1. Sole proprietorship
2. Joint Hindu family business
3. Partnership
4. Joint-stock Company
5. Cooperative Societies
Sole Proprietorship
It is a form of organisation owned, managed and controlled by an individual (also known as a sole proprietor) who is responsible for bearing all the risk and receiving all the profit.
Features
• The sole proprietor can establish and close the business without any legal formalities.
• The liability of the sole proprietor is unlimited.
• Being the sole owner, the sole proprietor bears all the risk and receives all the profits.
• All the decisions are taken and implemented in the organisation by the owner.
• Owners and businesses have no separate entity and are considered one in the eyes of the law.
• Even in case of a lack of business continuity, the business can continue until the owner wants.
Advantages
• Prompt decision-making as all the decisions are to be taken by the owner.
• Being a sole owner, it is easy to maintain business secrecy.
• The owner enjoys all the profits as there is no one to share profits.
• A successful business provides satisfaction to the owner and a sense of achievement.
• No legal formalities are required for a business’s formation and closure, making it easy to start and end the business.
Disadvantages
• Due to limited resources, a business can be funded from the owner’s savings or money borrowed from friends or relatives.
• The business’s continuity depends on the owner’s health and state of mind.
• If the business fails to repay debts, the sole proprietor’s personal assets are at risk.
• One person may not possess the ability to manage all the functions.
Joint Hindu Family Business
In this form of business organisation, the business is owned and managed by the members of an undivided Hindu family, with the possibility of three successive generations as members of the business.
Features
• The business is formed with at least two members of a Hindu Undivided Family having ancestral property. The Hindu Succession Act, 1956, governs it.
• Except for Karta, all the family members have limited liability up to their share in the business property.
• Karta has the right to control all the activities in the business organisation.
• The business can be discontinued based on the consent of all the members of the family.
• Membership in the organisation is by birth.
Advantages
• Karta has complete control of the business, thus effective decision-making is ensured.
• The business continues till all the members wish to continue, and control is transferred to the next elder member in case of the death of ‘Karta’.
• Members of the family enjoy liability limited to their share in the business party.
• All the work is done with the common objective of growth as the family members have a sense of belongingness and loyalty.
Limitations
• Due to limited financial resources, businesses can be funded mainly from ancestral property.
A summary of the important topics and concepts of the chapter 'Forms of Business Organisations' of class XI, Business Studies. It ix expected to be useful for the students to have a quick revision.
Identify and assess different core business structure of an organization and explain how these structure help to achieve the aims of the business.
Identify and compare different types of businesses.
Types of various business Organizations, includes Sole Proprietor, Partnership, Societies, Joint Stock Companies, Hindu Undivided Family Business in India
This presentation will help you to:
• explain the concept of business organisation;
• state the meaning and characteristics of Sole Proprietorship and Joint Hindu Family Business
• identify the merits and limitations of these forms of business organisation;
• describe the suitability of these forms of business organisation; and
• explain the steps in the formation of these business organisation.
Management by Objectives (MBO) is a strategic approach to enhance the performance of an organization.
It is a process where the goals of the organization are defined and conveyed by the management to the members of the organization with the intention to achieve each objective.
Management by exception is a business management strategy that states that managers and supervisors should examine, investigate and develop solutions for only those issues where there is a deviation from
set standards,
norms,
business practices,
or any other financial goals like profits deviation, quality issues, infrastructure issues, etc. instead of examining and dealing with each routine business activities.
There are different forms of business organisation which are discussed in this chapter. These include the following:
Sole proprietorship
Joint Hindu family business
Partnership
Joint-stock Company
Cooperative Societies
Holding & Subsidiary Companies
International organizations
MNCs
A summary of the important topics and concepts of the chapter 'Forms of Business Organisations' of class XI, Business Studies. It ix expected to be useful for the students to have a quick revision.
Identify and assess different core business structure of an organization and explain how these structure help to achieve the aims of the business.
Identify and compare different types of businesses.
Types of various business Organizations, includes Sole Proprietor, Partnership, Societies, Joint Stock Companies, Hindu Undivided Family Business in India
This presentation will help you to:
• explain the concept of business organisation;
• state the meaning and characteristics of Sole Proprietorship and Joint Hindu Family Business
• identify the merits and limitations of these forms of business organisation;
• describe the suitability of these forms of business organisation; and
• explain the steps in the formation of these business organisation.
Management by Objectives (MBO) is a strategic approach to enhance the performance of an organization.
It is a process where the goals of the organization are defined and conveyed by the management to the members of the organization with the intention to achieve each objective.
Management by exception is a business management strategy that states that managers and supervisors should examine, investigate and develop solutions for only those issues where there is a deviation from
set standards,
norms,
business practices,
or any other financial goals like profits deviation, quality issues, infrastructure issues, etc. instead of examining and dealing with each routine business activities.
There are different forms of business organisation which are discussed in this chapter. These include the following:
Sole proprietorship
Joint Hindu family business
Partnership
Joint-stock Company
Cooperative Societies
Holding & Subsidiary Companies
International organizations
MNCs
Organization is the backbone of management. Sound organization contributes greatly towards continuity & success of the organization.
Organizing is the process of integrating the physical, financial & human resources & establishing the productive relationship across them to accomplish the pre-determined goals.
It is concerned with the building up a stable framework or structure of various inter-related parts of the enterprise; each part having its own function & being centrally regulated.
