2. WHAT IS ORGANISATION STRUCTURE?
Organisation structure means determining the
form of entire organisation system of undertaking.
According to Henry H. Albert, “The organisational
structure is the framework within which
management and operating task are performed”.
3. Characteristics of ORGANISATION
STRUCTURE
• Performance of Business Activities
• Arranges functional relations among the
managers and the employees
• Various roles and positions are framed
• Establishing relations between the managers,
employees and their group
• Functions are assigned to various
Departments
4. Characteristics of ORGANISATION
STRUCTURE
• Arrangements of mutual formal relations,
among the employees
• Relations between various parties may be
depicted by charts and charts
• Powers & Responsibilities of the employees
are determined in the organization structure
• Vertical, horizontal and marginal functional
relations actively flow in the organization
structure.
5. Factor or Elements affecting Organization
Structure
Organization Structure is governed by several
interrelated and interdependent factors :-
• Objectives of the organization
• The nature of business is the most important
factor
• Scale of operations i.e. volume of business ( large,
medium, small) and size of the market area (local,
national, international)
6. • Pace of Growth of the Organization
• Commercial Scope
• Competitive Conditions
• Departmentalization in Organization
• Policies of Managers
• Even Strata
• Abilities of Managers
• Traditions and Customs
7. • Human & Social needs
• Environment
• The degree of control desired by the owner(s)
• Changes
• Amount of capital required for the establishment
and operation of a business
• The volume of risks and liabilities as well as the
willingness of the owners to bear it
• Comparative tax liability
8. WHAT IS THE RIGHT FORM OF
ORGANIZATION STRUCTURE ?
• There really is not one right form of ownership.
• The correct form depends of the type of
company, the goals of the owners, and the plans
of what the company may become.
• Factors such as tax considerations, liability
exposure, capital requirements and structure
and ownership control all play a role is
determining which form is correct for a
business.
10. TYPES OF BUSINESS
ORGANISATIONS
• Private Sector
• Sole Proprietorship
• Joint Hindu Family Business
• Partnership Firm
• Joint Stock Company
1) Private Limited
2) Public Limited
• Company
• Co-operative Society
12. SOLE TRADING or PROPRIETORSHIP
When the ownership and management of a business are
in control of one individual the form of business is called
sole proprietorship.
13. SOLE PROPRIETERSHIP
• The most common form of business organization.
• Owned by one person, who performs most roles and
owns everything
• Very few legal requirements for setting it up.
• Owner gets all profits, takes all the losses → called
unlimited liability
• Easiest and least expensive to set up
• Easiest for tax purposes → income recorded under
personal income
14. CHARACTERISTICS
• Oldest form of business organization
• The business enterprise is owned by one
single individual (i.e. both profit and risk
belong to him)
• Owner is the Manager
• Owner is the only source of Capital
• The proprietor and business enterprise are
same in the eyes of the law.
15. CHARACTERISTICS
• Liability of sole proprietor is unlimited
• Sole proprietorship business is free from
many legal formalities subjected to the
general law of the land
• Proprietor makes all decisions pertaining to
the business
• Limited scope of operations.
16. ADVANTAGES OR
MERITS OF
SOLE
PROPREITORSHIP
• Ease in formation
• Discretion in start and dissolution
• Flexibility
• Free from legal Formality
• Independence of proprietor
• Quick decesions
17. ADVANTAGES OR MERITS OF
SOLE PROPREITORSHIP
• Facilitate Coordination
• Personal contacts with customers
• Secrecy
• Perfect Control
• Economy in operation
• Ease to borrow funds
• Direct relation between effort and rewards
• Successors benefited by inherited business
• Social advantage
18. DISADVANTAGES OR DEMERITS OF
SOLE PROPREITORSHIP
• Limited managerial
capacity
• Hasty decisions
• Secrecy causes
suspicion
• Owner has unlimited
liability
• Limited financial
resources
19. DISADVANTAGES OF SOLE
PROPREITORSHIP
• Loss in absence
• Difficulty in attracting and retaining good
employees
• High morality rate
• Lack of stability
• Unfit for medium and large businesses
21. Meaning of Partnership
• A partnership is an association of two or
more persons who agree to carry on business
for earning and sharing profit among them.
