G12

ABM
Business Ethics
and
Social Responsibility
QUARTER 3: WEEK 1

Capsulized Self-Learning
Empowerment Toolkit

Schools Division Office of Zamboanga City

Region IX, Zamboanga Peninsula
Zamboanga City

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 CapSLET
BUSINESS ETHICS AND SOCIAL
RESPONSIBILITY
Subject & ESR
QUARTER 3 WEEK 1 DAY
Grade Level 12 dd/mm/yyyy
CONTENT Forms of Business Organizations and their characteristics
MOST ESSENTIAL Differentiate the forms of business organizations in terms
LEARNING
COMPETENCY of their purpose and role in socio-economic development.

IMPORTANT: Do not write on this material. Write your answers on a separate sheet of
paper.

KNOW AND UNDERSTAND

CONTENT STANDARD:
Nature and Forms of Business Organizations

CHECKPOINT: What are the difference among the forms of business

organizations, its purpose and role in the socio-economic development?

Great day learners!

Can you imagine, how would life be without the things you need or enjoy the
most, like foods, shelter and clothings?

If there are no cloths available in the malls, you

would have to sew your own clothes to cover
yourself.

If there are no shoes, you would have to make your own shoes. to
protect your feet so that you can comfortably walk from your house
to school.

If farmers did not sell their crops, you would have to toil the land,
plant your crops, and harvest them so you would have food to eat.

If there are no construction companies, you would have to build your

own shelter/house to protect you from rain and from the heat of the
sun, or worst prepare your own construction materials to have a
decent shelter.

These are just some of the things that business organizations do to make your life
easier.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
Purpose of Business Organizations
Business organization is an entity that aims to earn profit by
providing products to satisfy the needs of the market. It exist to serve
consumers’ needs. When people patronize their products and
services they make profits. Business organization are an important
component of modern society because they contribute to the
economy’s growth, provide products for consumption,
and offer employment to people. Most of the business Products can be tangible
organizations are operated to make profit by providing (goods) or intangible
commodities or services. It is the basic purpose of a (services). A business
business organization offers products to satisfy
the needs of the market in
Products can be tangible or physical objects like goods exchange for fair profit.
or commodities; such as cars, pens, shoes etc. It can also
be intangible or non-physical things; services, such as
haircut, legal advice, janitorial services etc..

Profit is the amount of money a business takes in after the expenses needed to
operate the business (e.g. salaries, cost of raw materials, etc.) have been deducted
from revenue.
Revenue is the total amount of money a business earns during a given period of time
by offering products to the market.

Organization can be For-profit and Non-profit organization.

For-profit organizations have the right to keep and use their profit
as they choose so long as it is within legal limits. Simply, because
profit is the reward for the risks they take in making and selling their
products.

Non-profit organizations (NPOs) are formed for a specific purpose

(e.g. to assist victims of domestic violence, promote animal welfare, or care for the
elderly) to serve the common good of the public. These organizations do not have the
fundamental purpose of earning profits, but they may initiate activities that can help
them raise funds for their advocacy.

Forms of Business Organizations

Business organizations have different forms, depending on the type

of ownership. These are sole proprietorship, partnership and
corporation.

1. Sole Proprietorship is owned and operated by one individual.

The owner has the full authority on the business and owns all assets and profits but,
at the same time, is personally liable for all the obligations and losses. Sole
proprietorship is the simplest form of business organization and is the easiest and least
costly to organize. The net income is treated as the personal income of the sole owner
and is taxed accordingly. If business condition becomes unprofitable the sole proprietor
has the advantage of immediate cessation of the operation.

A sole proprietor can venture into different types of businesses. Here are some
options:

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 Online Store
It is easy to build network online as long as you have good products and know how
to take advantage of social media. Almost anything can be sold online, from trinkets
to baby products to musical instruments to furnitures.

 Food Cart Franchise

Franchising is often convenient for a first-time business owner because the
franchisor lays out everything for the franchisee, which includes the name of the
business, food cart design, inventory, marketing, operations trainings and others.
Food carts can be placed in malls, trains/bus/public transport stations, and other
areas with high foot traffic.

