2. Business Organizations
Business
Organizations constitute a
major component of the whole economy.
They create investments, employment,
productions and incomes.
In other words, they make and supply
goods and services to the economy.
Such economic functions, help the
economy move forward.
3. Single or Sole Proprietorship
Single or Sole Proprietorship- owned
by one person who personally manages
his business.
Most of our business operations (including
those that are not registered) belong to
this.
Ex. retailers, market vendors, barbers,
tailors
4. Advantages of Single or Sole
Proprietorship
It is easy to organize. Financial capital
is small and registration requirements
are not difficult to comply with.
2. The single proprietor is the bossmakes the decisions, has freedom of
action; Possible conflicts or quarrels are
minimized
3. The owner acquires all profits from
his business; more incentives
1.
5. Disadvantages of Single or Sole
Proprietorship
1. The financial resources of this are not
enough to transform the business
into a large-scale enterprise. Due to
its small assets and high mortality rate,
banks are reluctant to grant big loans to
single proprietorship type of business.
6. 2.
Benefits of specialization in
business management are not
present here. There is only one
manager and sometimes the owner is
the only employee.
3. The owner has unlimited liability.
This means that the owner risks not
only the assets of his small enterprise
but his other personal assets as well.
7. Partnership
Partnership-
two or more persons agree to
own and operate a business. The partners
agree to own and operate a business. The
partners agree to combine their resources
(money, materials and management). They also
share losses and profits.
Silent
partner- who provide financial capital
but they do not participate in the management.
Industrial
partner- who does not contribute
money to the business but responsible for the
management.
8. Advantages of Partnership
It is also easy to organize like the single
proprietorship.
2. Better management because of the
presence of more participants in the
operations of the business.
3. Possibility of bigger resources than
the single proprietorship exists. Financial
institutions may extend bigger loans to
such business organization considering the
combined resources of the partners.
1.
9. Disadvantages of Partnership
Conflicts or quarrels between or among
the partners regarding the management or
policies of the business are likely to crop up.
2. It lacks stability. The death or withdrawal of
one partner dissolves the partnership. To
continue
its
operation,
a
complete
reorganization is needed.
3. Like the single proprietor, the partners are
also subject to unlimited liability, except
the limited partners since their liabilities are
only confined to the share of capital
contribution in form of cash or property.
1.
10. Corporation
Corporation-
It is a legal entity, distinct and separate
from the individuals (stockholders) who own it.
The
Corporation Code states “Corporation is an
artificial being created by operation of the law, having the
right of succession and the powers, attributes, and
properties expressedly authorized by law or incident to its
existence”.
Only
natural persons are qualified to be incorporators.
They must not be less than 5 but not more than
15, all of legal age and a majority of whom are
residents of the Philippines. Each incorporator of stock
corporation must be an owner of at least one
share of the capital stock.
11. Advantages of Corporation
1. A member has a limited liability. In case of
bankruptcy, only the capital contribution of the
members are affected.
2. It has the most effective means of raising
money capital for its operations, by selling
stocks and bonds. Stocks are certificate of
ownership; bonds of indebtedness.
12. 3. It has a permanent existence. The life-span
of a corporation is 50 years and subject to
renewal for another 50 years. The death or
withdrawal of one member does not affect its
existence. It can take managers or officers
from inside or outside the organization.
4. It is capable of getting the most efficient
management considering its huge resources
and large-scale operations.
13. Disadvantages of Corporation
1.
2.
3.
4.
It is not easy to organize a corporation. Aside
from complying with capital requirements, there are
many paperworks involved in securing a charter
(written document containing objectives and activities of
the corporation). It takes longer time for the approval
of the Securities and Exchange Commission.
Abuses of corporation officials
Some corporations are engaged in questionable
activities. They pollute the environment; sell
substandard goods—not complying with social
responsibility.
There is a very impersonal or formal relationship
between officers and employees of a
corporation.
14. Group Work (by pair)
Give
the
advantages
and
disadvantages of Partnership as one
of the business organizations.
