9

TVE-
ENTREPRENEURSHIP 3
Quarter 2 – Module 1:
Obtaining Fundamental Skills in
Managing a Business
(Week 1-2)

1
TVE – Grade 9
Quarter 2 – Module 1: Obtaining Essential Knowledge and skills in Managing a
Business

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Development Team of the Module

Complier/Contextualizer: Junilyn A. Sobrevilla Abellana National School

Editors: Almera A. Camay,Principal Paril Elementary School
Girlie Alberio,ANS
Mary Jane J. Gamba, MT1, Ramon Duterte MNHS
Reviewer: Marlene G. Padigos
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Management Team: Rhea Mar A. Angtud, Schools Division Superintendent
Danilo G. Gudelosao, Assistant Schools Division Superintendent
Grecia F. Bataluna, CID Chief
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Marlene G. Padigos, EPS-EPP/TLE/TVL

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 Introductory Message
For the facilitator:

Welcome to the Entrepreneurship 3 Alternative Delivery Mode (ADM) Module on

Obtaining Essential Knowledge and Skills in Managing a Business!

This module was collaboratively designed, developed, and reviewed by educators

both from public and private institutions to assist you, the teacher or facilitator in
helping the learners meet the standards set by the K to 12 Curriculum while
overcoming their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration
their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

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 For the learner:

Welcome to the Entrepreneurship 3 Alternative Delivery Mode (ADM) Module on

Obtaining Essential Knowledge and Skills in Managing a Business!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action, and purpose. Through our hands we may learn, create, and
accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant
competencies and skills at your own pace and time. Your academic success lies in
your own hands!

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

This module has the following parts and corresponding icons:

This will give you an idea of the skills or

What I Need to Know competencies you are expected to learn in
the module.
This part includes an activity that aims to
What I Know check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.
This is a brief drill or review to help you link
What’s In the current lesson with the previous one.

In this portion, the new lesson will be

What’s New introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity, or a situation.
This section provides a brief discussion of
What is It the lesson. This aims to help you discover
and understand new concepts and skills.
This comprises activities for independent
What’s More practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.
This includes questions or blank
What I Have Learned sentences/paragraphs to be filled into
process what you learned from the lesson.

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 This section provides an activity which will
What I Can Do help you transfer your new knowledge or
skill into real life situations or concerns.
This is a task which aims to evaluate your
Assessment level of mastery in achieving the learning
competency.
In this portion, another activity will be given
Additional Activities to you to enrich your knowledge or skill of
the lesson learned. This also tends to
retention of learned concepts.
This contains answers to all activities in the
Answer Key module.

At the end of this module, you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instructions carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know

This module was drafted and plot/written for you to be equipped with the
essential knowledge and skills in managing a Business. The basics of all the
areas in creating and starting your own business. The knowledge and skills
that you will acquire will be applicable and effective in managing your own
enterprise.

The module is divided into three lessons, namely:

● Lesson 1 – Obtain Essential Knowledge and Skills in Managing a
Business
● Lesson 2 – Distinguish the Legal forms of Business Ownership

After going through this module, you are expected to:

1. identify the managerial skills in managing a Business;
2. explain the Managerial functions of the entrepreneur;
3. enumerate the different forms of business ownership, and
4. explain the different forms of business ownership.

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 What I Know

Multiple Choice: Choose the letter of the best answer. Write the chosen
letter on a separate sheet of paper.
Please do not forget to write the following in your answer sheet:
Name: _______________________________ Grade & Section: ____________-
________
Yr. Level & Subject (Specialization): _________ Module No: ________________
Name of the Activity (e.g., What I know) _______________ Date: ____________

