IMPORTANT NOTES SECTION - A FORMS OF BUSINESS ORGNIZATIONExplain various form of business organization. Form of business organization:- 1. NON-GOVERNMENT concerns 2. GOVERNMENT or SEMI-GOVERNMENT concern 1. NON-GOVERNMENT concern • Sole Trading or Sole Proprietorship • Partnership • Joint Hindu Family • Joint Stock Company • Co-operative Society 2. GOVERNMENT or SEMI-GOVERNMENT concern • Departmental Undertakings - Indian railway • Public Corporations - RBI • Government Company - BHEL • Board Organization - Joint organization
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IMPORTANT NOTES SECTION - A FORMS OF BUSINESS ORGNIZATIONExplain various
form of business organization.
Form of business organization:-
1. NON-GOVERNMENT concerns
2. GOVERNMENT or SEMI-GOVERNMENT concern
1. NON-GOVERNMENT concern
• Sole Trading or Sole Proprietorship
• Partnership
• Joint Hindu Family
• Joint Stock Company
• Co-operative Society
2. GOVERNMENT or SEMI-GOVERNMENT concern
• Departmental Undertakings - Indian railway
• Public Corporations - RBI
• Government Company - BHEL
• Board Organization - Joint organization
SOLE PROPRIETORSHIP
What is sole Proprietorship? Explain features, Advantages and
Disadvantages.
"A sole trader is a person who carries on businessexclusively by and for himself. He is not only
the owner of capital of the undertaking.But is usually the organizer and manager and takes all
the profits or responsibility for losses."
FEATURES or CHARACTERSITICS of SOLE PROPRIETORSHIP:-
• Sole owner
• Capital contribution by one man
• No separate legal existence
• One-man management and control
• Unlimited liability
• Limited area of activities
• Ownership and risk go side by side
• No legal formalities
• Easy to start and dissolve
• Freedom of line of business
ADVANTAGES OF SOLE PROPRIETORSHIP:-
• Simple to form and work
• Secrecy of business
• Flexibility in operation
• Quick decision
• Sole claim on profits
• Free form legal restrictions
• Effective management and control
• Personnel relations with customers
• Harmonious relations with Employees
• Reduction in cost of production
• Way of life
• Development of personnel qualities
• inherited goodwill
• Tax advantages
• National importance
• Ease of dissolution
DISADVANTAGES OF SOLE PROPRIETORSHIP:-
• Unlimited liability
• Limited Financial Resources
• Uncertainty of duration
• Limited managerial ability
• Restricted growth
• Singleness of responsibility
• Limited opportunities of employees
• Change of wrong decision
• Absence of owner not tolerated
• Secrecy leads to suspicion
• No bargaining power
• Monotony and hard work
• Passing into incompetent-hands
PARTNERSHIP
Q. What is partnership?Explain features,Advantages and
Disadvantages.
"The relation existing between persons competent to make contracts, who agree to carry on a
lawful business in common with a view to private gain." ELEMENTS or FEATURES or CHARACTERSITICS of PARTNERSHIP:-
• Existence of Business
• Number of persons
• Contractual relationship
• Sharing of profits
• Agency
• Utmost good faith
• Unlimited liability
• Restrictions on transfer of interest
• Capital contribution
• Durationof the partnership
ADVANTAGES of PARTNERSHIP:-
• Easy formation
• Largefinancial resources
• Better managerial talent
• Flexibility
• Promptness in decision-making
• Division of labor
• Lesser risk
• Possibilities of expansion and growth
• Protection of minority interest
• Secrecy
• Incentives for hard work
DISADVANTAGES OF PARTNERSHIP:-
• Limited finances
• Uncertain existence
• Dishonesty of partners
• Unlimited liability
• Lesser Public confidence
• Limited managerial talent
• Restrictions on transfer or interest
• Risks of implied authority of partners
Q. What is partnership? Explain kinds of partnership and partnership
deed or agreement.
"The relation between persons who have agreed to share profits of a business carried on by all
or any of them acting for all."