• According to Indian Partnership Act, 1932,
“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.”
22. CHARACTERISITCS OF PARTNERSHIP
• Minimum 2 number of partners and maximum 20
partners. All of must be competent to contract.
• The relation between the partners is created in the
form of a contract. Written contract is called
“Partnership Deed.”
• The firm means partners, the partners mean the
firm
• The profit is divided in any as ratio as agreed
• No partner can sell/transfer his interest in the firm
to anyone without the consent of other partners
23. CHARACTERISITCS OF PARTNERSHIP
• The relation of partnership arises from a valid
agreement.
• The liability of partners is unlimited.
• To constitute a partnership, there must be a
relation of mutual agency between the partners.
• The relation of partnership is founded upon
mutual trust and confidence. Therefore, every
partner is bound to be faithful to each other.
• A firm does not have separate legal existence from
its partners. Firm is not a person in the eye of law.
• The registration of partnership is not compulsory
in India.
24. Test of Partnership
• There must be an agreement between two or
more persons.
• There must be a business of partnership.
• The partners must have agreed to share the
profits of the business.
• The business must be carried on by all or any
one
25. ADVANTAGES OF PARTNERSHIP
• Easy Formation
• Larger Resources
• Greater Management Talent
• Flexibility of Operation
• Prompt Decision
• Balanced decisions
• Sharing Of Risk and liability
• Personal care and
supervision of business
26. ADVANTAGES OF PARTNERSHIP
• Secrecy
• Direct relation between work and reward
• More possibility of growth and expansion
• Protection of minority interest
• Easy dissolution
27. DISADVANTAGES OF PARTNERSHIPS
• Unlimited Liability
• Limited resources
• Limited managerial skill
• Fear of Dispute
• Instability
• Non- transferability of
interest
• Lack of public interest
• Risk of mutual agency
relations
28. Partnership Deed
• When the contract of partnership is made in
writing, it takes the form of a document.
Thus, the document which contains the terms
of contracts of partnership is called the deed
of partnership.
• It must contain all the important terms of
partnership agreed by the partners.
29. Contents of deed
• Name of the firm
• Name of the partners
• Nature and place of business
• Date of commencement of partnership
• Duration of the partnership/ firm.
• Capital employed or to be employed by each partner.
• Profit and loss sharing ratio
• Interest on capital
• Limit of drawing and interest on it
• Interest on loans by and to partners
• Salary or commission, if payable, to the partners
30. Company
• According to companies act 2013, “Company”
means a company incorporated under this
act or under any of the previous companies
law.
• According to Prof. Haney, “ A company is an
artificial person created by law, having
separate entity with a perpetual succession
and common seal.”
31. CHARACTERISITCS OF COMPANY
• Registered voluntary association/ body corporate
• Members/ Subscriber
• Artificial person
• Separate legal entity
• Perpetual succession
• Common seal
• Limited liability
32. CHARACTERISITCS OF COMPANY
• Share Capital
• Transferable shares
• Separate property
• Capacity to sue and be sued
• Management team
• Governance by majority
• Nationality
• Not a citizen and has no fundamental rights
33. ADVANTAGES OF COMPANY
• Limited Liability
• Huge financial resources
• Perpetual existence or stability
• Transferability of shares
• Sound management
• Diffusion of risk
• Economy in operation
34. ADVANTAGES OF COMPANY
• Democratic management
• Scope of expansion and growth
• Public confidence
• Encourages capitalization
• Social advantages
35. DISADVANTAGES OF COMPANY
• Difficulty in formation
• Regulation and Control
• Oligarchy of directors
• Neglect of minority interests
• Lack of Secrecy
36. DISADVANTAGES OF COMPANY
• Delay in decisions
• Lack of motivations
• Tax Burden
• Difficulty in winding up
• Insider trading
37. MEANING OF A CORPORATION
• The term ‘Co-operation’ has been derived by
adding a prefix ‘Co’ with the word ‘operation’. ‘Co’
means together and ‘operation’ means work.
