Bus Ethics Soc Res - Q3 - M1 PDF

Business Ethics and SENIOR HIGH Social Responsibility SCHOOL Module Forms of Business Organization Part 1 1...

Business Ethics and SENIOR HIGH Social Responsibility SCHOOL Module Forms of Business Organization Part 1 1 Quarter 3 Business Ethics and Social Responsibility Business Ethics and Social Responsibility- Grade 12 Quarter 3 – Module 1: Forms of Business Organization Part 1 First Edition, 2020 Republic Act 8293, Section 176 states that no copyright shall subsist in any work of the Government of the Philippines. However, prior approval of the government agency or office wherein the work is created shall be necessary for exploitation of such work for profit. Such agency or office may, among other things, impose as a condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks, etc.) included in this module are owned by their respective copyright holders. Every effort has been exerted to locate and seek permission to use these materials from their respective copyright owners. The publisher and authors do not represent nor claim ownership over them. Published by the Department of Education - Schools Division of Pasig City Development Team of the Self-Learning Module Writer: Eunice H. Mariposque Editor: Content/Language : Hedelita B. Calonia/ Edna D. Camarao Reviewers: Content/Language : Hedelita B. Calonia, Dennis T. Alex / Aillen G. Sumagaysay, Edna D. Camarao Layout Artist: Clifchard D. Valente Management Team: Ma. Evalou Concepcion A. Agustin OIC-Schools Division Superintendent Carolina T. Rivera, EdD OIC-Assistant Schools Division Superintendent Victor M. Javeña EdD Chief, School Governance and Operations Division and OIC-Chief, Curriculum Implementation Division Education Program Supervisors Librada L. Agon EdD (EPP/TLE/TVL/TVE) Liza A. Alvarez (Science/STEM/SSP) Bernard R. Balitao (AP/HUMSS) Joselito E. Calios (English/SPFL/GAS) Norlyn D. Conde EdD (MAPEH/SPA/SPS/HOPE/A&D/Sports) Wilma Q. Del Rosario (LRMS/ADM) Ma. Teresita E. Herrera EdD (Filipino/GAS/Piling Larang) Perlita M. Ignacio PhD (EsP) Dulce O. Santos PhD (Kindergarten/MTB-MLE) Teresita P. Tagulao EdD (Mathematics/ABM) Printed in the Philippines by Department of Education – Schools Division of Pasig City Business Ethics and Social SENIOR HIGH Responsibility SCHOOL Module 1 Quarter 3 Forms of Business Organization Part 1 Introductory Message For the Facilitator: Welcome to Business Ethics and Social Responsibility-Grade 12 Self-Learning Module on Forms of Business Organization Part 1! This Self-Learning Module was collaboratively designed, developed and reviewed by educators from the Schools Division Office of Pasig City headed by its Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A. Agustin, in partnership with the City Government of Pasig through its mayor, Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K to 12 Curriculum using the Most Essential Learning Competencies (MELC) in developing this instructional resource. This learning material hopes to engage the learners in guided and independent learning activities at their own pace and time. Further, this also aims to help learners acquire the needed 21st century skills especially the 5 Cs, namely: Communication, Collaboration, Creativity, Critical Thinking, and Character while taking into consideration their needs and circumstances. In addition to the material in the main text, you will also see this box in the body of the module: Notes to the Teacher This contains helpful tips or strategies that will help you in guiding the learners. As a facilitator you are expected to orient the learners on how to use this module. You also need to keep track of the learners' progress while allowing them to manage their own learning. Moreover, you are expected to encourage and assist the learners as they do the tasks included in the module.  For the Learner: Welcome to Business Ethics and Social Responsibility Self-Learning Module on Forms of Business Organization Part 1! This module was designed to provide you with fun and meaningful opportunities for guided and independent learning at your own pace and time. You will be enabled to process the contents of the learning material while being an active learner. This module has the following parts and corresponding icons: Expectations - This points to the set of knowledge and skills that you will learn after completing the module. Pretest - This measures your prior knowledge about the lesson at hand. Recap - This part of the module provides a review of concepts and skills that you already know about a previous lesson. Lesson - This section discusses the topic in the module. Activities - This is a set of activities that you need to perform. Wrap-Up - This section summarizes the concepts and application of the lesson. Valuing - This part integrates a desirable moral value in the lesson. Posttest - This measures how much you have learned from the entire module.  