HBM 2201 - Lesson 1 (1)

Lesson 1: Nature and Forms of Business Organization

Business Ethics Definition

  • Study of ethical dimensions of goods and services exchange.

  • Involves entities offering goods/services.

  • Related activities include:

    • Production

    • Distribution

    • Marketing

    • Sale

    • Consumption

Doing Things Right vs. Doing the Right Thing

  • Distinction between operational effectiveness and ethical integrity.

Levels of Business Ethics (Johnson and Scholes)

Macro Level

  • Businesses operate within political and social frameworks.

  • Bound by societal virtues and standards.

Corporate Ethics

  • Reflects how a company interprets industry rules & standards.

  • Influences corporate strategy and operational decisions.

Individual Ethics

  • Represents an employee's moral compass.

    • Elements include:

      • Integrity

      • Principles

  • Corporate ethics build on individual's ethical foundations.

Forms of Business Organizations

Sole Proprietorship

  • One person owns all profits/assets.

  • Incur losses personally.

  • Advantages:

    • Easy to organize.

    • Inexpensive.

  • Disadvantages:

    • Unlimited liability extends to personal assets.

Partnerships

  • Consists of 2 or more members.

  • Governed by mutual agreements on profit sharing.

  • Advantages:

    • Easy to set up and generate funds.

  • Disadvantages:

    • Joint liability for debts and obligations.

    • Limited lifespan based on members.

Corporations

  • Separate entity from owners; minimum 5-15 owners (according to Philippine Corporation Code).

  • Limited liability for shareholders.

  • Disadvantages:

    • Tedious setup process.

    • Requires extensive paperwork.

    • Monitored by the SEC.

Role of Business in Society

Positive Contributions

  • Drive Innovation: Develops new products, services, and technologies.

  • Economic Growth: Job creation and income generation.

  • Philanthropic Activities: Supports charitable causes and community development.

  • Infrastructure Development: Builds essential services like hospitals and schools.

  • Consumer Choices: Provides variety in products and services.

Negative Impacts

  • Ethical Concerns: Engagement in unethical practices.

  • Environmental Impact: Pollution and resource depletion.

  • Economic Instability: Financial crises can arise.

  • Social Inequality: Widening gap between rich and poor.

  • Public Health Concerns: Some products negatively affect health.

Individual Impacts

  • Employment Opportunities: Availability for the population.

  • Access to Goods and Services: Ensures consumer availability.

  • Career Development: Opportunities for skill advancements.

  • Economic Impact: Influencing overall economic health.

  • Innovation and Technological Advancement: Drives progression forward.

  • Consumer Choices: Enhances competition and quality.