Therefore the literal meaning of the term co-
operation is to work together.
• Co-operation means working together for a
common good of all.
38. CO-OPERATIVE SOCIETY
It is a voluntary
association of
people or
business to
achieve a an
economic goal
with a social
perspective
39. DEFINITION OF A CORPORATION
• A Co-operative society or organization is one which
has been voluntarily formed by some persons for
the promotion of their common economic interest.
• According to the Indian Co-operative Societies Act,
1912, A Co-operative society is “a society which
has its object as the promotion of economic
interests of its members in accordance with co-
operative principles.”
40. CHARACTERISTICS OF A CO-OPERATIVE
ORGANIZATION
• Voluntary organization
• Must be registered
• Separate legal entity and artificial person
• Liability is limited
• Perpetual existence
• Every member has to buy at least one share
• Non-transferable shares
41. CHARACTERISTICS OF A CO-OPERATIVE
ORGANIZATION
• Each member of a co-operative society has a
right to one vote
• Managed on Democrative principles
• Certain proportion of profit is of co-operative
society is distributed among its member
• Works for promotion of economic interest of
its member
• Primary object is to serve its members
• Based on principles equality, justice and
mutual benefit
42. CO-OPERATIVE PRINCIPLES
• Principle of voluntary and open membership
• Principle of democratic member control
• Principle of member’s economic participation
• Principle of autonomy and independence
• Principle of education, training and
information
• Principle of co-operation among co-operatives
• Principle of concern for community
43. ADVANTAGES OF A CO-OPERATIVE ORGANISATION
• Organisational Advantages
• Easy formation
• Small amount of investment
• Equal voting rights
• Democratic management
• Stability
• Easy to wind up
44. ADVANTAGES OF A CO-OPERATIVE ORGANISATION
• Economic Advantages
• Economic management
• Tax advantages
• Ploughing back the profits
• Government aid
• Equitable distribution of profits
• Limited liability
45. ADVANTAGES OF A CO-OPERATIVE ORGANISATION
• Social Advantages
• Spirit of mutual help and brotherhood
• Uplift standard of living of weaker sections of
society
• Promotes equal distribution of income and wealth
in the society
• Relief from exploitation
• decentralisation of economic power
• Changes in society by peaceful means
• Promotes maximum social welfare
46. Public Enterprises
• Public enterprises (PE) refers to an enterprise
which is owned and controlled by the
Government or public authority.
• A public enterprise refers to an industrial,
commercial or service enterprise which is
owned and controlled by the Government or
by public authority/ Government
organisation for providing goods and services
to the public.
47. CHARECTERISTICS OF PUBLIC ENTERPRISES
• Owned by the government or any public
organisation
• Managed, controlled and operated by the
Government
• Carry on activities of production of goods or
services
• Run in different form of organisation
(departmental organisation, public
corporation, Government Company, Boards,
Trusts etc.)
48. CHARECTERISTICS OF PUBLIC ENTERPRISES
• Established with some special objectives
(economic objectives, social objectives, political
objectives etc.)
• Service motive is prime motive
• PE accountable to the public
• Subject to audit rules of the Government
• Required to prepare annual return of working &
place the same before the Lok Sabha.
• Monopoly position in certain economic activities
such as railways, mining, petro-products etc
49. ROLE & IMPORTANCE OF PUBLIC
ENTERPRISES
• Infrastructure Development
• Strong Industrial Base
• Planned Development
• Balanced regional development
• Employment
• Promotes capital formation or investment
• Export promotion
50. ROLE & IMPORTANCE OF PUBLIC
ENTERPRISES
• Import Substitution
• Contribution to the GDP
• Contribution to Exchequer
• Research and Development
• Help reduce disparities of income and wealth/
concentration of economic power
• Protection of consumer interests
52. Departmental Organisation
• Departmental form of organisation is the oldest
form of organising public enterprises.
• Under this form of organisation, an enterprise is
put under the control of a department.
• Such department is headed by the concerned
minister.
• For example- Railway is a public enterprises
which is under the control of Railway department
and is headed by Railway Minister.
