Lesson 1.

FORMS OF BUSINESS IN SOCIAL AND ECONOMIC DEVELOPMENT

Learning Outcomes:

The learners shall be able to:

- Differentiate the forms of business organizations.
- Give examples of the forms of business organizations.
- Show how these organizations contribute to socioeconomic development.

A business is an organization that uses economic resources or inputs to provide goods

or services to customers in exchange for money or other goods and services.

One of the initial decisions a business owner has to make is how the business should be
structured. All businesses must assume some legal design that describes the rights and
liabilities of participants in the business's ownership, control, personal liability, life span, and
financial configuration. Any decision made about how business shall be structured will have
long-term consequences to the business. Business organizations come in different forms. All
these forms of business organizations contribute to the socioeconomic growth and development
of a country.

SOLE PROPRIETORSHIP
A sole proprietorship, also known as a single proprietorship, is a business owned by only
one person who has complete control and authority of its own. It owns all the assets and
personally answers all liabilities or losses. This implies that the creditors of the business may go
after the personal assets of the owner should the business fail to pay them. The fact that it is
managed by the individual means that it is very flexible and the owner retains supreme power
over it.

It is the simplest, easy to set-up and register through the Bureau of Trade Regulation and
Consumer Protection (BTRCP) of the Department of Trade
and Industry (DTI). It is the least costly among all forms of ownership. The sole proprietorship
form is usually adopted by small business entities.

Here are the advantages and disadvantages of sole proprietorship as a form of business
organization:

Advantages
1 Ease of formation and dissolution
2 Low startup costs and low operational overhead
3. Typically subject to fewer regulations
4. No corporate income taxes
Disadvantages
1. Unlimited liability
2. Limited life
3. Difficult for an individual to raise money for capital.
Source: http://www.studyfinance.com/lessons/busorg/

Here are some types of businesses that usually use sole proprietorship in establishing a
company:

1. Bookkeeping - A bookkeeping business accommodates the financial requirements of other

businesses. A bookkeeper records the company's revenue, expenses and other financial data in
the accounting books of accounts. This gives business owners precise financial information
about their business. The financial information recorder kept by the bookkeeper is used to
prepare the tax returns of the company.

2. Home Healthcare - Both good and bad economic conditions the healthcare industry typically
flourishes. Numerous sole proprietors try to gain from this steadiness by opening home
healthcare businesses. A lot of these provide accommodation to senior citizens. Services may
possibly consist of cooking meals, cleaning homes and assisting with hygiene requests.

3. Financial Planners - Sole proprietors work as financial planners, providing their services to
individuals and small businesses. They help families plan and prepare for retirement, set aside
funds for college expenses and invest in securities. Financial planners furnish services to
businesses may aid a company arrange its employee
retirement packages and other employee benefits.

4. Landscaper - A landscaper may work on his own or engage a small team of employees.
Landscapers maintain lawns, plants and trees of homeowners and businesses. Most
landscaping companies working with commercial customers hire employees to work on projects.

5. Computer Repair Services - Computer repair companies are frequently operated as sole
proprietorships. Some business owners function in commercial shops, while others work from
home. Small computer repair businesses usually provide services to individuals.

6. Catering Company - Catering companies present their services for parties, weddings,
church functions and business events. In most cases, a sole proprietor operating a catering
company is required to employ staff.

7. House Cleaning Service - The costs to establish a housecleaning business are commonly
low. Business owners can propose an assortment of added services, like laundry, window
washing and carpet cleaning.
8. Freelance Writer - Some freelance writers function as independent contractors, while others
begin as small publishing companies. A freelance writer provides content to businesses owners
or writes content to sell to consumers. Press releases, sales copy, website
content and blog posts are usually provided by freelance writers.

9. Tutoring - Tutoring businesses offer learning assistance to students in a variety of subjects.

Tutors may teach students personally or by the use of online video chats. Many tutors have
teaching experiences or extensive knowledge in the topic they are teaching.

10. Virtual Assistant - Virtual assistants assist business owners with administrative functions
using the Internet. The tasks accomplished by virtual assistants are based on the requests of
clients. Ordinary tasks may consist of checking emails, creating excel spreadsheets and typing
documents.

