CHAPTER 1

A business organization

- is an individual or group of people that collaborate to achieve certain commercial goals.

- "business organization" is to focus on each word separately.

Nonprofits

- are formed for public purposes.

- These businesses often raise money and utilize other resources to provide or support public
programs.

For-profit businesses

- sell products or services to generate revenue and earnings.

- Success depends on the ability to gain more in revenue than is spent on fixed and variable
expenses.

Nonprofit businesses

- must bring in enough revenue to pay employees and cover the costs to administer or support
programs.

- Any money they have left over after expenses is put back into the organization.

The following, according to Scarborough et al (2009), are relevant issues the businessmen should
consider in the evaluation process:

Tax consideration
Liability exposure
Start – up and future capital requirements
Management ability
Business goals
Management succession plans
Cost of formation

1. Tax consideration: Graduated tax rates, the government’s (that is local, state and federal) constant
modification of the tax code, and the year-toyear fluctuations in a company’s income require an
entrepreneur to calculate the firm’s tax liability under each ownership option every year.

2. Liability exposure: Certain forms of ownership offer business owners greater protection from
personal liability due to financial problems, faulty products, and a loss of other difficulties. An
entrepreneur must evaluate the potential for legal and financial liabilities and decide the extent to
which they are willing to assume personal responsibility for their companies‟ obligations.

3. Start – up and future capital requirements: The form of ownership can affect an entrepreneur’s
ability to raise start-up capital. Also as a business grows, capital requirements increase, and some forms
of ownership make it easier to attract outside financing.

4. Management ability: Entrepreneurs must assess their own ability to successfully manage their own
companies. Otherwise, they may need to select a form of ownership that allows them to involve people
who possess those needed skills or experience in the company.

5. Business goals: The projected size and profitability of a business influences the form of ownership
chosen. Business often evolves into a different form of ownership as they grow, but moving from some
formats can be complex and expensive. Legislation may change and make current ownership options
less attractive.

6. Management succession plans: Entrepreneurs, in selecting a form of business ownership, must look
ahead to the day when they will pass their companies on to the next generation or to a buyer. Some
forms of business ownership better facilitate this transition. In other cases, when the owner dies –so
does the business.

7. Cost of formation: The cost to create forms of ownership varies. Entrepreneurs must weigh the
benefits and the costs of the form they choose.

A partnership agreement
Name of the partnership
Purpose of the business
Location of the business
Duration of the partnership
Names of the partners and their legal addresses
Contributions of each partner to the business, at the creation of partnership and later
Agreement on how the profits or losses will be distributed.
Agreement on salaries or drawing rights against people for each partner
Procedure for expansion through the addition of new partners
Distribution of the partnerships asset of the partners
Sale of the partnership interest
Absence or disability of one of the partners
Voting rights
Decision making authority
Financial authority
Handling tax matters
Alteration or modifications of the partnership agreement
Termination of partnership
Distribution of assets upon dissolution of the partnership

TYPES OF PARTNERSHIP
There are four types of partnership;

General partnership
Limited partnership
Master Limited Partnership (MLP)
Limited Liability Partnership (LLP)

(1.) General partnership: This is a partnership in which all owners share in operating the business and in
assuming liability for the business’s debts.
(2.) Limited partnership: This is a partnership with one or more general partners and one or more
limited partners. Limited partners is one in which certain partners are liable only for the amount of their
investment. This is a special kind of partnership governed by partnership Act of 1907. The purpose of a
limited partnership is to allow one or more individuals to provide capital on which a return is expected.
In case of liquidation, the limited partners only lose the capital.
(3) Master Limited Partnership (MLP): This is a newer form of partnership which looks much like a
corporation in that it acts like a corporation and is traded on the stock exchanges like a corporation but
it is taxed like a partnership and thus avoids the corporate income tax.
(4) Limited Liability Partnership (LLP): LLP limited partners‟ risk of losing their personal assets to only
their own acts and omissions of people under their supervision. This newer type of partnership was
created to limit the disadvantage of unlimited liability.

