Republic of the Philippines

DEPARTMENT OF EDUCATION
Region I
SCHOOLS DIVISION OFFICE I PANGASINAN
BOLINAO SCHOOL OF FISHERIES
Arnedo, Bolinao, Pangasinan
Email: bolinaobsof@gmail.com/bolinaobsof@yahoo.com
www.bolinaosof.com

ENTREPRENEURSHIP 9

ENTREPRENEURSHIP 9 Week 4

HOW TO USE THIS MODULE

Welcome to the Module “Acquiring Fundamental Skills in Managing a

Business”. This module contains instructional materials and activities for you to
complete.

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 The unit of competency “Acquire Fundamental Skills in Managing a Business ”
contains the knowledge, skills and attitudes required for the course
Entrepreneurship.
You are required to go through a series of learning activities in order to complete
each of the learning outcomes of the module. Follow these activities on your own and
answer the Self-Check at the end of each learning activity.
If you have questions, don’t hesitate to ask your teacher for assistance.

MODULE I

UNIT OF COMPETENCY : Acquire Fundamental Skills in Managing a Business

MODULE TITLE : Acquiring Fundamental Skills in Managing a Business

SUGGESTED DURATION : 4 Hours

WHAT IS THIS MODULE ABOUT?

This module covers the knowledge, skills, and attitudes required in identifying and explaining
effective managerial functions of entrepreneurs.

WHAT WILL YOU LEARN?

Upon completion of this module, you will be able to:

1. acquire fundamental skills in managing a business; and
2. differentiate the legal forms of business ownership.

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LESSON 2

DIFFERENTIATE THE LEGAL FORMS OF BUSINESS OWNERSHIP

WHAT IS THIS LESSON ABOUT?

This lesson deals with legal forms of business ownership.

WHAT WILL YOU LEARN?

At the end of the lesson, you should be able to:

1. identify the legal forms of business ownership; and

2. discuss the advantages and disadvantages of the legal forms of business.

LET US STUDY

Words to Study

Legal forms refer to the documents of ownership of a business.

Business is a legally recognized organization designed to provide goods and /or
services to consumers.
Enterprise is a business undertaking
Proprietorship is the state or right of a proprietor or owner
Liability refers to the amount that is owed.
Transaction is a business deal or agreement
Income is the gain or recurrent benefit usually measured in money that derives from
capital or labor

Deciding the business ownership

A business first exists in your mind is an idea. When this idea is developed and put
into writing, it becomes a plan. As you gather your resources be it material or human
resources, you are making your plan into a reality. And when you register it, it becomes a
legal entity, with appropriate rights and responsibilities.

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 Once you have identified your project or business, you are ready to organize and set up
your own enterprise. This means that you have to decide on its forms of ownership then later
the location, hire and train personnel, raise funds, acquire machinery and equipment, and
finally register the business.

The term legal form refers to the form of ownership of a business. You may decide to
share ownership with other people if you are not the only source of project ideas or if you do
not have enough capital and experience to start the business on your own.

Sole proprietorship. A sole proprietorship is a business unit owned and managed by

only one person. It is the simplest and most common form.

Most small businesses start as sole proprietorships. Here, you and the business are
essentially one. You, as the sole proprietor owns all the assets.

As such, you will exclusively enjoy the benefits to be derived from the business. If you
decide to become a sole proprietor, you do not need to consult anyone on matters related to
setting or running the business.

Advantages of a Sole Proprietorship Disadvantages of a Sole

Proprietorship

● Relatively low start-up costs

● Greatest freedom from ● Unlimited liability
regulation ● Lack of continuity in business
● Owner in direct control of organization
decision-making
● Minimal working capital ● Difficulty in raising capital
required ● All the risks are of the owner
● Tax advantages to owner ● Owner shoulders any liability
● Owner is the boss incurred in the business
● All profits to owner
● In cases of death, the business
may be passed on to another by
virtue of a will.

Partnership. Under this business form, two or more persons are owners of the
business. The owners define their rights and duties as partners in the business
through a partnership agreement.

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 Advantages of a Partnership
● The partners decide as to who
shall be responsible for paying
debts in case the business is
unable to pay its liabilities later.
● They agree as to how much will
be the share of each one in the
profits of the business and what
business responsibilities will be
assigned to each.
● The partners agree as to when
the partnership ends such as
when one partner agrees to a
buy-out offer or when one of the
partner dies.
● No income tax is levied on the
partnership itself but on the
owners as individuals.
Disadvantages of a Partnership
● Any action of one partner within
the scope of business binds the
other partner as well. Thus, if
one partner commits a mistake,
the other has to suffer the
consequences as well.
● Partners also have to be
consulted each time a decision or
action concerning the business
needs to be made. This means
taking more time to get things
done.