PARTNERSHIP
A partnership is a business owned by two or more persons who bind themselves to
contribute money or industry to a common fund with the intention of dividing the profits between
themselves.

Partnerships possibly could be as small as mom and pop type operations, or as big as
some of the large legal or accounting firms that may have dozens of partners. Similar to a
corporation a partnership is a juridical entity and recorded with the Securities and Exchange
Commission (SEC). Being a juridical entity means that it has a personality distinct and separate
from that of its members.

A partnership could be general or limited with the basic differences coming from the
extent of personal liability and management control.

In a general partnership, all partners have unrestricted liability for the debts and obligation of
the partnership, practically resembling a sole proprietorship.

In a limited partnership, one or more general partners have unlimited liability so creditors
cannot target their personal assets. The limited partners have liability only up to the amount of
their capital contributions.

Not like a corporation, which survive even when a member/stockholder dies or gets out, a
partnership is dissolved upon the death of a partner or whenever a
partner bolts out.

Advantages and Disadvantages of a Partnership

Advantages
1. Synergy resulting from two or more individuals combining Strengths
 2. Easy to form but requires developing a partnership agreement
3. Subject to fewer regulations compared to corporations
4. Stronger potential of access to greater amounts of capital
5. No corporate income taxes

Disadvantages
1. Unlimited liability where general partners are individually responsible for the obligations
of the business
2. Limited life with the withdrawal or death of a partner as reasons to end partnership
3. Real possibility of disputes or conflicts between partners that may lead to dissolve the
partnership

Source: http://www.studyfinance.com/lessons/busorg/

Here are some of famous business partnerships that became successful and became part of
world history.

1. Edison Electric Light Co. (Founded in 1880 in Edison, New Jersey by partners Thomas
Edison and J.P. Morgan and the Vanderbilts) - The electric light bulb propelled Thomas
Edison to becoming a celebrity and brought him great wealth. However Edison, similar to many
entrepreneurs with more ideas compared to capital, wanted financial partners to subsidize his
inventions. During the 1870s and 1880s, Edison received financial support from a group of
affluent investors, like J.P. Morgan and the Vanderbilt family, helping set the foundation for what
finally became the Edison Electric Light Co. In 1879, Edison demonstrated the incandescent
electric light bulb to his supporters and launched it in public almost immediately afterward.
Three years soon after, Edison watched as the first commercial central power system was
inaugurated in Manhattan. By 1887, 121 Edison central stations covered the country power

2. The Wright Co. (Founded 1892 by brothers Wilbur and Orville Wright in Dayton, Ohio) -
In 1878, Orville and Wilbur Wright's father presented them a gift of a toy helicopter with twirling
blades powered by a rubber band. The brothers later attributed this gift with igniting their
curiosity in flight. In 1892 the brothers opened a bicycle shop in Dayton. They had also earlier
designed and built a printing press and published a daily paper. In 1896, the pair had
manufactured their own brand of bicycles, however it is still that flight which persistent to
capture their thoughts. Amid 1900 and 1902, the brothers conducted experiments with kites,
gliders, and a wind tunnel. By 1903, they had constructed their first airplane. Right after they
made their first historic flight at Kitty Hawk, N.C. Two years afterward, the brothers produced a
plane which can fly longer than half an hour in one trip. In 1909, the Wrights had incorporated
the Wright Co., which developed and sold sophisticated aircraft until their deaths.

3. Warner Bros. (Founded in 1923 by Sam, Jack, Albert, and Harry Warner in Culver City,
Calif.) - Born from Poland with Jewish origin, sons Sam, Jack, Albert, and Harry Warner
co-founded what would turn out to be Warner Bros. Studios. In the early 1900s they got their
first experience working in film production and distribution. When the charge of rentals became
excessively unreasonable they ran a traveling movie business, founded their own movie house,
and started producing their own films. After Sam Warner obtained the technology he ended the
silent film era. His studio produced the first feature-length talkie entitled The Jazz Singer, which
the studio released in 1927. The movie became a blockbuster film and earned some $3 million.
This milestone created Warner Bros. as a foremost player and modernized the film industry.

