Business Ethics and Social Responsibility Q3 M2 PDF

Business Ethics and SENIOR HIGH Social Responsibility SCHOOL Module Forms of Business Organization Part 2 2...

Business Ethics and SENIOR HIGH Social Responsibility SCHOOL Module Forms of Business Organization Part 2 2 Quarter 3 Business Ethics and Social Responsibility Business Ethics and Social Responsibility- Grade 12 Quarter 3 – Module 2: Forms of Business Organization Part 2 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 2 Quarter 3 Forms of Business Organization Part 2 Introductory Message For the Facilitator: Welcome to Business Ethics and Social Responsibility-Grade 12 Self-Learning Module on Forms of Business Organization Part 2! 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 2! 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. Differentiate the corporation, limited liability corporations, and cooperative; 2. discuss the advantages and disadvantages of the corporation, limited liability corporation, and cooperative; and 3. determine companies in their community under the classification of service, merchandising, and manufacturing business. PRETEST Tell whether the statement is TRUE or FALSE. 1. Corporations and limited liability corporations have common characteristics such as a separate entities. 2. Cooperative is difficult to form. 3. A limited liability corporation has no perpetual existence. 4. The service business offers tangible and intangible goods. 5. Merchandising and manufacturing business offers tangible products. RECAP Indicate the advantages of sole proprietorship and partnership. Put their similar characteristics in the middle of the circles. Advantages Disadvantages Sole Sole Partnership Partnership Proprietorship Proprietorship  LESSON In your previous module, the two forms of business organizations have been discussed. In this module, we will learn the other three forms of business organizations namely, corporation, limited liability corporation, and cooperative. Moreover, we will also discuss the different classifications of businesses according to their activities. Corporation https://pixabay.com/illustrations/business-global-work-3443583/ A corporation is defined as “A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence” as stated in the Batas Pambansa Blg. 68 also known as The Corporation Code of the Philippines. (https://www.officialgazette.gov.ph/1980/05/01/batas-pambansa-bilang-68/) Owners of a corporation are called shareholders (for Stock Corporation) and members (for Non-stock Corporation). The corporation is considered as a unique entity, separate and apart from those who own it. A corporation itself can be sued, taxed, and enter into a contractual agreement. Advantages of Corporation 1. Limited liability- unlike sole proprietorship and partnership, a corporation has limited liability because a corporation is a unique and separate entity from the owners. The assets of the company alone are the only way to pay for all the debts the firm incurred or once the company goes bankrupt. 2. Ease of transfer of ownership- stockholders can sell their shares without affecting the status of the corporation.  3. Unlimited life- there is a life term for the corporation but it can be renewed. In case one of the owners of the company died, it will not affect the existence of the business. 4. Raise additional funds- the company can raise funds by selling new shares of stocks. Also, it is easy for them to apply for bank financing especially if the company is stable and profitable. Disadvantages of Corporation 1. Double taxation- The corporation must pay tax for the profit and at the same time, the dividends given to shareholders are also being taxed as personal income. 2. Cost and complexity of formation- establishing a corporation takes a lot of time, effort, and money than other forms of organization. 3. Government restrictions- corporations are monitored by the government and are subject to many regulations and reporting requirements. Limited Liability Corporation (LLC) Limited liability companies are a hybrid business that has characteristics of both corporation and partnership. An LLC is a separate entity like a corporation that conducts business and owns assets. There is no restriction on the number of members (owners referred to as members). The owners have limited liability because of its distinction with the company but are taxed like a general partnership https://pixabay.com/vectors/people-group- crowd-team-isolated-309097/ Advantages of Limited Liability Corporation 1. Limited liability- the business is a separate entity from the owner that is why personal assets of owners are restricted from the debt of the business. 2. Pass-through tax structure – income from your business can be treated as your personal income. 3. Organizational Freedom- there are no restrictions when it comes to the number of members. 4. Limited regulations- the business is not required to abide by some regulations implemented in a corporation business such as record keeping, board meeting, and administrative duties of the corporation.  Disadvantages of Limited Liability Company 1. Building Capital –limited liability corporation as a form of business is not that popular so investors are not convinced to invest their money in this kind of company. 