BUSINESS ETHICS AND SOCIAL RESPONSIBILITY MODULE Module No. 1: Week 1: THIRD Quarter THE ROLE OF BUSINESS IN SOCIAL AND ECONOMIC DEVELOPMENT Learning Competencies ; Differentiate the forms of business organizations in terms of their purpose anc¢ role in socio-economic development Code: ABM_ESR12-IMa-d-1.1 ABM_ESR12-IIla-d-1.2 ABM_ESR12-IIa-d-13 Objective After reading this module, the learners will be able to: 1. Identify forms of business organizations and their characteristics. 2. Explain the purpose of business organizations and their role in socio-economic development. Oo Let’s Recall Directions: Read each question and choose the one best answer and write your answer in youractivity notebook. 1. Which of the choices below are the most important personal characteristics of a good businessperson? a. observant and the willingness to serve the community b. avery focus person c. sharp-witted person d._media-savvy 2. Whatis the mostimportant attribute that a business person should haveto be an effectiveand successful businessperson? a. has command and genuineness b. ability to achieve the set goal of the company c. capability in using techniques appropriately d. none of the above 3. Trust should be developed by stressing a. favoritism b. buddy-buddy system c. an open and honest communication d. fairness4. Choose below which is the most important factor in determining whether a business enterprise will be successful? a. goal to make a big profit b. skills and knowledge c. being loved by the employees and the community d. none of the above 5. Bribery in business is a. Ethical b. Unethical ¢. Itis already part of our system d. Morality DLSCUSS Let’s Understand Before we go to the proper lesson, we will first discuss the word Business. When you encounter the word “Business”, whatis the first thing that comesinto yourmind? Some of youmay think about “Fishball ni Manong Cong”, “Computer shop ni Aling Cely”’, Beauty Parlorni Aling Viy, SM, Robinsons, or probably “Palengke”. As you have leamed in your accounting subjects and business finance, the common types of business organizations we practice here in the Philippines are Sole proprietorship, Partnership, and Corporation. In this module, we will have an overview of the 3 types of business organization and how each differs from one another. Sole Proprietorship This kind of business organization is the simplest and the oldest form of the business organization not only practiced in the Philippines but in other countries in the world as well. This kind of business organization is also the most common type that we have in our community due to its simplicity and quick formation especially during this pandemic that we are now experiencing When the pandemic started in our country, most of our Kababayans were laid off, some of them resorted to the Sole trader-ship or Proprietorship business to survive. Sole Proprietorship can be described as a business structure solely owned and managed by an individual. When an individual wants to start this kind of business, they must apply for a business name and be registered with the Department of Trade and Industry (DTI)-National Capital Region (NCR). In the provinces, the application may be filed with DTI regional or provincial offices. Characteristics of Sole Proprietorship 1. Sole Ownership and Management There is only one owner, which would mean that he/she would be a multi-task, thus, the the owner is the trader, the manager, accountant, and practically does everything related to the business. However, this type of business is easy to manage because decision making would depend on one person, that is the owner. Thou, this type of business is easy to manage since decisions making would only depend on one owner,2. Unlimited Liability Ina sole proprietorship, the ownerhas unlimited liability meaning that the owneris responsible for the loss of the business. Stated differently the owner bears all the burden of any losses that happen in the business. Thus, if the business becomes bankrupt and there are still payments to a the private assets of the owner like car, house, or land can be sold to clear off the ebts. 3. Limited capital and sole right on profit The capital start-up of a sole proprietorship is limited only to the resources of its owner. Thus, when it comes to profit the sole proprietor enjoys everything. 