EXPECTATIONS At the end of the module, you are expected to: 1. define what business is; 2. differentiate sole proprietorship and partnership business; and 3. discuss the advantages and disadvantages of sole proprietorship and partnership business. PRETEST Directions: State TRUE if the sentence is correct and FALSE if the sentence is wrong. 1. A business is an enterprising entity that operates in exchange for one another or money. 2. A sole proprietorship is owned by one person only. 3. A partnership business is composed of two business partners only. 4. One of the disadvantages of putting up a sole proprietorship business is that the owner has full control of his business. 5. One of the advantages of the partnership business is having a diversity of expertise. RECAP Give three brand names under the following business categories. Business Categories Brand names 1. Fast food 1. 2. 3. 2. Cellphone 1. 2. 3. 3. Shoes 1. 2. 3. 4. Bags 1. 2. 3. 5. Diapers 1. 2. 3.  LESSON We always use different brands of products coming from different local and abroad businesses. Undeniably, business is part of our daily lives, starting from our home ( the things we use in cooking, cleaning, etc.), to transportation and even to the services that we get from having our hair fixed, detailing of cars, computer services and many more. In module 1 and 2, we will discuss what business is and its category according to its form. What is a Business? A business is an organization, economic system, or enterprising entity that is engaged in commercial, professional, industrial activities and operates in exchange for one another or of money. It produces goods or offers services to satisfy the needs and wants of society. Business, then, operates with people working together to meet a common goals (which is to earn a profit). Profits in business are not necessarily money. It can be a benefit in any form which is acknowledged by the business (entity) involved in the business (activity). (https://www.feedough.com/what-is-business-definition-concept- types/) Basic Forms of Business Organization A business organization is an entity formed to carry on commercial enterprise. There are four different types of business organization that is to be discussed in this module. The single proprietorship, partnership, corporation, and cooperative. Single Proprietorship A sole proprietorship as the name implies is a business owned and operated by only one person for their benefit. The owner and the business are considered the same. Moreover, there is no legal separation between the two when it comes to taxes and liabilities and of https://pixabay.com/illustrations/multi-tasking-efficiency-manager- course assets and profits. That is why sole 2840792/ proprietorship has unlimited liability for all of its obligations because of this kind of condition but also has all the rights when it comes to assets and profit incurred by the business. Advantages of Sole Proprietorship 1. The Easiest and inexpensive to put up - Sole proprietorship is the simplest form of business organization, so, many businesses start from this kind. Most often, you only need minimal capital to put up this kind of business and there are no strict laws and policies for a single proprietorship. It only needs a few legal requirements to be in this type of business. Sometimes, you are not aware that you are already engaged in this type but technically, you are into it. Common examples are the sari-sari store and those who are engaged in online selling who use to use this type of marketing strategy, the “PM is the key!”. 2. All profits will go to the owner- because the owner himself fund the business, one hundred percent of the profit will go to the proprietor. If the business operates efficiently, the increase of the return will then follow. 3. Complete and direct control of the business- every decision that will be imposed in the business is always under the discretion of the owner. The owner does need to consult anyone as he has the right to decide on his own. 4. Freedom from government regulations- there are no or few specific policies and strict laws that are being imposed to follow by this kind of organization. 5. No special taxation- unlike corporations that pay corporate taxes and franchise, sole proprietorship taxed profit as personal income reported on the individual tax return of the owner. 6. Easy to dissolve if desired- sole proprietorship can be dissolved any time the owner desires to sell the business or terminate its business’ life. Disadvantages of Sole Proprietorship 1. Unlimited liability- there is only one liable to all of the obligations of the business and that is the owner. As discussed earlier, the owner and the  business are the same, so whatever the business incurs as a liability, the owner is the one responsible to pay for all of it up the extent of his assets. 