1. The most basic management function that tells you where to go and
how to get there?
A. Staffing C. Organizing
B. Controlling D. Planning
2. It is one of the types of planning, where in plans is used repeatedly as
it covers policies, procedures, and rules in management functions?
A. Business Plan C. Operational Plan
B. Standing Plan D. Single-Purpose Plans
3. The most basic management function that groups the activities into
departments and delegates the personnel to head and members of
each department?
A.Staffing C. organizing
B.Controlling D. planning
4. The most basic management function that involves proper and
effective selection, assessment, and development of personnel to do
the jobs and fulfill the roles in the structure.
A. controlling C. organizing
B. directing D. staffing
5.How many steps involve in strategic planning?
A. 4
B. 5
C. 6
D. 7
6.It is the correct sequencing of the most basic managerial function of
an
entrepreneur.
A. planning, organizing, staffing, directing, and controlling
B. controlling, staffing, organizing, planning, and directing
C. organizing, directing, planning, controlling, and planning
D. staffing, directing, planning, controlling and organization
7.The following are the steps in strategic planning except.
A. Implement the plan

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 B. Assess the workload
C. Develop support plan
D. Examine the Alternatives
8. The following are the 3 (three) types of organizational chart except?
A. Line organizational chart
B. Divisional organizational chart
C. Line and Staff Organizational chart
D. Functional staff organizational chart
9.The following are the skills that a leader should possess to conduct
directing effectively, except?
A. Technical Skills
B. Conceptual Skills
C. Creativity Skill
D. Human Relation Skill
10. It is one of the common types of standards that include quantity of
products or services, number of customers or clients,
and quantity of clients or services.
A. Basic Standard
B. Time Standard
C. Physical Standard
D. staffing

Entrepreneurship: Obtaining
Lesson
Essential Knowledge and
1 skills in Managing a
Business

This lesson talks about acquiring knowledge and skills in managing a

business. These are essential as a guiding step in attaining the skills and
knowledge in organizing and successfully managing our own business in the
future and become one of the successful entrepreneurs/young
entrepreneurs.

What’s In

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It is better for you to know and obtain the fundamental knowledge and skills
in managing the business in preparation for you in starting your own
business. As a young entrepreneur these are very essential in attaining our
goals as an entrepreneur and succeeding for our future and the future of the
country as well with regards to socio-economic development.

What’s New

Entrepreneurship Defined
Entrepreneurship is the process of organizing, creating, innovating, and
making of new products and services to gain or earn profit. It is a process of
starting and managing a business.

In a fast-changing world entrepreneurship is one of the keys in our socio-

economic development. Highly developed countries attain economic
development through the knowledge of entrepreneurship and the vast
entrepreneurial activities in their country.
Words to Study.

Table 1. Keywords in entrepreneurship

Word Definition

Accountability is a situation of being answerable to higher

authorities
Authority is the power or right delegated or given to a
person.
Line organization is a type of organization which characterized by
superior having direct command over workers to
accomplish the task
Line and staff is a type of organization where line officers have
organization staffs who assist them but who do not have any
authority over line personnel
Organization chart is a diagram that shows the organizational
relationships of the positions and their
corresponding authority, responsibility, and
accountability.

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 What is It

THE MANAGERIAL FUNCTIONS OF THE ENTREPRENEURS

Management functions are the same to all organizations regardless of size or
type. The only difference is the amount of emphasis given to each level. But
in general, managers must do the planning, organizing, staffing, directing,
and controlling.
The 4(four) functions of an entrepreneur
1. Entrepreneurial
2. Managerial
3. Promotional
4. Commercial

PLANNING

Planning is the most basic management function that tells you where to go
and how to get there. It is like preparing a blueprint of what is to be done,
when, how, and by whom it should be done.
When an idea is put into writing it will become a plan.

Classification of Plans:
1. Standing plans. These plans are used repeatedly and cover policies,
procedures, and rules.
2. Single-used or single-purpose plans. These plans are essentially one-
shot or non-repetitious. This is used within a relatively short period of time,
they comprise programs, projects, and budgets. Programs are complicated;
they are made up of objectives, goals, strategies, policies, rules, job
assignments, financial resources, and other pertinent items.
Another way to classify plans is according to whether they are short, (to be
from a day to a year), intermediate range plans (to be from a few months to
three years); and long-range plans (to be up to 25 years)
Steps Involved in the Strategic Planning
1) Formulate organization objectives. This serves as the basis where the
efforts and services will be used.