Basic principles of organizing: Achievement of Goal
Division of work
Well defined jobs & Authority
Discipline
Co-ordination
Security & support
Better Human Relation
Adaptability
Formal organization consists of pre defined goal & well defined structure of the jobs having clear cut authority & responsibility.
It is based on basic rules, regulations, principles & practices where employees accomplish their task & achieve the goal of the organization.
In formal organization each & every employee is responsible for his/her own task & performance.
Examples: Production house & Service sectors
Informal organization values both personal & social relationship which is spontaneously established within the formal set up.
There is not any strict rules & regulations, but there is high scope of liberty & feelings.
The relationships are voluntary based on emotional set up. Therefore, no conscious effort is required to hold the relations.
Examples: friendship group.
Both formal & informal organizations play very vital role in organizational set up. Formal organizations work independently & informal organizations depend upon formal organizations.
Line organization is the most oldest & simplest form of administrative organization.
Line organization is also known as scalar organization as authority flows from top to bottom.
There is the line officer who has unified control and independent decision making power in their field.
Specialized or supportive services do not take place in line organizations.
There is also inadequate communication & some times lack of proper co-ordination due to one way communication.
Example: President, Vice President, Supervisor & Employees.
Line & Staff organization is a modification of the line organization & it is more complex than the pure line organization.
In this kind of organization, line officers & staff officers (Generalists & Specialists) work together. Line officers plan & execute the work whereas staff officers play advisory role.
Power of command remains with the line executives & staff serves only as counselors who reduce the burden of the line managers & help to take quick decision.
Centralization refers to the process in which organizations take decisions & plan. The decision making power is retained in the hand of the head of the organization & all other employees have to obey this.
Decentralization is just the opposite of centralization. It refers to delegation of decision making authority through out an organization.
Henry Fayol is known as the Father of “Administrative Management”. He contributed fourteen management principles on the basis of his experience.
According to Fayol, the business operations of an organization can be divided into six activities: Technical, Commercial, Financial, Security, Accounting & Managerial.
These fourteen principles are: Specialisation of Labour, Authority, Discipline, Unity of Command, Unity of Direction, Subordination of Individual Interests, Remuneration, Centralization, Scalar Chain, Order, Equity, Personal Tenure, Initiative & Esprit de corps (SADUSRCSOEPIE).
Weber believed that bureaucracy was the most efficient way to set up & manage an organization, and absolutely necessary for larger companies to achieve maximum productivity with many employees & tasks.
The idea of Bureaucracy Favors efficiency, uniformity & a clear distribution of power.
Weber argued that bureaucracy constitutes the most efficient & rational way in which human activity can be organised.
Hierarchies are necessary to maintain order, to maximise efficiency & to eliminate favouritism.
The Hawthorne Studies (Experiments) were conducted from 1927-1932 at Western Electric Hawthorne Workers in Chicago ; which was engaged in producing bells & other electrical equipment for telephone industry.
George Elton Mayo (1880-1949) was born on 26th December, 1880 in Adelaide, Australia. He is known for his research including the “Hawthorne Studies”, & his book “The human problems of an Industrialised civilization”.
The conclusion of the study is the work performance of people is dependent on both social issues & job content. He suggested a tension between workers’ “logic of sentiment” & managers “logic of cost & efficiency” which could lead to conflict within organizations.
Mayo has conducted a series of experimental observations in plant & interview of employees. These are:
Illumination Experiment (1924-27)
Relay Assembly Test Room Experiments (1927)
Mass Interviewing Programme (1928-31)
Bank Wiring Observation Room Experiments (1931-32)
Chester Irving Barnard was a telecommunication executive looked at systems of the organization.
The author focused on two basic theories: the theory of Authority & theory of initiatives. Both are seen in the context of a communication system.
Everyone should know the channels of communication.
Everyone should have access to the formal channels of communication.
Lines of communication should be a short & as direct as possible.
Mary Parker Follett has focused on dynamics of the organization & groups. She has advocated “Pull” rather than “Push” approach for employee motivation.
She has differentiated between “Power Over” & “Power With” and given ideas on negotiation, conflict resolution, power sharing etc.
Conflict resolution through integration often results in a win-win situation. Integration refers to identifying & meeting each party’s underlying & often compatible need.
In Pre-classical theory the structure of the organization is mechanical.
Its main focus is on work.
It emphasizes on order, rules & regulations.
The practice of leadership is authoritarian.
It focuses on 5Ps: Power, Position, Production, Profit & Punishment.
It results workers’ dis satisfaction.
As a result Industrial Revolution got its root
Classical Theory emphasizes on both orders & rationality. It consists of basic rules & regulations for smooth running of the organizations.
Classical approaches can be explained in the following manner.
Scientific Management by F.W. Tayler, Frank & Gilbreth & Henry Gantt.
Administrative Management by Henri Fayol.
Bureaucratic Management by Max Weber
Frederick Winslow Taylor was an American engineer who is known as the Father of “Scientific Management” which studies the application of science in management.
According to Taylor there is “One Best Way” to do each thing.
He stressed on involvement of science for each element of man’s work to replace the old rule-of-thumb method.
Scientific training & development helped workers to perform in a better manner than allowing them to choose their own task & perform.
There was the development of spirit of hearty cooperation between workers & management.
Each group was assigned the task for which it was best fitted.
The father of “Motion Study” are Frank & Gilbreth which involves finding the best sequence & minimum number of motions needed to complete a task.
