LESSON 1 BUSINESS ETHICS

• Business is an organization where economic resources or inputs, such as materials and services, are brought together and distributed to deliver or to give consumers goods, products, or outputs.
• A business is an active process which is an integral part of human society.
• Business involves significant operations such as?

  • Buying
  • Assembling
  • Distributing
  • Advertising
  • Selling
  • Accounting
• Businesses aim to earn profit.
• Profit refers to the difference between the amount received and the amount spent on something purchased, produced, or manufactured.
• Three types of Business Organizations:

  1. Service Business
  2. Merchandising Business
  3. Manufacturing Business
• Service businesses provide services to customers rather than products.
• Merchandising businesses sell to customers products they buy from other businesses.
• Manufacturing businesses turn basic inputs into products which are sold to consumers.
• Three Forms of Business Organizations:

  1. Sole Proprietorship
  2. Partnership
  3. Corporation
• Sole Proprietorship is a one-person business.
• Sole Proprietorship - The owner has full control over the finances and operations and decides alone.
• Sole Proprietorship Advantages

  • Tax preparation is faster.
  • Has lower start-up costs.
  • Handling money for the business is easier.
  • Has least government rules and regulations that affect them.
  • The sole proprietor can own the business for as long as he/she wants.
  • Can pass the business down to his/her heir.
• Sole Proprietorship Disadvantages

  • Personally liable for all debts and actions of the enterprise.
  • Lack of financial control because of looser structure of sole proprietorship.
  • Difficulty in raising capital
• Partnership - It is a business relationship between two or more people.
• Partnership - It refers to an arrangement where individuals share a business venture's profits and liabilities.
• Partnership business


  • Lacks formality as compared with managing a limited company or corporation
  • Easy to start - can be created either verbally or in writing
  • You share the burden and have companion and support
  • Every partner adds their own expertise, skills, experience, and connections, giving the business a greater chance of success
  • Better decision-making - two heads are better than one
  • Privacy - business deals may be kept confidential by the partners
  • Partners own and control the business
  • More partners means more funds available for possible expansion, and higher borrowing capacity
  • Easy access to profits - partners just have to divide the profits