Business Types & Organizations PDF

**LEARNING OBJECTIVES:** At the end of this session, you are expected to be able to: 1. Define and describe business and business organization 2. Identify and describe the various forms of business organization: sole proprietorships, partnerships, and corporations 3. Compare and contrast...

**LEARNING OBJECTIVES:** At the end of this session, you are expected to be able to: 1. Define and describe business and business organization 2. Identify and describe the various forms of business organization: sole proprietorships, partnerships, and corporations 3. Compare and contrast the various forms of business organization; and 4. Illustrate the role of each form of business organization in the economy +-----------------------------------------------------------------------+ | Learning Information 1.1 | +-----------------------------------------------------------------------+ **3 Types of Business** 1. Service Business ================ - A service type of business provides intangible products (products with no physical form). Service type firms offer professional skills, expertise, advice, and other similar products. - Examples of service businesses are: salons, repair shops, schools, banks, accounting firms, and law firms. 2. Merchandising Business ====================== - This type of business buys products at wholesale price and sells the same at retail price. They are known as \"buy and sell\" businesses. They make profit by selling the products at prices higher than their purchase costs. - A merchandising business sells a product without changing its form. Examples are: grocery stores, convenience stores, distributors, and other resellers. 3. Manufacturing Business ====================== - Unlike a merchandising business, a manufacturing business buys products with the intention of using them as materials in making a new product. Thus, there is a transformation of the products purchased. - A manufacturing business combines raw materials, labor, and overhead costs in its production process. The manufactured goods will then be sold to customers. **Hybrid Business** **Forms of Business Organization** These are the basic forms of business ownership: 1. Sole Proprietorship =================== - A sole proprietorship is a business owned by only one person. It is easy to set-up and is the least costly among all forms of ownership. The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them. - 2. Partnership =========== - A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits of the business among themselves. - In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited partners. 3. Corporation =========== - A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock. 4. **Cooperative**  +-----------------------------------------------------------------------+ | Learning Information 1.2 | | | | Learning Content 1: **Social Function of Business** | +-----------------------------------------------------------------------+ Why Should Business be Ethically Sensitive? =========================================== 1. 2. 3. 4. Business Role in Poverty Alleviation ==================================== - **Absolute Poverty** -- not having the capability to provide for their basic needs - **Relative Poverty** -- poverty in comparison with the living standards of the others. +-----------------------------------------------------------------------+ | Learning Information 1.2 | | | | Learning Content 2: **Areas of Business most in need of Ethical | | Attention** | +-----------------------------------------------------------------------+ 1. - Milton Friedman -- the only social responsibility of business is to increase its profit - William Sauser -- business organizations have four levels of responsibility: (1) earning a profit, (2) legal responsibility, (3) ethical responsibility and (4) discretionary responsibility 2. The Morality of Advertisement ============================= - RA 7394 / Consumer Act of the Philippines. "The state shall protect the consumer from misleading advertisements and fraudulent sales promotion practices. - Art. 110 - "It shall be unlawful for any person to disseminate or to cause the dissemination of any false deceptive or misleading advertisement by Philippine mail or in commerce by print, radio, television or outdoor advertisement or other medium for the purpose of inducing or which is likely to induce directly or indirectly the purchase of consumer products or services......" 3. Basic Employee Rights, Job Discrimination, Other Labor -- Related To Ethical Issues =================================================================================== - The Labor Code of the Philippines / Presidential Decree No. 442 -- lays down the rights of workers in relation to wages, rights to self-organization, collective bargaining, security of tenure and just and humane conditions of work - RA 6727 / Wage Rationalization Act -- it mandates the fixing the minimum wages applicable to different industrial sectors - Book Four of the Labor Code of the Philippines -- lays down the "health, safety and social welfare benefits" accorded to workers - Book Five of the Labor Code of the Philippines -- lays down the policies of the state with regard to labor such as: - To promote and emphasize the primacy of free collective bargaining and negotiations including voluntary arbitration, mediation and conciliation as modes of setting labor or industrial disputes. - To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development - To foster the free and voluntary organization of a strong and united labor movement - To promote the enlightenment of workers concerning their rights and obligations as union members and as employees - To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes - To ensure a stable but dynamic and just industrial peace - To ensure the participation of workers in decision and policy making processes affecting their rights duties and welfare Insider Trading =============== Pollution and Resource Depletion. ================================= Whistle Blowing =============== +-----------------------------------------------------------------------+ | Learning Information 1.3 | | | | Learning Content 1: **Core Principles of Fairness, Accountability and | | Transparency** | +-----------------------------------------------------------------------+ 1. 