 Freelance Work
In this type of business maintaining a positive word of mouth is the key to long-term
success. If you are a good writer, illustrator photographer, graphic artist, or makeup
artist, or if you possess other talents that you can share with other people this type
of business fits you.

2. Partnership is owned by two or more persons who bind themselves to contribute,

money, property, or industry to a common fund with the intention of dividing the profits
and sharing the liabilities among themselves. The partnership is dissolved upon the
death of a partner or when a partner chooses to leave. The most common partnerships
are professional partnerships such as Law firms and Accounting firms. Partnership is
easy to form, the only requirement before partnership commences operation is for
partners to agree on basic aspects of the business like the nature of the business,
location, capitalization, and so on. A written agreement called Contract of
Partnership is drawn to formalize what has been agreed upon. The income of the
partnership is not taxed separately. Any profit derived by the partners are treated and
taxed as their individual income.

Partnership may either be general partnerships or limited partnerships.

 General partnerships- where the partners have unlimited liability for the debts and
obligations of the business.

 Limited partnerships- where one or more general partners have unlimited liability
and the limited partners have liability only up to the amount of their capital
contributions.

3. Corporation is owned by 5 to 15 persons, who are called incorporators, hold at

least one share and are bound by the Articles of Incorporation filed with the SEC. The
paid-up capital (total amount of capital received by a company from its shareholders in
exchange for shares of stocks) of a Philippine corporation must not be less than
P5,000.00. The liability of the shareholders is limited to the amount of their
shareholdings. The stockholder may sell or donate his share to another person, thus
the corporation may change ownership as often as it could without actually dissolving
corporation. The profits derived by the stockholders are taxed twice by the government.
First, when the corporation realizes profits. Second, when individual stakeholders
declare the dividends they receive from the corporation as part of their personal
income.

A corporation can be stock or nonstock.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 Stock corporation has a capital stock divided into shares and is authorized to
distribute to the shareholders dividends or allotments of the
surplus profits on the basis of the shares held.

 Nonstock corporation is one where no part of its income is

distributable as dividends to its members, trustees, or officers.
Any profit that a nonstock corporation earns is used to further
promote the purpose of the organization. These corporations may be formed for
charity, religious, educational, professional or other similar purposes.

Among the forms of business organizations, corporations have the most number of
advantages among which are as follows:
 Unlimited life. A corporation has unlimited life, as it may exist well beyond the
lifespan of the original owners.
 Credibility. Suppliers, investors, and financial institutions may see a business more
credible if it is corporation.
 Ease of transferring ownership. Corporations can easily transfer ownership should
the original owners decide to sell it by transferring the company’s stock certificate
to another shareholder.
 Protecting personal assets. Owners of a corporation are liable for business losses
and debts up to the equivalent of their investment in the corporation.

Business organizations are not only meant to generate profits for themselves. They also
perform important roles in the society, particularly in the socio-economic development.
It is important for companies to create shared value by playing a role in advancing
socioeconomic development.

is a business concept that

focuses on measurable business value by
identifying and addressing social problems
that cross paths with the business.

Roles of the Business Organizations in the Society

Providing Goods and Services. Creating or producing all the products you need seem
like impossible tasks for an ordinary individual who are not skilled in craftmanship or
electronics to produce products needed. But thanks to business organizations, you
get to enjoy products and more, so you can live a relatively comfortable life.
Pharmaceutical improve the health of the citizens through the products they develop,
produce and distribute to the market. Health is an important social economic asset.
Advances in medicines and health improvements have led to reduction in mortality
rates. Access to medicine and health care services for the poor has been extended by
certain companies and government institutions. These show the importance of
products made available by business organizations to people.