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2) Analyze present resources. This refers to the availability of money,
staff, machines, materials, space, and time to help you realize your
plans.
3) Determine alternative courses of action . Reduce the number of
alternatives. Remove those that do not look promising and retain those
sound ones for further analysis.
4) Examine the alternatives. You need to do some statistical and (reduce,
remove, and retain) quantitative analysis of factors involved in each
alternative.
5) Select the best course of action . Choosing alternatives most likely to
be effective in achieving your objectives.
6) Develop support plans. Smaller plans aim to establish coordination
among other levels of the organization so that the enterprise goal can be
easily achieved.
7) Implement the plan. Plans only come into reality when it is
implemented. In implementing the plans, it requires the exercise of other
management functions, such as organizing, staffing, directing, and
controlling.

ORGANIZING

Organizing involves identifying the specific activities necessary to achieve

the enterprise goals, clustering the activities into departments or job
positions, and designating the personnel to head and compose each
department.
An example of the organizing function is the owner-manager of a small
factory who establishes three departments - production department, sales
department, and administrative department. He assigns the manager to
head each department and clearly delineates responsibilities among them.
Thus, he gives the production manager the responsibility for manufacturing,
packing, and shipping, while he delegates to the sales manager the
responsibility for advertising and customer service. Then he assigns the
administrative head to look after personnel, purchasing, and accounting.
Below is the diagram showing the organizational relationships of the
positions and their corresponding authority, responsibility, and
accountability.

A. LINE ORGANIZATION
The manager has direct command over workers who accomplish the tasks.
Below is an example of a line organization

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 MANAGER

SUPERVISOR

FOREMAN

WORKERS

B. LINE AND STAFF ORGANIZATION

Any activities that a line officer cannot do are delegated to a staff officer to
render these services. For example, in a small manufacturing enterprise, the
president, production manager, and sales manager perform line functions,
while legal counsel who helps and advises the president has no authority
over line employees. Below is an example of this type.

PRESIDENT

LEGAL COUNSEL

SALES MANAGER PRODUCTION ADMINISTRATIVE

MANAGER MANAGER

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C. FUNCTIONAL STAFF ORGANIZATION
In this setup, the worker has more than one immediate superior or as many
as the types of activities assigned to him. An example of this type is shown
below.

MANAGER

SUPERVISOR

FOREMAN

QUALITY PRODUCTION
CONTROL SPECIALIST

WORKERS

STAFFING

This process involves proper and effective selection, appraisal, and

development of personnel to do the jobs and fulfill the roles in the structure.

A. Assess your workload. The officers manning the operating units can
determine what exactly they are responsible for. This information can be
used as the basis for defining the organizational structure, and the
quantity and quality of personnel needed to handle the workload.

B. Study jobs in the company. This refers to the process of determining

the duties, responsibilities of each job. The analysis can tell you whether
the present workers have the required skills and abilities. You can also
find out who else among the present’s employees fit in each job.

C. Examine your present personnel. Assess the skills, strengths,

weaknesses, and potentials. Compare your inventory against your
forecasted manpower needs. Your findings will tell you whether:

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 a) Your company has just the right quantity and quality of
people.
b) You have an excess in quantity but are short in quality; or
c) Both quantity and quality of skills of your personnel are
insufficient.

D. Design an improvement plan. If you find out that there is a problem in

quantity or quality of skills among your present personnel, you may
adopt any of the following solutions:

a) If your workers are not enough, consider recruiting from

inside or outside the organization.
b) If your workers do not possess the required skills, you may
resort to training and development.

DIRECTING

Directing involves putting your plans into effect. How to influence your
subordinates who have distinct needs and a unique personality, to
contribute to the attainment of the firm’s objectives is the principal concern
of directing.
Understanding certain principles will help you direct the actions of your
subordinates towards the successful implementation of your plans.
Directing includes the following.

A. Motivation is the process of encouraging the subordinates to act in a

desired manner. When an employee joins a company, they bring with
them certain needs which they hope to be able to satisfy.

a. Physiological needs these are needs for air, food, water, for survival
b. Safety needs to be protected from danger, threat, or deprivation
c. Esteem needs such as those for self-confidence, achievement,
competence, knowledge, self-respect, freedom, and independence.
It also includes the needs for status, recognition, importance, and
respect.
d. Self- realization needs represent the needs for full development of
potentials and of being creative.