2. No perpetual existence – this form of business organization will cease to exist once one member of the company died or withdraw. Cooperative Cooperative is well-known as “co-op” that is organized for-profit and non-profit. It is a form of business organization with members working together toward a common goal for their mutual benefit. The main purpose of cooperative business is not merely for making profit but to provide goods or services at a reasonable price. As defined by the Cooperative Development https://pixabay.com/vectors/people-human- Authority, group-person-symbol-3245739/ “A cooperative is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of risks and benefits of the undertaking per the universally accepted cooperative principles.” (https://www.cda.gov.ph/frequently-asks-questions- faqs#:~:text=FIRST.,provided%20for%20through%20a%20cooperative.) Advantages of Cooperative 1. Ease of formation – it only needs 15 members to be able to apply for a cooperative business and needs just simple legal documentary requirements. 2. Voluntary organization – it is open for all, so anybody who wants to be one with the common goal of the organization can be a member. The membership fee is kept low so that anyone can join and of course, any member also has the freedom to exit anytime without barrier. 3. Separate entity- the cooperative is distinct from its members. The cooperative business is a separate legal entity from its members. So whenever a member exits or dies, the business continues with the operation.  4. Limited liability- members’ liability is up to the extent of their capital only. They are not accountable to debts of the cooperative itself. 5. Government support- government supports this kind of business and they offer a loan that has lower interest rates and provides subsidies. 6. Low taxes- government provides various tax exemption. Disadvantage of Cooperative 1. Limited Capital- the rate of return of capital is low that is why it is difficult to raise funds. 2. Inefficient management- members of management are not efficient in handling the cooperative because they are inexperienced. It also difficult to find a qualified management team because it cannot offer competitive salaries and benefits. 3. Lack of interest- paid-members are not motivated to function well because their interests are not fully satisfied. In effect, the cooperative becomes inactive. 4. Corruption- because of a lack of profit motive, some members try to make misuse of some funds for personal gains. 5. Government Intervention- all of the daily operations of the business are subject to the rules and regulations of the government. Regular bookkeeping and monitoring are mandatory to cooperative business. 6. Conflict among members- because of their differences, some members are having issues with other co-members that create disharmony among them. Some also feel like controlling the whole organization. Basic Classification of Business Service Business – this is a type of business that provides intangible products (no physical form). Some needed people to deliver service and some needed goods to deliver service. https://pixabay.com/illustrations/cleaning- Types of Service Business service-cleaner-hand-3934664/ a. Service business- this type of service offers intangible goods and charged because of labor. Examples are consulting firms, entertainment, salon, and the likes.  b. Financial business- this type of service makes a profit through investment and asset management like banks, insurance, lending companies, and others. c. Transportation service- this type of service includes logistics and sending people to a certain locations for a fee. d. Utilities- this service provides public services such as water, electricity, telecommunication, and more. Merchandising Business- is also known as “buy and sell” where businessman buys good at a certain cost and sells it on a much higher price to earn a profit. Merchandising business sells products on the same form it was bought. a. Retailers and distributors- these businesses act as middlemen to satisfy consumers by delivering goods produced by manufacturers. Retailers and https://pixabay.com/illustrations/supermarket-shelf- distributors make a profit through mark up. products-shampoo-1094812/ Manufacturing business- this type of business buys raw materials and converts these materials into a new type of product. The newly manufactured products will then sell to consumers. a. Agriculture and mining businesses- produce raw materials such as plants or minerals. b. Manufacturers- produce tangible goods from raw materials. Examples are canned goods, supplies, and many more. c. Real-estate businesses- those who sell or rent https://unsplash.com/photos/Xlc8HG_FB2k properties such as land, residential, and commercial spaces and other buildings. d. Information businesses- those that sell intellectual properties such as publishers and internet and software companies. Hybrid Businesses- from the term “hybrid” means a combination of two or more types of business. One best example is a restaurant where it combines and cooks ingredients to form a new dish (manufacturing) sells canned soda (merchandising) and provides dining services (services). But it will be classified according to the major interest of the business, for instance, a restaurant will be classified as a service types of business for it focuses more on the dining service. https://unsplash.com/photos/sWEpcc0Rm0U ACTIVITIES Determine the advantages and disadvantages of corporation, limited liability corporation, and cooperative. Type of Business Advantages Disadvantages according to its Form 1. Corporation 1. 1. 2. 2. 3 3. 1. Limited Liability 1. 1. Corporation 2. 2. 3. 