KINDS OF PARTNERSHIP:-
1. GENERAL Partnership: - a. Partnership at will
b. Particular partnership.
2. LIMITED Partnership
PARTNERSHIP DEED OR AGREEMENT:-
Document containing all matters according to which mutual RIGHTS, DUTIES and LIABILITIES of
the partners in the conduct and management of the affairs of the firm is determined.
CONTENTS OF PARTNERSHIP DEED or AGREEMENT:-
• The name of the FIRM.
• The names and address of all the partners.
• The nature of the business to be carried by the FIRM.
• The amount of capital to be contributed by each partner.
• The duration of partner, if any.
• The amount which can be withdrawn by each partner.
• The ratio of distribution of profits and losses among the partners.
• The rate of interest on capital and drawings made by the partners.
• The amount of compensation or salary payable to any partner for his services rendered
to the firm.
• The mutual rights and dutiesof partners.
• Maintenance and audit of books of accounts.
• The loans and advance made by the partners to the firm and the rate of interest payable
on them.
• The mode of valuation of goodwill on admission, retirement and on death of a partner.
• The procedure of dissolution and mode of settlement of accounts among the partners
after dissolution.
• Arrangement in case a partner becomes insolvent.
JOINT STOCK COMPANY
Q. What is Joint Stock Company? Explain features, Advantages and
Disadvantages.
"It is a voluntary association of individuals, for profits having capital dividend into transferable
shares, the ownership of which a condition of membership."
FEATURES or CHARACTERSITICS of JOINT STOCK COMPANY:-
• A company is an association of persons.
• The association of persons must be incorporated.
• Artificial legal persons.
• Distinct legal entity.
• Continuous Existence.
• Limited Liability.
• Transferability of shares.
• Diffused ownership.
• Separation of ownership and management.
• Common Seal.
• Corporative Finance.
• Business.
• Centralized and Delegated Management.
• Publication of Accounts.
ADVANTAGES OF JOINT STOCK COMPANY:-
• Permanent Existence.
• Limited Liability.
• Transferability of shares.
• Availability of Large Resources.
• Better Management.
• Economics of scale.
• Ability to cope up with the changing Business Environment.
• Diffusion of risk.
• Scope for Expansion.
• Greater Public Confidence.
• Better use of Economic Resources.
• Democratic Organization.
• Social Benefits.
• Statutory Regulation.
DISADVANTAGES OF JOINT STOCK COMPANY:-
• Lack of Personnel Interest.
• Difficulty of formation.
• Lack of secrecy.
• Chances of fraud by Directors.
• Ineffectiveness of the shareholders.
• Excessive Regulation.
• Conflict of interest.
• Encouragement to speculation.
• Grouping the power.
• Evils form the social point of view.
PUBLIC ENTERPRISES AND PUBLIC UTILITIES
What are Public Enterprises? Explain features, Advantages and
Disadvantages.
"Public enterprises mean state ownership of operation of industrial, agricultural, financial, and
commercial undertaking."
FEATURES or CHARACTERSITICS of PUBLIC ENTERPRISES:-
• Financed by the government.
• Management by government.
• Financial Independence.
• Public Services.
• Useful to all.
• Monopoly Enterprises.
• Direct channel to use foreign funds.
• Helpful for execution of government plans.
• Undertake Strategic Projects.
ADVANTAGES OF PUBLICENTERPRISES:-
• Charges low prices.
• Provide essential facilities like education, health, free or at reduced prices.
• Ensures efficient control of industry.
• Expert administrative services.
• Money can be made available for R&D.
• Private monopoly which would cause high prices is avoided.
• Foreign denominations of the economy are avoided.
DISADVANTAGES OF PUBLIC ENTERPRISES:- • Government must bear losses or this could lead to higher taxation.
• Consumers’ choice is restricted to the state if the business is a monopoly.
• Regulations may be passed to curb the progress of private business.
• Lack of competition may lead to inefficiency and higher prices.
• Government interference.
• Don’t care attitude.
• Political pressure.
