BUSSINESS ORGANISATION

FACTOR OF PRODUCTION
• Land • Combined
• Controlled
• Labour
• Directed
• Capital

Business
Production Enterprise
 Traditional Modern
• Self Worker Specific Activities
• Owned Tools Large Operation
• Owned Land Forward &
Backward spread
• Planned Operation Labour/ Capital /
(Worker,capitalist and Management skill
Organiser all in one), provided seperately
(Smaller farmer fisherman) (Fishing activity at
Porbandar)
 ENTERPRENEUR RESPONSIBLE FOR :
• All factors of Production
• Coordinations
• Supervises and managemant
• Complete responsibility of profit / loss.
• Anticipates future demand and prices
• Transformation of busines-Product /technology
• No fixed wages
• Self Employed
 Individual Proprietorship
• Oldest form of Business Organization
• Small businessman
• Common Form:90%(e.g.Shopkeeper,Architect)
Advantage
• Not dependent on others
• Personal interest & concern.
• Operations in most economic manner.
• Quick decision
• Responsive –quick to market demand.
• Direct touch with staffless labour troubles
Disadvantages
• More risk on one persons
• Limits the size of business
• Limits availability of funds.
• Direct–involvement of proprietor required in all
decision making.
• Cannot take advantage of economy of scale.
 Partnership
• Generally two or more people jointly own the
business.
• Share the profit/loss in agreed proportions-
partnership deed.
• Can be family enterprises-family members
being the joint owners of business.
• Unlimited responsibility to every partner.
• Every partner is responsible for debts & losses
of firm.
 Advantages
• Paternership Agreement
• Easy to setup
• No special permission
• Access to large financial resource-banks,
formal sources.
• Better Management –more partners –division
of responsibilities
• Risk are shared
 Disadvantages
• Temporary in nature
• Never permanent can be dissolved easily.
• Unlimited liability makes irresponsible behavior.
• Business approaches are generally
conservative & cautions.
• Weak organization not suited for business
operation.
•Unlimited Liability
Joint Stock Company /Corporation
• Association of individuals
• Stockholders/Shareholders
• Separate legal entity then the members
• Authorized to run a business.
• Ownership shared by all the shareholders.
• Liability to the extent of shares.
• Professional management
• Ownership can be transferred.
 LEGAL FORMATION
• Memorandum of Association (MOU) & Article of
Association (AOA)
• Promoters:7 peoples to get together
• Named of Proposed Company.
• Aims and Objectives.
• Declare its equity.
• Total amount of share capital to be raised from public.
• Value of each share.
• Rules and Regulations
• Approval from Government
 Capital
• Preferred shares
• Sale of shares to general public
• Bonds/Debentures (fixed interest)
Types of Shares:
Preference:
Have special preferences to profits earned by
company. Even before ordinary shareholders are
paid anything ,preference shareholders are paid
anythings,preference share holders will be paid a
fixed percentage.
Ordinary:
Large volume : Share risk
• Subscribed Capital: Amount for which the
subscribers have subscribed or agreed to
subscribe.
• Paid up capital: Actual amounts received by the
company.
• Authorized capital
• Max. Amount which a company can raise from
market. Authorized by government
• Issued Capital: Amount (shares ) actually
offered to public for subscription.
Management
• Joint-stock company is managed by BOD
elected by shareholders –from the group
of share holders.
• Also have experts from outside the
shareholders.
• BOD appoints M.D. other G.M.S.
• Bear the largest amount of risk
Private Limited Companies:
•2 to 50 shareholders.
•Ownership restricted to small group
•Liability limited to the ownership of shares
•Cannot raise bonds

Public limited Company:

•Any number of shareholders
•Funds from market
•Wider ownership base
•To work within the rules & regulation provided
by government
Advantages:
• Large funds available.
• Limited liability-to the extent of ownership of
share.
• Facilities for all investors,small investment –
part ownership.
• Ownership can be transferred .
• Control by shareholders.
• Specialized Management.
• Best suited for large enterprises
Cooperative Societies:
• Setup by group having common interests, background.
(Agriculture, Housing, Handloom)
• Profits shared by shareholders: Producers cooperation
(Agriculture ,Fisheries)
• Consumers cooperation:
Consumers get together to buy goods
Available at cheaper rates
• Credit co-op
Operates-lending & borrowing
Society charges low interest for members
 State run enterprise
• Organisations of importance,defence.
• Set up by government as companies
• Organizations which may not be profitable e.g.
railways, postal
• Slow & low efficiency.
• Enterprise to run on commercial basis
• Capital belongs to the government
Advantages:
• Not only for profit
• Promote public welfare
• Large funds available

Drawbacks:
• Inefficient use of resources
• Controlled by whims of government
• Low on profitability& risk taking.
• Slow to adapt to new demands
THANK YOU