FORMS and ECONOMIC ROLES

of BUSINESS ORGANIZATIONS
for Organization and Management
Senior High School (ABM)
Quarter 1 / Week 4

FOREWORD
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 This Self Learning Kit for Organization and Management is an
innovative tool crafted exclusively for Senior High School students.
It assists students in understanding the basic concept of
organization and management explicitly on analyzing the forms
and economic roles of business organizations.
It is aligned with the BEC of the Department of Education
following the prescribed MELCs (Most Essential Learning
Competencies.
This Self Learning Kit is divided into three parts.
What happened?
This section contains a review that assess the learnings and
skills of the students from the previous lesson and a pretest that
measures student’s prior knowledge and the concepts to be
mastered throughout the lesson.
What I Need to Know? (Discussion)
This section also contains the difference among the forms of
business organizations and its role to the economy. The topic
intends to make the students appreciate the importance of
business organizations in today’s economic environment and
society.
What I have Learned? (Evaluation/Post Test)
A summary of key concepts and exercises that measures
student’s understanding on the forms of business organizations and
its role to the economy. Students are expected to apply the
concepts they’ve learned, as these will strongly influence the kind
of manager they will become in the future.

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OBJECTIVES:
At the end of the lesson, the students are expected to:
K: enumerate the forms and economic roles of business
organizations;
S: explain the forms and economic roles of business
organizations; and
A: appreciate the importance of analyzing the forms and
economic roles of business organizations in relation to
the company.

LEARNING COMPETENCY:
Analyze the forms and economic roles of business
organizations. (ABM_AOM11-Ic-d-4.1)

I. What Happened

LOOKING BACK TO YOUR LESSON!

Create a Personal SWOT analysis. Fill in your strengths,

weaknesses, opportunities and threats in the matrix below. Kindly
write two information in each factor.
STRENGTHS WEAKNESSES

S W
OPPORTUNITIES THREATS

O T
PRE-TEST:
Multiple Choice. Encircle the letter that corresponds th2e correct answer.

1. It is a social unit of people that is structured and managed to meet a need

or to pursue collective goals.
A. Economy B. Organization
C. Employment` D. None of these

2. Suppose you want to open your own boutique and you use your savings to
start up the business, and you are the sole owner of the said boutique. This
type of business is called _____________________.
A. Sole Proprietorship B. Partnership
C. Corporation D. Cooperative

3. It is an artificial being created by operation of law, having the right of

succession and the powers, attributes and properties expressly authorized
by law or incident to its existence.
A. Sole Proprietorship B. Corporation
C. Partnership D. Cooperative

4. Which role of business organization that taxes are being collected from
businesses to fund governments’ expenditures and programs?
A. Provide Employment
B. Through Investment
C. Production of Goods and Services
D. Increase in Government’s Revenue

5. What is your analysis of the given statements below?

Statement 1: Economy is a system of organizations and institutions that
either facilitate or play a role in the production and distribution of goods
and services in a society.
Statement II: Business organizations help improve economy through job
creation.
A. Both Statements are true B. Only Statement 1 is true
C. Only Statement II is true D. Both Statements are false

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II. What You Need To Know

KEY POINTS!
Forms of Business Organization
▪ Sole Proprietorship
▪ Partnership
▪ Corporation
▪ Cooperative

Roles of Business Organizations in Relation to the Economy

▪ Provides Employment
▪ Drives the Economy Through Investment
▪ Produce more Goods and Services
▪ Increase Government’s Revenue

KEY TERMS!

Organization is a social unit of people that is structured and managed to

meet a need or to pursue collective goals.

Economy is a system of organizations and institutions that either facilitate

or play a role in the production and distribution of goods and services in
a society.
(what-is-economy-definition-types-quiz.html n. d.)

Unlimited Liability. In a lawsuit, the personal properties of the owners can

be held beyond their contributions and may be used to answer for any
liability of the business.

Limited Liability. Owners are not personally liable of the company’s debts
or obligation, their liability is limited to their equity (ownership) in the
company.

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DISCUSSION

FORMS OF BUSINESS ORGANIZATIONS

An organization is a social unit of people that is structured and managed
to meet a need or to pursue collective goals. A business organization may
assume any of the following forms:

A. Sole proprietorship
• Also referred to as “single proprietorship”.
• A business that is owned by only one individual for the practice of
trade or profession.
• Simple and least costly form of ownership among other forms of
business. It is registered through the Bureau of Trade Regulation
and Consumer Protection (BTRCP) of the Department of Trade
and Industry (DTI).
• Common to small business entities like beauty salon, computer
shop, repair shop, and grocery store.