4. Parfums Chanel (Founded in1924 by Coco Chanel and Pierre Wertheimer in Paris,
France) - In 1924, three years following crafting her now-iconic fragrance Chanel No. 5, Coco
Chanel partnered with Pierre Wertheimer, a successful French businessman, to assist her
launch Parfums Chanel. Despite the fact that Chanel had the name and the distinction, she was
short of capital, marketing expertise, and links that Wertheimer had. The Wertheimer family
owned Bourjois, at that time the biggest cosmetics and fragrance firm in France. Wertheimer
acquired a 70% venture in the new company and Chanel obtained 10%. Theodile Bader, the
founder of the Galeries Lafayette department store, who became the go-between the pair, was
recompensed a 20% slice of the new outfit. Even though the deal ended Chanel a wealthy
woman with the business partnership in the company of Wertheimer it was still a lost for her.
She later made unsuccessful attempts to streamline the terms more favorably. These days, the
Wertheimer family owns 100% of the company, together with worldwide rights to the Chanel
name. Chanel No. 5 stays to be one of the best-selling perfumes in history.

5. Hewlett-Packard (Founded 1939 by Bill Hewlett and David Packard in Palo Alto, Calif.) -
Bill Hewlett and David Packard graduated with degrees in electrical engineering from Stanford
in 1934. After graduating they had a short friendship in a two-week camping and fishing trip in
Colorado. Four years later the duo started working part-time on a product based on Hewlett's
study of negative feedback in a rented Palo Alto garage with $538 in cash and a used drill
press. The outcome was the HP200A, an audio oscillator designed to check sound equipment.
Walt Disney Studios became one of their first customers. Walt Disney Studios purchased eight
of the devices to check a new sound system for the movie Fantasia. In 1939 the two made their
partnership official. They flipped a coin to decide their startup's name. Throughout the 1940s,
Hewlett-Packard (HP) continued to produce innovative tech products. It also became famous for
its similarly innovative open culture and management style By 1942, HP had eight employees
with $522,803 revenues every year. In 1961, the company was earning $87.9 million and was
listed on the New York Stock Exchange. These days the company that introduced laser jet
printers, touch screens, and personal computers is a global company with $104.3 billion in sales
annually.

6. McDonald's (Founded in 1948 by Richard and Maurice McDonald in San Bernardino,

Calif.) - The brothers were born in New Hampshire. In the late 1920s they moved to southern
California with the purpose of putting up their own business and earning $1 million before they
strike 50 years old. Following a failed effort to break into the movie business, they settled to run
a hotdog stand and a barbecue restaurant. Unknown to both that their gained experiences from
past ventures would be used to pioneer the fast food industry. In 1948 the brothers reinvented
their McDonald's Famous BBQ. They fired their car hops, slashed the number of items on the
menu, got rid of utensils and plates, and transformed the kitchen into a mechanized assembly
line. In 1954 Ray Kroc, a paper cup salesman from Illinois discovered McDonald's. By that time
the brothers had already sold 21 McDonald's franchises. In 1955 Kroc made an agreement with
the brothers for national franchise rights. In 1961 he bought the whole business and the rights to
the McDonald's name for $2.7 million. At present, there are 31,000 Golden Arches around the
world, taking in $22.7 billion a year.

7. Microsoft (Founded 1975 by Bill Gates and Paul Allen in Seattle,

Wash.) – Back in 1968, it was in a computer club meeting about basic programming at Seattle's
private Lakeside School where Gates and Allen met. The two students before long became
passionate with programming a mainframe of a local computer and quickly observe the
opportunity of micro-processing. However, it was an article in Popular Mechanics on personal
computers that prompted their consciousness that writing and selling software was the latest
edge. In the early 1970s Allen, who was three years older than Gates, went to work for
Honeywell in Boston, and Gates enrolled at Harvard. In 1974, the pair devised a basic platform
for the Altair 8800 in Gates' dorm room and sold it. Unfortunately this earned Gates disciplinary
charges from the University for running a business in his dorm. A year later, Gates dropped out
of Harvard and Allen formed Microsoft. Today, it's the world's largest software company. Three
years ago, Gates donated $40 million to Lakeside for a new scholarship fund.