Corporation: This business form is initiated by individuals called incorporators,

numbering from a minimum of five to a maximum of fifteen.

Advantages of a Corporation Disadvantages of a Corporation

● The incorporators put up the initial or ● The corporation is subject
starting capital of the business. To get to more government
additional capital, shares of stocks are control.
sold to interested parties called the ● The corporation is relatively
stockholders. complicated in form and
● Each stockholder shares in the management. It needs high
ownership of the company, together cost of formation and
with the incorporators. operation.
● The right of the stockholder to vote on ● Its credit is weakened by
matters affecting the corporation the limited liability of the
depends on the number of shares he or stockholder.
she holds. ● It is subject to a heavier
● The number of share holders in the taxation.
corporation is used as basis for ● The stockholders’ voting
computing the share of each one in the rights have become
profits of the corporation. This share is theoretical especially in a
called the dividend. big corporation because of
● The life of the business does not depend the use of proxies.
on the stockholders. ● The stockholders have little
● It has continuity in existence for a voice in the conduct of the
maximum of 50 years. business of the

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 ● Continuity is not affected by death of a corporation.
stock holder or by the transfer of shares
of stocks from one stockholder to
another.
● In case of losses, liabilities are settled
through the sale of the assets of the
corporation.
Cooperative: A cooperative is owned by twenty-five or more individuals who, like in a
corporation buy shares in the business. However, unlike a corporation, each member of the
cooperative is entitled to only one vote on matters regarding the business regardless of the
number of shares he or she has bought. In case of losses, responsibility for paying liabilities
is also borne equally by the members.

LET US REMEMBER

An entrepreneur should carefully choose what legal form of business he has

to venture. He has to consider or study very carefully the advantages and
disadvantages of each.

Activity

Read the following carefully. Then answer and discuss the questions at the end of the story.

Jane and Rose are best of friends working in the same agency. While they were having
their coffee break one day, Rose having three children going to school complained to Jane how
difficult to make ends meet with the meager salary they are receiving. When Jane heard her
friend, she said “why don’t you put-up a sideline? You are a good cook. You can sell peanut
adobo, brittle , peanut butter or other food products. I am sure you will not have problems in
terms of raw materials because these raw materials are abundant in our community.
Rose is sold to the idea and persuaded her friend to be her partner. The two friends
contributed P2,000.00 each to start the business. They agreed to have equal profit. Rose
would take care of production while Jane will concentrate in marketing.

Jane started getting orders while Rose concentrated in cooking. When they succeeded
in getting big orders they decided to register their business as a partnership under the name
R & J Food Products. From then on, their costumers have regular orders and even becoming
bigger.

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 After six months of operation, the partners earned P20,000.00 and they decided to
divide it equally between them. Meanwhile, Rose was exhausting herself with her production
efforts, while Jane’s life went on very casually because once the first orders have been booked,
most of the buyers placed repeated orders.
Before the business reached its first year anniversary, Rose got sick and advised to
rest. Rose can no longer cook and Rose husband’s forbade her to continue the business.

1. What went wrong with the business?

2. If you were Rose would you enter into a partnership with a friend or would you
register the venture as a sole proprietorship?
3. Were the partners right in splitting the profits equally?
4. Discuss the advantages and disadvantages of partnership.

HOW MUCH HAVE YOU LEARNED?

SELECTION TYPE: Select the best answer by writing the LETTER only in your quiz
notebook.

1. The term legal form refers to the type of business ownership. Which type of
business ownership is the simplest and most common?
a. Corporation
b. Cooperative
c. Partnership
d. Sole proprietorship
2. Partnership is a business form owned by two or more persons. Which among the
choices below is NOT an advantage of partnership
a. Partners have to be consulted each time a decision and action is made.
b. No income tax is levied on the partnership itself but on the owners as
individuals.
c. Partners decide as to who shall pay debts in case the business is unable to
pay its liabilities.
d. If one partner commits mistake, the other has to suffer the consequences.
3. Which of the following is NOT an advantage of a corporation?
a. Corporation continue to exist for a maximum of 50 years
b. Continuity of existence is not affected by death of a stockholder
c. Each stockholder shares in the ownership of the company, together with the
incorporators.
d. Subject to a more government control.
4. Which of the choices below makes sole proprietorship advantageous to the owner?
a. All profits goes to the owner
b. Unlimited liability
c. All the risk are for the owner

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 d. Owner shoulders any liability incurred in the business.
5. Which of the choices below is NOT true about a cooperative?
a. Each member is entitled to only one vote
b. Responsibility for paying liabilities is borne equally by the members
c. Owned by twenty-five or more individuals
d. Initiated by individuals numbering from a minimum of five to a maximum of
fifteen

LET US APPLY WHAT YOU HAVE LEARNED

1. If you engage into business, what form of ownership would you choose and
why?

2. Conduct a simple survey in your community. Find out what business forms are
existing. Present your findings to class.

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Post-Test

Answer the questions below honestly. Write the letter only of your answer in your
activity notebook.

