business add ppt!
Post on 21-Oct-2014
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BUSINESS
- distribution and exchange of all the surplus goods produced in the fields, seas, forests and factories of the earth so that they reach the final consumer in the right place and at the right price.
- any legal activity undertaken on a continuous basis which involve manufacturing, selling/marketing, financing or the creation of service with the objective of obtaining profit
- any activity where resources are invested in anticipation of profit.
Elements of BusinessEconomic activityInvestment of resourcesPricesProfitsRisks
Types of Risks
PhysicalNature (characteristics)Changes in government or
legislaturePersonal and financial statusTheftPhysical distribution
Factors which affect the choice of a particular business The only available opening Available funds Special aptitude or interest Social status Competitive situation Location Social values of the community Potential and present demands
Reasons why people go into business Social approval (prestige) Profit Service to the community Personal satisfaction Livelihood Power Protection and economic security Status Experience, training, and education To exercise one’s profession
Causes of business failure
Poor management Undercapitalization Poor planning Legal problems Accounting problems Lack of frugality Underestimating the competition Location Incapable or dishonest workers Economic conditions
Classification of Business
1. As to activity Industry Commerce Finance Service
2. As to size Micro Small scale Medium scale Large scale
3. As to ownership Sole proprietorship Partnership Corporation Cooperative
1. As to activity
a. Industryconcerned with production, the application of labor upon raw materials so that greater usefulness becomes possible after the processing;
conversion of raw materials into finished products or goods
1. Extractivedraw their products from nature or natural resources
2. Manufacturingwork on raw materials and supplies turned out by the extractive industries;change these materials into various articles; or for further processing either by altering their form to increase their usefulness or combine them with new products
1. As to activity
1. As to activity
b. Commerceactivity that makes available to the buyer the goods he would like to acquire
c. Financeactivity which specializes in providing investment capital or working capital;engaged in capital formation and extending the capital formed to others for wise expenditure
1. As to activity
d. Servicethose which serve the public or
community service in general on a community or national basis
those which may be termed professional or trade services who capitalize on personal talent rendering services in the manner preferred by the client
Receives payment in the form of fees
2. As to size
a. Micro Not more than P3M
1 - 10
b. Small scale P3,000,000 – P15M
11 - 99
c. Medium scale
P15,000,001 –P100 M
100 - 199
d. Large scale Above P100M 200 above
3. As to ownership
a. Sole Proprietorshipthe simplest and oldest form of organization
One man organization Proprietor sole responsible for all the
activities and liabilities of the firm Proprietor and business are one Particularly successful in
Retailing Craftwork Service of a personal nature
Advantages
Simplicity and flexibility of control and movement
Personal income tax Presence of personal elements Secrecy Easy to start, expand or terminate Only small amount of capital is required Profit belongs entirely to the owner Few legal requirements
Disadvantages
Unlimited liability Limited capital and credit accommodation Lack of all around business ability Lack of opportunity for employees Lack of continuity Long and irregular working hours Lack of provision for retirement Limitation upon the extent to which its
powers can be delegated
b. Partnership
Two or more persons bind together to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves
Control of business is held jointly by the partners, in the absence of limiting agreement among the partners, the power of control of management is held equally divided; equal voice in the management, equal shares in profit and loss.
Relationship is based on an agreement either written or oral.
Partnership Agreement or Articles of Partnership must include the following:
Name of firm Location and type of business Length of life of the Partnership Agreement Names of the partners and investment made
by each Distribution of profit and loss
Provision for salaries of partners Agreement on the amount of interest to be
allowed on capital and drawing account balances
Limitation on withdrawal of funds Provision of an accounting system and
fiscal year Method that will be followed in case of
withdrawal of a partner from the firm and other causes of dissolution
Disadvantages
Larger amount of capital Access to greater or better credit facilities Combined judgment and managerial skills Retention of valuable employees Personal interest in business It could be as easily formed as the single
proprietorship There are more persons to handle the
problems of the business Generally free from government control
Disadvantages
Unlimited liability of the general partner, limited for limited partner
Disagreement among partners Difficulty in assigning managerial
responsibilities Group commitment Easily and unexpectedly terminated Lack of continuity
Kinds of Partnership Extent of Liabilities
General Partnera partner who has unlimited liability for the debts of the firm
Limited Partner a partner of a limited partnership who does not
assume responsibility for the debts beyond the amount of his investment
As to participation in management Secret – active, not known Silent – not active, known Dormant or sleeping – not active, not known Nominal – not a partner
As to share of profits/investment Senior Junior Capitalist Industrial
c. Corporation
An artificial being created by operation of law having the right of succession and the power, attributes, properties, expressly authorized by the law or incident to its existence.
Board of directors are elected by the members to fix the policies and conduct of affairs of the company
Operates through delegated authority and responsibility
Life is 50 years an renewable Upon issuance of SEC certificate, the
corporation has start operation within 2 years or the operation would close
Advantages Ease of acquiring large amount of capital Continuity of life of the business Easy to transfer ownership Limited liability of shareholders Ease of expansion Legal entity or legal identity Efficiency of management
Disadvantages More government legal restrictions and
intervention More tax liabilities Greater organizational expenses Lack of secrecy Lack of personal interest Lesser management flexibility than sole
proprietorship
Parties involve in a Corporation Incorporators
Corporators
Stockholders
Members
Kinds of Corporation Stock
Non-stock Profit
Non-profit Open
Close Public
Private Domestic
Foreign
d. Cooperative A voluntary business organization formed
by its members or patrons for the purpose of collectively carrying on a business activity that directly benefit its members
It is a non-profit, owned, managed and democratically controlled on a mutual basis by its members.
Profit is called savings CDA
Principles of Cooperative Open membership Democratic control One man, one vote Limited interest on capital Patronage refund Neutral to political, religious, or other
controversial matters Education to members expansion
Types of Cooperatives Consumer cooperative
Credit or finance
Producer cooperative
Marketing
Multipurpose
Differences between cooperatives and corporations
Factors Corporation Cooperative
Objective/purpose
profit Service to its members
Control on management of the organization
Election of Board of Directors based on the # of sharesProxy allowed
One man, one vote
Distribution of earnings
Based on the # of shares held
Based on the volume of purchase made with the coop
Other types of business ownership Franchising Merger/integration
Horizontal Vertical Lateral Amalgamation
Holding Company Multinational Companies Joint Venture
Franchising – is where a company helps to establish people in business using its name and products or processes. This is a more recent and rapidly growing form of business ownership.
Merger or integration – two or more firms combine together to form a larger unit
Holding company are formed just to take a controlling interest in other firms