11

ORGANIZATION AND
MANAGEMENT
LEARNER'S ACTIVITY SHEET
Quarter 1 – Week 4:
Analyze the forms and economic
roles of Business Organizations
ORGANIZATION AND MANAGEMENT – Grade 11
Learner's Activity Sheet
Quarter 1 – Week 4: Analyze the forms and economic roles of Business
Organizations
First Edition, 2021
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 LEARNER’S ACTIVITY SHEET IN ORGANIZATION &
MANAGEMENT FOR 1st Semester – QUARTER 1, WEEK 4

Name:__________________________________ Grade & Section: ______________________

School: _________________________________ Teacher: ______________________________

Competency: Analyze the forms and economic roles of Business

Organizations
Learning Objective:

 Differentiate the various forms of business organizations

 Explain the role of business in relation to the economy

I. Explore
Let us activate our prior knowledge of this lesson by answering
the following quiz. Encircle the letter of the correct answer

1. A person who takes a risk to produce goods and services in search of

profit
A. Entrepreneur C. Profiteer
B. Magistrate D. bailiff
2. What kind of business is BEST described by these statements?
I am the only owner of my business.
I take all the risks of doing business.
I keep all the profits.
A. Proprietorship C. Partnership
B. Corporation D. Cooperative
3. An entrepreneur -
A. enforces government regulations
B. takes the risk to earn profit
C. sets the interest rates at banks
D. manages financial investments
4. In a corporation, owners share profit, but liability is limited to -
A. investment C. theft
B. distribution D. production

5. A form of business organization that is authorized to act as a legal entity

regardless of the number of owners.
A. corporation C. proprietorship
B. partnership D. distributor

6. What is a disadvantage of partnerships?

A. ease of formation
B. owners share responsibilities
C. limited liability
D. possibility of personality conflict
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7. The Dow Jones industrial average swept past 12,000 for the first time.
Investors are increasingly optimistic about corporate earnings and the
economy. This achievement MOST likely involved which type of business
organization?
A. proprietorship C. corporation
B. partnership D. conglomerate

8. Law firms, medical practices, and auto body repair shops are examples
of what type of ownership?
A. sole proprietorship C. franchise
B. partnership D. corporation

9. Which is true in relation to the rate of inflation? Business costs are:

A. More likely to stay the same if the rate of inflation rises
B. More likely to decrease if the rate of inflation rises
C. More likely to increase if the rate of inflation rises
D. More likely to increase if the rate of inflation falls

10. Which of the following businesses is most likely to experience a rise in

demand as consumer income falls?
A. Travel agent
B. A producer of chocolate
C. A department store selling discounted goods
D. A specialist bakery selling luxury products
11. What is most likely to be true if the rate of inflation rises sharply?
Businesses are:
A. More likely to to manage rising costs
B. More likely to reduce selling prices
C. Less likely to manage rising costs
D. Less likely to raise selling prices

12. When an economy becomes weaker, interest rates are often reduced
meaning consumers are likely to:
A. Save more and spend less
B. Save less and spend more
C. Save more and spend more
D. Save less and spend less

13. The basic necessities a person must have to survive.

A. Wants C. Happiness
B. Needs D. Friends

14. These goods are bought by a business or other businesses to produce

other goods or services.
A. Capital goods C. Consumer goods
B. Durable goods D. Perishable goods

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 15. Consumers are people or organization that
A. Buy a good or service
B. Buy and use a good or services
C. Pay for a good or service without using it
D. Use a good or service

II. Learn

What is it?

One of the first decisions you’ll make as a business owner is how your
business will be structured. You need to know the advantages and
disadvantages of each of the different forms of business organization to
make sure you make the right decision for your new business.

All businesses must adopt some legal configuration that defines the
rights and liabilities of business’s ownership, control, personal liability,
lifespan and financial structure. The form of business determines which
income tax return form to file and the company’s and owners legal liabilities.
This is a big decision that has long-term implications, so if you’re unsure of
which form of business is best for your company.