1. The most basic management function of an entrepreneur which tells you where you are
going and how to get there?
a. controlling
b. organizing
c. planning
d. staffing
2. Plans are categorized in different ways. Which plan is used repeatedly as it covers policies,
procedures, and rules in management functions?
a. organizational plans
b. staffing plans
c. standing plans
d. single-purpose plans
3. This plan is essentially non-repetitious. Since it is usually used within a short period of
time. It comprises programs, projects and budgets
a. improvement plan
b. organizational plan
c. single purpose plan
d. standing plan
4. A management function that clusters the activities into departments or job positions, and
designating the personnel to head and compose each department is called ______.
a. directing
b. organizing
c. planning
d. staffing
5. A diagram that shows the relationships of the position and their corresponding authority,
responsibility, and accountability is ______.
a. functional type organization
b. line and staff organization
c. line organization
d. organizational chart
6. Directing is a challenging task. The principal concern of directing as a management
function is to ______.
a. assess the skills, strengths, weaknesses and potentials of personnel
b. discover the problem in quantity or quality of skills of personnel
c. influence subordinate to contribute to the attainment of the firm objectives
d. make sure that what is done in the enterprise conforms with what had been
planned

7. Which among the choices below is the management function that is necessary to
determine how often you should measure performance in the controlling process?
a. compare performance with standards and analyze deviations

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 ` b. establish standards
c. measure actual performance
e. set performance measurements
8. A type of organization chart where officers have staffs to assists them but who do not have
any authority over line personnel is .
a. line and staff organization
b. line organization
c. functional staff organization
d. organizational chart
9. Assessing the skills, strengths, weaknesses and potentials of your personnel will tell you
whether_______.
a. your company has just the right quantity and quality of men
b. you have an excess in quantity but are short in quality
c. both quantity and quality of skills of your personnel are insufficient
d. a b & c
10.If you find out that there is a problem in quantity and quality of skills among your present
personnel, what solution should you adopt to solve the problem?
a. consider recruiting from inside or outside the organization
b. undertake training and skills development
c. advise the person to look for another job
d. a & b
11. When entrepreneurial activities slow down, what goes up?
a.Tax revenue
b.Inflation rate
c.Business profits
d.Unemployment rate
12. An entrepreneur is aware of
a. his family’s activities
b. his business competitors
c. his relations to people in his community
d. the present demand for certain products or services in his community.

13. The term legal form refers to the type of business ownership. Which type of
business ownership is the simplest and most common?
a. Corporation
b. Cooperative
c. Partnership
d. Sole proprietorship
14. Partnership is a business form owned by two or more persons. Which among
the choices below is NOT an advantage of partnership
a. Partners have to be consulted each time a decision and action is made.

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 b. No income tax is levied on the partnership itself but on the owners as
individuals.
c. Partners decide as to who shall pay debts in case the business is unable
to pay its liabilities.
d. If one partner commits mistake, the other has to suffer the consequences.
15. Which of the following is NOT an advantage of corporation?
a. Corporation continues to exist for a maximum of 50 years
b. Continuity of existence is not affected by death of a stockholder
c. Each stockholder shares in the ownership of the company, together with
the incorporators.
d. Subject to a more government control.

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Key to Correction

Pre-test and Post-Test

1. c 11. d
2. c 12. d
3. c 13. d
4. b 14. d
5. c 15. d
6. c
7. a
8. a
9. d
10. b

REFERENCES:
Asuncion, Jr. Ramon G.; et.al.; Entrepreneurship: Abiba Publishing House, INC: Copyright
1992.
Leuterio, Florida C.; Technology and Livelihood Education for Sustainable Development: St.
Augustine Publications, Inc.: Don Quijote St., Sampaloc, Manila Philippine Copyright
2005.
Principe, June B. et.al.; Technology and Home Economics for Secondary Schools Fourth
Year: FNB Educational, Inc.: #2 Uranus St., Corner Jupiter Street, Congresional
Subdivision, Project 6, Quezon City. 2000
Suratos, Cesar P. and J. S. Simpliciano; Technology and Livelihood Education II: Latest
Edition, St. Bernadette Publications, Inc.: Cubao, Quezon City 2006

Swanson, L., 2020. Chapter 1 – Introduction To Entrepreneurship. [online] Openpress.usask.ca. Available at:
<https://openpress.usask.ca/entrepreneurshipandinnovationtoolkit/chapter/chapter-1-introduction-to-
entrepreneurship/> [Accessed 2 August 2020].
2009. Entrepreneurship CBLM Year 9.

Technology and Home Economics III. Business Technology, Business

Management I. Experimental Education, 1993.

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