This is about the Business firms which are the entities that employ factors of production (resources) and produces goods and services to be sold to the consumers, other firms of government.

1. CHAPTER 10
PRINCIPLES OF ECONOMICS
THE FIRMS
Submitted by: BSBM 102-C
Ian Mark C. De Viana
Regine Uson
Mary Rose Gozo
Submitted to:
Mr. Christian J. Umlas

2. Business Firms
These are the entities that employ factors of
production (resources) and produces goods
and services to be sold to the
consumers, other firms of government.

3. Forms of Business Firms
• Sole Proprietorship
• Partnership
• Cooperative
• Corporation

4. Sole Proprietorship
It is a form of business organization owned and
controlled by a single individual.

5. Advantages of Sole Proprietorship
• The single proprietor is the boss
• Capital requirement is very small
• Lesser business documents are required
• Conflicts and quarrels are minimized

6. Disadvantages of Sole Proprietorship
• Engages himself in borrowing and mortgaging
his properties
• Inability in transforming his small scale
business into large-scale
• Lack of managerial ability

7. Partnership
It is a form of business organization owned
and controlled by two or more persons. Who
bind themselves to contribute
money, property or industry to a common
fund, with the intention of dividing profits
among themselves. (General
provisions, Article 1767).

8. Advantages of Partnership
• The owners may transfer their shares of stock to
new owners without affecting the life of the
corporation.
• Stockholders cannot be personally liable for any
debts of the corporation.
• A corporation may spread its responsibilities over
many persons hired by the corporations.

9. Disadvantages of Partnership
• A corporation is difficult to organize since it requires
the permission of the government to operate.
• Any changes in its original purpose require the
approval of the government.
• Government regulation is also apt to be more
extensive in the case of a corporation.

10. Cooperative
• It is a business voluntary organize by its members in
order to operate.
• It is the only one organization composed primarily
of small producers and consumers who voluntarily
join together to form business which they
themselves own, control and patronize.

11. Basic Cooperative principles
• Open and voluntary membership
• Democratic control
• Limited returns on capital
• Patronage refund

12. Failures of Cooperative
• Failure of the Board of Directors and members to
provide adequate capital.
• Incompetent management
• Lack of proper understanding of the aims of the
cooperatives
• The inability to meet competition happens when a
very small amount of capital outlay is provided in
the business.

13. Similarities of Cooperative and Corporation
• Factors of production are privately
owned, controlled and managed.
• Both depend on business efficiency to survive in a
corporate market.
• Their activities and operations are both regulated
and supervised by the government.
• Both enjoy a reasonable degree of economic
freedom.

14. Differences of Cooperative and Corporation
• Cooperatives are for service while corporations are for
profits.
• Membership in cooperatives is open, it is a “one man, one
vote, no proxy”, while membership under a corporation is
open only wealthy members of the society.
• Profits are distributed among the members of the
cooperative based on their patronage, while profits are
distributed to the members of the corporation base on the
number of their shares.

15. Financing Corporate Activities
Ways of Corporation where they can increase their profits
• Selling Bonds (sometimes referred to as issuing
debt)
• Issue (sell) additional shares of stock

16. Bond
It is a statement that promises to pay back a
certain fixed sum of money at specific point
of time.

17. Share of Stock
It is a certification of the assets of a
corporation that give the purchaser a share
of the ownership of the corporation

18. Non- profit Organization
Public Corporation
It is created for the purpose connected with the
administration of the government.
Non-stock Corporation
Their objective is to promote public welfare most
of them are the religious, social, scientific, civic and
political organizations and societies.

19. Ethical Standard in Business
• If the business firms obey the golden rules, then
there would be no need for a body of laws that will
attempt to keep all rules and regulations within
bounds.
• Ethical rules have suppressed the ethical psychology
of business because of the economic influence
which lies in a capitalistic society’s motive of
acquiring profits.

20. Ethics and Capitalism
• The theory on the acquisition of gains puts the
objective of the firm which is to “satisfy consumers”
as the secondary objective.
A person under the capitalist state of economy
recognizes the role of morality and he is ready to
put into practice the acceptable norms of the
society. No ethical standard shall seek to correct
bad practices.

21. -THE END-
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