When you form your new business, account for the following:
1. Your (practical) vision regarding the size and nature of your
business
2. The level of control you wish to have
3. The level of “structure” you are willing to deal with
4. The business’s vulnerability to lawsuits
5. Tax implications of the different organizational structures
6. Expected profit (or loss) of the business

Different forms of business organization

 Single/Sole Proprietorship
 Partnership
 Corporation
 Cooperatives

A sole proprietorship is owned and run by one individual who receives all
profits and has unlimited responsibility for all losses and debts.

Advantages
 Filing taxes as a sole proprietorship is relatively easier than
that of a corporation.
 Sole proprietorships typically require less capital to set up and
have easier payroll requirements.
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  Sole proprietorships are not as heavily regulated as other
forms of organizations.
Disadvantages
 The owner of a sole proprietorship is solely liable for
all debts and actions of the company.
 All personal wealth is linked to the business.
 Financial statements are not required in a sole proprietorship
as are typically required of a corporation, meaning a lack of
financial control is very probable.
 It is difficult to find outside investors to fund sole
proprietorships, meaning growth potential is very limited
beyond a certain point.

Partnership
A partnership, of which various forms exist, is an arrangement where
parties agree to cooperate to advance their mutual interests.

The three typical classifications of profit partnerships

 general partnerships,
 limited partnerships, and
 limited liability partnerships.
A general partnership exists when partners divide responsibility
for management and liability as well as the shares of profit
or loss according to their internal agreement.

A limited partnership is a form of partnership similar to a general

partnership, except that in addition to one or more general partners
(GPs), there are one or more limited partners (LPs). General Partners
carry more liability, and in cases of financial loss, the GPs will be
liable.

A limited liability partnership (LLP) is a partnership in which some

or all partners (depending on the jurisdiction) have limited liability. In
an LLP, one partner is not responsible or liable for another partner's
misconduct or negligence.

Advantages
 Partnerships are relatively easy to establish.
 With more than one owner, the ability to raise funds may be
increased.
 The profits from the business flow directly through to the
partners' personal tax returns.
 The most obvious advantages to a partnership are the ease in
which they may be established, the combination of a wider pool
of skills and knowledge, and the increased ability to raise more
funds with more partners.
 The business usually will benefit from partners who have
complementary skills.

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 Disadvantages
 Partners are jointly and individually liable for other partners’
actions.
 Profits must be shared with the partners.
 Decision making is divided.
 Business can suffer if the detailed partnership agreement is
not in place.

Corporations

A corporation is considered by law to be a unique entity, separate from

those who own it. A corporation can be taxed, sued and enter into contractual
agreements. The corporation has a life of its own and does not dissolve when
ownership changes.

It’s an artificial being created by operation of law. As artificial being, its

powers, attributes and properties are limited to those expressly authorized by
law or incident to its existence. It has a separate juridical personality.

Advantages
 It is limited liability.
 In regards to transfer of ownership, shareholders can sell their
shares.
 Capital is easier to raise through the sale of stock.
 The company pays fringe benefits.
 There are tax benefits.

Disadvantages
 It is subject to double taxation. (Corporation and shareholder
earnings are taxed.)
 It can be costly to form.
 There are more administrative duties. This entity type is
required by law to have annual meetings, notify stockholders
of the meeting and keep minutes of meetings.

Cooperative

Is an association of persons who have voluntarily joined together to

achieve a common end through the formation of a democratically controlled
organization, making equitable contributions to the capital required and
accepting a fair share of the risks and benefits for the understanding in
which the members actively participate.

Economic Roles of Business Organizations

The role of business in social and economic development cannot be

overstated. Business plays a vital role in the economic development and wealth of
a country. Success in business translates to the economic well-being of a company
and its residents through job creation and offering improved quality of life for the
country’s citizens. Here, we delve into several aspects that relate to the importance
of business in today’s economic environment and society.
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The Role of Business in the Economy

The definition of economic development as given by Michael Todaro,

is an increase in living standards, improvement in self-esteem needs and
freedom from oppression as well as a greater choice.

The most accurate method of measuring development is the Human

Development Index which takes into account the literacy rates & life
expectancy which affect productivity and could lead to Economic Growth.

It also leads to the creation of more opportunities in the sectors of

education, healthcare, employment and the conservation of the
environment .It implies an increase in the per capita income of every
citizen.

