BUSINESS

ORGANIZATIONS

Presentation by::
• HARSHITA TAK
• YASH AGARWAL
• SEBIN S. JOHN
• GARIMA KUMAWAT
• MEHAK CHOPRA
 The success of every business depends largely on its
organisation.

 The form of ownership is a significant aspect of any

organisation.

 Businesses may be organised in various forms,

depending on their size, nature and need for resources.
TYPES OF BUSINESS
ORGANIZATIONS
SOLE PROPRIETORSHIP
 A sole proprietorship is an unincorporated business with
only one owner.
 Proprietor and the business are one entity, no separate
legal entity is created.
 Owner pays personal income tax on profits earned.

 Sole proprietorships are easy to establish and dismantle,

due to a lack of government involvement.
  These types of businesses are very popular among sole
owners of businesses, individual self-contractors, and
consultants. 
 ADVANTAGES

 Owners can establish a sole proprietorship instantly,

easily and inexpensively.
 Sole proprietorships carry little, if any, ongoing
formalities.
 Owners may freely mix business or personal assets.
 DISADVANTAGES

 Owners are subject to unlimited personal liability for the

debts, losses and liabilities of the business.
 Owners cannot raise capital by selling an interest in the
business.
 Sole proprietorships rarely survive the death or
incapacity of their owners and so do not retain value.
PARTNERSHIP FIRM
“ Partnership is the relation between persons who
have agreed to share the profits of a business
carried on by all or any of them acting for all.” as
per Partnership Act 1932.

 Partnership is a form of business in which two or

more but not more than 20 people owns a business.
  An agreement between the partners of a firm that
outlines the terms and conditions of partnership
among the partners is known as Partnership deed.
 PARTNERSHIP DEED
 The agreement can be either in written or oral form.
 It usually comprises the attributes about all the
characteristics influencing the association between the
partners counting the aim of trade, the contribution of
capital by each partner, the ratio in which the gains
and losses will be divided by the partners and
privilege and entitlement of partners to interest on
loan, interest on capital, etc.
 TYPES OF PARTNERS

 Active or Working Partner

 Dormant or Sleeping Partner

 Nominal Partner

 Partner by estoppel

 Partners in profit only

 Sub Partner

 Minor as a Partner
 CO-OPERATIVE
ORGANIZATIONS
 A cooperative organization is an association of persons,
usually of limited means, who have vol­untarily joined
together to achieve a common eco­nomic end through the
formation of a democrati­cally controlled organization,
making equitable dis­tributions to the capital required,
and accepting a fair share of risk and benefits of the
undertakings.

 The word ‘co-operation’ stands for the idea of living

together and working together.
 A cooperative organisation always prefers Service
instead of profit maximization.

 Characteristics of Cooperative Organisation:

 1. Voluntary Association:

 2. Spirit of Cooperation:
 ADVANTAGES:
 Easy formation
 Open Membership
 Limited Liability
 Elimination of middleman’s profit
 Democratic Control

 DISADVANTAGES:
 Limited capital
 Problems in management
 Lack of motivation
 Lack of cooperation
 Dependence on government
STATE OWNED FIRMS
OR PUBLIC SECTOR
UNDERTAKINGS
 They are usually fully owned and managed by the
Government such as Railways, Posts, Defence
Undertakings, Banks etc.
 They are also known as public sector undertaking , state
owned company ,state enterprise . PSUs (Public Sector
Undertakings) are the government-owned corporations in
India, in which 51% or more than 51% of the paid up
share capital is owned by government of India.
 Advantages of Public Sector Enterprise
 It is accountable to the general public.
 It helps in generating revenues for the government.
 It provides infrastructural facilities for the citizens.

 Disadvantages of a Public Corporation

 Difficult to manage.
 Financial burden.
 Political interference.
 Misuse of power.
PUBLIC COMPANY
AND
PRIVATE COMPANY
 PUBLIC COMPANY
 A Public Ltd. Company is the legal status of any firms
which has offered shares to the general public.
 A PLC’s shares are presented to the general public and
can be purchased or claimed by any individual, either
privately during the process of initial public offerings or
via trade on the stock exchange market.

