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
 Personnel
Significance:
 Facilitates administration
 Ensures specialization
 Facilitates growth & diversification
Social Responsibility:
Causes:
 Public opinions
 Trade union movement
 Consumerism
 Education
 Public relation
 Managerial resolutions
Rationale:
 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 Country
Responsibility
Internal:
 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 freedom
Advantages:
 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 decisions
Company:
 Promotion
 Incorporation or Registration
 Floatation or Capital Subscription
 Commencement of Business
Advantages:
 Limited liability
 Ease in management with a team
 Better reputation
Disadvantages:
 High regulation formalities
 Late decisions
Partnership:
 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 interest
Disadvantages:
 Limited resources
 Limitation on capital & organizing power
 Risks of implied authority
 Lack of public confidence
Types:
 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 out
Rights 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 making
Classification :
On the basis of incorporation:
 Incorporated
 Un-incorporated
On the basis of liability:
 Limited liability
 Unlimited liability
Nationality:
 Indian
 Foreign
On 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 interest
Features:
 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 wealth
Disadvantages:
 Greater
 Better & cheaper production is a myth
 Top heavy administration
 Nepotism and favoritism
 Delay in decision
Importance:
 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 industry
Factors affecting location:
Physical Factors:
 Availability of raw material,
 Power
 Climatic conditions
Economic Factor:
 Labour
 Transport
 Capital
 Sale centers
 Banking
Political Factor:
 Peace & security
 Government policy
Weber’s theory of Location: enunciated by Prof.
Alfred Weber of Germany in 1909, causes influence
location
Primary:
 Cost of land
 Building
 Power labour
 Transport
Secondary:
 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 & machinery
Objectives:
 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 shifting
Type of Plant Layout:
 Line (product) layout, (Process) functional
 Product process layout
Techniques 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 Contact
 Landline No. 4082444 / 2445 /
2453
 Mobile No. 9755557307
 Website :
www.aptinfoservices.com
 E-mail :
info@aptinfoservices.com