Both were mainly involved in exploring new ways for eliminating unnecessary motions & reducing work fatigue.
They introduced the concept of “Therbligs” which consists of different basic motions like: Search, Select, Position & Hold.
Both are very famous for their experiment of reducing the number of motions in “Bricklaying”, by analyzing brick layers jobs & reducing the number of motions in bricklaying from 18.5-4.
Henry Laurence Gantt was a mechanical engineer & management consultant who is the most famous personality for developing “Gantt Chart” in 1910.
He is one of the associate of F.W. Taylor & his contribution is very helpful in project management task.
Gantt Chart is used for scheduling multiple overlapping tasks over a time period.
He focused on leadership qualities along with motivational schemes & emphasized the greater effectiveness of rewards for good work rather than penalties for poor performance.
He developed a “Pay Incentive System” with a guaranteed minimum wage & bonus for workers. If the workers completed their task before the standard time they would receive bonus definitely.
Henry Fayol is known as the Father of “Administrative Management”. He contributed fourteen management principles on the basis of his experience.
According to Fayol, the business operations of an organization can be divided into six activities: Technical, Commercial, Financial, Security, Accounting & Managerial.
These fourteen principles are: Specialisation of Labour, Authority, Discipline, Unity of Command, Unity
In Pre-classical theory the structure of the organization is mechanical.
Its main focus is on work.
It emphasizes on order, rules & regulations.
The practice of leadership is authoritarian.
It focuses on 5Ps: Power, Position, Production, Profit & Punishment.
It results workers’ dis satisfaction.
As a result Industrial Revolution got its root
Classical Theory emphasizes on both orders & rationality. It consists of basic rules & regulations for smooth running of the organizations.
Classical approaches can be explained in the following manner.
Scientific Management by F.W. Tayler, Frank & Gilbreth & Henry Gantt.
Administrative Management by Henri Fayol.
Bureaucratic Management by Max Weber
Frederick Winslow Taylor was an American engineer who is known as the Father of “Scientific Management” which studies the application of science in management.
According to Taylor there is “One Best Way” to do each thing.
He stressed on involvement of science for each element of man’s work to replace the old rule-of-thumb method.
Scientific training & development helped workers to perform in a better manner than allowing them to choose their own task & perform.
There was the development of spirit of hearty cooperation between workers & management.
Each group was assigned the task for which it was best fitted.
His studies helped to improve the working conditions of industrial workers & were instrumental in enhancing the productivity of the organization.
He propounded sound management practices by stressing on division of labor, scientific selection, placement & training of workers.
Taylor was also instrumental in introducing the differential piece rate system in organization.
His studies helped to improve the working conditions of industrial workers & were instrumental in enhancing the productivity of the organization.
He propounded sound management practices by stressing on division of labor, scientific selection, placement & training of workers.
Taylor was also instrumental in introducing the differential piece rate system in organization.
Piece Rate-Incentive System: Incentives are being received according to the maximum pieces produced.
Time-&-Motion Study: Jobs are broken down into various small tasks or motions & unnecessary motions are removed to find out the best way of doing a job.
Scientifically performing the job with proper selection & training.
Harmony between management & employees to perform the task.
Mental revolution towards the thought of workers who are not the mere wage earners. They are the assets.
The father of “Motion Study” are Frank & Gilbreth which involves finding the best sequence & minimum number of motions needed to complete a task.
Both were mainly involved in exploring new ways for eliminating unnecessary motions & reducing work fatigue.
They introduced the concept of “Therbligs” which consists of different basic motions like: Search, Select, Position & Hold.
Nature & characteristics of Management.pptxdebajanipalai
Management is goal oriented as every organization has to achieve some specific predetermined goals.
To achieve goals managers have to formulate, implement & control plans & programs.
Goals can be further divided into objectives & then tasks can be assigned.
To achieve goals & objectives organizations are connected with group of people.
Every organization focuses on team work. In a team there are different types of personnel who have different knowledge, skill & ability along with diversified age, gender & religion.
Organizations maintain unity in diversity and act as a group to accomplish the tasks.
Management makes different rules & imposes authority for the smooth run of the organization.
It has to maintain proper superior-subordinate & peers relationship.
It clearly indicates who is accountable towards whom, who will perform what activity etc.
Management states getting things done by others. It involves delegation of authority.
In order to achieve goals & objectives management has to direct, coordinate & regulate personnel.
To get optimum output management makes proper allocation & utilization of resources which can be done through social process.
Management is applicable to all-over the world.
The organization may be big or small, private or public undertaking management plays very vital role.
As a dynamic function management has to change policies & processes according to change in environment.
Organization consists of three levels to be managed. These are:
Top level
Middle level
Lower level
Management is different from activities, processes & techniques.
It has to achieve goals & objectives of the organization by preparing strategy.
It has to make planning, organizing, staffing, leading & controlling
Management means manage men tactically & getting things done through others which act can not be seen, but felt only.
The manager is tangible, but skill of management is intangible.
Management integrates different functional areas such as: marketing, finance, production, operation, human resource, research & development etc.
It also focuses on different divisions such as: customer, product, geographic etc.
It co-ordinates individual efforts into teams.
Management means proper allocation & utilization of resources to achieve the goals of the organization.
Our resources are 6Ms, 2Is & T.
6Ms are: Man, Money, Material, Method & Market.
2 Is are: Idea & Information.
T stands for Time.