Creating Employment Opportunities. Business organizations, whether big or small,

create employment opportunities. When consumers patronize the products of
businesses, these companies commit to providing better goods and services, for
customers continue patronizing their products. As the companies grow, they hire more
people in order to keep up with the demands in the market.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 Advancing the Economy. The 1987 Philippine Constitution recognizes
entrepreneurship or putting up businesses as an engine of economic growth. Article XII,
section 1 highlights the role of private enterprises in supporting equitable distribution
of income and wealth, sustaining production of goods and services and expanding
productivity, therefore raising the quality of life. When people have jobs or businesses,
they have disposable income that they use to purchase more goods and services. The
income that the businesses generates advances the national economy.

Promoting Sustainability. Most CSR activities use sustainable development as

starting point of business organizations. This means that if company takes raw
materials from the forest this will be replenished in the immediate future through
different means such as sustainable farming, replanting etc. Promoting
sustainable development and becoming environmentally sustainable make good
business sense because of the following reasons:

 Good Management Practice-Reducing wastes, using less toxic chemical,

improving energy efficiency, and other measures have been the goals of
most companies. These measures have been wide recognized as cost
effective and most efficient practices for the company, which result in
good management practice and sound business advantage.

 Adherence to Government Policy-The government sets laws, regulations,

and guidelines pertaining to sustainable practices for corporations to
follow. The legal costs and dealing with penalties when going against the
government- mandated may cause the company losses or worse, may
even send the company to foreclosure.

 Public Opinion-It is important for a company to take care of its public

image, as it equates to how credible the company is. Thus, a negative
public image can affect the company’s market share, investor confidence,
consumer trust, and the ability to attract future employees.
 New Opportunities-Adapting to sustainable business practices may open
up new business opportunities for companies.

Investing in Innovation and Excellence. A real entrepreneur will always find ways to
innovate and address an opportunity or a demand gap in the market. Innovation is the
product of consumer research and good understanding and analysis of market need.
Companies pour a lot of investments to make new, and differentiated products, or an
improvement of what the consumers are currently enjoying.

BE ABLE TO DO
Apply your understanding on the forms of business organizations, its purpose and role in socio-economic
development.

Let’s Practice!

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 Activity 1: “Complete me”
(Individual Activity)

Differentiate the forms of business organizations based on the different areas of

Directions: concern, by completing the table below. See choices for your answer, after the table.

Areas of Concern Forms of Business organization

Sole Proprietorship Partnership Corporation
Liability of Owner/s
Ease of Expansion
Life of Firm
Decision Making
Taxation of Income
Ease of Formation

Choices:

1. Liability of owners -Limited or Unlimited

2. Ease of Expansion - Easy or Not Easy
3. Life of Firm - Dependent on the owner/s or Independent on the owner/s
4. Decision Making - Quick, slower, slowest
5. Taxation of Income- Once or Twice
6. Ease of Formation- Not Easy, Easy, Easiest
Let’s Practice PaMORE!

Activity 2: Reflect Upon

(Individual Activity)

Directions:
Write a reflection paper about business organizations’ purpose and role in
socio -economic development following the guide questions as your guide
content.

Guide Questions:

1. What is business organization? CRITERIA:

2. What is the purpose of business organization?
3. Why should business organization satisfy customers? Content 10 pts.
4. What are the roles of business organization? Organization 5 pts.
5. How do business organization advances the socio-
economic development? Neatness 5 pts.
Let’s Practice PaMORE MORE ! TOTAL 20 pts.

Activity 3: “Connections”
(Individual Activity)

Differentiate the forms of business organizations, base on the areas of concern and other
characteristics found below. In which area are they alike or differ? Write the number that
corresponds to the area of concern /characteristics on the appropriate portion of the diagram.