B. Leadership is the ability of an individual to persuade the subordinates to

follow. As a leader you need a mixture of skills to be effective. These skills

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 may be required in varying degrees by managers in different situations.
These skills include the following.

a. Conceptual skills refer to the mental capacity of an individual

to grasp the relationship of different parts into an integrated whole.
They need these skills in planning and analyzing.

b. Human relation skills is the ability to deal effectively with

people

c. Technical skills incorporate the capabilities to perform the

mechanics of a certain job which the operative employees perform,
like producing goods that the company manufactures.

CONTROLLING

The function of controlling is to make sure that what is done in the

enterprise conforms to what has been planned. The two main activities
involved here are comparing actual performance with desired performance
and making necessary connections where there is deviation from the plans.

Steps in the controlling process:

A. Establish standards. Standards are sets of measurements against which

you can evaluate actual results.

Three common types of standards:

● Physical standards include quantity of products or services, number of

customers or clients, and quantity of clients or services.
● Monetary standards are indicated in terms of peso values and include
labor cost, selling cost, material cost, sales revenue, and gross profit.
● Time standards refer to the speed with which job should be done or the
deadlines for their completion.

B. Set performance measurements. It is also necessary to determine how

often you should measure performance, who will do the measurement,

15
 and what form will the measurement take. An important consideration
in determining appraisal is that it must be easy to do and easy to
explain to your people.

C. Measure actual performance. This step can be easy for you if the
standards are spelled out clearly and if what your personnel are doing
can be determined clearly. It Includes observation, oral and written
reports, automatic methods, inspections, tests, and samples.

D. Compare performance with standards and analyze deviations .

Control does not stop after measuring performance. Data about actual
performance can be meaningless unless they are compared with desired
performance. Then you should analyze the reasons for the failure to
meet the standards so that you can deal with the roots of the
performance problems.
Depending on the nature of the shortfalls in performance, you
may correct these shortfalls by resorting to any of the following
remedies.
a) Revising your plans
b) Modifying your goals
c) Reassigning workers
d) Clarifying duties and responsibilities
e) Hiring additional staff
f) Firing problems workers
g) Stronger leadership

Controls can be classified as either organizational or operational.

Organizational controls are those that measure the overall performance of
the organization. Operational controls evaluate day to day activities and spot
areas where you may need to take corrective actions.

Effective controls have the following characteristics

a) They control the proper activities. People will naturally be conscious

about meeting standards if they are aware that those activities will be
monitored. However, you should take care not to cause an imbalance but
concentrating too much control on one group of activities and easing up
on another.
b) Control should be timely. “A stitch in time saves nine” a popular saying
goes. Control must report deviation in time to enable you to deal with the
problem before it is too late.
c) Controls should be cost effective . Controlling entails costs. You pay for
the processing and monitoring that you use, like registers and

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 computers, you pay for the personnel like the inspector, accountants,
and inventory controllers. You also pay for the line personnel who work
on the data on scrap, production costs, and personnel report. But are all
these practical and economical?
d) Controls must be accurate. Control measures must be accurate to have
a good basis for corrective actions.
e) Controls must be accepted. It is important that your people understand
the purpose and benefits of control so that they will not feel that you
have installed controls just because you don’t trust your men.

What’s More

Please do not forget to write the following in your answer sheet:

Name: _______________________________ Grade & Section: ____________-
________
Yr. Level & Subject (Specialization): _________ Module No: ________________
Name of the Activity (e.g., What I know) _______________ Date: ____________

Activity 1. Memory Lane!

Direction: Write the order/sequence in managing the enterprise by filling up
the diagram below.10 Points
Managerial Functions of the Entrepreneurs
1. 2. 3.

4. 5.

What I Have Learned

1. Planning is the most basic management function that tells you where
to go and how to get there. It is like preparing a blueprint of what is to
be done, when, how, and by whom it should be done.

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 2. Organizing involves identifying the specific activities necessary to
achieve the enterprise goals, clustering the activities into
departments or job positions, and designating the personnel to head
and compose each department.
3. Staffing is the process involving proper and effective selection,
appraisal, and development of personnel to do the jobs and fulfill the
roles in the structure.
4. Directing involves putting your plans into effect. How to influence
your subordinates who have distinct needs and a unique personality,
to contribute to the attainment of the firm’s objectives is the principal
concern of directing.
5. The function of controlling is to make sure that what is done in the
enterprise conforms to what has been planned. The two main
activities
involved here are comparing actual performance with desired
performance and making necessary connections where there are
deviation from the plans.

