Category: Education

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BUSINESS ORGANIZATION Meaning: “Art of establishing effective coordination, technique of efficient operations, concerned with the study of methods and procedure, purpose of earning profits, covers different functions of business” Objective: Efficiency Division of work Delegation

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Functions: Production Marketing Finance Personnel Significance: Facilitates administration Ensures specialization Facilitates growth & diversification

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Social Responsibility: Causes: Public opinions Trade union movement Consumerism Education Public relation Managerial resolutions Rationale: Long term self-interest of business Ensuring law & order Maintenance of free enterprise Creation of society Moral justification Profitable opportunities System interdependence

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Areas: Utilization & conservation of national resource Promoting the interest of various groups in society To work within the framework of the laws Environmental planning Philosophy of the Country Responsibility Internal: Shareholders Workers External: Consumers Suppliers Government Community

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PROMOTION OF BUSINESS Meaning: “Promotion begins when, an idea is conceived, preliminary & detailed investigation, feasibility of the idea, provision of funds & resources” Entrepreneurial decisions: Choice of form of business Financing preposition Selection of line of business Project report Location of business Size of unit Machines & equipments Labour force

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Promoters: conceives the business idea Sole Proprietorship: Individual introduces his own capital Absolute freedom Advantages: Ease of formation & dissolution Direct motivation & incentive Quick decision & prompt action Secrecy Flexibility in management Minimum cost of management

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Disadvantages: Limited capacity of an individual Difficulties of outside finance Unlimited liability Responsibility for decisions Company: Promotion Incorporation or Registration Floatation or Capital Subscription Commencement of Business

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Advantages: Limited liability Ease in management with a team Better reputation Disadvantages: High regulation formalities Late decisions Partnership: Combination of capital Labour & specialized skill or managerial talent Two or more persons Carry on business jointly

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Advantages: Facility of formation Scope of individual ability Protection of minority interest Disadvantages: Limited resources Limitation on capital & organizing power Risks of implied authority Lack of public confidence Types: Partnership at will Particular partnership Joint venture Limited partnership

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Kinds of Partners: Active or working partner Sleeping or dormant partner Nominal partner Partner in profits only Sub-partner Limited partner Partner by estoppels or holding out Rights of Partners: Take part in management Be consulted in business matters Have access to & to inspect & copy any of books of the firm Share profit & losses Entitled to get 6% interest on capital p.a. in any loan to firm To retire To act in emergency

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Duties of Partners: Must observe good faith towards other partner Indemnify the firm for any loss by his fraud and willful conduct Bound to attend diligently to his duties To hold & use the property of the firm for the purpose of business only Jointly & severally liable for all debts To act within his authority

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COMPANY “Complex form of business organization, permanent existence, limited liabilities, common seal to authorize” Advantages: Large recourses Limited liabilities Continuity of existence Efficient management Transfer of share Democratic set up

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Disadvantages: Difficult in formation Separation of ownership & management Speculation of share Lack of secrecy Fraudulent management Delay in decision making Classification : On the basis of incorporation: Incorporated Un-incorporated

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On the basis of liability: Limited liability Unlimited liability Nationality: Indian Foreign On the basis of number of members: Public Private Independence: Independent Holding Subsidiary

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Ownership: Government Non-Government Co-operative Organization: Limited means Profit not a motive Voluntarily Common interest Features: Voluntary Equal voting rights Democratic management Importance to service motive Sales on cash basis Distribution of dividend

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Advantages: Open membership Service Motto Cheaper rates Democratic management Low management cost Surplus shared by members Disadvantages: Lack of capital Lack of unity among members Political Interference

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PUBLIC ENTERPRISE “Concern owned & managed by the state or any public authority, social interests, nationalized or socialized industry, government undertaking, known as “Public Sector” Advantages: Growth of key & heavy industries Avoidance of uncertainty Planned progress Greater Better & cheaper products Prevents the concentration of wealth Strengthens the defense measures Helps in distribution of essential goods

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No exploitation of labour capital or management Preservation of national wealth Disadvantages: Greater Better & cheaper production is a myth Top heavy administration Nepotism and favoritism Delay in decision Importance: Creation of the social basis facilitates balanced economic growth Speed up the pace of industrialization Remove regional economic imbalances Equitable distribution of wealth

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SIZE OF BUSINESS UNIT Refers to scale of its organization operations Size of Business: Scale of organization depends on nature of business & market Combination of recourses Measures of Size: Net worth Total Assets Employees Power & materials used Value of output

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Industrial Location: Development of industry at specific place depends on needed means of industry Factors affecting location: Physical Factors: Availability of raw material, Power Climatic conditions Economic Factor: Labour Transport Capital Sale centers Banking

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Political Factor: Peace & security Government policy Weber’s theory of Location: enunciated by Prof. Alfred Weber of Germany in 1909, causes influence location Primary: Cost of land Building Power labour Transport Secondary: Deviation from transport cost

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Criticism: Unrealistic approach More selective than deductive Study of only transport and labour Rest factors not included More importance to technical aspects Florence’s theory of Industrial Location: Approach of theory: Localization coefficient Localization multiple

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Criticism: Incapable of explaining industrial location, No significance of quantity produced No attention toward the local characteristics Difficult to calculate the tendency on the basis of multiples Plant Layout: Plan of installing of plant & machinery Objectives: Best production on minimum cost Maximum utilization of movable & immovable property Providing best services Safety against accidents

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Factors affecting Plant Layout: Weight of materials & products Form of the machines Checking Prospective needs of the factory Minimum shifting Type of Plant Layout: Line (product) layout, (Process) functional Product process layout Techniques of Plant Layout: Process flow chart Process flow diagram Machine data cards Template Scale model layout

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Business Combination: Combination of various units for common objects Objects: Reduction in the cost Development of mutual co-operating feeling Large scale production Regulating the market Reasonable return of investment Advantages: Economy & finance Economy in administration Economy in distribution Economy in production Maintaining selling price

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Advantages: Rise of big business Over capitalization Exploitation of labour Unequal distribution Kinds of Combination: Horizontal Vertical Lateral Circular Diagonal

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Cause of Combination: Elimination of competition & Price War Economics of large scale business Effects of trade cycles Rise of joint stock companies Technical progress

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APT Contact Landline No. 4082444 / 2445 / 2453 Mobile No. 9755557307 Website : E-mail :

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