2. 3. 4. What is Accountability? ======================= - To be accountable is to be liable to explain or justify one\'s actions and decisions. - It is the process of explanation and justification. - Holding to account is the process of requiring explanation and justification, but it is also about testing, forming a judgment, and if necessary, taking action. - Accountability implies responsibility: it is reasonable only to hold people to account for those things What Accountability is not? =========================== - It does not imply a management relationship. - It is not synonymous with responsibility. - It is not a \"one off\" annual event. - It is not the same as appraisal. It is not about confrontation, putting someone in his place or \"giving him a hard time\". Why is accountability important? ================================ - Sound accountability structures are the most important aspect of prevention and detection of corruption. - A civil society organization without proper accountability systems is fragile and open to rumors about mismanagement and abuse of power. - A civil society organization will prevent it from enjoying respect and full legitimacy in the eyes of its stakeholders including those duty bearers whom it intends to engage with advocacy. Accountability Structures ========================= - Accountability is the ability to account for your actions and performance to your stakeholders. - Accountability includes the fact that persons (your stakeholders) are willing and able to hold you accountable. - Accountability is the obligation to demonstrate that work has been conducted in compliance with agreed rules and standards or to report fairly and accurately on performance results vis-à-vis mandated roles and/or plans. Fairness ======== - Comes from the old English faeger, meaning \"pleasing, attractive\". - The quality of making judgments that are free from discrimination. - Judges, umpires, and teachers should all strive to practice fairness. - Showing fairness in making a decision, pleases all parties involved and offering a solution - Involves balancing the interests involved in all decision-making including any decisions related to hiring, firing (including the investigatory process), and the compensation and rewards system. - Fairness and Equity can be subjective. What one person sees as unfair may be perfectly appropriate for another. Justice ======= - Looks at the balance of benefits and burdens distributed among members of the group. - Can result from the application of rules, policies, or laws that apply to a society or a group. Transparency ============ - It is used and sometimes mis-used by both scholars and practitioners. - Essential in building families, and through families, in strengthening civil society as a whole. - An important mechanism for guaranteeing social accountability. - Allows stakeholders to understand whether the activities of social institutions such as international organizations and NGOs provide a genuine service to civil society and whether money is used appropriately. +-----------------------------------------------------------------------+ | Learning Information 1.3 | | | | Learning Content 2: **Notions of Competence, Professionalism and | | Responsibility** | +-----------------------------------------------------------------------+ 1. Technical Skills ================ - Encompass the ability to apply specialized knowledge or expertise. - All jobs require some specialized expertise, and many people develop their technical skills on the job. 2. Conceptual Skills ================= - Skills and the mental ability that managers must have to analyze and diagnose complex situations. - The ability to integrate new ideas with existing processes and innovate on the job is also a crucial conceptual skill for today\'s managers. 3. Human Skills ============ - The ability to understand, communicate with, motivate, and support other people, both individually and in groups, which defines human skills. a. Human Maturity. A person works not only hard and solidly but also efficiently, that is, with professionalism. b. Work is done in a spirit of service and love for those around us -- the worker must take in and develop the social dimension that the work involves. He realizes that work is something that helps improve social conditions, generally, it is a source of progress and well-being. Servant Leaders =============== - Go beyond their own self-interest and focus on opportunities to help followers grow and develop. - Do not use power to achieve ends; they emphasize persuasion. - Focuses on serving the needs of others, research has focused on its outcomes for the well-being of followers. The Effects of Servant Leadership =================================  +-----------------------------------------------------------------------+ | Learning Information 1.4 | | | | Learning Content 1: **Codes of Ethics and Business Conduct** | +-----------------------------------------------------------------------+ Can You Combine a Code of Conduct and Code of Ethics? ===================================================== Code of Ethics and Professional Conduct Sample Template: ======================================================== 1. **Be inclusive.