An active process which is an integral part of human society, where economic resources or inputs are brought together and distributed to deliver or give consumers goods, products, or outputs
Business
Involves significant operations such as buying, assembling, distributing, advertising, selling, and accounting
Profit
The difference between the amount received and the amount spent on something purchased, produced, or manufactured
The fundamental reason for examining business activities from a moral point of view is that business organizations should, in principle, help promote the common good and protect the rights and interests of individuals
Types of business organizations operated for profit
Service businesses
Merchandising businesses
Manufacturing businesses
Service businesses
computer repair
laundry services
tutoring
delivery services
wellness (such as gym or spa)
Sole Proprietorship
A one-person business where the owner has full control over the finances and operations and decides alone
Advantages of Sole Proprietorship
Tax preparation is faster
Lower start-up costs
Easier handling of money
Least government rules and regulations
Can own the business for as long as desired
Can pass the business down to heir
Disadvantages of Sole Proprietorship
Personally liable for all debts and actions
Lack of financial control due to looser structure
Difficulty in raising capital
Partnership
A business relationship between two or more people where they share the business venture's profits and liabilities
Advantages of Partnership
Lacks formality
Easy to start
Share the burden
Combine expertise, skills, experience, and connections
Better decision-making
Privacy
Partners own and control the business
More funds available for expansion
Easy access to profits
Disadvantages of Partnership
No independent legal status
Partners are personally liable for debts and losses
Lack of prestige
Difficulty in raising money
Potential for differences and conflicts
Slower decision-making
Profits must be shared
May affect life-work balance
Profits subject to individual income tax
Limits on business development
Corporation
An entity created by law that is independent and distinct from its owners and relies on the corporate laws of the state in which it is incorporated to continue its existence
Advantages of Corporation
Limited liability of shareholders
Can raise substantial funds by selling shares or issuing bonds
Easy for shareholders to sell shares
No limit on the corporation's life, ownership can pass through generations
Disadvantages of Corporation
Income gets taxed twice (corporation pays taxes, shareholders pay dividend taxes)
Management team can operate the business without real oversight from owners
Social Development
Company activities that provide the local community with opportunities to develop, as part of the company's core business or additional activities that enhance the company's reputation and its relationship with the community
Economic Development
Enhancing the factors of productive capacity - land, labor, capital, and technology - of a national state or local economy to reduce risks and costs
Factors affecting Economic Development
Social and cultural values
Governmental policies
Personal happiness of the individuals comprising the economic community
Doing business that increases capital and economic development presents all sorts of moral quandaries taking into consideration thoughts and beliefs about how the world works and the social ramifications of development, particularly in the second and third worlds
Related issues for a company to consider
Moral
Reputations
Abilities to compete
Legal exposure
Business Enterprise
A business started to make a profit, revolving around a single idea or mission which the owner intends to use to create a viable company
Reasons for Business Failure
Inexperience
Funding problems
Business Organization
An individual or group of people that collaborate to achieve certain commercial goals, either for profit or for public purposes
Types of Business
For-profit business - sells products or services to generate revenue and earnings
Non-profit business - must bring in enough revenue to pay employees and cover costs to administer or support program
Organization
Has a specific structure and hierarchy, with people and systems creating a culture and guiding its operations, with different policies, workflows, and objectives
System View of Business
Business begins with a hierarchy that establishes structure and order, with business leaders working on mission, vision, values, objectives and strategies to fulfill through people, processes and policies
Organizational Culture
Reflects the shared values within the organization that impact employee morale, communication, and ultimately success, influenced through formal and informal processes
Process to choose a business organization
1. Research different types
2. Determine liability desired
3. Decide on number of owners
4. Choose best tax structure
5. Consider record keeping ability
Purpose of Establishing Business Enterprise
Beyond being profitable and functional, includes community involvement, fairness to employees, and managing the enterprise effectively
Responsibilities of a Successful Business
Invest in the local community
Treat employees with respect, pay fair wages, provide benefits
Keep employees challenged and satisfied to encourage innovation and productivity
Managing the Business Enterprise
1. Lead with knowledge and confidence
2. Delegate effectively
3. Hire and manage employees well
4. Motivate and train employees
5. Meet customer needs
6. Market the company effectively
Business Ethics
Companies are expected to act ethically and honestly with the community, employees and shareholders, avoiding corporate fraud, shutting down local businesses, cheating on taxes, and violating laws and regulations
Environmental Impact
A company should limit its environmental impact and be able to show what it is doing to proactively protect the environment
Business Enterprise Planning
An essential business function that requires a dedicated effort from the company's management team to set goals, determine strategies, and make the enterprise more competitive
Business Enterprise Planning Process
1. Research the current state of the company and the market
2. Conduct opportunity analysis to allocate resources to the best opportunities
3. Plan and develop a high-quality management team
Fairness
The standard of judging which is exempted from bias or prejudice
Fairness
A boss listening to both sides of the story before judging who is right and who is wrong
An employer giving 13th month pay to all his/her employees
A person paying the right price for a product purchased or for a service received
Accountability
The explication and justification process, about testing, forming a judgment, and taking an action if necessary
Accountability
A cashier admits he/she lost the company's collection, and it is his/her mistake
An engineer who is assigned on a project is the one to be blamed if the project did not meet the deadlines
Employee A recommended his cousin to be their company janitor, but the latter stole the cellular phone of their secretary. Therefore, Employee A may be blamed for recommending his/her cousin and should pay or replace the lost cellphone
Transparency
(at the individual level) A personal quality which is necessary to develop unity between and among individuals
(organizationally) An important mechanism for ensuring social responsibility