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.

Answer

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.