Principles,

Tools and
Techniques
(Different Forms of
Business Organization)
Task:
• Identify different forms
of business organization
• Explain different forms
of business organization
Sole/ Single
Proprietorship
Partnership
Corporation
 Business vs. Industry
 Business - it is an entity or  Industry - It is a
organization that is
group of companies
intended for commercial,
industrial or any or businesses that
professional activities carry on the same
- its main objective is to line of business
earn profit for the owners
- A business is just a small
activities or
portion of an industry undertaking
 Business
Organization

Sole
Proprietorshi Partnership Corporation
p
 Sole/ Single
Proprietorship
 This is generally the
simplest way to set up a
business. A sole
proprietorship is owned by
a single individual who is
singly responsible for
running the business and is
accountable for all debts
and obligations related to
 SOLE PROPRIETORSHIP
ADVANTAGES DISADVANTAGES
 Full Control  Unlimited liability
 Start-up costs low  Limited capital for
(Business License) expansion
 Relatively few  Lack of
regulations permanence
 Full receiver of
profits
 Taxation
 PARTNERSHIP
 A partnership is an
agreement in which two or
more persons combine
their resources in a
business with a view to
making profit.
 A Partnership agreement is
drawn up and profits are
divided among the
partners according to the
 TWO TYPES OF
PARTNERSHIP

1. General partnership
2. Limited Partnership
 TWO TYPES OF
PARTNERSHIP
1. General partnership – All
owners share the management
of the business and each is
personally responsible for and
must assume the consequences
of the actions of the other
partners. All general partners
have unlimited liability which
means loan payments will
extend to their personal
property.
 TWO TYPES OF
PARTNERSHIP
2. Limited partnership – Some
members are general partners
who control and manage the
business and may be entitled to
a greater share of the profit
while other partners are limited
and contribute only capital, take
no part in control or
management, and are liable for
debts to a specific extent only.
 PARTNERSHIP
ADVANTAGES DISADVANTAGES
 Low start-up costs low  Unlimited liability
 Shared decision  Potential for
making conflict
 Specialization/
complimentary
qualities
 Larger pool of assets
= expansion
Corporation
 CORPORATION
 A corporation is a legal
entity that is separate
from its owners, the
shareholders.
 No shareholder is

personally liable for

the debts, obligations,
or acts of the
corporation.
 CORPORATION
 Directors and officers can
bear liability for their
involvement with the
corporation.
 Corporations normally can
exist for a life of 50 years,
which is renewable for
another 50 years. Owners
have limited liabilities.
However, corporations are
burdened by heavy taxes.
 CORPORATIONS
ADVANTAGES DISADVANTAGES
 Limited liability  Difficult and expense of
 Capital investment and start-up
expansion easy w/ stock  Double taxation
offering. (Corporate and
 Stockholders do not carry
Individual)
responsibility for  Loss of control =
corporation’s actions
 Easy to raise money to stockholders
purchase capital
 More regulations
 Long life
Principles, Tools
and Techniques
in Creating a
Business
PRINCIPLE
 Principles and
Tools in Creating
a Business
Task:
• Identify different principles
in creating a business
• Explain different principles
in creating a business
 Ten Key Principles to make a
business successful
1.Scalability – it must be scalable for it to be
successful. It is the capability of a company to
sustain or improve its performance in terms of
profitability or efficiency when its sales volume
increases.
2.Big Ideas – A business is no more effective than
the idea upon which it is built. Business creates
its own plan to expand its economic growth.
 Ten Key Principles to make a
business successful
3. Systems – A business is a system in which all
parts contribute to the success or failure of the
whole.
4. Sustainability – a business must be dynamic –
able to thrive through all economic conditions,
in all markets, providing meaningful highly
differentiated results to all of its customers,
such differentiation is the key to survival.
 Ten Key Principles to make a
business successful
5. Growth – Without continued growth, operations
will stagnate. This can result in lowered standards
of quality for products or services, decreased
customer service and poor employee morale.
6. Vision – A business must manifest the higher
purpose upon which it was seeded. The vision
was meant to exemplify, mission was intended to
fulfil.
 Ten Key Principles to make a
business successful
7. Purpose – business is the result of a big
dream in mind of the person who dream for
it.
8. Autonomy – A business if not part of the
owner’s life, but is in fact its own entity.
 Ten Key Principles to make a
business successful
9. Profitability – a business help economic
entity, creating an economic certainty for
the communities in which it thrives.
10. Standards – a business creates a standard
against which all businesses are measured
as either successful or not.
Factors that must be considered
in analyzing the industry
 The geographic area which your
business will cater to. Is it limited to
local areas? Or will it cover a region,
the entire country, or even the
international market?
 The size and outlook of the industry.

What trends can be identified?

