The impacts of belief system in business

1. BUSINESS ETHICS &
SOCIAL
RESPONSIBILITY
LESSON 1
MS. Arjane B. Cuasay

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4. LESSON 1:
THE NATURE & FORMS OF
BUSINESS ORGANIZATIONS

5. ◦A business is an active process which is an integral part of
human society. It is an organization where economic resources or
inputs, such as materials and services, are brought together and
distributed to deliver or to give consumers goods, products, or
outputs. It involves significant operations such as buying,
assembling, distributing, advertising, selling, and accounting.

6. ◦ Most businesses aim to earn profit. The term profit refers
to the difference between the amount received and the
amount spent on something purchased, produced, or
manufactured. The fundamental reason for examining
business activities from a moral point of view is that
business organizations should, in principle, help promote
the common good and protect the rights and interests of
individuals

7. 3 Types of Business Organizations
◦ Service businesses provide services to customers rather than products. Examples:
computer repair, laundry services, tutoring, delivery services, wellness (such as gym or
spa), etc.
◦ Merchandising businesses sell to customers products they buy from other
businesses. Examples: sari-sari stores, bookstores, department stores, groceries,
supermarkets, etc.
◦ Manufacturing businesses turn basic inputs into products which are sold to
consumers. Examples: shoe manufacturing, baked goods, candle manufacturing,
cosmetics manufacturing, wine production, etc

8. Forms of Business Organizations
◦1. Sole Proprietorship- It is a one-person
business. The owner has full control over the
finances and operations and decides alone.

9. Advantages:
◦ A. Tax preparation is faster. Simply file an individual income tax return including losses
and profits to your business.
◦ B. Sole proprietorship has lower start-up costs.
◦ C. Handling money for the business is easier.
◦ D. Sole proprietorships have the least government rules and regulations that affect them.
◦ E. The sole proprietor can own the business for as long as he/she wants, and when he/she
wants to move out, he/she can cash in and sell the business.
◦ F. Even in common practice, the sole proprietor can pass the business down to his/her
heir.

10. Disadvantages:
◦A. The sole proprietor is personally liable for all debts and
actions of the enterprise.
◦B. There is lack of financial control because of looser
structure of sole proprietorship.
◦C. There could be difficulty in raising capital.

11. ◦2. Partnership- It is a business relationship between two or more
people. It refers to an arrangement where individuals share a business
venture's profits and liabilities.
Advantages:
a. Partnership business lacks formality as compared with managing a
limited company or corporation.
b. It is easy to start. The partnership may be created either verbally or in
writing.
c. You share the burden. You have companion and support.

12. ◦ D. Every partner would add his/her own expertise, skills, experience, and
connections to the business, thus giving it a greater chance of success.
◦ E. There is better decision-making. Two heads are better than one.
◦ F. There is privacy. The business deals may be kept confidential by the partners.
◦ G. The partners own and control the business.
◦ H. The more partners there are, the more funds are available in the company,
which can be used for possible expansion. Its borrowing capacity is also likely to
be higher.
◦ I. There is an easy access to profits in a business partnership. The partners just
have to divide the profits.

13. Disadvantages:
a. The business does not have any independent legal status.
b. The business has no separate legal personality, so the partners are personally liable
for the debts and losses incurred.
c. The partnership business often seems to lack the sense of prestige more closely
associated with a corporation.
d. A partnership will often find it more difficult to raise money than a corporation.
e. There is a potential of differences and conflicts.
f. Decision-making can be slower because there is a need for consultation among
partners.

14. ◦g. The profit must be shared among the partners.
◦h. It may require a lot of time and energy thus may affect life-work
balance.
◦i. The profits earned by the partnership will be translated to income on
the individual partners. Thus, they are subject to income tax in the
financial year in which they are made.
◦j. There are limits on business development like unlimited liability, lack of
funding opportunities, and a lack of commercial status, etc.

15. 3. Corporation - It is an entity created by law that is independent and distinct from
its owners and relies on the corporate laws of the state in which it is incorporated to
continue its existence.
Advantages:
a. The liability of the shareholders of a corporation is limited up to the amount of
their investments.
b. A publicly held corporation may sell shares or issue bonds to raise substantial
amounts.
c. It is easy for a shareholder to sell shares in a corporation.
d. A corporation’s life has no limit, ownership can pass through many generations.

16. Disadvantages:
a. The corporation pays taxes on its income depending on its type
and the shareholders pay dividend taxes, so income gets taxed
twice.
b.The management team of a corporation can operate the business
without any real oversight from the owners.