TYPES OF PARTNERS
General partner
Limited partner
Silent partners
Secret partners
Sleeping partners
Nominal partners
1) General partner: A general partner is an owner (partner) who has unlimited liability and is active in
managing the firm.
2) Limited partner: A limited partner is an owner who invests money in the business but does not have
any management responsibility or liability for losses beyond the investment.
3) Silent partners: These are partners who are known by the public as owner of the business, but they
may take no active role in marketing the business.
4) Secret partners: These are partners who take active role in the management of the company but
they are unknown to the outsiders as partners.
5) Sleeping partners: These are also known as dormant partners, they are neither known as partners by
the public nor do they participate in managing the company. They only share from the profit /loss of the
business to the tune of capital contributed.
6) Nominal partners: These kinds of partners are publicly known that they are partners although they
have no investment in the business and therefore have no rights of management. They merely lend
their names to the enterprise and may be liable for certain debt of the partnership.

Thus dissolution occurs when a general partner ceases to be associated with the business.
This may be as a result of:
1. Expiration of a time period or completion of the project undertaken as delineated in the partnership
agreement.
2. Expressed wish of any general partner to cease operation.
3. Expulsion of a partner under the provisions of the agreement.
4. Withdrawal, retirement, insanity, or death of a general partner (except when the partnership
agreement provides a method of continuation).
5. Bankruptcy of the partnership or of any general partner.
6. Admission of a new partner resulting in the dissolution of the old partnership and establishment of a
new partnership.
7. A judicial decree that a general partner is insane or permanently incapacitated, making performance
or responsibility under the partnership agreement impossible.
8. Mounting losses that make it unpractical for the business to continue.
9. Impropriety or improper behavior of any general partner that reflects negatively on the business.
Types of Cooperative
1) Consumer/producer co-operative

2) Workers co-operative

3) Finance co-operatives

CHAPTER 2
 The work of management is divisible into two aspects:

a. Organization

b. Administration

Arrangement of the parts thereof in a logical and suitable manner for operation
or service such as;

A. laying out the functions of the parts

B. gathering the requisite capital and personnel
C. assignment of responsibilities
D. determining future activity
Organization establishes the answers to the questions of

WHY, WHAT, WHO, WHEN, WHERE, and HOW

MANAGEMENT FUNCTIONS

Organization

1. Definition of objectives
2. Formulation of plans
3. Implementation of plans
4. Development for the future
Administration

1. Direction of daily activities

2. Coordination of resources
3. Control for economy
4. Supervision for efficiency and attainment of Objectives
Functions of Management As
Planning
Organizing
Staffing
Directing
Controlling
The ten (10) principles of management
1. Well-defined Objectives
2. Adequate Resources fully utilized
3. Careful Decision Making
4. Plan Carefully
5. Calculate your Risk
6. Responsibility and Authority
7. Improved Earnings, Reduce Costs
8. Moving Forward
9. Inspire Best Efforts 10. Community Betterment and General Progress

In Decision Making, there should be a thorough study of the problem from the viewpoint of everyone
concerned and not only from the management’s viewpoint. An important decision in a large business
undertaking may be of serious concern not only to the management but also to

The Stockholders
The Personnel
The Customers
The Community
The Government

Right Planning of arrangements and of the sequence of work will bring about the accomplishment of
tasks in logical order, accurately, promptly, and economically. Business Organization and Management
25 We must visualize the work to be done, what are needed to do the work well, and how to have all
these at the time and at the place of need. Inadequate planning may cause

Additional Expense for Alterations

Loss of Time
Loss of Opportunities
Faulty Production

An enterprise should be strong enough, through sufficient financial reserves, to weather such

Contingencies like a temporary drop in business

A prolonged labor strike

Expensive court litigation

Responsibility is the accountability for the performance and the use of resources, while Authority is the
freedom to exercise initiative, decide courses of action, and oblige performance from others in the
discharge of one’s responsibilities.

Initiative

Persistence

Originality
have to be exercised so that revenue-producing opportunities are found and developed.

e. All projects should be evaluated in terms of what they will cost in

time
effort
money
as against the benefits expected from the projects.

There are many ways by which costs may be reduced:

Perfect attendance
Work simplification
Proper maintenance
Better methods
Adequate supervision
Inventory control
Quantity purchasing

A good wage policy provides two things:

1. Enough to live on
2. Something to grow on.

If the leader himself renders dedicated service and is just in dealing with his staff and with the public, he
will find it easy to obtain the best results through the
Loyalty
Integrity
Best efforts

If the personnel are carefully chosen before employment, given adequate inservice training, and
inspired to render best service through
Good leadership
Recognition
Attractive working conditions

Good community relations contribute substantially to the company’s goodwill, and management
should actively participate in such projects as community beautification, nuisance abatement, cultural
and educational funding support, social betterment, and civic action