Mary Parker Follett : Management is an art of getting things done through others.
Peter Drucker: Management is doing the things right & Leadership is doing the right things.
Peter Drucker: Management is a multi-purpose organ that manages business & manages managers & manages workers & work.
Henry Fayol: Management is the systematic process of five functions; Planning, Organizing, Commanding, Coordinating & Controlling.
According to Fayol, to manage is to forecast & to plan, to organize, to command, to coordinate & to control.
Harold Koontz: Management is the art of getting things done by others & with people in formally organized groups.
The concept of management consists of four following points.
Management as an activity
Management as a group
Management as a discipline
Management as a process
Management as both Science & Art
Nature & characteristics of Management.pptxdebajanipalai
Goal oriented
Group activity
System of authority
Social process
Universal
Levels of management
Dynamic concept
Distinct feature
Intangible
Integrated
Multi disciplinary
Science-Art-Profession
Henry Mintzberg has identified ten common roles of all managers.
The roles are divided into three groups:
Interpersonal
Informational
Decisional
Under interpersonal role management involves managers to act as:
Figurehead
Leader
Liaison manager
Figurehead performs ceremonial & symbolic duties such as greeting visitors, signing legal documents, attaining social functions etc. on behalf of the organization.
As a Leader managers have to direct & motivate subordinates, provide training & counselling etc.
As a Liaison manager maintains information, links both inside & outside organizations through mail, phone, meeting etc.
Under informational role managers have to play as:
Monitor
Disseminator
Spokes person
The main role of a Monitor is to seek & receive information, scan periodic reports & maintain personal contacts.
Disseminator has to forward information to other members of the organization through memos, reports, phones etc.
Spokes Person transmits information to outsiders through speeches, reports etc.
Under decisional role managers have to act as:
Entrepreneur
Disturbance handler
Resource allocator
Negotiator
Entrepreneur has to indicate projects, identify new ideas, focus on creativity, take risk & exploit opportunities.
As a Disturbance Handler manager takes corrective action during disputes or crises. Managers have to resolve conflicts among subordinates & remain adaptive to face environmental changes & challenges.
As a Resource Allocator manager decides allocation of resources on priority basis & prepares budget.
A Negotiator represents department during negotiation of union contracts, sales, purchases etc.
Robert Katz has suggested three managerial skills that are essential to the success of management.
These skills are:
Technical
Human
Conceptual
Technical skill involves process or technical knowledge & proficiency.
It belongs to the lower level of the hierarchy.
Managers use the processes, techniques & tools of a specific area.
It is the ability & knowledge needed to accomplish complex action actions, tasks & processes.
Human skill involves the ability to interact effectively with people.
Middle level managers should have strong human skill.
Managers interact & cooperate with employees. Human relations skills are directly related to a manager’s leadership abilities.
It focuses on the ability to get things done by understanding & working through others outside of formally prescribed organizational mechanisms is crucial for managerial success.
Conceptual skill involves the formulation of ideas.
It is associated with top level management.
Managers understand abstract relationships, develop ideas & solve problems creatively.
Conceptual skill focuses on the ability to see the enterprise as a whole & recognise how various functions of the organization are interrelated & how changes in one part affect all the others.
It helps to visualize internal & external relationship.
Example: Articulating a vision for the organization
The levels of management refers to a line of action between various managerial positions in the organization.
It determines a chain of command, the elasticity of authority & status enjoyed by each managerial position.
The levels of management can be broadly categorized into three parts such as:
Top Level
Middle Level
Lower Level
Top level management consists of directors, CEO & MD.
The top level sets the vision & formulates the strategy to achieve it.
It is responsible for strategy implementation & evaluation.
It devotes maximum time on planning. Co-ordinating, directing & controlling.
Top management lays down the objectives & broader policies of the organization.
It issues necessary instructions for preparation of departmental budgets, different procedures & schedules.
It prepares strategic plans & policies for the enterprise.
It appoints executives or divisional heads for middle level.
It deals with both internal & external environment of the organization.
The divisional managers, departmental or branch managers constitute middle level.
They are accountable to the top management for the functioning of their department.
They devote more time to organizational & directional functions.
In small organizations, there is only one layer of middle level of management, but in large organizations, there may be senior & junior middle level management.
Middle level managers execute plans of organization in accordance with the policies & directives of the top management.
They make plans for the sub-units of the organization.
They participate in employment & training of lower level management.
They interpret & explain policies from top level management to lower level.
The middle level managers are responsible for coordinating the activities within the division or department.
It sends important reports & other important data to top level management.
They evaluate performance of junior managers.
They are responsible for inspiring lower level managers towards better performance.
Lowe level is also known as supervisory or operative level of management.
It consists of supervisors, foreman, section officer & superintendent.
The managers direct operative employees.
They are concerned with direction & controlling function of management
Assigning of jobs & tasks to various workers.
Guide & instruct workers for day-to-day activities.
They are responsible for the quality as well as quantity of production.
They are entrusted with the responsibility of maintaining good relation in the organization.
They communicate workers problems, suggestions & recommendatory appeals etc. to the middle level.
Lower level management helps to solve the grievances of the workers.
They supervise & guide the sub-ordinates.
They are responsible for providing training to the workers.
They arrange necessary materials, machines, tools etc. for getting the things done.
They prepare periodical reports about the performance of the workers.
They ensure discipline in the enterprise.