• Corruption and embezzlement of funds.
• Foreign investment may be discouraged due to fear of nationalization.
NATURE, IMPORTANCE AND SCOPE OF
MANAGEMENTwhat is Management? Explain nature and function
of management.
"Management is the process of reaching organizational goals by working with and through people and other organizational resources."
NATURE OF MANAGEMENT:-
• Management as a PROCESS: - Management is a process which includes all the activities--starting from the setting up of objectives of business enterprises to the taking up of steps which ensure the attainment of these objectives.
FEATURES OF MANAGEMENT AS A PROCESS:-
1. Continuous process.
2. Integrating process.
3. Social process.
4. Universal process
5. Interactive process.
• MANAGEMENT AS A GROUP: - management as a group refers to those who carry the activities of management.
FEATURES OF MANAGEMENT AS A GROUP:-
1. It comprises persons right from chief execution to the supervisor, who have been assigned managerial duties.
2. It refers to TOP MANAGEMENT only.
• MANAGEMENT AS DISCIPLINE: - MANAGEMENT has been done developed as a full-fledged discipline in the due course of time. Itincludes the specialized functional courses - "FINANCIAL management”, “PERSONNELmanagement”, “MARKETING management".
FEATURES OF MANAGEMENT AS DISCIPLINE:-
1. It is organized body of knowledge.
2. It can be learnt through teaching and training.
3. Its study produces qualified professionals.
• MANAGEMENT AS ACTIVITY:-The functional aspect of management is to organize the human and the material resources to achieve the objectives of the enterprises. In this process, the managers have to perform many activities.
These activities are:-
• COMMUNICATION
• DECISION MAKING
• HUMAN RELATIONS.
Discuss the levels of management.
"Levelsof management refer to a line of demarcation between various managerial position in
an organization."
-TOP management. -MIDDLE management. -LOWER management. TOP MANAGEMENT: -Owners or shareholder, Boardof Director, Managing Director or
General Manager, or Executive Committee.
MIDDLELEVELMANAGEMENT: - a. Department Managers or Section Officers
• PRODUCTION
• SALES
• PURCHASES
• PERSONNEL
• FINANCE
LOWER LEVELMANAGEMENT: - Superintendents, foremen and Supervisor.
PLANNING -NATURE, OBJECTIVES TYPES AND PROCESS
Q. What is planning? What is Nature AND purpose ofPlanning?
“Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it.”
NATURE OR CHARACTERISTICS OF PLANNING: -
Planning is primary function of management.
Planning focuses on objectives.
Planning is a function of all managers.
Planning is an intellectual process.
Planning is a continuous process.
Planning is dynamic (flexible).
Planning secures efficiency, economy and accuracy.
Planning involves forecasting.
Planning and Limited factors.
Planning is realistic.
NEED, OBJECTIVES OR PURPOSE, IMPORTANCE OR SIGNIFICANCE OR
ADVANTAGES OR FUNCTIONS OF PLANNING:-
Achievement of objectives.
Planning avoids haphazard actions.
Planning minimizes future uncertainties.
Planning brings economy in operations.
Planning facilitates control.
Planning and technological development.
Planning helps in proper utilization of resources.
Achieves co-ordination.
Make Management by exception possible.
Q. What is planning? Discuss the steps in planning process?
“Planning is fundamentally choosing and a planning problem arises only when an alternative
course of action is discovered.”
Steps in planning process:-
Determination of objectives.
Determining planning premises or limitations.
Collection, analysis and classification.
Searching for alternative courses.
Evaluating alternative course of action.
Selecting the best alternatives.
Formation of derivative plans.
Communication of plans.
Controlling the plans.
DECISION-MAKING -IMPORTANCE, TYPES, PROCESS,
AND APPROACHES
What is Decision-making? Explain the Decision-making process?
“Decision-making is the selection based on some criteria from two or more possible
alternatives.”
Decision-making process:-
Define the problem.
Analyzing the problem.
Developing alternative solutions or course of actions.
Selection of the best type of alternative.