What I Can Do

Effective management is very much important in running a business,

without proper management people might just work to pursue their own
interest without considering that of the organization or those of the other
members. Effective and efficient management makes it possible for both the
organization and the employees to work for a common goal, at the same time
satisfying their respective interests.

Please do not forget to write the following in your answer sheet:

Name: _________________________________________ Gr. & Section:
_____________
Yr. Level & Subject (Specialization): _____________________ Module No:
_______
Name of the Activity (e.g., What I know) ________________________ Date: _____

Activity 2. Think! Think!

Direction: Give an idea/explanation of each managerial functions in one-
two sentences. Write your answer in a separate sheet of paper.25 Points

1.Planning

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___________________________________________________________________________
_______________________________________________________.
2.Organizing
___________________________________________________________________________
________________________________________________________.
3.Staffing
___________________________________________________________________________
_________________________________________________________.
4.Directing
___________________________________________________________________________
_________________________________________________________________.
5.Controlling
___________________________________________________________________________
__________________________________________________________________.

Assessment

Multiple Choice: Read each question carefully and choose the letter of the
best answer.
Please do not forget to write the following in your answer sheet:
Name: _________________________________________ Gr. & Section:
_____________
Yr. Level & Subject (Specialization): _____________________ Module No:
_______
Name of the Activity (e.g., What I know) ____________________ Date: _________

1.It is the blueprint of what is to be done today for future purposes?

A. Controlling C. Planning
B. Organizing D. Staffing
2.It is the heart of all the managerial functions?
A. Controlling C. Planning
B. Directing D. Staffing
3.It is the process of encouraging the subordinates to act in a desired
manner?
A. Controlling C. Motivation
B. Leadership D. Staffing
4.It is the ability of the individual to persuade others to follow?
A. Controlling C. Motivation
B. Leadership D. Staffing
5. It is one characteristics of an effective control which states
that control must report deviation in time to enable you to deal with the

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 problem before it is too late. As a popular saying goes “A stitch in time
saves nine”?
A. Controls must be timely
B, Controls must be accurate
C. Controls must be cost effective
D. They control the proper activities
6. It is a type of standard that include quantity of products
or services, number of customers or clients, and quantity of clients or
services?
A. Time Standard
B. Basic Standard
C.Physical Standard
D.Monetary Standard
7. It is one of the controlling process that is necessary to determine
how often you should measure performance, who will do the
measurement, and what form will the measurement take?
A. Establish Standards
B. Measure Actual Performance
C. Set Performance Measurement
D. Compare performance with standards and analyze deviations
8.It is a type of standard refer to the speed with which job should be
done or the deadlines for their completion?
A. Time Standard
B. Basic Standards
C. Physical Standard
D. Monetary Standard
9. It is important that your people understand the purpose and benefits
of control so that they will not feel that you have installed controls
just because you don’t trust your men?
A. Controls must be accepted
B. Controls must be accurate
C. Controls must be cost effective
D. They control the proper activities
10. It is one of the ways to do staffing that will assess the skills,
strengths, weaknesses, and potentials?
A. Assess your workload
B. Study jobs in the company
C. Design an improvement plan
D. Examine your present personnel

Additional Activities

Please do not forget to write the following in your answer sheet:

Name: _________________________________________ Gr. & Section:
_____________
20
Yr. Level & Subject (Specialization): _____________________ Module No:
_______
Name of the Activity (e.g., What I know) ________________________ Date: _____

Activity 3. Remember me!

Directions: Fill in the blanks with the correct answer. Write your answer in
a separate sheet of paper.

Classification Types of Ways to do Steps in the

of Plans Organizational Staffing controlling
Chart process
1. 1. 1. 1.
2. 2. 2. 2.
3. 3. 3.
4.

What I Know

Multiple Choice: Choose the letter of the best answer. Write the chosen
letter on a separate sheet of paper.