Advantages Disadvantages
Easy to start, easy to dissolve; with Limited source of capital
less government requirements
Fast decision making; only one Limited Life – the business ceases to
person decides operate if the owner dies, becomes
physically or mentally incapacitated
Full control of operations The owner is legally obliged to pay all
business debts
Flexibility of operations Management may be limited to the
owner’s capabilities

B. Partnership
• Business that is owned by two or more persons pooling their
resources together as common fund. (The details of the
arrangement between the partners are outlined in a written
document called Articles of Partnership).
• Just like corporation, it is registered with the Securities and
Exchange Commission (SEC).
• The partners are normally involved in the management and
operation of the business.
• Profits are divided among partners based on their agreed sharing.
The owner is called partner.
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 • The most common example of partnerships are professional
partnerships, such as law and accounting firms.

Advantages Disadvantages
Easy to form; with proper agreements Limited life – the business ceases to
on its formation operate if one of the partners dies,
becomes physically or mentally
incapacitated.
Suited to the practice of a profession A partner can be held liable for the
acts of other partners
Higher capital because two or more Unlimited liability of one or all owners
persons will contribute to the for the debts of the partnership.
common fund
Less regulations compared to High possibility of dispute and
corporation conflicts between partners

C. Corporation
• A business organized as a separate legal entity (artificial person)
under the corporation law with ownership divided into
transferable shares of stocks. It is a business required to have five
to fifteen incorporators. Incorporators refer to those who originally
formed the corporation. The existence of the corporation is
evidenced by Articles of Incorporation and by-laws that are duly
approved by Securities and Exchange Commission (SEC).

Section 2 of the Corporation Code of the Philippines defines

corporation as “an artificial being created by operation of
law, having the right of succession and the powers, attributes
and properties expressly authorized by law or incident to its
existence.”

• It has a legal personality that is separate and distinct from the

owners. The owners are called stockholders or shareholders. The
voting rights of a shareholder is generally based on the
percentage of ownership.
• Management of the business is delegated by the shareholders to
the Board of Directors.
• Example includes :
✓ General Motors Corporations - an icon for
craftsmanship,

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 ✓ Apple Corporations - one of the famous tech
companies and Amazon Corporation as the world’s
leading ecommerce and innovation company.

Advantages Disadvantages
Capacity as a legal entity Activities limited by the articles of
incorporation and corporate by-
laws
More sources of funds More regulations to be followed
Easy to transfer ownership through Profit is taxed at the corporate tax
selling of stocks rate and stockholders are taxed
again when profits are distributed to
them
Liability of stockholders/shareholders Costly to incorporate
is limited
Unlimited life Possibility of abuse of powers by
(50 years subject for renewal) officers

D. Cooperative
• Duly registered association of persons with a common bond of interest,
voluntarily joining together to achieve their social, economic and
cultural needs.
• Usually requires at least fifteen members to function.
✓ Usually a board of directors and officers are elected to
manage the business operation.
✓ The owners are called members who contribute equitable
to the capital of the cooperative.
✓ The members are expected to patronize their products and
services.

• The word “cooperative” appears in the name of the entity.

• This form of business organization is regulated by the Cooperative
Development Authority (CDA).
• Shall exist for a period not exceeding fifty (50) years from date of
registration sooner dissolved or unless said period is extended.
• Types of cooperatives:
✓ credit cooperative,
✓ consumer cooperative
✓ multi-purpose cooperative
✓ electric cooperative
✓ water service cooperative
✓ fishermen cooperative
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 ✓ health service cooperative
✓ cooperative bank
✓ marketing cooperative

Advantages Disadvantages
Unlimited life. The change of Obtaining capital through investors.
members does not dissolve the Cooperative has a “one-member-
business one vote” philosophy. Big investors
may choose to invest their money to
other firms where their voting power
is equal to their ownership interest.
Democratic organization. Social Lack of membership and
equality of members is the most participation. The cooperative may
important component of not fully function if members do not
cooperatives. It ensures that it serves involve themselves in the routine
its members’ needs. business operation.

ROLES OF BUSINESS ORGANIZATIONS IN RELATION TO THE

ECONOMY
Business plays an important role in the economy of the country. The
success of business translates to the economic well-being of a company and
offers improved quality of life of the citizens of the country hence, as a whole
affect directly to the world’s economy.
Here, we will delve the several aspects that relate the importance of
business in today’s economic environment and society.