Putting the decision into action or execution of the decision.
Follow up.
Monitoring and feedback.
Q. Discuss the strategic, tactical & operational decision?
STRATEGIC DECISION: - These are important which affect objectives, organizational goals and
other important policy matters.
- Strategic refers to the - “what and the why”.
- Strategic plans involve the vision, the mission, the guiding principles and the goals for the
business.
- To achieve LONG TERM (8-10 years) goals.
TACTICAL DECISION: - The primary goal of tactical decision making in an organization is to
ensure success. This encapsulates more than productivity, and even more than profitability,
which really are operational and transactional concerns.
- To achieve 1 -2 years goals.
OPERATIONAL DECISION: - Decisionsinvolveroutine tasks, such as planning production and
sales.
- To achieve SHORT TERM (5-6 months) goals.
- Operational decision is administrative process.
ORGANISATION -NATURE, IMPORTANCE, OBJECTIVES,
AND PROCESS
Q. What is organization? Discuss its Nature and importance?
“A group of people who are co-operating under the direction of leadership for the
accomplishment of a common end”
NATURE OF ORGANISATION:-
Organization as a process.
Organization as a structure or framework of relationship.
ORGANIZATION AS A PROCESS:-
Division of work.
Grouping of inter-related activities.
Assigning duties to persons with requisite competence.
Delegating authority.
Coordinating the efforts of different persons and groups.
Determining activities necessary for the accomplishment of the business
objectives.
ORGANIZATION AS A STRUCTURE:-
As structure, organization is a network of internal authority and responsibility
relationships.
It is the framework 0f relationships of persons, operating at various levels, to accomplish
Common objectives
IMPORTANCE OF ORGANIZATION:
It facilitates administration.
It promotes growth & diversification.
It fasters co-ordination.
It provides optimum use of technological innovation.
It enhances productivity.
Optimum use of human resources.
It provides scope for training & development.
Q. Discuss organization process?
Organization process:-
Define activities.
Assigning duties.
Delegating authority.
Coordinating activities.
Providing right environment.
Establishment of structural relationship for overall control.
Q. What is organization objective? Differentiate between formal &
informal organization?
“A purpose refers to commitment to desired future objectives.”
FORMAL ORGANISATION: - “An organization is formed when two or more persons are
consciously co-ordinated towards a common objective”
INFORMAL ORGANISATION: -“Informal organization is a joint personal activity without a
conscious joint purpose, even though possibly contributing to joint results”.
---------DIFFERENCE BETWEEN FORMAL ORGNISATION AND INFORMAL ORGNISATION----------
FORMATION: -
BASIS
NATURE
SET UP
EMPHASIS
AUTHORITY
EXISTENCE
RATIONALITY
DEPICTION
DEPARTMENTATION
Q. Define Depart mentation? Discuss its Types?
“It is a process of directing the large monolithic functional organization into smaller and flexible
administrative units”.
Types of depart mentation:-
Depart mentation by function :- SHAREHOLDER
BOARD OF DIRECTORS
CHIEF EXECUTIVE
Production mgr. Purchase mgr. Personnel mgr. Financial mgr.Marketing mgr.
Chief engineer Works & MethodsAdvertisement mgr.sales promotion mgr. Sales mgr.
Study manager Maintenance mgr.
Quality control mgr.Marketing research mgr.Productplanning mgr.
Depart mentation by product :- SHAREHOLDER
BOARD OF DIRECTORS
CHIEF EXECUTIVE
Finance Personnel Manufacturing Marketing
Metal product Division Plastic Product Division
Personnel Accounting Personnel Accounting
Manufacturing Marketing Manufacturing Marketing
Depart mentation by Territory:- SHAREHOLDER
BOARD OF DIRECTORS
Finance Personnel Manufacturing Marketing
WESTERN REGION MANAGER EASTERN REGION MANAGER
Personnel Accounting Personnel Accounting
Manufacturing Marketing Manufacturing Marketing
Depart mentation by Customer or markets :- SHAREHOLDER