Please do not forget to write the following in your answer sheet:

Name: _______________________________ Grade & Section: ____________-
________
Yr. Level & Subject (Specialization): _________ Module No: ________________
Name of the Activity (e.g., What I know) _______________ Date: ____________

1.Which of the following options below is an example of a corporation form

of business ownership?
A. Coolers
B. Cebu Peoples Multi-purpose Cooperative
C. Jollibee
D. Cebu CFI Community Cooperative
2.Which of the following is not a cooperative form of business ownership?
A. Primera Producers Cooperative
B. Cebu Peoples Multi-purpose Cooperative
C. Mc Donalds
D. Cebu CFI Community Cooperative
3. The term legal form refers to the type of business ownership. Which type
of business ownership is the simplest and most common?
A. Corporation
B. Cooperative

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 C. Partnership
D. Sole proprietorship
4. Partnership is a business form owned by two or more persons. Which
among the choices below is NOT an advantage of partnership?
A. Partners must be consulted each time a decision and action are
made.
B. No income tax is levied on the partnership itself but on the owners as
individuals.
C. Partners decide as to who shall pay debts in case the business is
unable to pay its liabilities.
D. If one partner commits a mistake, the other must suffer the
consequences.
5.Which of the following is NOT an advantage of a corporations?
A. Subject to more government control.
B. Corporation continues to exist for a maximum of 50 years
C. Continuity of existence is not affected by death of a stockholder.
D. Each stockholder shares in the ownership of the company, together
with the incorporators.
6.Which of the following businesses below is not a partnership form
of business ownership?
A. Levi’s and Pinterest
B. Starbucks and Spotify
C. Burger king and McDonalds
D. Cebu CFI Community Cooperative
7.Which of the following is an advantage of a Sole proprietorship form of
business ownership?
A. Unlimited liability
B. All the risks are of the owner
C. Owner in direct control of decision-making
D. Owner shoulders any liability incurred in the business
8. The number of shareholders in the corporation is used as the basis for
computing the share of each one in the profits of the corporation. Which
of the following is being describe?
A. Revenue
B. Dividend
C. Stock market
D. Resources
9. What is the definition of liability?
A. Is a business deal or agreement
B. Refers to the amount that is owed.
C. To refer to the documents of ownership of a business.
D.Is the gain or recurrent benefit usually measured in money that
derives from capital or labor.
10. What do you mean by a Legal Form?
A. Is a business deal or agreement
B. Refers to the amount that is owed.
C. Refer to the documents of ownership of a business.
D.Is the gain or recurrent benefit usually measured in money that
derives from capital or labor.

22
 Lesson Entrepreneurship:
2 Distinguish the Legal Form
of Business Ownership

This lesson is very essential particularly in choosing the right type of

business ownership that you would like to venture in the future. The
selection of the business ownership depends on the resources of the owner
which is the capital or the urge to pursue such a type of business.

What’s In

It is better for you to know what business you like to venture and the
advantages and disadvantages of each type of business ownership. The
success and future of the business depends on the hands of the owner as
what he thinks would be beneficial and fits on the business.

What’s New

Business Ownership is Defined

Business Ownership is the type of ownership that someone chooses to
formulate and to start each business. Anyone who would like to venture
business must be wise in choosing the right business ownership.

It is when the owner or the proprietor or the individual or group of people

owns the business legally. That includes all the assets and liabilities of the
business as well as the profits earned by the business.
WORDS TO STUDY.

Table 1. Key words

Word Definition

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 Legal forms to refer to the documents of ownership of
a business.
Business is a legally recognized organization
designed to provide goods and /or
services to consumers
Enterprise is a business undertaking
Proprietorship is the state or right of a proprietor or
owner
Liability refers to the amount that is owed.
Transaction is a business deal or agreement

Income is the gain or recurrent benefit usually

measured in money that derives from
capital or labor

What is It

Deciding the business ownership

A business first exists in your mind is an idea. When this idea is developed
and put into writing, it becomes a plan. As you gather your resources you
are making your plan into a reality. And when you register it, it becomes a
legal entity, with appropriate rights and responsibilities.
Once you have identified your project or business, you are ready to organize
and set up your own enterprise. This means that you must decide on its
forms of ownership then later the location, hire and train personnel, raise
funds, acquire machinery and equipment, and finally register the business.
The term legal form refers to the form of ownership of a business. You may
decide to share ownership with other people if you are not the only source of
project ideas or if you do not have enough capital and experience to start the
business on your own.

