2. • Choice of Suitable form of ownership –
A Crucial Decision
• The form of ownership determines the -
• Division of Profits
• Extent of liability
• Extent of Risk
• Division of Power
• Control of Owner
• Long term commitment, cannot be altered easiliy
3. Forms of Ownership
1) Sole Proprietorship
2) Joint Hindu Family Firm
3) Partnership Firm
4) Private Company
5) Public Company
6) Cooperative Society
4. Ideal Form of Ownership
1. Ease of Formation
2. Sufficient Finances
3. Limited Liability
4. Transferability of Interest
5. Efficient Management
5. Ideal Form of Ownership – Contd.
6. Continuity and Stability
7. Flexibility of Operations
8. Minimum Govt. Control
9. Retention of Business Secrets
10. Low Tax Burden
6. Factors to Choice of Ownership
1. Nature of Business
2. Size and Area of Operations
3. Degree of Control Desired
4. Amount of Capital Required
5. Degree of Risk Involves
7. Factors to Choice of Ownership –
Contd..
6. Division of Surplus
7. Duration of Business
8. Government regulation and control
9. Managerial Requirements
9. Definition
According to MSME Act, 2006-
I. Small Scale Industrial Unit - Investment in P&M < 5 Cr
II. Ancillary Small Scale Unit - Sells > 50% of output to other
undertakings, investment in P&M < 5 Cr
III. Export Oriented Unit- Exports > 50 % Output; Investment in
P&M < 5 Cr
IV. Tiny Units – Investment in P&M < 25 Lacs
V. Micro Enterprise – Investment < 1 Lac
10. Characteristics
1) Personal Character- Single Entrepreneur
2) Independent Management
3) Limited Investment
4) Simple Technology
5) Local Area of Operations
6) Closely-Held Ownership
7) Unorganized Labor
11. Role of Small Business –
Indian Economy Perspective
1) Generation of Employment
2) Balanced Regional Development
3) Optimization of Capital
4) Mobilization of Local Resources
5) Exchange Earnings
6) Development of Entrepreneurship
7) Egalitarian Society
8) Social Advantage
12. Problems
1) Shortage of Materials and Power
2) Lack of Adequate Finance
3) Outdated Technology
4) Inadequate Marketing Facilities
5) Weak Orgn Management
6) Lack of Trained Personnel
13. Measures taken by Govt.
1. Protective Measures
• Products reserved for exclusive production
• Concessions in excise, sales tax
• Govt. gives preference to products by SSI
2. Promotional Measures
• Imported raw materials are provided at reasonable rates
• Development of industrial estates to provide sheds to SSI
• Extension of price preference to products by SSI
• Preference given to SSI in land allocation
• Technical assistance by Central Small Industries Orgn
• Financial assistance by banks and public financial
institutes.