8. Apple (Founded in 1976 by Steve Jobs and Steve Wozniak in

Cupertino, Calif.) - In the early 1970s Steve Jobs and Steve Wozniak, who were college
dropouts, met when Jobs was attending lectures at Hewlett-Packard. Incidentally, Wozniak was
an employee in Hewlett-Packard. The two made experiments with hardware and software in
Homebrew Computer Club situated in Silicon Valley. Before long they conceptualized a design
for a new kind of personal computer. In order to fund their new venture, they sold off some of
their belongings, like a Volkswagen minibus and programmable HP calculator. With the
combination of Wozniak's computer and software expertise and Jobs' marketing brilliance they
assembled the first Apple computer in Jobs' family garage in 1976 in Los Altos, California. The
result was the first single-board computer with onboard ROM and a video interface, modernized
computer functionality, and design. Their first 50 computers were bought by the Byte Shop in
Mountain View, California. In 1980, both became multimillionaires when the went public. At
present, Apple is a $32.4 billion company known for its innovative products. Apple products
ranged from the Macintosh to the iPod to the iPhone company

9. Ben & Jerry's Home made (Foundedin 1978 by Ben Cohen and Jerry
Greenfield in Burlington, Vermont) - The well-known ice cream company became popular
with its notion of combining commerce and social conscience. In 1963, in seventh grade gym
class in Merrick, New York, Ben Cohen met Jerry Greenfield in seventh grade gym class.
Fourteen years later on, the pals who had by then moved toVermont paid $5 for a
correspondence course in ice cream making. The subsequent year, the pair opened their first
Ben & Jerry's Homemade shop in a renovated gas station. They started the business with
$12,000 capital in which the $4,000 was just borrowed. By 1983, Ben & Jerry's was franchising
stores, while pints of Cherry Garcia and Chunky Monkey were sold by independent distributors.
In 1984, the company reported sales topping $4 million. A year shortly, the company established
the Ben & Jerry's Foundation to fund community-oriented projects with 7.5% of the company's
annual pre-tax profits. In 2000, Unilever bought the company for $326 million. Yet, Ben & Jerry's
maintained its social mission and philanthropy activities, continuing to donate a yearly minimum
of $1.1 million of pretax profits to its preferred causes.

10. Google (Founded in 1998 by Larry Page and Sergey Brin in Mountain
View, California) - Page and Brin are both sons of academics, economists, and
mathematicians. In 1995 they met while working on their doctorates in computer science at
Stanford University. Jointly, they created a proprietary algorithm for a search engine. Their goal
was organizing the vast amount of information available on the Net. At the outset it was called
BackRub, the software catalogued search results according to the popularity of pages. Quite
rapidly it became obvious that in majority of cases the most popular results were also the most
helpful. Later Presto, another game changer was born. In 1998, the duo quitted from Stanford,
changed their startup's name to Google, started shop in a friend's garage, and solicited funds of
about $1 million for capital from friends, family, and other investors. At the start, Google received
10,000 queries a day and in 1999 the partner received $25 million in venture-capital funding.
Soon after five years, Google went public, opening at $85 a share. Possibly the world's No.1
Internet search engine, last year the company earned $16.5 billion in sales through ad sales.
Today that number of queries is estimated to be at 235 million every day.

CORPORATION

A corporation is a business organization that has a separate legal personality from its
owners. It is a juridical entity created under the Corporation Code and registered with the SEC.
It should be established by or composed of at least 5 natural persons and not exceeding 15
persons, technically called "incorporators." Juridical persons, like other corporations or
partnerships, cannot be incorporators, although they may subsequently purchase shares and
become corporate shareholders/stockholders.
Ownership in a stock corporation is signified by shares of stock. The owners or
stockholders have the benefit of limited liability but have limited participation in the company's
operations. The board of directors, who control the activities of the corporation, is elected from
the stockholders.
The liability of the shareholders of a corporation is restricted to the amount of capital they
contributed. This means, personal assets of stockholders are not attached to pay the
corporation's liabilities, though the responsible members may be held personally liable in some
instances. For example, the incorporators may be held responsible when the doctrine of
piercing the corporate veil is applied. The doctrine of piercing the corporate veil is a situation in
which courts put aside limited liability and hold a corporation's shareholders or directors
personally liable for the corporation's actions or debts. The responsible officers may also be
liable with the corporation in some labor cases, mostly in cases of illegal dismissal.

