+++++++++++++++++0

UNIT I:
BUSINESS ETHICS
MODULE I:
+++++++++++++++++0
BUSINESS
ORGANIZATION
 +++++++++++++++++0
Imagine a world
without business…
Business organizations exist to serve consumers’ needs, and in return,
they make profits when people patronize their products and services.
+++++++++++++++++0
They are an important component of the modern society as they
contribute to the economy’s growth, provide products for
consumption, and offer employment to people.
 +++++++++++++++++0
NATURE OF BUSINESSS
ORGANIZATIONS
NATURE OF BUSINESSS
ORGANIZATIONS

Business Organization
• an entity that aims to earn profit by providing products to satisfy the
needs of the market.
+++++++++++++++++0
• Products can be:
• Tangible/Physical (goods/commodities, e.g. pens, cars, etc.)
• Intangible/Nonphysical (services, e.g. haircut, medical
consultation, legal advice, etc.)
NATURE OF BUSINESSS
ORGANIZATIONS

Businesses need to earn profits in order to stay in the market.

Profit is the amount of money a business takes in after the expenses

+++++++++++++++++0
needed to operate the business (e.g. salaries, cost of raw materials, etc.)
have been deducted from the revenue.
Cost a costumer pays – Cost of producing and marketing the product= P

Revenue is the total amount of money a business earns during a given

period of time by offering products to the market. Loss happens when
the expenses are greater that the revenues of the business.
 NATURE OF BUSINESSS
ORGANIZATIONS

For-Profit Organizations Nonprofit Organizations (NPOs)

• organizations that were formed • organizations that are not for profit
mainly to gain profit. but may initiate activities to raise
• +++++++++++++++++0
have the right to use their profits as
funds for their advocacies.
they choose- within legal limits • formed for specific purposes to serve
because profit is the reward for the the common good of the public
risks they take in making and (serve humanitarian, social or cultural
selling their products. interests of the society as a whole)
(Ferell, et al. 2016) • Accdg. to the World Bank, NPOs are
largely independent from the
government, and are not operated for
profit.
 +++++++++++++++++0
FORMS OF BUSINESSS
ORGANIZATIONS
FORMS OF BUSINESSS
ORGANIZATIONS

Businesses organizations have different forms, depending on the

type of ownership.

+++++++++++++++++0
These include:

• SOLE PROPRIETORSHIP
• PARTNERSHIP
• CORPORATION
 FORMS OF BUSINESSS
ORGANIZATIONS

SOLE PROPRIETORSHIP
• The business is owned and operated by one individual,
thus the name sole.
•
+++++++++++++++++0
The owner has full authority on the business and owns all assets and
profits, but at the same time, is personally liable for all the obligations
and losses.
• The simplest form of business organization and is the easiest to
register through the Bureau of Trade Regulation and Consumer
Protection (BTRCP) of the Dept. of Trade and Industry (DTI).
• Examples are Online Store, Food Cart Franchise, Freelance
Work
 FORMS OF BUSINESSS
ORGANIZATIONS

PARTNERSHIP
• Two or more persons bind themselves to contribute money, property,
or industry to a common fund with the intention of dividing the
+++++++++++++++++0
profits and sharing the liabilities among themselves.
• A partnership is registered with the Security and Exchange
Commission (SEC).
• The most common partnerships are professional partnerships such as
law firms or accounting firms.
 FORMS OF BUSINESSS
ORGANIZATIONS

PARTNERSHIP
• Partnership may either be:
• General Partnership – partners have unlimited liability for the
+++++++++++++++++0
debts and obligations of the business.
• Limited Partnership – where one or more general partners
have unlimited liability and the limited partners have liability
only up to the amount of their capital contributions.

• Furthermore, a partnership is dissolved upon the death of a partner

or when a partner chooses to leave.
 FORMS OF BUSINESSS
ORGANIZATIONS

CORPORATION
• 5 to 15 persons, who are called incorporators, hold at least one
share and are bound by the articles of incorporation filed with the
SEC.
+++++++++++++++++0
• The paid-up capital (total amount of capital received by a company
from its shareholders in exchange for shares of stocks) of a Philippine
corporation must not be less than PhP 5,000.
FORMS OF BUSINESSS
ORGANIZATIONS

