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5. Quick Look
1. List three companies that you are familiar with.
2. Include the suffix of the official company name (e.g., Ltd., Inc., Corp.).
3. Indicate their products or services.
5
What’s in a Name?
7. Quick Look
1. Why are you familiar with the companies on the list?
2. Is it possible for a company to provide more than one product or
service? Cite an example to support your answer.
3. What do suffixes in a business name indicate?
7
Questions to Ponder
8. Learning Competencies
This lesson aims to target the following DepEd competencies:
● Differentiate the forms of business organizations (ABM_ESR12-
IIIa-d-1.1).
● Give examples of the forms of business organizations
(ABM_ESR12-IIIa-d-1.2).
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9. Learning Objectives
9
At the end of the lesson, you should be able to do the following:
● Identify the different forms of businesses and types of business
activities.
● Analyze the type of business of a company.
● List the advantages and disadvantages of each form of business
organization.
13. Forms of Business Organizations
Advantages
● easy to set up
● only one decision maker
● utmost secrecy
13
Disadvantage
unlimited liability of the
owner
Sole Proprietorship
14. Anna owns a home restaurant. She buys the ingredients,
prepares the food, and sells them to her customers.
The Secret Ingredient
14
15. One day, Anna discovers that she forgot to buy a vital ingredient
for her Beef Caldereta Special. It will not taste the same without
that specific item, and her customers will be disappointed if they
notice. She thus decides to change the menu for that day. It is
easy for her to do that because she needs no approval from
anyone.
The Secret Ingredient
15
16. In a sole proprietorship like Anna’s, decisions are made quickly
and straightforward.
The Secret Ingredient
16
17. Partnership
A business partnership
binds two or more
people into contributing
money, property, or
industry to set up a
business.
17
Forms of Business Organizations
19. Partnership
19
Forms of Business Organizations
General partners Limited partners
Limited Liability
Partnership
Participation
directly involved in
management
operations
not involved/have
minimal control over
operations
Liability
legally liable for
business debts
protected from
company debts but
liable for investments
only be legally liable
for the operations
they directly handle
20. Check Your Progress
What are the similarities and differences between sole
proprietorships and partnerships?
20
1
22. Forms of Business Organizations
Corporation
● separate legal entity from
its shareholders
Shareholder
● a person,
company, or
organization that
owns a stock of a
corporation
22
23. Forms of Business Organizations
Advantages
● Limited liability of
shareholders
● has to more financial
resources
23
Disadvantages
● pays its own taxes
● difficult upkeep due to
many processes
concerning many
shareholders
Corporation
24. Forms of Business Organizations
Corporation
● can borrow large amounts
of money from banks
● sell bonds to investors
Bonds
● loans made by an
investor to a
company
24
25. 25
Forms of Business Organizations
One Person
Corporation
● a corporation with a
single incorporator or
stockholder
26. 26
Forms of Business Organizations
One Person
Corporation
● has features of a
corporation and a sole
proprietorship
27. Forms of Business Organizations
Advantages of One Person
Corporation
27
● The owner’s liability is limited to financial investments.
● The owner’s personal assets are protected.
28. Forms of Business Organizations
Disadvantages of One Person
Corporation
● The business is taxed as a regular corporation
● The owner’s dividends are taxed separately
29. 29
Types of Business
Service Businesses
● deliver intangible
products
● offer professional
skills, expertise,
skilled labor, and
other essential
assistance
30. Types of Businesses
● Wholesalers that buy from manufacturers to resell.
30
● Retailers that buy from wholesalers or manufacturers.
Categories of Merchandising Businesses
32. Types of Business
mass-produce
- To produce goods
in quantity
commodities
- basic goods
32
Manufacturing
Businesses
● mass-produce tangible
commodities delivered
to wholesalers and
retailers
34. The Key Role of MSMEs in the Philippines
34
Micro, small, and medium enterprises (MSMEs) are the backbone
and driving force of economies in Asia and the Philippines.
In the Philippines, MSMEs comprise 99% of the total registered
businesses in the country. It generates more than 5 million jobs
or 62.4% of the country's employment.