** We welcome and support people of all backgrounds and identities. This includes but is not limited to members of any sexual orientation, gender identity and expression, race, ethnicity, culture, national origin, social and economic class, educational level, color, immigration status, sex, age, size, family status, political belief, religion, and mental and physical ability. 2. **Be considerate.** We all depend on each other to produce the best work we can as a company. Your decisions will affect clients and colleagues, and you should take those consequences into account when making decisions. 3. **Be respectful.** We won\'t all agree all the time, but disagreement is no excuse for disrespectful behavior. We will all experience frustration from time to time, but we cannot allow that frustration become personal attacks. An environment where people feel uncomfortable or threatened is not a productive or creative one. 4. **Choose your words carefully.** Always conduct yourself professionally. Be kind to others. Do not insult or put down others. Harassment and exclusionary behavior aren\'t acceptable. This includes, but is not limited to: - Threats of violence. - Insubordination. - Discriminatory jokes and language. - Sharing sexually explicit or violent material via electronic devices or other means. - Personal insults, especially those using racist or sexist terms. - Unwelcome sexual attention. - Advocating for, or encouraging, any of the above behavior. 5. **Don\'t harass.** In general, if someone asks you to stop something, then stop. When we disagree, try to understand why. Differences of opinion and disagreements are mostly unavoidable. What is important is that we resolve disagreements and differing views constructively. 6. **Make differences into strengths.** We can find strength in diversity. Different people have different perspectives on issues, and that can be valuable for solving problems or generating new ideas. Being unable to understand why someone holds a viewpoint doesn't mean that they're wrong. Don't forget that we all make mistakes, and blaming each other doesn't get us anywhere. Instead, focus on resolving issues and learning from mistakes. +-----------------------------------------------------------------------+ | Learning Information 1.4 | | | | Learning Content 2: **What to include in your Code of Ethics and | | Professional Conduct** | +-----------------------------------------------------------------------+ 1. **The work environment.** Employees should act with integrity, comply with laws, maintain a professional work environment and comply with company policies. They should treat customers, colleagues, and partners ethically at all times. 2. **Conflicts of interest.** A company\'s reputation depends on the actions and integrity of its employees. It is essential that they avoid relationships and activities that hurt, or appears to hurt, their ability to make objective and fair decisions. 3. **Protecting company assets.** Employees should always act to protect company assets, including physical, intellectual, and electronic or digital properties. 4. **Anti-bribery and corruption.** A company\'s integrity is essential for maintaining trustworthiness and reputation. Employees should always do their work fairly, honestly, and legally. 5. **Attendance and punctuality.** Employees are expected to be regular and punctual in attendance. This means being in the office, ready to work, at starting time each day. Absenteeism and tardiness burden other employees and the company. 6. **Absence without notice.** Employees who are unable to work due to illness or an accident should notify their supervisor. This allows the company to arrange for coverage of their duties and helps others continue to work in their absence. If an employee does a report for work and the company is not notified of an employee\'s status for 3 days, it is typically considered a job abandonment. 7. **General harassment and sexual harassment.** This company is committed to providing a work environment free of discrimination and unlawful harassment. Actions, words, jokes, or comments based on an individual's sex, race, ethnicity, age, religion, or any other legally protected characteristic are not tolerated. 8. **Cell phone use at work.** Personal cell phone usage during work hours is discouraged, except in extreme cases such as an emergency. 9. **Dress code.** A professional appearance is important when employees work with customers or potential customers. Employees should be well groomed and dressed appropriately for the business and for their position. 10. **Substance abuse.** The manufacture, distribution, possession, sale, or purchase of controlled substances of abuse on company property is prohibited. Being under the influence of illegal drugs, alcohol, or substances of abuse on company property is prohibited. Working while under the influence of prescription drugs that impair performance is prohibited. 11. **Tobacco products.** The use of tobacco products on company property, outside of permitted areas, is specifically prohibited. 12. **Internet use at work.** Employees may use the Internet when appropriate to access information needed to conduct a business company business. Use of the Internet must not disrupt or injure the company computer network. Use of the Internet must not interfere with an employee\'s productivity. **The Importance of a Code of Ethics:** A code of ethics is important because it helps employees or organization members make decisions that are in line with company values in the absence of a clear rule or direct supervision. A code of ethics can improve decision making at a business, and make it easier for employees to be autonomous. **Why does a project manager need a code of ethics and professional conduct?