53. Public/ Statutory Organisation
• A public or statutory corporation is a body
corporate incorporated under a special Act or
State Legislature.
• According to Morrison, “In public corporation,
we are seeking a combination of public
ownership, public accountability and business
management for public ends.”
54. Government Company
• According to the Companies Act 1956, a
Government company means any company in
which not less than fifty-one per cent of the
paid-up share capital is held by the following-
a) By the central Government
b) By any State Government or Governments
c) Partly by the Central Government and Partly by
one or more State Governments
• A Government company is one in which not less
than 51% of the paid-up capital is held by the
Central or/ and State government.
55. Joint Sector
• A Joint Sector Enterprise is one which is
established in the partnership of the public
sector and the private sector.
• It is refers to a form partnership between the
Government and private sector.
• According to M. Adhikari, “Joint sector is a form
of partnership between the public sector and
the private sector or between the government
and business.”
56. Characteristics of a Joint sector
Enterprise
• Public & Private sector partnership
• Both entrepreneur contribute to the capital
• Managed & controlled by a Board of Directors
• Day to day operations of the enterprise are
conducted by the managing director
• Not accountable to the public
57. Characteristics of a Joint sector
Enterprise
• Organised in company form of organisation
• Both public enterprises and private enterprises
may be converted into joint sector enterprises
• Whenever a big business house or a foreign
enterpreneur wants to participate in a joint
sector enterprise, prior permission of the central
government is essential
• Effective voice in the management and
operations
58. AMUL
• Amul is an Indian dairy cooperative, based at Anand in the state
of Gujarat, India.[2] The word amul (अमूल) is derived from
theSanskrit word Anand Milk Utpadan Limited , meaning rare,
valuable .[3] The co-operative was initially referred to as Anand Milk
Federation Union Limited hence the name AMUL.
• Formed in 1946, it is a brand managed by a cooperative body, the
Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF),
which today is jointly owned by 3.6 million milk producers in
Gujarat.[4]
• Amul spurred India's White Revolution, which made the country the
world's largest producer of milk and milk products.[5] In the process
Amul became the largest food brand in India and has ventured into
markets overseas.
• Dr. Verghese Kurien, founder-chairman of the GCMMF for more
than 30 years (1973–2006), is credited with the success of Amul.
59. Role & Importance of Joint sector
enterprises
• Integration of public and private sector
• Board-based entrepreneurship
• Social control over industry
• Promotion of socio-economic objectives
• Acceleration of industrial growth
• Curbing concentration of economic power
• Helps develop entrepreneurship
• Promotion of mixed economy
60. Problems/ Demerits of Joint sector
enterprises
• Problem due to capital contribution ratio
• Problem of management and operation
• Many formalities
• Difference of opinion among the directors
• Selection of project
61. Problems/ Demerits of Joint sector
Enterprises
• Difficulty in choosing private entrepreneur
• Change in the board
• Conflict on objectives
• Delay in completion of the project
• Under utilisation of capacity
62. 2. PUBLIC COMPANY
• Stocks are held by a large
number of people
• Minimum 7 shareholders
and no limit for maximum
• Can be listed on stock
exchange and can go
public
• Have to follow many laws
with regards to the board
composition and AGM.
63. TWO TYPES OF CORPORATIONS
1. PRIVATE COMPANY
• Closely held by a few people
• Minimum 2 and maximum 50
shareholders
• Stocks cannot be traded on exchanges
and private equity cannot be raised
• Less regulations as compared to
Public Companies
64. CHARECTERISTICS OF CO-OPERATIVE
• Voluntary association
• Minimum membership requirement is 10
and there is no maximum limit
• Registration of Co-operative is must
under the “Co-operative Societies Act” is
a must. After the registration it enjoys
certain privileges of a Joint Stock
Company
65. ADVANTAGES OF CO-OPERATIVE
• Easy Formation
• Limited Liability
• Stability
• Democratic
Management
• State Assistance
66. DISADVANTAGES OF A CO-OPERATIVE
• Possibility of
conflict
• Long decision
making process
• Not enough capital
67. JOINT STOCK COMPANY
A joint stock company is a voluntary
association of people who contribute
money to carry on business
