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BUSINESS ORGANISATION
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 PersonnelSignificance: Facilitates administration Ensures specialization Facilitates growth & diversification
Social Responsibility: Causes: Public opinions Trade union movement Consumerism Education Public relation Managerial resolutionsRationale: Long term self-interest of business Ensuring law & order Maintenance of free enterprise Creation of society Moral justification Profitable opportunities System interdependence
Areas: 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 CountryResponsibilityInternal: Shareholders Workers External: Consumers Suppliers Government Community
PROMOTION OF BUSINESS
Meaning:“Promotion begins when, an idea is conceived,
preliminary & detailed investigation, feasibility of the idea, provision of funds & resources”
Entrepreneurial decisions: Choice of form of business Financing preposition Selection of line of business Project report Location of business Size of unit Machines & equipments Labour force
Promoters: conceives the business idea Sole Proprietorship: Individual introduces his own capital Absolute freedomAdvantages: Ease of formation & dissolution Direct motivation & incentive Quick decision & prompt action Secrecy Flexibility in management Minimum cost of management
Disadvantages: Limited capacity of an individual Difficulties of outside finance Unlimited liability Responsibility for decisionsCompany: Promotion Incorporation or Registration Floatation or Capital Subscription Commencement of Business
Advantages: Limited liability Ease in management with a team Better reputationDisadvantages: High regulation formalities Late decisionsPartnership: Combination of capital Labour & specialized skill or managerial talent Two or more persons Carry on business jointly
Advantages: Facility of formation Scope of individual ability Protection of minority interestDisadvantages: Limited resources Limitation on capital & organizing power Risks of implied authority Lack of public confidenceTypes: Partnership at will Particular partnership Joint venture Limited partnership
Kinds of Partners: Active or working partner Sleeping or dormant partner Nominal partner Partner in profits only Sub-partner Limited partner Partner by estoppels or holding outRights of Partners: Take part in management Be consulted in business matters Have access to & to inspect & copy any of books of
the firm Share profit & losses Entitled to get 6% interest on capital p.a. in any
loan to firm To retire To act in emergency
Duties of Partners: Must observe good faith towards other partner Indemnify the firm for any loss by his fraud and
willful conduct Bound to attend diligently to his duties To hold & use the property of the firm for the
purpose of business only Jointly & severally liable for all debts To act within his authority
COMPANY
“Complex form of business organization, permanent existence, limited liabilities, common seal to authorize”
Advantages: Large recourses Limited liabilities Continuity of existence Efficient management Transfer of share Democratic set up
Disadvantages: Difficult in formation Separation of ownership & management Speculation of share Lack of secrecy Fraudulent management Delay in decision makingClassification :On the basis of incorporation: Incorporated Un-incorporated
On the basis of liability: Limited liability Unlimited liability Nationality: Indian ForeignOn the basis of number of members: Public Private Independence: Independent Holding Subsidiary
Ownership: Government Non-Government Co-operative Organization: Limited means Profit not a motive Voluntarily Common interestFeatures: Voluntary Equal voting rights Democratic management Importance to service motive Sales on cash basis Distribution of dividend
Advantages: Open membership Service Motto Cheaper rates Democratic management Low management cost Surplus shared by members Disadvantages: Lack of capital Lack of unity among members Political Interference
PUBLIC ENTERPRISE
“Concern owned & managed by the state or any public authority, social interests, nationalized or socialized industry, government undertaking, known as “Public Sector”
Advantages: Growth of key & heavy industries Avoidance of uncertainty Planned progress Greater Better & cheaper products Prevents the concentration of wealth Strengthens the defense measures Helps in distribution of essential goods
No exploitation of labour capital or management Preservation of national wealthDisadvantages: Greater Better & cheaper production is a myth Top heavy administration Nepotism and favoritism Delay in decisionImportance: Creation of the social basis facilitates balanced
economic growth Speed up the pace of industrialization Remove regional economic imbalances Equitable distribution of wealth
SIZE OF BUSINESS UNIT
Refers to scale of its organization operations Size of Business: Scale of organization depends on nature of
business & market Combination of recourses Measures of Size: Net worth Total Assets Employees Power & materials used Value of output
Industrial Location: Development of industry at specific place depends
on needed means of industryFactors affecting location:Physical Factors: Availability of raw material, Power Climatic conditionsEconomic Factor: Labour Transport Capital Sale centers Banking
Political Factor: Peace & security Government policyWeber’s theory of Location: enunciated by Prof.
Alfred Weber of Germany in 1909, causes influence location
Primary: Cost of land Building Power labour TransportSecondary: Deviation from transport cost
Criticism: Unrealistic approach More selective than deductive Study of only transport and labour Rest factors not included More importance to technical aspects
Florence’s theory of Industrial Location: Approach of theory: Localization coefficient Localization multiple
Criticism: Incapable of explaining industrial location, No significance of quantity produced No attention toward the local characteristics Difficult to calculate the tendency on the basis of
multiples Plant Layout: Plan of installing of plant & machineryObjectives: Best production on minimum cost Maximum utilization of movable & immovable
property Providing best services Safety against accidents
Factors affecting Plant Layout: Weight of materials & products Form of the machines Checking Prospective needs of the factory Minimum shiftingType of Plant Layout: Line (product) layout, (Process) functional Product process layoutTechniques of Plant Layout: Process flow chart Process flow diagram Machine data cards Template Scale model layout
Business Combination: Combination of various units for common objects Objects: Reduction in the cost Development of mutual co-operating feeling Large scale production Regulating the market Reasonable return of investment Advantages: Economy & finance Economy in administration Economy in distribution Economy in production Maintaining selling price
Advantages: Rise of big business Over capitalization Exploitation of labour Unequal distribution Kinds of Combination: Horizontal Vertical Lateral Circular Diagonal
Cause of Combination: Elimination of competition & Price War Economics of large scale business Effects of trade cycles Rise of joint stock companies Technical progress
APT ContactAPT Contact
Landline No. 40824444082444 / 2445 /
2453
Mobile No. 97555573079755557307
Website :
www.aptinfoservices.com
E-mail :
info@aptinfoservices.cominfo@aptinfoservices.com