1. Market - A market is a social arrangement that allows buyers and sellers

to discover information and complete voluntary exchanges of goods and
services. Markets allow you as a consumer to purchase the goods and
services that you want. Through markets, information is transmitted
between buyers and sellers about:

1) The goods and services desired by consumers, and;

2) The price of those goods and services

2. Coordinating Trade and Commerce - Commerce is an act of trading

something of economic value such as a good, service, information, or
money between two entities. Trade is what increases our standard of
living. Instead of having to produce everything that you consume on your
own, you are able to trade with others and obtain a higher quality of life.
3. Product or Service Specialization - Businesses bring “specialized”
people, equipment, and other resources together and coordinate the
production of goods and services.

4. Economies of Scale - When more units of a good or a service can be

produces on a larger scale, yet with (on average) less cost input cost,
economies of scale are achieved. This means that as a business
grows and production units increase, a business will have a better
chance to decrease its cost

5. Positive and Negative Externalities - An externality is defined as a

benefit or cost that is imposed on a third party, such as society, other
than the producer or consumer of a good or service, or, more
simply, an economic side effect.

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Activity 1

Let us validate your ideas. Why is Economic Roles of Business Organizations

important? Explain.

__________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
III. Engage

What I Learned

A. Directions: In your notebook, complete the following statements.

1. I have learned that

____________________________________________________________________
2. I have realized that
_____________________________________________________________________
3. I will apply what I have learned
___________________________________________________________________________

IV. Apply

What I Can Do

Differentiate the forms of Organization by completing the table below.

FormofBusiness Disadvantages
Advantages

1. Single
Proprietorship

2. Partnership

3. Corporation

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V. Post Test

Multiple Choice.
Directions: Read and answer each statement carefully then encircle the letter of
the best answer.
1. Choose the best description of a sole proprietorship.
A. A business owned by shareholders.
B. A business owned when one shareholder has 99% investment and the
other has 1% investment.
C. A business owned by one person.
D. A business owned by two or more people.

2. Choose which answer is NOT an advantage of a sole proprietorship.

A. A sole proprietorship can retain all the profits.
B. A sole proprietorship can make all of the hiring decisions.
C. A sole proprietorship can make all of the marketing decisions.
D. A sole proprietorship must consult with federal agencies to determine
the business location

3. Corporations have advantages and disadvantages. Choose which answer

is NOT an advantage of a corporation.
A. Business continuity
B. Shareholder investments
C. Limited liability
D. Unlimited liability

4. The form of business organization that has the largest sales volume is
the:
A. partnership. C. cooperative.
B. corporation. D. multinational.

5. The simplest form of business ownership is a:

A. proprietorship. C. corporation.
B. partnership. D. cooperative.

6. Which of the following is an advantage of a sole proprietorship?

A. ease of starting a business. C. pride of ownership.
B. being your own boss. D. all of the above.

7. The main disadvantage of a general partnership is:

A. the unlimited liability of the partners.
B. disagreement amongst partners.
C. shared management.
D. difficulty of termination.

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8. A ___________ is a business with two or more owners:
A. corporation. C. partnership.
B. conglomerate. D. public corporation.

9. A partner who is not actually involved in the partnership but lends his
name for public relations purposes is a:
A. silent partner. C. nominal partner
B. general partner. D. dominant partner

10. A _____________ partner is an owner who has unlimited liability and is

active in managing the firm:
A. senior partner c. silent partner.
B. general partner D. limited partner

11. You become part of the process that supplies goods and services.
A. Citizen Role C. Worker Role
B. Consumer Role D. Supply

12. This role includes political involvement and community service.

A. Citizen Role C. Consumer
B. Worker Role D. Supply

13. Which of the following is probably the most important reason for
incorporating?
A. limited liability of shareholders.
B. more money for investment.
C. increased flexibility.
D. shared management.

14. The major advantage of a franchise is:

A. training and management assistance.
B. personal ownership.
C. nationally recognized name.
D. all of the above.

15. The most effective form of business organization for raising capital is
the:
A. joint venture. C. corporation.
B. partnership. D. proprietorship.