Business OrganizationsBusiness Organizations

Prepared by:Ms. Mary Ann A. Jasa

College of Arts and SciencesUniversity of the East Caloocan

Business OrganizationsBusiness OrganizationsBusiness Organizations

constitute a major component of the whole economy. They create investments, employment, productions and incomes.

In other words, they make and supply goods and services to the economy. Such economic functions, help the economy move forward.

Single or Sole Single or Sole ProprietorshipProprietorshipSingle or Sole Proprietorship-

owned by one person who personally manages his business.

Most of our business operations (including those that are not registered) belong to this.

Ex. retailers, market vendors, barbers, tailors

Advantages of Single or Advantages of Single or Sole ProprietorshipSole Proprietorship1. It is easy to organize. Financial

capital is small and registration requirements are not difficult to comply with.

2. The single proprietor is the boss- makes the decisions, has freedom of action; Possible conflicts or quarrels are minimized

3. The owner acquires all profits from his business; more incentives

Disadvantages of Single Disadvantages of Single or Sole Proprietorshipor Sole Proprietorship

1. The financial resources of this are not enough to transform the business into a large-scale enterprise. Due to its small assets and high mortality rate, banks are reluctant to grant big loans to single proprietorship type of business.

2. Benefits of specialization in business management are not present here. There is only one manager and sometimes the owner is the only employee.

3. The owner has unlimited liability. This means that the owner risks not only the assets of his small enterprise but his other personal assets as well.

PartnershipPartnershipPartnership- two or more persons

agree to own and operate a business. The partners agree to own and operate a business. The partners agree to combine their resources (money, materials and management). They also share losses and profits.

Silent partner- who provide financial capital but they do not participate in the management.

Industrial partner- who does not contribute money to the business but responsible for the management.

Advantages of Advantages of PartnershipPartnership

1. It is also easy to organize like the single proprietorship.

2. Better management because of the presence of more participants in the operations of the business.

3. Possibility of bigger resources than the single proprietorship exists. Financial institutions may extend bigger loans to such business organization considering the combined resources of the partners.

Disadvantages of Disadvantages of PartnershipPartnership1. Conflicts or quarrels between or

among the partners regarding the management or policies of the business are likely to crop up.

2. It lacks stability. The death or withdrawal of one partner dissolves the partnership. To continue its operation, a complete reorganization is needed.

3. Like the single proprietor, the partners are also subject to unlimited liability, except the limited partners since their liabilities are only confined to the share of capital contribution in form of cash or property.

CorporationCorporation Corporation- It is a legal entity, distinct and

separate from the individuals (stockholders) who own it.

The Corporation Code states “Corporation is an artificial being created by operation of the law, having the right of succession and the powers, attributes, and properties expressedly authorized by law or incident to its existence”.

Only natural persons are qualified to be incorporators. They must not be less than 5 but not more than 15, all of legal age and a majority of whom are residents of the Philippines. Each incorporator of stock corporation must be an owner of at least one share of the capital stock.

Advantages of Advantages of CorporationCorporation

1. A member has a limited liability. In case of bankruptcy, only the capital contribution of the members are affected.

2. It has the most effective means of raising money capital for its operations, by selling stocks and bonds. Stocks are certificate of ownership; bonds of indebtedness.

3. It has a permanent existence. The life-span of a corporation is 50 years and subject to renewal for another 50 years. The death or withdrawal of one member does not affect its existence. It can take managers or officers from inside or outside the organization.

4. It is capable of getting the most efficient management considering its huge resources and large-scale operations.

Disadvantages of Disadvantages of CorporationCorporation

1. It is not easy to organize a corporation. Aside from complying with capital requirements, there are many paperworks involved in securing a charter (written document containing objectives and activities of the corporation). It takes longer time for the approval of the Securities and Exchange Commission.

2. Abuses of corporation officials

3. Some corporations are engaged in questionable activities. They pollute the environment; sell substandard goods—not complying with social responsibility.

4. There is a very impersonal or formal relationship between officers and employees of a corporation.

Group Work (by pair)Group Work (by pair)

Give the advantages and disadvantages of Partnership as one of the business organizations.