The largest businesses take the form of corporations, a demonstration to the effectiveness of
this business organization. A corporation, however, Commission. Unless the stockholder owns a
sufficient number of shares to meet several reportorial requirements with the Securities and
Exchange control of the corporation, he will most likely be left with no participation in the
management. The blow of these concerns, however, is made lighter by the army of lawyers,
accountants and consultants that help the corporation's management.

Advantages and Disadvantages of a Corporation

Advantages
1. Unlimited commercial life because corporation is an entity of its own and does not
dissolve when ownership changes
2. Greater flexibility in raising capital through the sale of stock
3. Ease of transferring ownership by selling stock
4. Limited liability

Disadvantages
1. Regulatory restrictions which can be costly
2. Higher organizational and operational costs
3. Double taxation which refers to income taxes that are paid twice on the same source of
earned income.

The following are examples of corporations that have started out as small companies and are
now globally recognized as leaders in their own fields.

1. United Laboratories began as a small drugstore after the war in Philippines back in 1945. It
gradually became the top pharmaceutical company in the country, providing medicine of finest
quality yet affordable in price to every Filipino. The company's products has also entered
adjacent Asian countries like Indonesia, Thailand, Malaysia, Singapore, Hong Kong, Vietnam,
and Myanmar.

2. Jollibee Foods Corporation is the popular Filipino owned fast-food chain in the Philippines.
Tony Tan Caktiong and his family started the first Jollibee joint in Cubao in 1975. In 2007, the
company opened its 600th Philippine store in Aparri, Cagayan and also a new branch in Las
Vegas, Nevada, USA. In 2009, Jollibee celebrated its 31st as the fast-food chain most loved by
Filipinos. Today, Jollibee is in its year 45th year and still the most loved by everyone.
3. The SM Group of Companies, considered as the Philippines' biggest retail company, was
initiated by Filipino-Chinese business mogul Henry Sy. It comprises retail outlets, shopping
malls, banking and finance institutions, and property developments. Back in the 1950s, SM was
just a small store in Carriedo.

4. San Miguel Corporation is the Philippines' largest food, beverage, and packaging company.
It started in 1890 as a brewery. Presently it has 100 facilities in the Philippines, Southeast Asia,
China, and Australia. Its divisions and subsidiaries include San Miguel Beer, Ginebra San
Miguel, Incorporated, Coca-Cola Bottlers Philippines Inc., Purefoods-Hormer Company, San
Miguel Packaging Products, and other businesses.

5. Ayala Corporation operates as the holding company of the many diversified interests of the
Ayala Group. It is the oldest and largest multinational operating in the Philippines since its
founding in 1834. Currently, the company is being led by Jaime Augusto Zobel de Ayala, the
elder son of ex- chairman Jaime Zobel de Ayala.

6. The Philippine Long Distance Telephone Company is the biggest telecommunications

provider in the country. It was incorporated in 1928 after the merger of four telephone
companies under US ownership. Presently, the company has developed to include fixed lines
subsidiaries, wireless companies such as Smart Communications, Inc., and companies
engaged in information and communications technology.

7. Filinvest Development Corporation is a company connected in real estate development

and leasing, financial and banking services, and the sugar business. It is controlled by the family
of Andrew L. Gotianun Sr. through ALG Holdings Corporation. The corporation has several
subsidiaries, which are Filinvest Alabang, Inc., Filinvest Land, Inc., East West Banking Corp.,
and Pacific Sugar Holdings Corp.

8. The Lopez Group of Companies is the business conglomerate owned by the Lopez family
of Iloilo. Its flagship company is Benpres Holdings Corporation which was first listed in the
Philippine Stock Exchange in 1993. Among the businesses listed under its names are
ABS-CBN, Maynilad Water Services, Inc., Meralco, Rockwell Land Corporation, Bayan
Telecommunications, SKYCable, and The Medical City.

9. Metropolitan Bank and Trust Company or Metrobank is the country's biggest bank in
terms of assets, with 641.5 billion pesos under its name as of December 2006. The bank's first
branch was founded by four enterprising individuals on September 5, 1962 in Binondo, Manila.
At present, the company has a combined network of over 800 local and international branches,
remittance offices, and subsidiaries worldwide.
10. JG Summit Holdings, Inc. was founded in 1957 when Universal Corn Products, Inc. (now
Universal Robina Corporation) was established in Manila. Subsequently, the business grew and
expanded into diverse fields. Under its control are Universal Robina Corporation, Robinsons
Land Corporation, Digital Telecommunications Philippines, Inc., JG Summit Petrochemicals
Corporation, Cebu Pacific Air, Robinsons Savings Bank, and JG Summit Capital Services
Corporation.