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A. Provide Employment
• New employment opportunities provide chances for previously
unemployed or underemployed workers to increase take-home pay
and meet their financial obligations.
• Increased employee’s earnings lead to a higher rate of consumer
spending, which benefits other businesses who depend on consumer
sales to stay open thus, contributes to a healthier economy in the
locality.
• Providing employment opportunities for all is the single most effective
means of tackling poverty and social exclusion, thus improve an
individual’s standard of living.
• Employing people at each local business contributes to the economy of
the country.

Illustrative Example:
• Needs to hire cooks, wait staff, dishwashers, and other people.
• Provides jobs for many people

B. Drives the Economy through Investment

• Businesses encourage investment by keeping their profit margins large

and their cost of doing business low.

“Investing money in a business either in the form of technology or

in the form of money definitely helps the economic development. If
businesses have sufficient investment, it will produce more goods and
can provide more employment opportunities to the public (labors or
staff members). If employment opportunity increases in a country,
income and standard of living of the employees also increases. If
standard of living increases automatically the employees (labors or staff
members) consumption power also increases as employees and public
consume more goods from the business consequently, businesses will be
benefited so the economic conditions of the country will also develop”
(TS 2018)

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 Illustrative Example:
• as consumers buy more houses, house construction and contractors
see increases in revenue.
• as companies invest in their businesses in order to expand their
products and services, they hire more employees which yields to
develop the economy of the country.

C. Production of Goods and Services

• Businesses are designed to serve a particular need that people have,

and to provide trusted goods and services related to that need.

• In the modern economy, most firms and employees have found that to
be competitive with other firms and employees they must become very
good at producing quality goods and services because, when
consumer’s confidence or trust dips in business, it is not just sales that are
affected, this mistrust has a ripple effect which can result in a decline in
a country’s general economy.

• No matter how efficiently you make a product or how special the service
is that you deliver, if you lose consumer confidence as a result of your
business decision, consumers won’t support you by purchasing your
goods and services, and then nobody benefits.

D. Increase Government’s Revenue

• Businesses help increase governments revenue through the payment of

taxes hence, without business, there would not be much tax which will
on the other hand affect the government’s revenue generation.

• The increased presence of companies in the region translates to

increased tax revenue. Taxes that are collected by the government will
be used to fund government expenditures and programs. It is also used
for the salaries of public employees such as teachers, nurses, doctors,
agriculturist, policemen and many more.

• Additionally, business growth and increased sales contribute to better

national income in the form of higher tax revenue and higher
government spending, which can directly translate to better
maintenance and offerings of local infrastructure and services that
benefit the community.
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III. What Have l Learned

REMEMBER KEY IDEAS!

✓ Forms of Business Organization

Sole proprietorship - it is a business that is owned by only one individual for
the practice of trade or profession.

Partnership – it is a business that is owned by two or more persons pooling

their resources together as common fund.

Corporation - it is a business organized as a separate legal entity (artificial

person) under the corporation law with ownership divided into transferrable
shares of stocks.

Cooperative - A cooperative is a duly registered association of persons with

a common bond of interest, voluntarily joining together to achieve their
social, economic and cultural needs.

✓ Roles of Business Organizations in Relation to the Economy

The roles of business organizations in relation to the economy are:

▪ Provide Employment

▪ Drives the Economy Through Investment

▪ Produce more Goods and Services

▪ Increase Government’s Revenue

EVALUATION:

YOU CAN DO THIS!

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A. Differentiate the forms of business organizations by filling out the blank matrix
below.
ITEM Sole Partnership Corporation Cooperative
Proprietorship
1. Number of
Possible 1. 2. 3. 4.
Owners
2.
Management 5. 6. 7. 8.
(who manages
the business)
3. Termination
of the Business 9. 10. 11. 12.

4. Government
agency 13. 14. 15. 16.
assigned to
regulate
5. Transfer of
Ownership 17. 18. 19. 20.

B. Multiple Choice. Choose the letter that corresponds the correct answer.

21. Which role of business organization that improves the economy through job
creation?
A. Provide Employment
B. Through Investment
C. Production of Goods and Services
D. Increase in Government’s Revenue

22. What is your analysis of the given statements below?

Statement 1: Success in business translates to the economic well-being
of a company and offers improved quality of life of the citizens of the country.
Statement II: When consumer confidence or trust dips in business, it is not
just sales that are affected, this mistrust has a ripple effect which can result in
an increase in a country’s general economy.