They mot
Management means proper allocation & utilization of resources to achieve the goals of the organization.
Our resources are 6Ms, 2Is & T.
6Ms are: Man, Money, Material, Method & Market.
2 Is are: Idea & Information.
T stands for Time.
Management also means manage men tactfully to fulfill the vision of the organization.
Management is the application of knowledge & skill of managers to achieve the goals & objectives of the organization.
Mary Parker Follett : Management is an art of getting things done through others.
Peter Drucker: Management is doing the things right & Leadership is doing the right things.
Peter Drucker: Management is a multi-purpose organ that manages business & manages managers & manages workers & work.
Henry Fayol: Management is the process of five functions; Planning, Organizing, Commanding, Coordinating & Controlling.
Henry Fayol: Management is the systematic process of five functions; Planning, Organizing, Commanding, Coordinating & Controlling.
According to Fayol, to manage is to forecast & to plan, to organize, to command, to coordinate & to control.
Harold Koontz: Management is the art of getting things done by others & with people in formally organized groups.
The concept of management consists of four following points.
Management as an activity
Management as a group
Management as a discipline
Management as a process
As an activity management plans & controls human efforts to achieve common goals of an organization.
Management has to play different roles like:
Interpersonal
Informational
Decisional
Under interpersonal role management involves managers to act as:
Figurehead
Leader
Liaison manager
Under informational role managers have to play as:
Monitor
Disseminator
Spokes person
Under decisional role managers have to act as:
Entrepreneur
Disturbance handler
Resource allocator
Negotiator
As a group management consists of personnel from top level to bottom level such as : BOD, CEO, Departmental Heads, Functional Heads & many others.
There are several types of managers such as:
Family managers
Professional managers
Civil managers
Management as a discipline deals with specific areas such as:
Production
Marketing
Sales
Finance
Research & Development
HR etc
Management as a discipline focuses on different principles & theories.
HRA is the systematic process of identifying, measuring & communicating data about human resources.
According to Flamhoitz HRA involves measuring the costs incurred by business firms & other organizations to recruit, select, hire, train & develop human assets.
HRA therefore, shows how the organization makes investment in its people & how the value of the people change over time. Value of the employees increases by training (the core HRD activity ) & experience over a time period.
With the help of HRIS (personal profile, career profile, benefits profile ) organizations collect basic information while doing HRA.
Personal profile – name, age, gender, address, phone number, service date.
Career profile – education, training, certificate, license, degrees, skills, hobbies, requisite training etc.
Benefits profile – insurance coverage, disability provisions, pension, profit sharing, vacation, holidays, sick leave etc.
HRIS consists of
Number of employees
Categories
Grades
Total value of HRs
Value per employee
Number of employees acquired during the year
Cost of acquisition
Levels for which they were acquired
HR development
HR maintenance
Cost related to HR maintenance
HR separation
Cost related to HR separation
Detail of benefits provided to the employee
Methods of evaluation can be non-monetary & monetary
Non- monetary measures – It involves the classification of human resources in terms of skills, performance evaluation, potentiality for development & promotion, attitude surveys & subjective values
Skill is coordinated series of actions to attain some goal. Skills are defined widely as overt responses & controlled stimulation.
Overt responses may either be verbal, motor or perceptual.
Verbal responses typically stress on speaking.
Motor responses stress on movements of limbs & body.
Perceptual responses stress on understanding of sensory responses.
Controlled stimulation are energy inputs to the workers which we express in units of frequency, length, time & weight.
Monetary measures are
Capitalization of historical costs method
Replacement cost method
Opportunity cost method
Economic value method
Present value method
Historical cost method was developed by Likert.
It capitalizes all costs of recruitment, hiring, training & other initial costs involved in the development of HRs.
The amount which is capitalized is written off over the period of an employee remains with the organization.
If he leaves before the expected service period, the amount remaining as an asset is written off in the year of leaving.
Replacement cost method measures the cost to replace an organization’s existing human resources.
It indicates what it would cost the concern to recruit, hire, train & develop human resources to match the present level of efficiency.
Under opportunity cost method, the value of HRs is determined on the basis of the value of an individual employee in an alternative use.
If an employee can be hired externally, there is no opportunity cost for him.
Internal Factors consist of
JOB ANALYSIS – It is a basic exercise of HRM which provides the necessary inputs for both Job Description & Job Specification. Job description consists of information related to jobs ( job characteristics, location, physical setting, hazards & discomforts of a job, responsibility related, materials, tools & equipments required, nature of operation etc). Job specification specification focuses on the information related to the employee who will perform that job ( personal attributes like – experience, training, physical strength, mental capabilities , education required for efficient performance of the job etc ).
MGT POLICIES – Policies related to vision, mission, goals & objectives. Under management policies we can also discuss about production operation such as – what products are produced in terms of quantity & quality. To achieve that particular level, employees are required.
.HR POLICIES – A policy is a pre determined established guideline towards the attainment of accepted goals & objectives. So HR policies are basic guidelines related to recruitment, selection, placement, induction, performance appraisal, remuneration & reward, training, labor relations, QWL etc. All these policies influence HR Planning.
COMPANY STRATEGIES – Different companies follow different strategies such as expansion, diversification etc & on these basis HRP will be designed.
