, investing and what assets to acquire
could be overwhelming. We will have to look for an area where it is convenient for the
majority of the locals. Then, we’ll have to plan carefully how big will be the building is and
the necessary equipment to run the business. To sum it up, all of the finance functions are
essential but for the starter, investing is what aspiring business owners should be thinking
and deciding carefully and practically.

3. In 1776 Adam Smith described how an “invisible hand” guides companies striving to
maximize profits so that they make decisions that also benefit society. Smith’s insights led
economists to reach two key conclusions: (1) Profit maximization is the proper goal for a
business, and (2) the free enterprise system is best for society. In the current age, given the
various evolvement in business enterprises, do you still regard the “invisible hand” as a
reliable guide? Please expound your answer.

Talking about the invisible hand in the present situation, I believe it is still a good
guide. Because both parties, the customer and the business, would have the ability to
decide what they would buy and sell. According to Adam Smith  The Wealth of the Nation
(1776),  “It is not from the benevolence of the butcher, the brewer, or the baker that we got
our dinner- but from their regard to their own self-interest.” The companies are free to sell
what they think the society needs and think of it as an advantage since they also care about
the money the customer will give in exchange for a service or goods. The seller and the
buyer must enter the exchange of their own accord and voluntarily decide that the
exchange is in each of their interest. Each party must have an opt-out option. Thus, the self-
interest of the individual is what grows the economy and the sum of all individual choices on
the part of businesses and consumers inevitably guide economic growth.