Saturday, March 27, 2010

SOLE TRADING CONCERN

A. MEANING AND FORMS OF BUSINESS ORGANIZATION

The term " Business Organization " is simple to understand. It consists of two terms business and organization. Business is and production, distribution and exchange of goods. Organization brings inputs ( man, machine, materials, money, etc.) into the production of goods and services (output) for planned distribution in the market. It is a mechanism enabling persons to work together effectively and achieve the set goals. Hence, business organization may be defined as an institution, which is engaged in business activities. It is the act bringing into effective cooperation the available resources for production, distribution and exchange of goods with a view to earn profit.

Business organization denotes ownership, management and operation of business undertaking. Of these three, ownership is the most important because management and operations depend on it. It may be owned and controlled by a single individual or a group of individuals. The owner accepts all the risks involved in the running of the business. The right and liabilities vary according to the form of ownership.

A number of forms of organizations exist to suit requirements of different business undertakings. On the basis of ownership, business organizations can be divided into:

1. Private Enterprise
2. Public ( State ) Enterprises
3. Joint Enterprises
4. Co-operative Sector

(1) Private Enterprises : When individuals invest their capital with a view to earning profit, it is known as private enterprise. Private enterprises have the following types of organization:
a. Sole Trading Concern
b. Partnership
c. Joint Stock Company

(2) Public Enterprises : Business owned or operated by public authorities are known as public or state enterprise. In these enterprises the government does either whole of most of the investment. The aim of these enterprises is to provide goods and services to the public at a reasonable rate though profit earning is not entirely excluded. These enterprises have the following forms of organizations:
a. Departmental Organization
b. Public Corporations
c. Government Companies

(3) Joint Enterprises : Joint enterprises is a form of partnership between private sector and the government where management will generally be in the hands of private sector and overall supervision will lie with the Board of Directors. It provides adequate representation from government too.

(4) Co-operative Societies : Co-operative societies are voluntary associations started with the aim of service to members. The aim of societies is not to increase profits as in other enterprises but service to members is their important goal.

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