FORMS OF BUSINESS ORGANIZATION

The main forms of business organization are

1.Individual entrepreneur:-
The common form of business organization
in India is one man business. In this type of
enterprise the individual entrepreneur
supplies the entire capital (even if he has to
borrow) he organizes and supervises the
business; and he alone is responsible for the
results that he gets profit or suffers losses.
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Merits of Individual Enterprise:-

•Incentives for hard work
•Superior Output at low cost
•Customer’s satisfaction
•Low Overhead Charges.
•Independence: Entrepreneur is his own
boss
•Easy Dissolution.
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Demerits of Individual Enterprise:-

•Limited resources
•No division of labour
•Small Income
•Weak Competitive Capacity
•Limited in area.

Conclusion :- Entrepreneurs of ability do not like to

enter into partnership or to take up a job in a public
company. They prefer to run their business
independently and content with whatever profit they
make.
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2.PARTNERSHIP
•Sometimes the one-man business reaches
such a stage of development that it becomes
too unwieldy for one man to be able to carry
on. To prevent firm from decaying Individual
ownership thus naturally develops into a
partnership.
• It can be formed to start a new business
altogether. Two or more person combines
together to do business
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2. PARTNERSHIP
•Unlimited Liability :-From the legal point of
view, each partner is a fully authorized agent of
the partnership, and every partner has the power
to bind the other partners to any contract that he
may enter into.
•Limited Partnership:- There is also a type of
partnership in which one or more partners can get
their liability for the partnership debts limited to
their share capital or to a fixed proportion of it.
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2.PATERNERSHIP
Merits :-
1.More capital
2.Diverse Talent
3.Correct Decisions.
4.Vigour and Zeal
5.Prompt Decision
6.Personal relationship
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2.PATERNERSHIP
Demerits :-
1.Unlimited Liability
2.Less work and more waste
4.Misunderstanding
5.Money locked up
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3.Joint Stock Company:-

•A company whose stock is owned jointly by the shareholders.
An entrepreneur conceives a scheme of business, he secures the
co-operation of at least 6 more persons, for the minimum number
of persons to form a company is seven.
They take steps for the formation of the company with all articles
of association, getting it registered and then it comes into
existence. The company then canvass for the sale of shares.
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3.Joint Stock Company:-

1. Public Limited Company:- the shares in a
Public Limited company are open to
everyone. The company is not in the hands
of a few promoters but the public owns it.

2. The minimum number of shareholders in a

Public Ltd Company is seven and there is
no limit to the maximum number of
shareholders.
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3.Joint Stock Company:-

2. Private Limited Company:-
A company is called private limited when
all its shares are in private hands. Pvt Ltd
Company is owned by a group of
promoters. 

The minimum number of shareholders

should be two and the maximum 50.
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3.Joint Stock Company:-

Merits :-
1.Economies of Large scale.
2.Limited Liability.
3.Shares Transferable.
4.Democratic organization.
6.Permanent Existence.
7.Encourages savings.
8.Legal control.
9.Goodwill.
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3.Joint Stock Company:-