2. Difficult to raise capital or additional capital- it is hard for a business owner to raise capital/additional funds to sustain its life or expand the business because lenders find sole proprietorship as high risk because of unlimited liability. 3. Limited managerial expertise- Business owners do not know all sides of the business. They may be skilled in one field but are weak points of decision making because of lack of knowledge. For example, a chef is the owner of a café, but he is not that capable of accounting for the financial matters of the business. 4. Has a hard time finding qualified talents- because there are lots of companies out there that offer high paying jobs and other benefits, most employees resort to applying to these well-known companies than these new and small startup sole proprietorship businesses. 5. Consumes personal time- if you are to put up a sole proprietorship business, you must be ready to sacrifice your time for it requires you to work for almost all day long seven days a week. 6. Unstable business life- there are lots of factors for a business to cease to exist, such as bankruptcy, health issues of the owner, loss of interest to continue, or mortality of the owner. Partnership According to The Philippine Civil Code, it defines partnership as “Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, to divide the profits among themselves.”(https://ndvlaw.com/how-to- form-apartnership /#:~ :text= Art., dividing https://pixabay.com/illustrations/handshake- %20the%20profits%20 among%20themselves.) regard-cooperate-connect-2009195/  The partners should then decide on how the decision should be made, the amount of capital each partner will share and the percentage of profit/losses sharing, and other related concerns regarding the firm that the partners want to put up. Advantages of Partnership 1. Ease of Formation- compared to a corporation, a partnership is more likely easy to form. The partners need to create a partnership agreement as one of the pertinent requirements to set up partnership business. 2. Availability of capital- unlike in sole proprietorship that has only one source of capital, which is the owner, the partnership has two or more people that can contribute to raising funds for the operation of the business and/ or its expansion. 3. Diversity of expertise- it is said that two brains are better than one, so if you have a partner/s in business, it will be very easy to handle it with shared obligations and responsibilities. You can collect different ideas and can make better decisions. That is why it is also essential to choose the right partner/s in your business---the one with complementary talents, skills, and experience to yours. 4. No special taxes - just like the sole proprietorship, partnership profit, and loss report, and partner’s personal income tax are one and declared as one. 5. Relative freedom from government control- the government has little control over the partnership activities. Disadvantages of Partnership 1. Unlimited liability- all general partners are liable up the extent of their personal assets to settle debts of the firm. 2. Conflicts between partners- every partner may have different management styles and different ideas on running their business. So one decision may not be agreeable to all that cause conflict with the partners. They have also different personalities that cause clashes and sometimes, need intervention of other parties to be settled. 3. The complexity of profit-sharing - some partners contribute a big amount of money but not time and effort and vice versa, in this case, it is difficult to assess a fair percentage of profit-sharing among the partners. 4. Limited life- once one partner dies, the partnership business will also need to cease. Types of partnership 1. General Partnership – in a general partnership, all partners agree to have unlimited liability. It means that when the company is bankrupt, the personal assets of partners can be used to pay the remaining debt of the firm. 2. Limited Partnership- as to the term “limited” it means that the liability of partners is bounded only within their capital/investment in the company. Their assets are secured and will not be used to pay for the company’s debt. But there should at least one partner that is considered a general partner and be the one who has unlimited liability. 3. Limited Liability Partnership- this type of partnership is common only to professional service businesses such as doctors, lawyers, accountants, engineers, architects, and other professional fields. Their personal assets are protected for business’ debts and liabilities but do not protect the personal assets of partners for malpractices.  ACTIVITIES Direction: Fill in the box. Type of Business Advantages Disadvantages according to its Form 1. Sole 1. 1. Proprietorship 2. 2. 3 3. 2. Partnership 1. 1. 2. 2. 3. 3. WRAP-UP 1. What is a business? 2. What is a business organization? 3. Define Single/Sole Proprietorship. 