Introduction

A business is always owned by someone. This can just be one person, or thousands. So a business can have a number of different types of ownership depending on the aims and objectives of the owners.

Most businesses aim to make profit for their owners. Profits may not be the major objective, but in order to survive a business will need make a profit in the long term.
Some organizations however will be not-for-profit, such as charities or government-run corporations.

Business Organization
Meaning: Art of establishing effective coordination, technique of efficient operations, concerned with the study of methods and procedure, purpose of earning profits, covers different functions of business Objective: Efficiency Division of work Delegation

Functions: Production Marketing Finance Personnel Significance: Facilitates administration Ensures specialization Facilitates growth & diversification

Areas
o o o o o Utilization & conservation of national resource Promoting the interest of various groups in society To work within the framework of the laws Environmental planning Philosophy of the Country

Responsibility Internal: o Shareholders o Workers External: o o o o Consumers Suppliers Government Community

Types of Organizations
FOR-PROFIT(BUSINESS) PROFIT NON-

What is a Business(Profit) Organization

Exists primarily to generate a profit.
Profit: to take in more money than it spends.

The owners can decide to keep all the profit themselves, or they can spend some or all of it on the business itself. Or, they may decide to share some of it with employees through the use of various types of compensation plans, e.g., employee profit sharing.

Measuring size of a Business

No one measure of the size of the business Options
Number of employees Number of outlets (e.g. shops) Total revenues (or sales per year) Profit Capital employed amount invested in business Market value

Often need to consider several measures together Business size is relativee.g. how large is a business compared with its main competitors?

Main types of For-Profit (Business) Organization

o Sole trader o Partnership o Private Limited Company (Ltd) o Public Limited Company (plc.) o Co-operatives o Franchises o Public sector

Sole Traders
Owned by one person. Advantages
Total control of business by owner Cheap to start up Keep all profit

Disadvantages
Unlimited liability Difficult to raise finance May be difficult to specialize or enjoy economies of scale Problem with continuity if sole trader retires or dies

Partnership
Two or more persons Advantages:
Facility of formation Scope of individual ability Protection of minority interest

Disadvantages:
Limited resources Limitation on capital & organizing power Risks of implied authority Lack of public confidence

Limited company
Business owned by Shareholders Run by Directors (who may also be shareholders. Directors are responsible to shareholders
Have a duty to act in best interests of shareholders Have to account for their decisions and performance (Accounts)

Differences between a private and public limited company

Shares in a plc can be traded on Stock Exchange and can be bought by members of general public Shares in a private limited company are not available to general public

Main forms of Co-Operative

Three main types of co-operative
Retail co-ops Marketing or trader co-ops Workers co-ops

E.g:
Indian Farmers Fertiliser Co-operative Limited (IFFCO) Girijan Co-operative Corporation(GCC) Co-Operative Banks

Franchises
Franchisor: The business whose sells the right to another business (franchisee) to operate a franchise Franchisee: A franchise is bought by the franchisee

E.g.
McDonalds, KFC, Subway etc

Public Sector
Run by State/Government. Provide essential services not fully provided by private sector Prevent exploitation of customers Avoid duplication of resources Protect jobs and maintain key industries
E.g:
B.H.E.L, B.E.L, Coal India Ltd, B.P.C.L, H.A.L, etc