Demerits :-
1.Shareholders indifferent views.
2.Democratic only in Theory.
3. Fraud and Exploitation.
4.Conflict of Interest.
5.Lack of personal touch.
Conclusion :- It is very desirable and beneficial.
This form of business has come to stay and no
country can do without it.
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4.CO-OPERATIVE ORGANISATION
Co-operation is broadly of two types namely,
Producers’ co-operation and Consumers’ Co-
operation.
1.Producer Co-operation :- In this form of co-
operation, the workers are their own masters.
The business is owned by them. They elect
managers and foremen. They are their own
employees. The profit if any are divided
among them all.
 They are formed by small producers who plan to obtain
inputs (raw materials, components, tools and equipment)
and to sell their output (finished goods) by direct
distribution and without any involvement of middlemen.
They are also called as industrial co-operatives.
 Goods are produced to meet the requirements of
members. Goods can also be sold to outsiders at a profit.
Certain portion of the profits earned is spent for the
welfare of the community and the balance is distributed
among members.
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4.CO-OPERATIVE ORGANISATION
2. Consumer’s Co-operation :- They are the oldest
form of cooperatives. They are formed for the
benefit of consumers who wish to get household
goods at reasonable prices. These societies make
bulk purchases of goods from producers directly
or from wholesalers at wholesale rates and sell the
goods to members. Sometimes the goods are also
sold to non-members. The prices charged from
non-members would be higher when compared to
the prices charged from members.
 Since purchases are made directly from the producers or
wholesalers in bulk quantities, the cost of purchases is less
and they are able to pass on this benefit to members in the
form of lower prices. They ensure steady supply of goods
to members. The difference between the sale price and
purchase price represents the surplus earned. The surplus
is distributed among the members in the form of bonus.
 Eg. Currently there are around 9,000 consumer co-
operatives in the country. There are Primary societies at
the local level, Central or wholesale societies at the
district level, State Consumer Co-operative Federation at
the State level and National Co-operative Consumer
Federation at the National level.
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4.CO-OPERATIVE ORGANISATION
3.Other forms of Co-operations :- The principle
of co-operation has been given a very extended
application. Co-operative societies have been
formed for a number of purposes.
1.Central co-operative banks
2.State co-operative banks
3.Co-operative societies for all sorts of
purposes, credit and non-credit.(running
schools, libraries, for sale of milk.)
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4.CO-OPERATIVE ORGANISATION
Principles of Co-operation :
1. Voluntary and Open Membership
Cooperatives are voluntary organisations ,
open to all persons able to use their services and
willing to accept the responsibilities of
membership, without gender, social, racial,
political or religious discrimination.
 2. Democratic Member Control
Cooperatives are democratic organisations controlled by
their members, who actively participate in setting their
policies and making decisions. Men and women serving
as elected representatives are accountable to the
membership.
 3. Member Economic Participation

Members contribute equitably to, and democratically

controlled, the capital of their cooperative. At least part
of that capital is usually the common property of the
cooperative. Members usually receive limited
compensation
 4. Autonomy and Independence
 Cooperatives are autonomous, self-help organisations
controlled by their members. If they enter into
agreements with other organisations, including
governments, or raise capital from external sources, they
do so on terms that ensure democratic control by their
members and maintain their cooperative autonomy.
 5. Education, Training, and Information

 Cooperatives provide education and training for their

members, elected representatives, managers, and
employees so they can contribute effectively to the
development of their co-operatives.
 6. Cooperation among Cooperatives
 Cooperatives serve their members most effectively and
strengthen the cooperative movement by working
together through local, national, regional and
international structures.
 7. Concern for Community

 Cooperatives work for the sustainable development of

their communities through policies approved by their
members.
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4.CO-OPERATIVE ORGANISATION
Merits :-
1.Easy formation
2.Democratic management
3.Open membership
4.Service motto
5.Economical operation
6.Low management cost
7.Sharing of surplus
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4.CO-OPERATIVE ORGANISATION
Merits :-
8.Check on business
9.Limited liability
10.Internal financing
11.Continuous existence
12.Satisfy the needs of poor persons
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4.CO-OPERATIVE ORGANISATION
Demerits :-
1. Limited Capital
2.Inefficient management
3.Lack of motivation
5.Lack of secrecy
6.Excessive government control
7.Rift among members.
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5.PUBLIC ENTERPRISE :-
Here the government or a local body like a
municipality or a Zilla Parishad runs a
business. This is generally done in the case
of public utility services like gas, electricity,
water supply or bus service.
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5.PUBLIC ENTERPRISE :-
Merits :-
1.Profits for public welfare
2.Ample funds
4.Best talent
5.Proper control
6.consumer’s interests.
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5.PUBLIC ENTERPRISE :-
Demerits :-
1.Evils of bureaucracy
2.No incentives
3.Inefficiency
4.No continuity
5.No initiative
Conclusion :- Public sector in India is steadily
expanding to occupy commanding heights in the
economy.