** A code of ethics is important because it helps employees or organization members make decisions that are in line with company values in the absence of a clear rule or direct supervision. +-----------------------------------------------------------------------+ | Learning Information 1.5 | | | | Learning Content 1: **Classical Ethical Philosophies** | +-----------------------------------------------------------------------+ *The unexamined life is not worth living. \-\--Socrates* *He who has never learned to obey cannot be a good commander \-\--Aristotle* *Life is really simple, but we insist on making it complicated \-\--Confucius* **Ethics and Philosophy** ***Ethics*** -  the principles of conduct governing an individual or a group Examples: - ***Personal Ethics*** - refers to the rules by which an individual lives his or her personal life. - ***Accounting Ethics*** - refers to the code that guides the professional conduct of accountants **Ethics** - The study of morality. Although ethics deals with morality, it is not quite the same as morality. Ethics is a kind of investigation, which includes both the activity of investigating as well as the results of that investigation, whereas morality is the subject matter that ethics investigates. **Philosophy** -   comes etymologically from two Greek words PHILIA or PHILOS which means love, and SOPHIA, which means wisdom.  It is the study of the fundamental nature of knowledge, reality, and existence.  **Three Branches of Philosophy** 1. **Metaphysics** - It is concerned with reality and existence.  It is the philosophy of being. 1. **Ontology** - deals with the nature of existence 2. **Cosmology** - inspects the origin and organization of the universe 2. **Epistemology** - raises questions about the nature of knowledge. 1. **Logic** is a key dimension to epistemology. - - 3. **Axiology** - explore the nature of values 1. **Ethics** - studies human conduct and examines moral values 2. **Aesthetics** - which values beauty, nature and aesthetic experience  **Strands of Philosophy** 1. **Idealism** - The oldest philosophy of western culture. It refers to the world of mind and ideas. **Idealism** is the philosophy that believes that the ultimate nature of reality is ideal, or based upon ideas, values, or essences. Leading proponents of idealism are:  1. Socrates 2. Plato 3. Augustine 4. Rene Descartes 5. Immanuel Kant 6. Georg Wilhelm Friedrich Hegel 2. 1. 2. 3. 4. 3. 3. **Contemporary Philosophies** 1. 2. 3.  +-----------------------------------------------------------------------+ | Learning Information 1.6 | | | | Learning Content 1: **Major Ethical Philosophers** | +-----------------------------------------------------------------------+ **Classical Philosophers and Their Philosophies** **Plato** - Student of the equally great philosopher Socrates - Plato ranks among the greatest philosophers of the world, and many scholars view him as the most important philosopher of western civilization. - We find in Plato a drive for absolute truth that goes beyond the merely popular opinions of the multitudes. - We also find in Plato a conviction that the physical world around us is merely a pale copy of the true reality of things that exist on a higher objective plane (Fieser, 2003) - Plato held that moral values are objective in the sense that they exist in a spirit-like realm beyond subjective human conventions. Moral values are absolute for internal, in that they never change, and also that they are universal insofar as they apply to all rational creatures around the world and throughout time.  - Plato largely shares the teaching of his master, Socrates, to make all virtue intellectual, a doctrine expressed in the formula,  virtue is knowledge,  which is tantamount to this other,  vice is ignorance,   or an erroneous view.  the condition is indivisible:  no evil deed is willfully done and therefore no man is to blame for being wicked (Coppens, 1895) **Aristotle** - His ethics is Teleological (telos-end) - He is concerned with action which is conducive to man's good. - Right actions are actions which tend to attain man's good. - Wrong actions are actions which oppose to the attainment of man's good. **Immanuel Kant** Treat people as an end and never as a mean to an end. **Utilitarianism as an Example of Consequentialist Theory** - Act Utilitarianism (tallying the consequences of an action) - Hedonistic Utilitarianism (tallying the pleasure and pain cause by an action) - Rule Utilitarianism, a behavioral rule is morally right if the consequences of adapting that rule are more favorable than unfavorable to everyone. - Ideal Utilitarianism, tallying any consequence that we intuitively recognize as good or bad. - Preference Utilitarianism, tallying any consequence that fulfills our preference. - Perfect Happiness, the ultimate end can be found only in God +-----------------------------------------------------------------------+ | Learning Information 1.5 | | | | Learning Content 2: **Implication of Philosophies for Business | | Principles and Practices** | +-----------------------------------------------------------------------+ Ethics are the principles that will tell us the right thing to do, or what things are worth doing.  Ethics can be distinguished from reality in the sense that morality deals with principles of right or wrong conduct in general, while ethics is more concerned with standards of conduct acceptable to a group, a profession, or members of an organization.  Since ethics is universal and the same for all, company should obey the same ethical rules wherever they operate. For instance, there are basic norms necessary for the conduct of business such as keeping promises, honoring contracts, telling the truth, and respecting the lives and integrity of those with whom one engages in business.