Business-ethics-Lesson-3 (copy)

Lesson 1: The Nature of Business and Forms of Business Organization

Objective

• Goal: Understand different forms of business organizations and their roles in socio-economic development.

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Business

• Definition: An entity involved in providing goods and/or services to consumers; also known as enterprise, agency, or firm.

• Types:

  • For-profit enterprises.

  • Non-profit social enterprises.

  • State-owned public enterprises targeting social and economic objectives.

Economy

• Definition: A place or country where government-managed resources bring benefits to society.

Key Concepts:

• Third World Countries: Often developing economies.

• Developing Economies: Characterized by lower average income, literacy rates, and health services than developed nations.

Barter System

• Definition: Exchange of goods or services without money.

• Problems of Barter:

  1. Lack of a common measure of value.

  2. Double coincidence of wants may not exist.

Roles in the Economy

• Firms:

  • Produce commodities/goods/services to meet market needs.

  • Act as producers, employing consistent advertising and sales promotions to maintain markets.

• Government:

  • Manages the economy and establishes laws for households and businesses.

  • Provides essential services (e.g., roads, water, transportation).

  • Collects taxes from households and businesses.

• Households:

  • Consume goods and services from firms; categorized as consumers.

Money and Trade

• Money emerged to address barter system challenges.

• Definition: Anything acceptable for purchasing goods and services.

• Forms of Money: Notes and coins; historical forms included shells, beads, and precious metals.

Characteristics of Money

• Acceptable: Universally recognized for transactions.

• Convertible: Easily exchanged for goods/services.

• Divisible: Can be broken down into smaller units.

• Durable: Long-lasting quality.

• Homogenous: Uniform appearance (e.g., all P100 bills identical).

• Scarce: Limited supply to ensure value.

• Portable: Convenient to carry.

Scarcity of Resources

• Time and money as scarce resources.

• Real-world examples:

  • Someone may have a lot of time but little money (e.g., unemployed).

  • An executive may have money but limited time (e.g., busy schedule).

Types of Money

1. Near Money: Easily turned into cash (quasi-money).

2. Bank Draft: Guarantee of payment from the issuing bank.

3. Bill of Exchange: Used for overseas credit payments.

4. Cheques: Instruction to banks for payment.

5. Credit/Debit Cards: Facilitate payments using cards.

6. Ecommerce: Buying and selling via the internet.

More Types of Money

7. Electronic Transfer: Funds moved electronically.

8. Internet Banking: Online access to banking services.

9. Money Orders: Payment method for local and overseas transactions.

10. Tele-Banking: Banking via telephone service.

Types of Business Organizations

1. Service Business: Provides services to consumers.

2. Merchandising Business: Sells goods.

3. Manufacturing Business: Produces goods.

Various Forms of Business Organization

• Conglomerates: A parent company with unrelated subsidiaries.

• Cooperatives: Owned by members who purchase shares.

• Franchise: Agreement allowing a franchisee to sell a parent's product/service.

• Government Departments: Entities within government ministries.

• Multinationals: Global organizations managed from a main office.

• Nationalized Industries: Businesses owned and controlled by the government.

• Partnership Business: Association of partners sharing profits and liabilities.