1. consists of two or more persons bind themselves to contribute money, property, or

industry to a common fund, with the intention of dividing the profits among
themselves.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 2. P 5,000.00 is equivalent to 1 share.
3. Easiest to form
4. Profits derived are taxed twice. First, when profits are realized. Second, when
dividends are declared by individual shareholders.
5. In terms of decision making, tend to be the slowest
6. With an unlimited liability
7. Not easy to form
8. Law and Accounting firms are common examples of this form of business organization.
9. Quick in decision making because the business is owned and operated by one
individual and has the full authority over it.
10. Life of the firm is dependent on the owner/s.
11. In terms of decision making, tend to be slower
12. Expansion is not easy because of limited resources.
13. Life of the firm is independent on the owners.
14. Profits derived are treated and taxed as their individual incomes.
15. These are operated to make profit by providing commodities or services

Example :
16. Business is terminated upon the death of a member or a member decided to
withdraw investment.

Partnership

16

Sole
Proprietorship Corporation

REMEMBER
Key Points

 Business organizations make people’s life easier by providing goods and services to the
consumers. It generate employment opportunities as they expand their business thus,
advancing the economy.
 Business organization exist to earn profits by serving the needs of the market.
 They provide products, which can be tangible (goods) or intangible (services).
 Revenue is the total amount of money a business earns during a given period of time by
offering products to the market.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
 Profit is the amount of money a business takes in after expenses needed to operate the
business have been deducted. It is the difference of the amount spent to produce and
market the product, and the amount the customer pays for it.
 Loss happens when the expenses are greater than the revenues of the business.
 While For profit organizations focus on important roles in economic development, NPOs
or Non-profit organizations focus on serving humanitarian, social, or cultural interests.
 Business organizations differ in forms of ownership. In sole proprietorship, the business is
owned and operated by one individual. The owner has full authority on his or her
business, owns all its assets and is solely liable for liabilities or losses.
 Partnership consists of two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among
themselves.
 Corporation consist of at least 5 to 15 persons called incorporators, each of whom must
hold at least one share and must registered with the SEC. The minimum paid up capital
required is not less than P5,000.00.
 As part of dynamic society, business organizations fulfil an important role in advancing
socioeconomic development. They provide goods and services to consumers, generate
employment opportunities as they expand their business, contribute to the economy,
promote sustainability through socially responsible business practices and invest in
innovation.

TRY
Let’s see how much have you learned today!

A. MULTIPLE CHOICE.
Directions: Choose the letter found inside the box, that best answer the question. Write the
letter of your choice before each number.

a. Profit f. Partnership
b. Sole Proprietorship g. Advancing the Economy
c. Providing goods and services h. Creating Employment Opportunities
d. For -profit organizations i. Corporation
e. Business organizations j. Non-profit organizations

1. Organizations which have the right to keep and use their profits as they choose – within
the legal limits.
2. They exist to serve consumers’ needs and in return make profits.
3. Is the amount of money a business takes in after the expenses needed to operate the
business have been deducted.
4. Organizations which are formed for a specific purpose to serve the common good of the
public.
5. The owner is personally liable for all the obligations and losses.
6. Two or more persons bind themselves to contribute money, property, or industry to a
common fund with the intention of dividing the profits and sharing the liabilities among
themselves.
7. Compose of 5 to 15 incorporators.
8. Role of business organizations to produce products that allow individuals to live a
comfortable life.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
9. As companies grow, they hire more people in order to keep up with the demands of the
market.
10. The income that the business generates advances the national economy.

BOOK:
Jonalyn C. Baquillas Business Ethics and Social Responsibility
DIWA Learning Systems Inc.
4/F SEDCCO 1 Bldg.
120 Thailand corner Legaspi streets
Legaspi Village, 1229 Makati City, Philippines

Helena Ma. F. Cabrera, PhD

Anthony DC. Altajeros, PhD
Riaz Benjamin
Clarence Darro B, Del Castillo
Organization and Management
REFERENCES
Department of Education
Republic of the Philippines

Roberto G. Medina
Organization and Management
Rex Bookstore
856 Nicanor Reyes, Sr. Street
1977 C.M. Recto Avenue
Manila, Philippines
www.respublishing.com.ph
:

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“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School
“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”
Prepared by: Shirley G. Elas, ST III
Don Pablo Lorenzo Memorial High School Stand-Alone Senior High School