COMPETITIVE STRATEGIES – Cost leadership, differentiation, focus etc. are competitive strategies which influence HRP
External factors are also known as Environmental factors which are beyond direct control of any organization. So environmental feed back plays very important role in strategy formulation & implementation. Those who are always active towards environmental changes appoint knowledgeable employees, who help to collect accurate information & prepare strategy.
POLITICAL FACTORS – Political & legal factors such as GOVT. rules & regulations influence HRP. For example – policies related to industrial relation, quota & reservation system, different Acts related to factory, mines, disputes, compensation, etc.
ECONOMIC FACTORS – The country which is economically developed have high employment rate, high standard of living & low poverty. It basically focuses on selection of HRs qualitatively & takes steps for training & developmental needs of employees.
SOCIAL FACTORS – Rapid changes in social conditions influence HRP. For example – nuclear family, employment of women, elementary education, community development programs & other welfare activities etc. similarly there is rapid change in our traditions , false beliefs & old thoughts which influence HRP.
TECHNOLOGICAL FACTORS – Due to globalization MNCs can easily operate in every country. MNCs bring developed technology. Technology determines the HRs required in the organization. To run large scale industries heavy machineries are required & to run those efficient HRs are required.
Career is a sequence of attitudes & behaviors associated with the series of job & work related activities over a person’s lifetime.
It can be defined as a succession of related jobs, arranged in hierarchical order & through which a person moves in an organization.
Career can be identified as an integrated pace of vertical & lateral movement in an occupation of an individual over his employment span.
Career planning is a systematic process of establishing career objectives for an employee or by the person himself & developing planned strategies to achieve them.
It is a proper sequence of job related activities which includes role experiences at different hierarchical levels of an individual which lead to an increasing level of responsibilities, status, power, achievements & rewards.
Career is often defined as external career & internal career. External career refers to the objective categories used by society & organizations to describe the progression of steps through a given occupation.
Internal career refers to the set of steps or stages which make up the individual’s own concept of career progression within an occupation
Career development means the process of increasing an employee's potential for advancement & career change.
It is the systematic process of planning the series of possible jobs which an individual may hold in the organization over time & developing strategies designed to provide necessary job skills as the opportunity arises.
It is different from career managements as career management focuses on specific human resource management activities such as recruitment, selection, placement, & appraisal to facilitate career development.
Poor career development program may affect an organization badly by creating high employee turnover & decrease in employee involvement.
Objectives of Career Development is To attract & retain effective persons in an organization.
To utilize HRs optimally.
To improve morale & motivation level of employees.
To reduce employee turnover.
To make employees adaptable to change.
To increase employee loyalty & commitment to the organizations.
To maintain harmonious industrial relations.
To provide equal career progression opportunities to women & minorities.
Carrier development programs can be of different types which can be explained in the following manner.
Organization Development Programmes - are planned & managed from the top to bring about planned organizational changes for increasing the organizational effectiveness.
Management Development Programmes – are concerned with upgrading the manager’s skills, knowledge & ability of the employees to enable them to accomplish the additional process of guiding the movement of human resources through different hierarchical levels.
Career development stages can be of four forms. These are
Exploratory
Establishment
Maintenance
Decline
Exploratory starts when a new employee joins an organization with his qualification & knowledge . He finds himself i
MRA has been developed by Youdi in 1985. It is one of the dominant model of MPP.
It establishes linear relationship between manpower category in different industry groups & their output.
Example – This model is used by our country for the educational planning at the national level.
This model consists of 3 steps. These are
(a) Assessing the demand for manpower,
(b)Assessing the supply of manpower,
( c)Balancing the supply & demand.
Demand side consists of some basic aspects such as –
Estimation of future level of GDP.
Estimation of distribution of output by economic sectors.
Estimation of labor productivity by economic sector.
Estimation of occupational structure of labor force within economic sectors.
Estimation of educational structure of the labor force in given occupations within economic sectors over time.
Supply side consists of Estimation of population & categorization on the basis of age, gender & educational level.
Estimation of number of graduates.
Distribution of labor force & participation rates to the number of graduates.
Estimation of occupational supply based on the labor supply by education level.
While developing a MPP if the planner is too optimistic about labor productivity, his forecasting may fall short of actual labor demand & labor force participation rate can increase the actual supply of labor.
So it is very important to maintain a balance in between demand for & supply of man power.
Sometimes due to poor data quality it then tends to use an ad hoc adjustment mechanism which is helpful to revise one or more of the key assumptions.
RRA is also known as cost-benefit analysis of human capital.
It is applied to decide the aggregate investment requirement for different skill development.
Cost & earnings of an individual over his productive life cycle is computed first & then their discounted value is estimated to assess the rate of return.
PORTFOLIO RESTRUCTURING/BUSINESS PORTFOLIO ANALYSIS:
Large diversified organizations basically use combination strategy. For example: an organization may simultaneously seek growth through the acquisition of new businesses, employ a stability strategy for some of it existing businesses and divest of any other business which runs in loss.
It is very complicated to identify a consistent strategy for large diversified organizations, because a number of different business-level strategies need to be coordinated to achieve overall organizational objectives.
Business portfolio models are tools for analyzing: the relative position of each of an organization’s businesses in its industry & the relationships among all the businesses of the organization.
The well-known approaches to develop business portfolio include: BCG Matrix, GE 9 Cell, 7s Framework & Balance Score Card.
BCG Matrix is also known as BCG Growth-Share Matrix.
It states that the organization should have a balanced portfolio of businesses such that some generate more cash than they use and can support other businesses that need cash to develop & become profitable.