COOPERATIVE
A cooperative is a duly registered business organization owned by a group of
individuals and is operated for their mutual benefit. The persons making up the group are called
members who have voluntarily joined together to achieve a lawful common social or economic
end. They made equitable contributions to the capital required and accepted a fair share of the
risks and benefits of the undertaking in accordance with universally accepted cooperative
principles.

Cooperatives may be incorporated or unincorporated. Some examples of cooperatives are:

water and electricity (utility) cooperatives, cooperative banking, credit unions, and housing
cooperatives.

Advantages and Disadvantages of a Cooperative

Advantages

1. Formation and registration is very simple with only 10 adults needed

2. The membership of cooperative society is open to everybody regardless of religion, sex
or color
3. Liabilities of the members of the society is limited to the extent of capital contributed by
them
4. Members are provided with better good and services at reasonable prices
5. Managed by the elected members from and among themselves
6. Cannot be dissolved by the death insolvency, lunacy, permanent incapability of the
members
7. The operation is economical due to the eliminations of middlemen.
8. Portion of the surplus is spent for the welfare of the members
9. Government extends many subsidies to strengthen their financial stability and
sustainable growth in future

Disadvantages
1. Financial strength depend on the capital contributed by its members
2. Managed by the members only who most of the time do not possess any managerial and
special skills
 3. Maintain no secrecy in business because the affairs of the society is openly discussed in
the meeting
4. Sell their products to outsiders only in cash
5. Excessive state regulation interference with the flexibility of its operation
6. Members may not feel enthusiastic because the law governing the cooperatives put
some restriction on the rate of return
7. Different opinions and disputes may paralyze the effectiveness of the management

Source:http://www.preservearticles.com/201101193579/advantages-and-disadvantages-of-
cooperative-society.html

The types of cooperatives in the Philippines are as follows:

1. Credit Cooperative - It promotes and accepts savings and lending services among its
members. It produces a general collection of funds in order to grant financial assistance and
other related financial services to its members for useful and wise purposes.

2. Consumer's Cooperative - It has the main intention to buy and allocate commodities to
members and non-members.

3. Producer's Cooperative - It undertakes a combined production whether agricultural or

industrial. It is created and managed by its members to assume the production and processing
of raw materials or goods produced by its members into finished or processed products for
retailing by the cooperative to its members and non-members. Any finished product or its
derivative coming from the raw materials made by its members, sold in the name and for the
account of the cooperative, shall be considered a product of the cooperative and its members

4. Marketing Cooperative - It engages in the supply of production inputs to members and

markets their products.

5. Service Cooperative - It engages in medical and dental care, hospitalization, transportation,

insurance, housing, labor, electric light and power, communication, professional and other
services.

6. Multipurpose Cooperative - It combines two or more of the business activities of these

different types of cooperatives.

7. Advocacy Cooperative - It is a primary cooperative which promotes and advocates

cooperative spirit among its members and the public through socially-oriented projects,
education and training, research and communication, and other similar activities to extend to its
proposed recipients.
8. Agrarian Reform Cooperative - It is organized by poor farmers majority of them are agrarian
reform beneficiaries with the intention of developing a suitable system of land tenure, land
development, land consolidation or land management in areas covered by agrarian reform.

9. Cooperative Bank - It is one organized for the main idea of offering an extensive range of
financial services to cooperatives and their members.

10. Dairy Cooperative - It is one whose members are engaged in the production of fresh milk
which may be processed and/or -marketed as dairy products.

11. Education Cooperative - It is one organized for the prime intention of owning and operating
licensed educational institutions, despite the provisions of Republic Act No. 9155, also known as
the Governance of Basic Education Act of 2001.

12. Electric Cooperative - It is one organized for the principal reason of undertaking power
generation, utilizing renewable energy sources, plus hybrid systems, acquisition and operation
of sub-transmission or distribution to its household members.

13. Financial Service Cooperative - It is one organized for the chief purpose of engaging in
savings and credit services and other financial services.