4. What are the advantages of a sole proprietorship? 5. What are the disadvantages of single proprietorship? 6. Define Partnership. 7. What are the benefits of the partnership business? 8. What are the drawbacks of a partnership business? 9. What are the different types of partnerships?  VALUING There are lots of considerations that you need to check before you put up a business. One of the considerations that need your attention is its form. Let’s check its difference for us to come up with a decision on which type we want to establish. Point of Distinction Sole Proprietorship Partnership Number of Owners Formation of Business Management Decision Flexibility of Capitalization Life of Business If you were to establish a business between sole proprietorship and partnership, what form of enterprise do you want to put up? Why? _____________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________  POSTTEST Direction: Write in your answer sheet the word/s that is/ are missing or being described in the sentence. 1. It is an organization that is engaged in producing goods or services in exchange for money. 2. It pertains to a business organization that has only one owner. 3. A business organization that has two or more owners that contribute capital to be engaged in business activity and divide its return to themselves. 4. Ease of formation is one of the _____________ of sole proprietorship business. 5. Conflict between partners is one of the _____________ of partnership business. PRETEST POSTTEST 1. True 1. Business 2. True 2. Single Proprietorship 3. False 3. Partnership 4. False 4. advantage 5. True 5. Disadvantage ACTIVITY Type of Business Advantages Disadvantages according to its Form 1. The Easiest and 1. Sole Proprietorship inexpensive to put up 1. Unlimited liability 2. All profits will go to 2. Difficult to raise capital the owner or additional capital 3. Complete and direct 3. Limited managerial control to the expertise business 4. Has a hard time finding 4. Freedom from qualified talents government 5. Consumes personal regulations time 5. No special taxation- 6. Unstable business life 6. Easy to dissolve if desired 2. Partnership 1. Ease of Formation 1. Unlimited liability 2. Availability of capital 2. Conflicts between 3. Diversity of expertise partners 4. No special taxes 3. Complexity of profit 5. Relative freedom from sharing government control 4. Limited life VALUING Point of Distinction Sole Proprietorship Partnership Number of Owners Only one Two or more Formation of Business Easiest to form Easier to form than corporation Management Decision Sole decision making Consent of partners is needed Flexibility of Capitalization Limited finance Limited but more compare to sole proprietorship Life of Business Unstable business life Limited life KEY TO CORRECTION  References Books Cortez, Franz Giuseppe F. Business Ethics and Social Responsibility. Vibal, 2016. Jerusalem, Violeta L. Business Ethics & Social Responsibility: Concepts, Principles, & Practices of Ethical Standards. Fastbooks Educational Supply, 2017. Websites About Aashish Recent Posts About Aashish Aashish Pahwa A marketer, About Aashish, Recent Posts, and Aashish Pahwa. “What Is Business? - Definition, Concept & Types.” Feedough, July 21, 2019. https://www.feedough.com/what-is-business-definition-concept-types/. Gitman, Lawrence J., Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, and James C. Hyatt. “Going It Alone: Sole Proprietorships.” Introduction to Business. OpenStax Introduction to Business, September 18, 2018. https://opentextbc.ca/businessopenstax/chapter/going-it-alone-sole- proprietorships/. Hain, John. Photograph. Accessed July 14, 2020. https://pixabay.com/illustrations/handshake-regard-cooperate-connect- 2009195/. Hassan, Mohamed. pixabay.com/illustrations/multi-tasking-efficiency-manager- 2840792/. Accessed 14 July 2020. Hayes, Adam. “Business: A Definition.” Investopedia. Investopedia, February 5, 2020. https://www.investopedia.com/terms/b/business.asp. Nelson, Nikki. “Compare Types of Partnerships - LP, LLP, GP.” Bizfilings. Accessed June 13, 2020. https://www.bizfilings.com/toolkit/research- topics/incorporating-your-business/types-of-partnerships. Team, FindLaw's. “Types of Partnerships.” Findlaw, July 22, 2019. https://smallbusiness.findlaw.com/incorporation-and-legal-structures/types- of-partnerships.html. ———. “Partnerships: Sharing the Load.” Introduction to Business. OpenStax Introduction to Business, September 18, 2018. https://opentextbc.ca/businessopenstax/chapter/partnerships-sharing-the- load/. “How to Form a Partnership in the Philippines: Law Firm in Metro Manila, Philippines: Corporate, Family, IP Law, and Litigation Lawyers.” Law Firm in Metro Manila, Philippines | Corporate, Family, IP law, and Litigation Lawyers, May 13, 2020. https://ndvlaw.com/how-to-form-a-partnership/. 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