The role of each business is determined on the basis of two factors: the growth rate & market share
The vertical axis indicates the market growth rate which is the annual growth percentage of the market (current or forecasted) in which the business operates.
The horizontal axis indicates the market share dominance or relative market share. It is computed by dividing the firm’s market share (in units) by the market share of the largest competitor.
The matrix is the combination of rows & columns. The growth-share matrix has four cells.
A star is the market leader in a high growth market (HMS & HMG). They are question mark business that become successful.
The organization has to spend a great deal of money keeping up with the market’s growth rate & fighting off competitor’s attack.
Stars are often cash using category rather than cash generating. They are profitable units and provide high ROI as compared to others.
Hold strategy is maintained for this success and benefit from market growth by means of a Star.
Question mark is also known as problem child as it operates in high growth market, but low relative market share (LMS & HGR).
The term question mark or problem child is well chosen, because the organization has to think hard about whether to keep investing funds to become a star or it comes down to dog category.
Most business start off as question marks, in that they enter in a high growth market in which there is already a leader.
A question mark generally requires the infusion of a lot of funds to keep adding plant, equipment, personnel to keep up with fast growing market & it wants to overtake the leader.
Build strategy is appropriate for question mark as it increases share inorder to become a star by creating a new brand and a new target audience.
Question mark is also known as problem child as it operates in high growth.
STRATEGY FORMULATION, IMPLEMENTATION, EVALUATION & CONTROL:
Strategy formulation includes planning & decision-making and developing plans to achieve organizational goals & objectives.
It is an entrepreneurial activity based on strategic decision making to reach at vision.
It demands co-ordination of personnel of each and every level of organizational hierarchy.
It requires strong analytical and conceptual skill.
Choice of strategy involves understanding and choosing the best formulated strategy across different strategic alternatives.
Its first step is SWOT analysis.
Management needs to seek to identify & evaluate alternative courses of action to ensure that the business reaches the objectives they have set.
It is a creative process of generating alternatives, building on the strengths of the business & allowing it to tackle new products or markets to improve its competitive position.
STEPS IN STRATEGIC CHOICE
Strategy formulation
Focusing on strategic alternatives
Evaluating strategic alternatives
Considering decision factors
Choice of strategy.
Strategy implementation involves all those means related to executing the strategic plans.
It is mainly a administrative task based on strategic & operational decisions.
It is an operational process which requires co-ordination among all employees.
It requires specific leadership & motivational traits
Evaluation of strategy is as significant as strategy formulation because it throws light on the efficiency & effectiveness of comprehensive plans in achieving the desired results.
The managers can also assess the appropriateness of the current strategy in today’s dynamic world which is influenced by PEST (Political, Economic, Social & Technological )
It is very significant because of various factors such as: developing inputs for new strategic planning, the urge for feedback, appraisal & reward, development of strategic management process, judging the validity of strategic choice etc.
PROCESS/ STEPS OF STRATEGIC EVALUATION
Setting standard performance or expected performance or benchmarking performance.
Measure the actual performance.
Analyzing the variance by comparing standard and actual performance.
Taking corrective action to achieve the target
LECT-8-Global Environment In Corporate Strategy.pptxdebajanipalai
Global Environment:
Global environment is the most vital component of macro environment.
It refers to operating in more than one country in the world & gain its R & D, production, marketing & financial advantages in terms of cost & reputations that are not available to domestic competitors.
Globalization of markets refers to the process of integrating & merging of world markets into a single market. This process involves the identification of some common norm, value, taste, preference & cultural shift towards the use of common product or services.
The Example of products having global acceptance are: Coca-Cola, Pepsi, Mc Donald’s, Citicorp Credit cards etc.
Characteristics of Global Environment:
Global Environment treats the whole world as a common village focuses on how organizations are related to each other.
It consists of a set of fresh beliefs, working methods, economic, political and socio-cultural relatives in business.
It integrates the world economy & opens scope for new potential of huge market.
It intends to remove all global barriers among countries.
Global Company:
Global company is a firm which having multiple units that are located in different parts of the world, but all are being linked by common ownership of umbrella.
Global multiple units draw a common pool of resources like: money, credit, information, patent, trade name & control system.
Its shareholders & human capital are of different nations. The company follows common strategy to sell its products in most of the countries.
Reasons For Globalization:
The large scale industries have mass production. So they focus on foreign market.
They try to reduce the risk of diversity of portfolio of countries.
Companies globalize markets in order to increase their profits & achieve goals.
The adverse business environment in the home country pushes the companies to globalize their market.
The failure of domestic companies in catering the needs of their customers pulled the foreign countries to market their products.
It is particularly important to industries which are directly depending on imports & exports.
Advantages Of Globalization:
Free flow of capital & increase in the total capital employed.
Free flow of technology from developed countries to developing countries.
Increase in industrialization.
Spread production facilities throughout the globe.
Balanced development of world economies.
Increased in production & consumption of outputs.
Commodities available at lower price with high quality.
Cultural exchange & demand for a variety of products in foreign market.
Increase in job opportunities & income for the country along with welfare & prosperity.
Disadvantage Of Globalization:
Globalization kills domestic small business firms.
It exploits human resources in global firms.
It leads to unemployment & underemployment in developing countries.
It declines income & standard of living due to unemployment & increases high gap between rich & poor.