FORMSOF
FORMS OFBUSINESS
BUSINESS OWNERSHIP
OWNERSHIP

1.Sole proprietorship. A sole proprietorship is a business unit owned and

managed by only one person. It is the simplest and most common form.

Advantages of a Sole Disadvantages of a Sole

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 Proprietorship Proprietorship

● Relatively low start-up costs ● Unlimited liability

● Greatest freedom from ● Lack of continuity in business
regulation organization
● Owner in direct control of ● Difficulty in raising capital
decision-making ● All the risks are of the owner
● Minimal working capital ● Owner shoulders any liability
required incurred in the business
● Tax advantages to owner
● Owner is the boss
● All profits to owner
● In cases of death, the business
may be passed on to another by
virtue of a will.

2. Partnership. two or more persons are owners of the business. The

owners define their rights and duties as partners in the business through a
partnership agreement.

Advantages of a Partnership Disadvantages of a Partnership

● The partners decide as to who
shall be responsible for paying
debts in case the business is
unable to pay its liabilities later.
● They agree as to how much will
be the share of each one in the
profits of the business and what
business responsibilities will be
assigned to each.
● The partners agree as to when the
partnership ends such as when
one partner agrees to a buy-out
offer or when one of the partners
dies.
● Any action of one partner within
the scope of business binds the
other partner as well. Thus, if one
partner commits a mistake, the
other must suffer the
consequences as well.
● Partners also must be consulted
each time a decision or action
concerning the business needs to
be made. This means taking more
time to get things done.

● No income tax is levied on the

partnership itself but on the
owners as individuals.

3. Corporation. This business form is initiated by individuals called

incorporators. This legal entity consists of individuals, shareholders, and
stockholders.

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 Advantages of a Corporation Disadvantages of a
Corporation
● The incorporators put up the initial or
starting capital of the business. To get ● The corporation is subject
additional capital, shares of stocks are to more government
sold to interested parties called the control.
stockholders. ● The corporation is relatively
● Each stockholder shares in the complicated in form and
ownership of the company, together with management. It needs a
the incorporators. high cost of formation and
● The right of the stockholder to vote on operation.
matters affecting the corporation ● Its credit is weakened by
depends on the number of shares he or the limited liability of the
she holds. stockholder.
● The number of shareholders in the ● It is subject to a heavier
corporation is used as the basis for taxation.
computing the share of each one in the ● The stockholders’ voting
profits of the corporation. This share is rights have become
called the dividend. theoretical especially in a
● The life of the business does not depend big corporation because of
on the stockholders. the use of proxies.
● It has continuity in existence for a ● The stockholders have little
maximum of 50 years. voice in the conduct of the
● Continuity is not affected by the death of business of the corporation.
a stockholder or by the transfer of
shares of stocks from one stockholder to
another.
● In case of losses, liabilities are settled
through the sale of the assets of the
corporation.

4. Cooperative. A cooperative is owned by twenty-five or more individuals

who, like in a corporation buy shares in the business. However, unlike a
corporation, each member of the cooperative is entitled to only one vote on
matters regarding the business regardless of the number of shares he or she
has bought. In case of losses, responsibility for paying liabilities is also
borne equally by the members.

What’s More

Multiple Choice: Choose the letter of the best answer. Write the chosen
letter on a separate sheet of paper.

Please do not forget to write the following in your answer sheet:

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Name: _______________________________ Grade & Section: ____________-
________
Yr. Level & Subject (Specialization): _________ Module No: ________________
Name of the Activity (e.g., What I know) _______________ Date: ____________

Activity 1: Remember me!

Direction: Enumerate and explain the 4 (four) Forms of Business
Ownership. 20 Points

1.

2.

3.

4 .