 They have a minimum paid up capital of Rs. 5,00,000.

 PRIVATE COMPANY
 A private ltd. Company is a privately owned business
whose shares are not traded on the public exchange and
are not issued through an initial public offering.
 These companies do not need to comply with filling
requirements of the security exchange commission.
 They are usually less liquid and it is often more difficult
to estimate their valuation.
 They have a minimum paid up capital of Rs. 1 lacs.
 PRIVATE COMPANIES V/S PUBLIC
COMPANIES

 Listing on stock exchange board.

 Minimum number of members.
 Statutory general meeting of members.
 Prospectus
 Certificate of commencement
 Scope
 Regulatory burden.
 Features Public Limited Private Limited
- Company
Company
 Minimum members 7 2
 Minimum directors 3 2
 Maximum members Unlimited 200
 Minimum capital 5,00,000 1,00,000
 Invitation to public Yes No
 Issue of prospectus Yes No
 Quorum at AGM 5 members 2 members
 Certificate for commencement Yes No
 of business
 Term used at the end of name Limited Private limited

 Statutory meeting (mandatory) Yes No

MULTINATIONAL
COMPANIES
 Multinational corporations participate in business in two
or more countries.

 MNC can have a positive economic effect on the country

where the business is taking place.

 Many believe manufacturing outside of the U.S. has a

negative effect on the economy with fewer job
opportunities.

 Transnational business is considered diversifying the

investment.
 Features of MNC’s:
Reasons to establish MNC’s
Advantages of MNC’s
Disadvantages of MNC’S
MNC’s and social responsibility
LIMITED LIABILITY
COMPANY
  LLP is an alternative corporate business form that gives
the benefits of limited liability of a company and the
flexibility of a partnership.
 • The LLP can continue its existence irrespective of
changes in partners. It is capable of entering into
contracts and holding property in its own name.
 • The LLP is a separate legal entity, is liable to the full
extent of its assets but liability of the partners is
limited to their agreed contribution in the LLP.
 • Further, no partner is liable on account of the
independent or un-authorized actions of other partners,
thus individual partners are shielded from joint liability
created by another partner’s wrongful business decisions
or misconduct.
 ADAVANTAGES:

 LLP form is a form of business model which:

 (i) is organized and operates on the basis of an
agreement.
 (ii) provides flexibility without imposing detailed legal
and procedural requirements
 (iii) enables professional/technical expertise and
initiative to combine with financial risk taking capacity
in an innovative and efficient manner
JOINT LIABILITY
COMPANY
 Joint Liability Company

 A join liability company is a type of corporation or

partnership involving two or more individuals with the
legal capacity to undertake commercial transactions for
profit. All partners invest their money, work and skills,
or any part thereof, in the company, and share profits and
losses according to percentages agreed upon. Partners
are jointly and severally liable and their liability is
unlimited. The type of entity of a partner in a joint
liability company is a primary importance.
A joint liability company has the following features:
a- Partners are personally liable for the company’s debts. Their
liability is unlimited. Creditors may attempt to claim the whole
debt from any of the partners personally. Partners are severally
liable for the company’s debts. Partners who settle the
company’s debts may recover payment from the company. They
may also claim from other partners the amount of debt they are
responsible for.
b- A main feature of joint liability companies is the sharing of
profits and losses.
c- Partners in a joint liability company are considered to be
merchants by virtue of law.
Therefore, partners are those who naturally enjoy the legal
capacity to perform business.
As a result, bankruptcy of the firm means automatically
bankruptcy of the partners who then loose the capacity to
perform business due to liquidation of the company.
 d- The company operates under a trade name made up of
the partners’ names respectively.
 In the event that all names are not mentioned, the trade
name or the mentioned names will be followed by “and
his associates” or “and associates”.
 e- Partners in a joint liability company are not allowed to
give up their shares without prior consent of all partners.
Partners are able though to give up their shares to other
partners.
 f- The company contract is always written.
THANK YOU
By:
 HARSHITA TAK

 YASH AGARWAL

 SEBIN S. JOHN

 GARIMA KUMAWAT

 MEHAK CHOPRA