4. Flexible Choosing the type of business is a sole proprietorship is unlimited as longas itis legal. The owner can change from time to time as to what products they would sell. 5. Easy to Establish * A sole proprietorship is easy to set up and easier to register. This type of business requires an only minimal amount of capital and lower cost in registering for government permits and licenses. Partnership As the name suggests, this type of business has two or more owners who enter into a contract. These ‘owners bind themselves to contribute money, property, or servicesto a common fundto splitup the revenue and losses among themselves. The division of profits or losses depends on the agreement made by the partners but in cases where thereis no agreement, the partners will share the profit and losses equally, Under the civil code of the Philippines, a partnership is considered a juridical person. Although a partnership is, nota natural person however it is granted by law with certain duties and rights and is recognized as a legal person and has a distinct identity. There are many kinds of partnership that are practiced in our country, the common ones are General Partnership (liable to the extent of his separate property afterall the assets of the partnership are exhausted), Industrial Partnership (one who contributes labor or industry), Capitalist Partnership (one who gives money or property to the common fund of the partnership) and Limited Partnership (one who is liable only to the extent of his contribution). Characteristics of Partnership 1. Joint Contribution There is no partnership without joint contribution for building up capital for the business, the partners may give in a form of money, plant, property and equipment or services which may be personal manual efforts or intellectual. 2. Division of Profits or Losses The nature of the partnership is that partners should divide profits and losses equally unless the partnership, when formed, has an agreement as to what percentage one partner will receive in terms of profits and losses equally. 3. Joint-Ownership of contributed assets All contributed assets by the owners become the property of the partnership and thus make each — partner a co-owner of all the contributed assets. eM 4. Limited Life . The partnership has a limited life. Once a partner withdraws, dies, incapacity, insolvency, expiration of the partnership agreement, the partnership will be dissolved. 5. Unlimited Liability All partners, except limited partners, are held liable for all the debts incurred The creditors may claim up to the personal properties of the partners 0 properties are exhausted.Ancome Taxes Partnerships, except general professional partnerships, are subject to a tax rate of 30% of taxable income per R.A. NO.9337, 6. Equity accounts. Fach partner has its equity account. Each partner's equity account will show the partner's contributions to the business, share in the profit, and the partner's drawings. Corporation A corporation is governed by law and comprises or owned by numerous stockholders or shareholders thru their shares of stocks. As shareholders, they can have the right to elect or vote the board of directors to oversee the organization's affairs or business, depending on their number of shares. The said entity has its Tights and liabilities separate from the owners. As the law states, a corporation is considered an individual. Ithas the same rights and responsibilities as a person. It can also buy, sell and own properties, enter into Contracts, and can bring lawsuits and be sued as well. A corporation can be formed by at least five (5) individuals but not more than 15 individuals but under a new legal business structure in the Philippine, the new revised corporation code (RCC) allows a single person to forma corporation, which is what we call — the ONE PERSON CORPORATION or also known as (OPC). Characteristics of Corporation 1. Separate legal structure A corporation is like an artificial being. The law treats it as an individual a corporation can cary out on its own. The Corporation’s obligations are not linked to the owners. It means that the shareholder's assets cannot be touched by the creditors to pay for the corporation’ liabilities. 2. Unlimited life The lifespan ofa corporation does not end or dissolve the corporation when a stockholder dies, becomes insane, or sells his/her shares of stocks. In short, the corporation canhave a continuous life unless the board of directors and owners vote to dissolve the business, orthe said entity becomes bankrupt or its lifespan of 50 years expires. 3. Transferable ownership An individual’s ownership in a corporation is determined by the number of shares he/she owns. The numberof Stock shares may be owned by an individual or many stockholders. The owners have the right to transfer ownership without asking permission from the other shareholders. y to obtain capital The corporation can raise funds to finance their upgrading, new investments or merely just financing their daily operations through the issuance of bonds and stocks, S. Dividends Corporations distribute their dividends to their investors. Most dividends are given four times a year or some prefer paying it twice a year, annually, monthly, or rarely. This may be in a formof cash payment or additional shares of stocks 6. Double Taxation It is said to be double taxation because corporates are taxed on their annual earnings and these ceamings are the ones used to pay for the dividends for the shareholders which are also taxed by the government. 