What I Have Learned

Directions: Read the following story carefully. Then answer questions at the
end of the story in a separate sheet of paper.
Jane and Rose are best friends working in the same agency. While
they were having their coffee break one day, Rose having three children
going to school complained to Jane how difficult to make ends meet with the
meager salary they are receiving. When Jane heard her friend, she said “why
don’t you put-up a sideline? You are a good cook. You can sell peanut
adobo, brittle, peanut butter, or other food products. I am sure you will not
have problems in terms of raw materials because these raw materials are
abundant in our community.
Rose is sold on the idea and persuades her friend to be her partner.
The two friends contributed P2,000.00 each to start the business. They
agreed to have equal profit. Rose would take care of production while Jane
would concentrate in marketing.

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 Jane started getting orders while Rose concentrated on cooking. When
they succeeded in getting big orders, they decided to register their business
as a partnership under the name R & J Food Products. From then on, their
customers have regular orders and even become bigger.
After six months of operation, the partners earned P20,000.00 and
they decided to divide it equally between them. Meanwhile, Rose was
exhausting herself with her production efforts, while Jane’s life went on very
casually because once the first orders have been booked, most of the buyers
placed repeated orders.
Before the business reached its first-year anniversary, Rose got sick
and advised to rest. Rose can no longer cook, and Rose husbands forbade
her to continue the business.
1.What went wrong with the business?
2.If you were Rose would you enter a partnership with a friend, or would you
register the venture as a sole proprietorship?
3.Were the partners right in splitting the profits equally?
4.Discuss the advantages and disadvantages of partnership.

What I Can Do

It is important to choose the correct and right forms of business ownership

to venture in the future because the success lies to the correct selection of
business ownership. It also depends on the resources of the individual who
likes to pursue business. It is better to study each form of business
ownership.

Assessment

Multiple Choice. Choose the letter of the best answer. Write the chosen
letter on a separate sheet of paper.
1. Which of the choices below makes sole proprietorship disadvantage to
the owner?
A. Unlimited liability
B. Owner is the boss
C. Minimal working capital required
D. Owner in direct control of decision-making
2.Which of the choices below is NOT true about a cooperative?
A. Each member is entitled to only one vote
B. Owned by twenty-five or more individuals
C. Responsibility for paying liabilities is borne equally by the members
D. Initiated by individuals numbering from a minimum of five to a

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 maximum of fifteen
3.The number of shareholders in the corporation is used as basis for
computing the share of each one in the profits of the corporation. Which
of the following options is being describe?
A. Profit C. Income
B. Shares D. Dividend
4.What is a term given to a legal owner of the shares of stocks in the
corporation?
A. Corporators C. Shareholder
B. Stockholder D. Incorporators
5.What is the most complicated and biggest form of business ownership?
A. Corporation C. Partnership
B. Cooperative D. Sole Proprietorship
6.What do you mean by Proprietorship?
A. Is A Business Undertaking
B. Greatest Freedom from Regulation
C. Refers to The Amount That Is Owed.
D. Is the State or Right of Owning and Holding A Business.

7. In partnership form of business ownership. The owners’ rights and

duties as partners in the business is define through a________?
A. Business Agreement
B. Partnership Agreement
C. Greatest Freedom from Regulation
D. The State or Right of Owning and Holding A Business.
8. In a Corporation form of business ownership. It has a continuity in
existence for a maximum of ___________ years. Which of the following
is correct?
A. 10
B. 20
C. 40
D. 50
9.What are the forms of Business Ownership?
A. Single Proprietorship, Partnership and Corporation
B. Single Proprietorship, Partnership and Cooperative
C. Single Proprietorship, Corporation and Cooperative
D. Single Proprietorship, Partnership, Corporation and Cooperative
10.What is the form or type of business ownership, that is for the people
and by the people?
A. Corporation C. Partnership
B. Cooperative D. Sole Proprietorship

Additional Activities

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Let us strengthen your understanding of the lesson.
Direction: Answer the following questions. Write your answer in a separate
sheet of paper.5 points each.
1.Compare a sole proprietorship and a partnership form of business
ownership?
2. Compare a corporation and a cooperative form of business ownership?
3. What form of business ownership you would like to venture in the future
and Why?

1._________________________________________________________________________
___________________________________________________________________.
2._________________________________________________________________________
___________________________________________________________________.
3._________________________________________________________________________
___________________________________________________________________.
4._________________________________________________________________________
___________________________________________________________________.

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