14. Fishermen Cooperative - It is one organized by poor fishermen in localities whose products
are sold either as fresh or processed products.

15. Health Services Cooperative - It is one organized for the primary reason of giving medical,
dental and other health services.

16. Housing Cooperative - It is one organized to help or make available, access to housing for
the advantage of its regular members who aggressively participate in the savings program for
housing. It is co-owned and controlled by its members.

17. Insurance Cooperative — It is one engaged in the business of insuring life and property of
cooperatives and their members.

18. Transport Cooperative - It is one which includes land and sea transportation, limited to
small vessels, as defined or classified under the Philippine maritime laws, organized under the
provisions of this Code.

19. Water Service Cooperative - It is one organized to own, operate and manage water
systems for the provision and distribution of drinkable water for its members and their
households.

20. Worker's Cooperative - It is one organized by workers, including the self-employed, who
are at the same time the members and owners of the enterprise. Its principal function is to
provide employment and business opportunities to its members and manage it in accordance
with cooperative principles.

21. Other types of cooperatives may be determined by the Cooperative Development

Authority (CDA).

Here are some exemplary and successful cooperatives in the Philippines:

1. Tagum Cooperative Tagum City - Tagum Cooperative operates as a practical cooperative

strongly in savings and credit, insurance and funeral services. The number 1 billionaire
cooperative in Region XI, CDA Gawad Parangal Most Outstanding Cooperative for 2012 Large
Scale Category, with its Chairperson of the BOD, Dir. Norma R. Pereyras, DE-Asia, awarded as
the Most Outstanding Cooperative Leader of 2012. It has 81,641 general memberships and was
founded in May 1967 with 45 years in service to the public. It offers high interest in deposit
services, and low-interest rates in credit services. It works like a bank and extends as far as
Davao Regions and Compostela Valley Province with 8 branches.

2. Oro Integrated Cooperative of Cagayan de Oro City - Oro Integrated Cooperative is an

open type primary cooperative that has been serving its members for over 48 years. It was
organized in March 5, 1966 and was registered as Oro Credit Union. Oro Integrated
Cooperative started with 28 founding members who served as the first set of officers and
managers. Its initial capital was Php 88.00. In 1991, the cooperative changed its name to Oro
Integrated Cooperative and has simply become known as OIC. OIC has become a household
name and has been in service to its members and its community, delivering quality products and
tailor fit financial services in its efforts to live up to its mission. Over the years, stories of
achievements and conquering the odds with the help of OIC were shared by its members.
These helped build OIC's stature in the hearts not only of its members but that of the community
as well.

3. Lamac MPC of Cebu Province - The Lamac Multi-Purpose Cooperative is born out of the
former Lamac Samahang Nayon that was operating in 1973. Lamac is a far-flung barangay
surrounded by mountain in the municipality of Pinamungajan, Cebu. Cooperativism was sown in
the heart of Lamac through the teachings of the barangay's founder. Teaching by doing, deeply
founded with love for God and the community, was and still is a firmly held believe and practice.
This faith, as manifested in their community prayers held every day, became the center of the
community's life. The chapel also became the seat where plans of actions were discussed.
These discussions started the peaceful and sustaining revolution towards its growth and
development as a self-governing and self-sustaining community.

PURPOSES OF ESTABLISHING A BUSINESS

The principal purpose for opening a business is typically monetary. Several people who are
discontented when working for somebody else, or who have been jobless involuntarily; establish
their own businesses for a living. A business can also be a way to become more occupied in
something a person is passionate about. Here are the some of the reasons why some people
wanted to put up their business:

1. Money - There is a big opportunity to earn far more money for successful business people if
they are working under their own businesses. Determined individuals frequently become
discouraged with the restrictions that are forced on them in the boundaries of somebody else's
business. A business means that a person can earn without depending on his own ability to
succeed and excel in the marketplace. Although income is based on market conditions and the
manner of management.

2. Control - Business allows for a more personal control of an owner's financial future. Being an
employee a person could be subjected to layoff though no fault of his own. Confident people are
often happier when running their own business, even with the enlarged risks, responsibilities
and stresses.