Factors that must be considered
in analyzing the industry
 Description of the product.
 The buyers need to be identified. Who are
your target customers?
 The regulatory environment. Are there
local, national laws that will restrict the
business? One needs to identify
government regulations specific to the
 The need to identify the leading
businesses in the industry, and to
provide company information on the
most successful businesses that you
will be up against.
 Factors that will affect the growth of
the business.
 INDUSTRY ANALYSIS
Important factors in Industrial Analysis

1. COMPETITION
Who are the major businesses in the
industry? Are there locations close to your
proposed business? Have they been long
existing or still new entrants? What is the
market share of each of these businesses? It is
very important that you know your competitors
and be ready for them. Your aim is to win their
Important factors in Industrial Analysis

2. CUSTOMERS
Who will you sell your product to? The
target market must be identified. Who
exactly will buy your products? What income
groups? What age brackets? What gender?
What career groups? What type of people
will you cater to, based on their preferences,
Important factors in Industrial Analysis

3. SUPPLIERS
Every retail business needs supplier from
whom one can source raw materials,
intermediate products, or even the finished
goods on intends to resell.
A business may need one or more
suppliers.
A business owner can buy directly form the
manufactures. This will be the cheapest
Important factors in Industrial Analysis

3. SUPPLIERS
Another alternative is to buy form
distributors. They are wholesalers or brokers
who buy in big quantities form
manufacturers, add a mark-up to their
purchase price, and sell to retailers. Their
prices are higher but they can sell in small
quantities, which the manufacturers would
not normally do.
Important factors in Industrial Analysis

4. SUBSTITUTES
Substitutes are goods that can be used in
place of another.
These are goods that may even if partly,
satisfy the same needs of a consumer such that
the consumer may use one instead of another.
Tools in Evaluating a
Business
 SWOT ANALYSIS
 ENVIRONMENTAL ANALYSIS
 THE SWOT ANALYSIS
• SWOT, which stands for Strengths,
Weaknesses, Opportunities, and
Threats
• It is an analytical framework that can
help a company meet its challenges
and identify new markets.
• The framework can help identify the
 SWOT ANALYSIS
(Strengths
Internal, positive ) of your
attributes
company. Things that are within your
control
What business process are successful?
What assets do you have in your team?
What advantages do you have over your
competitors?
 SWOT ANALYSIS
(Weaknesses)
Negative factors that detract from your
strengths. Things that you might need to
improve on to be competitive.
Are there things that your business needs to
be competitive?
What business processes need to improve?
Are there tangible assets that your company
needs?
Are there gaps in your team?
 SWOT ANALYSIS
(Opportunities)
External factors in your business environment
that are likely to contribute to your success.

Are there upcoming events that your company

may be able to take advantage of to grow the
business?
Are there upcoming changes to regulations
that might impact your company positively?
 SWOT ANALYSIS (Threats)
External factors that you have no control over.
You may want to consider putting in place
contingency plans for dealing them if they
occur.
Do you have potential competitors?
Will suppliers always be able to supply the raw
materials you need at prices you need?
Are there market trends that could become a
threat?
 Strengths Weaknesses
 Experienced Staff and  Difficulty of organization
Strong Delivery system  Costly set-up
 Fresh Food  Possible pollution
 Well Organized product problems
 Lack of training of
workers
Opportunities Threats
 Project/ company  Entry of competitors
expansion  Time consuming
 Will improve employee production processes
welfare  Opposition from
 Improved customer
residents in the
 ENVIRONMENTAL
ANALYSIS
• The other analysis that has to be done
is an analysis of the environment in
which the business will operate.
• This means an evaluation of the
possible or probable effects of external
forces and conditions on the survival
and growth of the business.
 ENVIRONMENTAL
ANALYSIS
Important factors in Environmental Analysis
1. ECONOMIC RESOURCES
This involves a look at economic factors
such as income of the people, specifically
the target market, economic conditions
such as inflation, recession, prosperity,
demand and supply in the market.
Important factors in Environmental Analysis

2. PHYSICAL ENVIRONMENT
This includes a look at the population size,
the geography of the place where
business will be located, land distribution,
climate and in today’s global warming
situation, whether or not the area is prone
to flood or earthquake.
Important factors in Environmental Analysis

3. POLITICAL FACTORS
The type of government, the stability
and strength of the government, and
good leadership are factors that can
be an advantage to a business.
Important factors in Environmental Analysis

4. CULTURES AND LIFESTYLES

It is important to study cultural
practices such as fiestas, celebration
of the Christmas season, trends in
consumption patterns, as a means to
identify the goods and services that
will fit into these celebrations and
spending behavior.
Important factors in Environmental Analysis

5. COMPETITION
This is something that needs to be
studied. As already mentioned above,
the degree of competition in the
market and the extent and strength of
competition are all very vital in
determining the success or failure of a
business.
Activity: 1/2 Crosswise
SWOT Analysis
 Imagine your self as a business or
industry. Analyze your self using
the SWOT Analysis.
 State your strength, weaknesses,

the opportunities and threat.