The Importance of MSMEs in the Philippines
Aaron Ronquillo, “The Importance of MSMEs in the Philippines,” The Manila Times, July 23, 2021.
https://www.manilatimes.net/2021/07/23/supplements/the-importance-of-msmes-in-the-philippines/1808048, last accessed on
November 7, 2021
35. The Key Role of MSMEs in the Philippines
35
MSMEs are often described as single, small, and local. Most
MSMEs are single proprietorship businesses that provide local
employment opportunities and serve clients within their
immediate communities. MSMEs are involved in all types of
businesses: manufacturing, trading, retailing, rentals, and
services.
The Importance of MSMEs in the Philippines
Aaron Ronquillo, “The Importance of MSMEs in the Philippines,” The Manila Times, July 23, 2021.
https://www.manilatimes.net/2021/07/23/supplements/the-importance-of-msmes-in-the-philippines/1808048, last accessed on
November 7, 2021
36. The Key Role of MSMEs in the Philippines
36
Although small in scale, MSMEs have advantages over big
corporate businesses. Single proprietorship businesses are more
flexible, creative, and innovative in introducing new products and
services that respond to local needs. They are not burdened by
red tape and rigid structures that typically characterize
corporations.
The Importance of MSMEs in the Philippines
Aaron Ronquillo, “The Importance of MSMEs in the Philippines,” The Manila Times, July 23, 2021.
https://www.manilatimes.net/2021/07/23/supplements/the-importance-of-msmes-in-the-philippines/1808048, last accessed on
November 7, 2021
37. The Key Role of MSMEs in the Philippines
37
Unfortunately, MSMEs were not spared by the impact of the
coronavirus pandemic. According to the Department of Trade
and Industry, 38% of the MSMEs had to shut down. However,
experts believe that MSMEs will play a crucial role in the
economic recovery of the country. It could help reduce poverty
by creating local employment opportunities, stimulating local
economic activities, and distributing wealth in communities.
The Importance of MSMEs in the Philippines
Aaron Ronquillo, “The Importance of MSMEs in the Philippines,” The Manila Times, July 23, 2021.
https://www.manilatimes.net/2021/07/23/supplements/the-importance-of-msmes-in-the-philippines/1808048, last accessed on
November 7, 2021.
38. Keep in Mind
38
● Business organizations exist to meet the needs, wants, and demands of
their customers. Businesses benefit when consumers buy their goods
and avail of their services.
● Business structures differ based on the degree of ownership, liability,
funding sources, and distribution of profit. The forms of business
organizations are sole proprietorship, partnership, corporation and
limited liability company.
● The types of businesses according to activity are service,
manufacturing, and merchandising.
39. Try This
A. Identify the form of business organization described by the following
statements.
1. “I keep 100 percent of the profits.”
39
Answer area
41. Try This
Identify the form of business organization described by the following
statements.
2. “My business associate and I will pay off debts owed by
the
company.”
41
Answer area
42. Try This
Identify the form of business organization described by the following
statements.
3. “I am willing to assume all of the risks that come with
running a business.”
42
Answer area
43. Try This
Identify the form of business organization described by the following
statements.
4. “The company will answer for itself in court.”
43
Answer area
44. Try This
Identify the form of business organization described by the following
statements.
5. “If the business fails, my finances are 100 percent
affected, too.”
44
Answer area
45. Practice Your Skills
Direction: Answer the questions based on the given scenario.
Wife and husband Angie and Ramon launched their business of
selling books and school materials to children before the COVID-19
pandemic. They pooled their savings to raise a capital of ₱30,000,
and the value of their business has grown ever since.
When the pandemic hit and face-to-face classes were suspended,
they supplemented their income by selling face masks, face shields,
gardening tools and other merchandise. They also started to supply
bulk orders to more prominent clients.
45
46. Practice Your Skills
Direction: Answer the questions based on the given scenario.
The flexibility of their business operations helped them weather the
economic hardships caused by the pandemic and allowed them to
expand their business continuously. For Angie and Ramon, the time-
honored custom of taking a hands-on approach to business is the
key to success.