3. Adventure-A person who enjoys adventure many discover some jobs quite boring even
well-paid. Some adventurous people may find the excitement of the marketplace irresistible.
These people will pursue their own businesses basically for the adventure, regardless of how
much profit they will likely gain. They wanted to be in charge of their success or failure when
running things. They find it very exciting to value innovation over security.

4. Service - Some businesses are founded chiefly with the aim of serving the local community
or the world in general. Non-profit businesses are committed to working with the poor, the
underprivileged and those stricken by calamity. Likewise, many for-profit businesses also grant
helpful and necessary services to the public. A local grocery store for instance can make
available locally good food to surrounding residents.

BUSINESS ORGANIZATIONS AND SOCIO-ECONOMIC DEVELOPMENT

Socio-economic development is the process of social and economic development in a society.

Socio-economic development is calculated with indicators, such as Gross Domestic Product
(GDP), life expectancy, literacy and employment rates. GDP is the sum of gross value added by
all resident producers in the economy plus any product taxes and minus any subsidies not
included in the value of the products. It is calculated without making deductions for depreciation
of fabricated assets or for depletion and degradation of natural resources may live factors
including sex.

Literacy rate is simply the total percentage of the based on the year of their birth, their current
age and other demographic population aged 15 and above who can, with understanding, read
and write a short, simple statement on their everyday life. While, employment rate is a measure
of the number of people who are both jobless and looking for a job. Changes in less-tangible
factors are also considered, such as personal dignity, freedom of association, personal safety
and freedom from fear of physical harm, and the extent of participation in civil society. Causes of
socio-economic impacts are, for example, new technologies, changes in laws, changes in the
physical environment and ecological changes. All business organizations create wealth for
shareholders, employees, customers and society at large. No other human activity matches
business organizations in their ability to marshal people, capital and innovation under controlled
risk-taking, in order to create meaningful jobs and produce goods and services profitably. Profit
is an essential element to long-term business survival and job creation. If the majority of
business organizations in a country are profitable then there will be assurance of both social
and economic growth and development.

Business organizations not only create jobs but also contribute to improving their local
economies. When people are employed, they spend money in local businesses, like clothing
stores and restaurants, which keeps those businesses prosperous. The new company
establishes relationships with suppliers, vendors and other companies and spends money
purchasing good and services from those companies. The existence of a new company can
persuade others to open businesses in the same area, which in turn encourages new job
creation.

Business organizations contribute to their communities with their charitable donations. In some
instances, some businesses focus equally on profit and charitable goals. For example, a
financial company might start a program that grants loans to low-income female business
owners. Some business organizations do not confine their charitable activities to just giving
money but work directly with organizations. Because business organizations are often
professionals at finding resources and financing and marketing their products, they can offer
very useful advice to non-profit organizations. Wider schemes to impact the community could
include sponsorship. These require more commitment in terms of time and money but give staff
a real opportunity to help others in a hands-on way. Firms ca sponsor nature areas, help
schools-build new playgrounds, run care schemes for elderly people or give their expertise for
free to aid new buildings or regeneration initiatives. In the Philippines one of the most admirable
companies and dear to many Filipinos is Manila Electric Company (MERALCO), being the
country's top utility corporation. It is one of the companies in the Philippines with the "best CSR
practice" because of its "malasakit" not only to customers but also to the communities that it
serves. Recently, Francisco Ed. Lim, president and CEO of the Philippine Stock Exchange
(PSE) praised MERALCO's Chairman and Chief Executive Officer (CEO) Manolo Lopez for his
leadership in promoting best practices in the business sector.

MERALCO believes that CSR is the best investment for the future. One of the major
CSR projects of the company is the Meralco Sibol School which allows the business to make an
impact on education. The school served pre- school kids in Gawad Kalinga (GK) communities
so that they would learn in a safe and nurturing environment, The company considers this
project a great contribution to a better tomorrow.
 Aside from the Meralco Sibol School, Meralco is also involved itself in the Brigada
Eskwela where the company's engineers and linemen visit various public schools to test the
safety of their electrical facility. Meralco's CSR also comes into play during natural disasters
such as typhoons or earthquakes in making certain that power is brought back right away to
affected areas.

Reference:
Serrano, A. O. C. (2016). *Business ethics and social responsibility*. Intramuros, Manila: Unlimited Books Library
Services & Publishing Incorporation.