7. Limited Liability Stockholders are liable only for corporate debts up to the number of their shareholdings.Purpose of Business Organizations History tellsus thatey. our products with our neighbor poet ‘wer conquered by theSpanishpeople, we werealready tating detivides such as service budless, mechantsig Ce organizations are vital in ie a ee ‘andising, and manufacturing. We could say that business service a business provides sane a OF every nation to boosts its economy. As the name suggests Serves like Schools, Hospice caer ates sch as professional sil, expertise, and other sini busines is all about the hay af anita insitons, et, Merchandising busines or trading rocery stores, departnen: an tof #004 without changing the physical form ofthe product, tke they ate the ones ore ant Ores SaF-sari stores, online sores, etc. While wth manufacturing business uy raw materials and make it into a finished product, like car manufacturers, food ey Companies, etc. Small and big businesses are greatly responsible for ier. These business organizations are responsible for bringing a different in the market which was not available years ago, goodwill and services as Such it will continue to improve since these businesses are free to compete with one another and with competition around this offers the opportunity to make new or improved products and services in the market. Sole proprietorship proved to be very effective during this pandemic in our country today. Those workers who were laid off, resorted to selling a different kind of online production to survive. Processing companies, technolo making the consumer's life eas kind of products and services i Business Organization’s Social role The social role of business organization small or big is having the best possible goods produced, rendering good quality services, and having the lowest cost as possible to the consumer in the community or the whole nation. The business organization's social role also, is that they think of the best ideas for products and services and at the same time making improvements to existing products that are appropriate for the time being. Another social role of a business organization is the preservation of the environment. Business organizations just don’t attain their goals, but they make products that will not only boost owners” revenues but will also help create jobs in the community and ensure that they make products that will not harm the environment Business Organization’s Economic Development On the economic development side, the business organization is giving stability and growth to the community or on a bigger scale the whole world. Since business organizations provide jobsto the people, in turn, the people are taxed by the government. These taxes are used to finance infrastructure projects like public roads, bridges, tunnels, power supplies, communication networks so on and so forth that is needed. fora society ora nation to function REFERENCES: * Business Ethics and Social Responsibility By Aliza Racelis + Business Ethics and Social Responsibility By Dr. Reynaldo A. Padilla + Philippine Business Ethics (Third Edition) By Alejandro R. Gorospe & Jose Ma. Quintos * Business Ethics By William H. Shaw Fundamentals of Accountancy, Business, and Management 1-Senior High School By RodielC. Ferrer & Zeus Vernon B. MillanLet’s Apply Directions: ay ae. ae Your activity notebook kindly provide whether each statement plies to Sole Proprietorship, Partnership, or Corporation. Separate legal structure a ability to raise funds to finance their upgrading or new investments ‘his type of business is Flexible Generally, formed at least five (5) Life limited by the death of owners Ithas double taxation . There is only one owner Itis an artificial being Joint-Ownership of contributed assets Share certificate is proofof ownership {duals but not more than 15 individuals meen aA eene 0. Let’s Analyze Directions: Read each word out loud in the box below. In your activity notebook, group the given companies into the diffent business organizations as SERVICES, MANUFACTURING AND MERCHANDISING. ToyotaCorp. Robinsons Sari-SariStore Mitsubishi Corp. Classic Savory Mercury SMHypermart FordCorp. SharpCorp. Google Egg Vendor SMPrimeHoldings KuyaJ Max's Restaurant Kolin Pure Foods Corp. Silver Swan Corp. DMCIHomes Boysen David’sSalon Hyatt Hotel Vegetable Vendor San Miguel Corp Asian Hospital Chowking ChinaBank Shakey’sPizza_ Ace Hardware CarDealers Afra Steel Let’s Try Directions: If you were given a task to open a Sole Proprietor Business what are the basic requirements and procedures in registering said entity? Write your answers in your activity notebook.