CORPORATION
• A corporation can be:
• STOCK CORPORATION- has a capital stock divided into
+++++++++++++++++0
shares and is authorized to distribute to the shareholders
dividends or allotments of the surplus profits on the basis of the
shares held.
• NON-STOCK CORPORATION- no part of its income is
distributable as dividends to its members, trustees or officers.
Profits are used to promote the purpose of the organization. This
type of corporation may be formed for charity, religious,
educational, professional or other similar purposes.
 FORMS OF BUSINESSS
ORGANIZATIONS

CORPORATION
• Among the forms of business organizations, corporations have the
most number of advantages, which are as follows:
+++++++++++++++++0
• Unlimited life
• Credibility
• Ease of transferring ownership (stock certificate)
• Protecting personal assets
 BUSINESSS
+++++++++++++++++0
ORGANIZATIONS
and the
ECONOMY
BUSINESSS ORGANIZATIONS
and the
ECONOMY

+++++++++++++++++0
Economic conditions affect how businesses fare in the market. Changes
in the economic and political system can have an impact on certain
industries or the whole business system.
BUSINESSS ORGANIZATIONS
and the
ECONOMY

ECONOMICS
• is the study of how resources used in the production of goods and
services are distributed for consumption within a social system.
•
+++++++++++++++++0
Resources, which include natural, human, and financial resources,
are sometimes called factors of production.
• Business organizations may also have intangible resources such as
good brand equity for producing credible products. Their goal is to
turn these resources into a competitive advantage that they can use in
marketing their products.
BUSINESSS ORGANIZATIONS
and the
ECONOMY

ECONOMIC SYSTEMS
• describes how a society distributes its resources to produce goods and
services. In this system, there is an unlimited demand for goods and
+++++++++++++++++0
services, and the challenge is how to meet this demand with a limited
supply of resources.
• Different Economic Systems of focus are:

• CAPITALISM
• COMMUNISM
• SOCIALISM
BUSINESSS ORGANIZATIONS
and the
ECONOMY

FREE ENTERPRISE SYSTEM (FREE MARKET)

• Free enterprise gives an opportunity for business organizations to
+++++++++++++++++0
succeed or fail based on the demand of the market. Consumers can
freely choose to pay for goods and services that they want. Businesses
that can efficiently produce, distribute, and market their products will
most likely succeed, while those who don’t fail.
BUSINESSS ORGANIZATIONS
and the
ECONOMY

Rights that individuals and business organizations must have in order

for FREE ENTERPRISE to work:
+++++++++++++++++0
• Right to own a private property
• Right to own a business and keep all profits
• Right to freedom of competition
• Right to freedom of choice
ROLES OF BUSINESS
+++++++++++++++++0
ORGANIZATIONS
in the
SOCIETY
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
The primary objective of business organizations is to develop, produce,
and distribute goods and services to the market in order to generate
profits. Apart from this, they perform important roles in the society,
particularly in socioeconomic development.
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
What are these roles?
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
Providing Goods and Services
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
Creating Employment
Opportunities
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
Advancing the Economy
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

The 1987 Constitution of the Philippines recognizes entrepreneurship or

putting up business as an “engine of economic growth.”

+++++++++++++++++0
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
When people have jobs or businesses, they have disposable income that
they use to purchase more goods and services. The income that the
businesses generate advances the national economy.
A more recent example is the rise of Business Process Outsorcing (BPO).
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

Big corporations are not the only ones that contribute to the economy.
Micro, small, medium enterprises (MSME) are also important
components of the economy. They stimulate development in rural and
+++++++++++++++++0
far-flung areas, supply or provide support services to large enterprises ,
and serve as a breeding ground for new entrepreneurs.
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
Promoting Sustainability
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

Sustainability- a method of harvesting or using a resource so that it is

not depleted or permanently damaged.
+++++++++++++++++0
Most Corporate Social Responsibility (CSR) activities use sustainable
development as a starting point for business organizations. This means
that if a company takes raw materials from the forest (e.g. timber), this
will be replenished by means like sustainable farming, replanting, etc.
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

Promoting Sustainability is possible through:

• Good management practice

+++++++++++++++++0
• Adherence to government policy
• Public opinion
• New opportunities
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
Investing in Innovation and
Excellence
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

Companies often look for a gap in the market – a need that is currently
+++++++++++++++++0
not being served- in order to offer a product that would respond to this
need.

A real entrepreneur will always find ways to innovate and address an

opportunity or demand gap in the market.
ROLES OF BUSINESS ORGANIZATIONS
in the
SOCIETY

+++++++++++++++++0
Innovation is the product of consumer research and a good
understanding and analysis of market need. It is how you turn a unique
idea into something with commercial value to achieve sustainable sales.