Types of Organisation and their Structure Line Organisation. Line and Staff Organisation. Functional Organisation. Project Organisation. Matrix Organisation.

1. Types of Business organisation
• Classified into 2 types,
1.Individual organisation
i)Sole trades
ii)partnership
iii)Joint stock company
iv)Co-operative
v)Multinational companies
2.Government organisation
i)Departmental undertaking
ii)Public corporation
iii)Government company state enterprises

2. 1.Sole Trading
• Business unit owned and controlled by a single individual
called sole trading concern
• Use his own savings for his business
• Purchases, sells and maintains accounts on his own
• He alone enjoys all profits & losses in business
• Sole trader-person who contributes capital and manages the
business
• According to Wheeler, The sole proprietorship is that form
of business organisation which is owned & controlled by a
single individual. He receives all the profits & risks all of
his property in the success or failure of the enterprise.

3. Characteristics of sole proprietorship
1.One man ownership and control
2.Unlimited liability(responsiblity)
3.Enjoyment of entire profit
4.No separate legal entity
5.Simplicity
6.Self employment
7.Secrecy

4. Advantages
*Easy to form & close the business
*Easy for decision making
*Full control of business activities
*Promotes self employment of individual
*Liberal legal formalities to start the business
*Easy to expand or reduce the size of the business
*Easy to accessibility of consumers
*Easy to maintain healthy relations with employee

5. Disadvantages:
1.Limited resources
2.Short life
3.Lack of consultation
4.Risk of entire loss
5.Uncertainty

6. Partnership
• Association of persons who agree to combine their
financial resources & managerial abilities to run a
business & share profits in an agreed ratio
• Need for expansion of business with more capital,better
supervision and control,division of work and spreading
of risk.
• According to Indian partnership act, The relation between
person who have agreed to share the profits of a business
carried on by all or any of them acting for all.

7. Features of partnership
1.Agreement
2.Multiplicity of person
3.Lawful business-legal
4.Sharing of profits
5.Contractual relations
6.Mutual agency-dual role in orgnisation
7.Unlimited liability
8.Registration
9.Common management
10.Utmost good faith

8. Kinds of partners
1.Active partner-represents all others in business
orgnisation
2.Sleeping or dormant partner- does not express
his intention
3.Normal partner
4. Partner in profit only
5. Partner by estoppel- for outsiders belief
6.Sub-partner-strange to contact
7.Secret partner- whose name is not disclosed
8.Minor as a partner-below 18 years.

9. Rights of partner
1.Right to express his option
2.Right of participation
3.Right of access to books
4.Right to share profits
5.Right to get interest on the capital
6.Right of idemnity -protection

10. Advantages:
*Easy to formation
*Registration is not compulsory
*Larger financial resources
*Promptness in decision making
*Risk of business is shared by more persons
*More possibility of growth & expansion of business
*Close supervision is possible and reduces wastages.
*Easy dissolution

11. Disadvantages:
*Unlimited liability increases the dissolution of
firm
*Lack of harmony among partners
*Difficulties in expansion & modernization
*lack of public faith
*Limited resources
*Limitation on transfer of share

12. Joint stock company
• As per the definition, there must a group of persons
who voluntarily agree to form a company.
• Once formed the company becomes a separate legal
entity with a distinct name of its own.
• Its existence not affected by change of members.
• According to lord justice lindleg, By a company,
we mean an association of many persons who
contribute money or money’s worth to a common
stock and employ it in some trade or business and
also share the profit and loss as the case may be
arising there from.

13. Advantages
*Limited liability
*More stable
*Shares are freely transferable
*Company can easily expand
*Company is charged lesser amount of taxes
*Democratic setup is made
*possible for large financial resources

14. Disadvantages
*Time consuming legal formalities
*Lack of motivation
*difficult to maintain resources
*Promotion of frauds
*Delayed decisions and actions

15. Types of companies
(i)On the basis of formation
(a)Statutory company-by special act of parliament
(b)Registered company- companies act
(c)Government company- 51 % is held by the central
government
(ii)On the basis of public interest
(a)Private limited company-minimum paid up capital
(b)Public limited company- large scale
(iii)On the basis of control
(a)Holding company -for ex if company A hold more than
51% of paid up share capital of company B
Then A- holding company, B- subsidiary company
(b)Subsidiary company

16. (iv) On the basis of Nationality
(a)Indian company
(b)Foreign company
(v) On the basis of Area
(a)National company
(b)Multi national company

17. Private limited company
• Minimum paid up capital is Rs.1,00,000
• Minimum number of members is 2
• Limits the number of its members to 50
• Restricts the right to transfer the shares
• Prohibits any invitation to the public to
subscribe the shares

18. Public limited company
• Minimum paid up capital is Rs.5,00,000
• Minimum number member is 7,the maximum
is unlimited
• Capital is collected from the public by issuing
shares
• No restriction on the transfer of shares
• Company should send the financial statement
to members and registrar
• Must have 3 directors
• Necessary to follow certain legal formalities

19. Public Enterprises
• Form of business organisation owned and
managed by the state government or any other
public authority(departmental undertaking)
• Owned and controlled by local or state or central
government
• Whole or most of the investment is made by the
government
• According to N.N.Mallya, Public enterprises are
autonomous or semi autonomous corporations and
companies established, owned and controlled by the
state and engaged in industrial and commercial
activities

20. Characteristics of public enterprises
1.Financed by government
2.Financial Independence
3.Government management
4.Public services
5.Legislative control
6.Monopoly enterprises(eg: Railway, post &
energy production enterprises)

21. Merits:
*Helps in implementing government policy
*Complete government control
*Income for government
*Useful for developing enterprises
*Funds are properly used
Demerits:
*Excessive government interference
*Shortage of competent staff
*Tax burden to public
*Delay

22. Public corporation
• Created by special act of state or central
government (ONGC,FCI)
• Such act defines the power, duties, privileges
and pattern of management of these organisation
• Power of government but possessed with
flexibility & initiative of private enterprises

23. Merits:
*Finance from government
*Internal autonomy
*Free from government interference
*Protect public welfare
*Service to society
*Flexibility
Demerits:
*Limited autonomy
*Misuse of power
*Inefficient operation
*Lack of interest
*Government control

24. Cooperative Organization
• It is a voluntary association of persons for
mutual benefits and it aims are accomplished
through self help and collective effort.
• Every state government has appointed a
registrar of co-operative societies for
registering controlling and supervising the
societies.