Forms of Business Organizations Quiz

Forms of Business Organizations

• Sole Proprietorship: Owned by one person, managing daily activities.

  • Assets: Resources owned by the business.
  • Liabilities: Debts or obligations of the business.
  • Advantages: Manageable, least expensive.
  • Disadvantages: Unlimited liability (owner responsible for all debts).

• Partnership: Shared ownership by two or more members.

  • General Partnership: Unlimited liability for all partners.
  • Limited Partnership: Some partners have limited liability (up to their investment).
  • Advantages: Wider capital base.
  • Disadvantages: Joint liability for all partners' actions.

• Corporation: Private company, established by 5-15 owners (shareholders).

  • Legally recognized by the government (incorporation).
  • Stock Corporation: Issues shares, distributes profits (dividends).
  • Non-Stock Corporation: Created for public interest (charitable, educational).
  • Advantages: Limited liability for shareholders.
  • Disadvantages: Close government monitoring, more paperwork.

Foreign Business Organizations

• Branch Office: Conducts head office activities in a host country.
• Representative Office: Supported by head office, no fund transfer.
• Regional Headquarters: Oversees subsidiaries, affiliates, and branches; administrative, communication, coordination.
• Services: Administration, planning, raw material acquisition, marketing, technical support, research and development.

Classification of Businesses

• Service Business: Provides labor or services.
• Merchandising Business: Sells products purchased from others.
• Manufacturing Business: Creates finished products from raw materials.

Ethical Environment of the Firm

• Ethics: Principles guiding behavior and judgments.
• Ethical Standards: Create values, ensure meaningful decisions.
• Ethical Issues: Moral dilemmas in business decisions.
• Universalism: Everyone should have the same values (honesty, respect).
• Egoism: Self-interest guides decisions.
• Utilitarianism: Greatest good for the greatest number.

Corporate Integrity

• Sense of wholeness: Created by right relationships among members (cultural, interpersonal, organizational, social, natural).
• Cultural: Internal relationships; language, rituals, beliefs.
• Interpersonal: Relationships between people (family, civic, work).
• Organizational: Purposes of the business (economic, managerial).
• Social: Impacts of the organization on society.
• Natural: Organization's impact on nature.

Corporate Social Responsibility (CSR)

• Corporate Social Responsibility considers the welfare of society.
• Social Obligation: Following legal and ethical standards.
• Social Responsiveness: Going beyond to impact society positively.
• Economic Responsibility: Producing goods at reasonable prices.
• Legal Responsibility: Complying with local and international laws.
• Ethical Responsibility: Fairness to consumers, employees, shareholders, community.
• Philanthrophic Responsibility: Voluntary activities like charity.