3. 2. Cooperative 1. 1. 2. 2. 3. 3.  List down at least three companies in your community that is under service, merchandising, and manufacturing business. Classification of Business Name of Company Service Business Merchandising Business Manufacturing Business WRAP-UP 1. What is a corporation? 2. What are the advantages of a corporation? 3. What are the disadvantages of corporation? 4. What is a limited liability corporation? 5. What are the advantages of limited liability corporations? 6. What are the disadvantages of a limited liability corporation? 7. What is cooperative? 8. What are the advantages of the cooperative? 9. What are the disadvantages of the cooperative? VALUING Point of Corporation Limited Liability Cooperative Distinction Company Number of Owners Formation of Business Management Decision Flexibility of Capitalization Member’s Liability Life of Business  POSTTEST Direction: Identify the following items. 1. It is an artificial being created by law and can enter into a contract and own assets. 2. It is a form of business that has members that work together to achieve a common goals with mutual benefit. 3. It is a hybrid form of business that has characteristics of corporation and partnership. 4. It is also known as the “buy and sell” type of business. 5. It is a type of business that transforms raw materials into a new product and sells them with a markup price.  accounting/advantages-disadvantages-limited-liability-company. April 13, 2020. https://efinancemanagement.com/financial- and Disadvantages of Limited Liability Company.” eFinanceManagement.com, Management Concepts in Layman's Ter, and Sanjay Bulaki Borad. “Advantages simple and easy. Running this blog since 2009 and trying to explain "Financial eFinanceManagement. He is passionate about keeping and making things About The AuthorSanjay Bulaki BoradSanjay Borad is the founder & CEO of Websites Practices of Ethical Standards. Fastbooks Educational Supply, 2017. Jerusalem, Violeta L. Business Ethics & Social Responsibility: Concepts, Principles, & Cortez, Franz Giuseppe F. Business Ethics and Social Responsibility. Vibal, 2016. Books References PRETEST POSTTEST 1. TRUE 1. Corporation 2. FALSE 2. Cooperative 3. TRUE 3. Limited Liability Company 4. FALSE 4. Merchandising 5. TRUE 5. Manufacturing Type of Business Advantages Disadvantages according to its Form 1. Limited liability 1. Corporation 2. Ease of transfer of 1. Double taxation ownership 2. Cost and complexity of 3. Unlimited life formation 4. Raise additional funds 3. Government restrictions 1. Limited Liability 1. Limited liability Corporation 2. Pass-through tax structure 3. Organizational Freedom 1. Building Capital 4. Limited regulations 2. No perpetual existence 2. Cooperative 1. Ease of formation 1. Limited Capital 2. Voluntary organization 2. Inefficient management 3. Separate entity 3. Lack of interest 4. Limited liability 4. Corruption 5. Government support 5. Government Intervention 6. Low taxes 6. Conflictamong members KEY TO CORRECTION Administrator, CDA Website. “Home.” Regulatory Services. Accessed June 2020. https://www.cda.gov.ph/frequently-asks-questions-faqs. “Batas Pambansa Bilang 68: GOVPH.” Official Gazette of the Republic of the Philippines, May 1, 1980. https://www.officialgazette.gov.ph/1980/05/01/batas-pambansa-bilang-68/. Brandt, Waldemar. “Photo by Waldemar Brandt on Unsplash.” Beautiful Free Images & Pictures, June 26, 2018. https://unsplash.com/photos/Xlc8HG_FB2k. Brown, Kenny. “What Are the Benefits of Using a Limited Liability Company?” Small Business - Chron.com. Chron.com, November 21, 2017. https://smallbusiness.chron.com/benefits-using-limited-liability-company- 3688.html. Clker-Free-Vector-Images. Photograph. Accessed July 14, 2020. https://pixabay.com/vectors/people-group-crowd-team-isolated-309097/. Gitman, Lawrence J., Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, and James C. Hyatt. “Corporations: Limiting Your Liability.” Introduction to Business. OpenStax Introduction to Business, September 18, 2018. https://opentextbc.ca/businessopenstax/chapter/corporations- limiting-your-liability/. Gitman, Lawrence J., Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, and James C. Hyatt. “Specialized Forms of Business Organization.” Introduction to Business. OpenStax Introduction to Business, September 18, 2018. https://opentextbc.ca/businessopenstax/chapter/specialized-forms-of- business-organization/. Hayes, Adam. “Business: A Definition.” Investopedia. Investopedia, February 5, 2020. https://www.investopedia.com/terms/b/business.asp. K8. “Photo by K8 on Unsplash.” Beautiful Free Images & Pictures, May 31, 2019. https://unsplash.com/photos/sWEpcc0Rm0U. Linforth, Peter. Photograph. Accessed July 14, 2020. https://pixabay.com/illustrations/business-global-work-3443583/. Mohamed Hassan. Photograph. Accessed July 14, 2020. https://pixabay.com/illustrations/cleaning-service-cleaner-hand-3934664/. Sharma, Harish. Photograph. Accessed July 14, 2020. https://pixabay.com/vectors/people- human-group-person-symbol-3245739/ Speedy McVroom. Photograph. Accessed July 14, 2020. https://pixabay.com/illustrations/supermarket-shelf-products-shampoo-1094812/. Taylor, Julie, and Lindon Robison. “Alternative Forms of Business Organizations.” Financial Management for Small Businesses Financial Statements Present Value Models. Michigan State University Libraries, January 10, 2020. https://openbooks.lib.msu.edu/financialmanagement/chapter/alternative- forms-of-business-organizations/.