18 Questions
What is the main purpose of a business organization?
To earn profits by satisfying market needs
Which type of business organization has the right to keep and use their profits as they choose?
For-Profit Organization
What does the term 'revenue' refer to in a business context?
The total amount of money earned by a business by offering products
Which type of business organization provides services to customers rather than products?
Service Businesses
What is a disadvantage of a partnership business organization?
Unlimited liability for the partners
Which type of business organization turns basic inputs into products sold to customers?
Manufacturing Businesses
What is a key advantage of a partnership?
Easy to start
Which is a disadvantage of a sole proprietorship?
Owner is personally liable for all debts
What is a benefit of owning a corporation?
Limited financial risks for owners
Why might partnerships be better at decision making?
More expertise, skills, and connections from partners
Which factor is a disadvantage of a partnership compared to a corporation?
Formality in managing the business
What characteristic makes sole proprietorship different from partnerships or corporations?
One-person ownership and control
What is a partnership in business?
A form of business organization involving two or more people working together
What is a disadvantage of a partnership?
Difficulty in raising capital compared to corporations
What is an advantage of a corporation?
Ability to raise capital through the sale of stocks
What is a disadvantage of a corporation?
Complex legal formalities and regulatory requirements
Why do business organizations exist according to the text?
To serve consumer's needs and make profits
Who is responsible for making ethical decisions according to the text?
Both business leaders and every employee
Study Notes
Business Organization
- A business organization is an entity that aims to earn profits by providing products to satisfy the needs of the market.
- Business organizations exist to serve consumer’s needs, and in return, they make profits when people patronize their products and services.
Types of Business Organization
- Service businesses provide services to customers rather than products.
- Examples of service businesses: computer repair, laundry services, tutoring, delivery services, wellness (such as gym or spa).
- Merchandising businesses sell to customers products they buy from other businesses.
- Examples of merchandising businesses: sari-sari stores, bookstores, department stores, groceries, supermarkets.
- Manufacturing businesses turn basic inputs into products which are sold to customers.
- Examples of manufacturing businesses: shoe manufacturing, baked goods, candle manufacturing, cosmetics manufacturing, wine production.
Forms of Business Organization
- Sole proprietorship is a one-person business where the owner has full control over the finances and operations.
- Advantages of sole proprietorship: faster tax preparation, lower start-up costs, easier handling of business money, minimal government rules and regulations, and the ability to own the business for as long as desired.
- Disadvantages of sole proprietorship: personal liability for all debts and actions of the enterprise, lack of financial control.
- Partnership is a business relationship between two or more people who share a business venture’s profits and liabilities.
- Advantages of partnership: lack of formality, easy to start, shared burden, combined expertise, skills, experience, and connections, better decision making, privacy, owned and controlled by the partners, access to more funds, and easy access to profits.
Business Ethics and Social Responsibility
- Small and big corporations worldwide face daily challenges that concern ethical issues.
- Ethical decisions are not only the responsibility of business leaders but of every employee as well.
Business Terminology
- Profit refers to the difference between the amount received and the amount spent on something purchased, produced, or manufactured.
- Revenue is the total amount of money a business earns during a given period by offering products to the market.
- For-profit organizations have the right to keep and use their profits as they choose, within legal limits.
- For-non-profit organizations are formed for a specific purpose to serve the common good of the public.
Test your knowledge on different forms of business organization and learn about good and bad policies/practices. Additionally, arrange jumbled letters to form the correct words related to web design and development.
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