Unit-3 Forms Of Business Organization II

In this unit you will learn about the requisites of a good form of organisation, compare the four forms of organisations.

Explain the factors determining the choice of the form of business organisation.

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Written on Apr 15, 2019 5:45:37 PM

  • The small businesses like grocery stores, hair dressers, small restaurants, etc. are predominantly sole trade organisations.
  • They function on small scale, cater to the needs of a limited market and require a very limited capital.
  • The managerial supervision can be tackled easily by the owner.
  • Service enterprises like auto workshops, large restaurants and hotels, large scale retail houses and medium scale industrial organisations are generally organised under partnership form.
  • In these cases the entrepreneurs would like to pool their capital, skills, experience, etc., as partners of a firm.
  • In those enterprises where the risk involved is quite significant and scale of operation is medium, the choice will be the private company.
  • Transport undertakings, hire purchase units, finance and leasing companies etc. are generally organised as private limited companies.
  • For large scale business operations, the most suitable form of business organisation is the public limited company.
  • The large scale manufacturing plants, large transport undertakings, engineering and electronic companies, departmental stores, multiple shops are usually organised on the basis of public limited company.
  • The principal reasons are the necessity of larger capital and the large amount of risk involved.
  • The cooperative form of organisation is suitable when the interest of a particular segment of society is to be promoted.
  • This form of organisation is used largely for consumers, producers, farmers, etc.