A. Both Statements are true B. Only Statement 1 is true

C. Only Statement II is true D. Both Statements are false

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23. Which role of business organization that taxes are being collected from
businesses to fund governments’ expenditures and programs?
A. Provide Employment
B. Through Investment
C. Production of Goods and Services
D. Increase in Government’s Revenue

24. Suppose you want to open your own boutique and you use your savings to
start up the business, and you are the sole owner of the said boutique.
This type of business is called _____________________.
A. Sole Proprietorship B. Partnership
C. Corporation D. Cooperative

25. It is an artificial being created by operation of law, having the right of

succession and the powers, attributes and properties expressly authorized
by law or incident to its existence.
A. Sole Proprietorship B. Corporation
B. Partnership D. Cooperative

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 DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V

Schools Division Superintendent

JOELYZA M. ARCILLA, EdD

Assistant Schools Division Superintendent

MARCELO K. PALISPIS, EdD

Assistant Schools Division Superintendent

NILITA L. RAGAY, EdD

OIC - Assistant Schools Division Superintendent
CID Chief

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ELISA L. BAGUIO, EdD

Division Education Program Supervisor – MATHEMATICS

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

FLORAMAE T. SIOCO
Writer

BB. BOY JONNEL C. DIAZ

Illustrator/Lay-out Artist
_________________________________

ALPHA QA TEAM
LITTIE BETH S. BERNADEZ
MERCYDITHA D. ENOLPE
RONALD TOLENTINO
DIDITH T. YAP

BETA QA TEAM
ELIZABETH A. ALAP-AP
EPIFANIA Q. CUEVAS
NIDA BARBARA S. SUASIN
VRENDIE P. SYGACO
MELBA S. TUMARONG
HANNAHLY I. UMALI

ENHANCEMENT TEAM
BB. BOY JONNEL C. DIAZ
JEE LIZA T. INGUITO
SALVADOR G. AGUILAR JR

The information, activities and assessments used in this material are designed to provide accessible
learning modality to the teachers and learners of the Division of Negros Oriental. The contents of this module
are carefully researched, chosen, and evaluated to comply with the set learning competencies. The writers and
evaluator were clearly instructed to give credits to information and illustrations used to substantiate this material.
All content is subject to copyright and may not be reproduced in any form without expressed written consent
from the division.
 REFERENCES
Books:
Andres, C. et al. 2016 Fundamentals of Accountancy Business and
Management 1, 20-23. (Quezon City, Published by CHED

Orjalo, V. et al. 2016. Organization and Management: Concepts, Caselets,

and Exercises, 48-49. Quezon City: The Phoenix Publishing House Inc.

Tugas, F. et al. 2016. Fundamentals of Accountancy Business and

Management 1, 27-30. Quezon City: Vibal Group Inc.

Online Sources:
Dogarawa, A. 2010. The Role of Cooperative Societies in
Economic Development. Retrieved from
https://www.researchgate.net/publication/46446457_The_Role_of_Coo
perative_Societies_in_Economic_Development

Holland, P. n. d. What is the Role of Business in the Economy? Retrieved from

https://www.enotes.com/homework-help/what-role-business-
economy-716463

Partnership Business and Its Contribution to the Economic Development

and Growth of Nigeria. n. d. Retrieved August 5, 2020 from
https://www.grossarchive.com/upload/1425898382.htm

Ross, S. 2020. How does Total Capital Investment Influence Economic Growth?
Retrieved from
https://www.investopedia.com/ask/answers/032615/how-does-total-
capital-investment-influence-economic-growth.asp

Sisk, A. 2018. Major Factors Influencing Economic Growth. Retrieved from

https://bizfluent.com/list-6706424-major-factors-influencing-economic-
growth.html
 SYNOPSIS AND ABOUT THE AUTHOR

SYNOPSIS ANSWER KEY

This Self Learning Kit (SLK) is
about analyzing the forms and
economic roles of business
organizations. Specifically on the
difference among the four forms
of business organizations and the
roles in relation to the economy.
As you go over the
discussion you will appreciate the
role of business organizations in
today’s economic environment
and society.
Explore and Learn!

Explore and enjoy learning

how to solve direct, indirect
and partitive proportion inAUTHOR
SLK. FLORAMAE TUBOG SIOCO is an Accountancy Business and
Management (ABM) teacher at Dauin National High School Division
of Negros Oriental. She is currently teaching specialized, applied, and
core subjects for Senior High School students.
She graduated Bachelor of Science in Industrial Engineering from the
University of San Jose – Recoletos in Cebu City. She earned her
degree in Master of Business Administration at Foundation University,
Dumaguete City. She took her Continuing Program Education at
Negros Oriental State University (NORSU), which made her qualified to
teach in the Department of Education.
She was a faculty member of the School of Industrial Engineering,
Foundation University for 20 years. After 16 years, she became an
Acting Dean for two years in the same department and consequently
became the Dean until she retired.
Her experiences strengthened her in materializing this Self-Learning
Kit.