46
47. Practice Your Skills
Answer the following questions based on the case study you just read:
1. What type of business did they establish? Explain your
answer.
47
Answer area
48. Practice Your Skills
Answer the following questions based on the case study you just read:
2. What form of business organization did they start with?
Explain your answer.
48
Answer area
49. Practice Your Skills
Answer the following questions based on the case study you just read:
3. If they had started to produce their own products,
what kind of business would they have been engaged in?
Explain your answer.
49
Answer area
50. Practice Your Skills
4. Suppose they maintained their business structure. If a
client had filed a case against their business company
for breach of contract who would have been legally
responsible to respond? Explain your answer.
50
Answer area
51. Practice Your Skills
5. Angie and Ramon believes that owners should employ
a
hands-on approach to business, implying that owners
should be involved in day-to-day activities. Which forms of
business organization do not employ this kind of
approach? Provide at least one and explain your answer.
51
Answer area
52. Challenge Yourself
Assess each form of business organization based on the anticipated risks
outlined by Jose.
Jose wants to establish a business to help farmers sell their
products. Through his business, the farmers can provide city
residents with fresh vegetables and fruits.
He plans to buy the farmers' produce in bulk, transport these
to the cities, and sell it to consumers. Jose is contemplating the
structure of his business. Some of his friends and neighbors
are interested in his business plan.
52
53. Challenge Yourself
List the advantages and disadvantages of each form of business
organization based on the anticipated risks outlined by Jose.
Jose's business can encounter these problems:
1. A significant amount of funds is needed to start the
business.
2. Food spoilage and weather conditions may cause
bankruptcy and debt.
3. Ethical and legal concerns can arise from setting selling and
buying prices.
4. The amount of tax is always a consideration.
53
54. Challenge Yourself
List the advantages and disadvantages of each form of business
organization.
54
Jose is the sole proprietor.
Jose is the general partner,
and his neighbors are
limited partners.
Jose established a regular
corporation.
Advantage
Disadvantage
55. Photo Credits
Slide 1: Makati City Skyline by Lawrence Ruiz is licensed under CC BY-SA 4.0 via Wikimedia Commons.
Slide 3: man-working-what-to-do by Clker-Free-Vector-Images via Pixabay
Slide 28: File:Call Centre 2006.jpg by Vitor Castillo is licensed under CC BY 2.0 via Wikimedia Commons.
Slide 29: Hardware store bangkok chinatown 5 by Stephan Knauss is licensed under CC BY-SA 4.0 via Wikimedia
Commons.
55
56. Bibliography
Armstrong, Gary. Marketing: An Introduction. 11th ed. Harlow, England: Pearson, 2013.
Lumen Learning. Boundless Finance. Lumen. Accessed 2021. https://courses.lumenlearning.com/boundless-
finance/chapter/types-of-business-organizations/.
Dollinger, Marc. Entrepreneurship: Strategies and Resources. 3rd ed. New Jersey: Prentice Hall, 2003.
Economics Discussion. “Forms of Business Organisation.” Accessed 2019.
https://www.economicsdiscussion.net/organisation/forms-of-business-organisation/31599.
Korchak, Johnathan. “Advantages and Disadvantages of a Partnership Business.” Inform Direct. August 27, 2017.
https://www.informdirect.co.uk/business-management/partnership-business-advantages-and-disadvantages/.
Kotler, Philip, and Gordon McDougall. Marketing Essentials. Ontario: Prentice-Hall Canada, 1985.
Morgan, H.E. 2021. Business Organisation. University of California Library.
https://www.goodreads.com/book/show/26899699-business-organisation.
Corporate Finance Institute“ Types of Businesses.” Accessed 2020.
https://corporatefinanceinstitute.com/resources/knowledge/strategy/types-of-businesses/.
56
Editor's Notes
For the answer key, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the answer, please refer to the Answer Key of the study guide provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the correct answer and/or standards for grading, please refer to the Answer Key provided in the Teacher's Content.
For the suggested rubric, please refer to the study guide.
For the suggested rubric, please refer to the study guide.