Porter’s Five Force Model:
THREAT TO NEW ENTRANTS
THREAT TO SUBSTITUTE
RIVALRY AMONG EXISTING FIRMS
BARGAINING POWER OF BUYERS & SUPPLIERS
COMPETITIVE CHANGES DURING INDUSTRY LIFE CYCLE:
Industry lifecycle comprises four stages including fragmentation, growth, maturity and decline. An understanding of the industry lifecycle can help competing companies survive during periods of transition.
The Fragmentation or birth stage of the organization is dominated by the entrepreneur as it is based on concentration and niche marketing.
The growth is carried out with the help of integration of both horizontal & vertical. Here focus is given more on the functional management.
In maturity stage the industry focuses on concentration and diversification. The centers like: profit, investment etc. are established in this stage.
Decline stage is followed by retrenchment strategy. The stage after decline I death which is known as liquidation or bankruptcy.
Strategic Group:
A strategic group consists of those rival firms with similar competitive approaches and positions in the market. The identification of strategic groups within an industry enables the competitive structure of the industry to be redefined to compare strategies of various competitors for similarities and differences.22-Jan-2015
Strategic groups are sets of firms that follow similar strategies to one another (Hunt, 1972; Short et al., 2007). More specifically, a strategic group consists of a set of industry competitors that have similar characteristics to one another but differ in important ways from the members of other groups.
A simple example of a strategic group would be the fast-food restaurant chains in the foodservice industry. Other strategic groups in this industry include fine-dining restaurants, cafes, and family restaurants among many others.30-Sept-2022
Strategic Group Analysis:
Strategic group analysis is used to examine the competitive environment and the rivalry among competitors within an industry.
It helps,
Identify the strategic direction of the direct rivals in the industry. This will in turn help shape the strategic moves of your own organization.
Identify the strategies used by companies in other strategic groups. In certain difficult situations, your organization can use these alternative paths to success as solutions.
Discover untapped opportunities in the industry by revealing the gaps (i.e. disclose areas where there is limited or no competition)
Mapping Strategic Groups:
The strategy group map is used as the primary tool in the analysis of strategic groups. It helps visualize and analyse the competitive positions of industry rivals based on variables (common characteristics) relevant to their strategic significance.
Oprah Winfrey: A Leader in Media, Philanthropy, and Empowerment | CIO Women M...CIOWomenMagazine
This person is none other than Oprah Winfrey, a highly influential figure whose impact extends beyond television. This article will delve into the remarkable life and lasting legacy of Oprah. Her story serves as a reminder of the importance of perseverance, compassion, and firm determination.
Artificial intelligence (AI) offers new opportunities to radically reinvent the way we do business. This study explores how CEOs and top decision makers around the world are responding to the transformative potential of AI.
Senior Project and Engineering Leader Jim Smith.pdfJim Smith
I am a Project and Engineering Leader with extensive experience as a Business Operations Leader, Technical Project Manager, Engineering Manager and Operations Experience for Domestic and International companies such as Electrolux, Carrier, and Deutz. I have developed new products using Stage Gate development/MS Project/JIRA, for the pro-duction of Medical Equipment, Large Commercial Refrigeration Systems, Appliances, HVAC, and Diesel engines.
My experience includes:
Managed customized engineered refrigeration system projects with high voltage power panels from quote to ship, coordinating actions between electrical engineering, mechanical design and application engineering, purchasing, production, test, quality assurance and field installation. Managed projects $25k to $1M per project; 4-8 per month. (Hussmann refrigeration)
Successfully developed the $15-20M yearly corporate capital strategy for manufacturing, with the Executive Team and key stakeholders. Created project scope and specifications, business case, ROI, managed project plans with key personnel for nine consumer product manufacturing and distribution sites; to support the company’s strategic sales plan.
Over 15 years of experience managing and developing cost improvement projects with key Stakeholders, site Manufacturing Engineers, Mechanical Engineers, Maintenance, and facility support personnel to optimize pro-duction operations, safety, EHS, and new product development. (BioLab, Deutz, Caire)
Experience working as a Technical Manager developing new products with chemical engineers and packaging engineers to enhance and reduce the cost of retail products. I have led the activities of multiple engineering groups with diverse backgrounds.
Great experience managing the product development of products which utilize complex electrical controls, high voltage power panels, product testing, and commissioning.
Created project scope, business case, ROI for multiple capital projects to support electrotechnical assembly and CPG goods. Identified project cost, risk, success criteria, and performed equipment qualifications. (Carrier, Electrolux, Biolab, Price, Hussmann)
Created detailed projects plans using MS Project, Gant charts in excel, and updated new product development in Jira for stakeholders and project team members including critical path.
Great knowledge of ISO9001, NFPA, OSHA regulations.
User level knowledge of MRP/SAP, MS Project, Powerpoint, Visio, Mastercontrol, JIRA, Power BI and Tableau.
I appreciate your consideration, and look forward to discussing this role with you, and how I can lead your company’s growth and profitability. I can be contacted via LinkedIn via phone or E Mail.
Jim Smith
678-993-7195
jimsmith30024@gmail.com
The Team Member and Guest Experience - Lead and Take Care of your restaurant team. They are the people closest to and delivering Hospitality to your paying Guests!
Make the call, and we can assist you.
408-784-7371
Foodservice Consulting + Design
The case study discusses the potential of drone delivery and the challenges that need to be addressed before it becomes widespread.
Key takeaways:
Drone delivery is in its early stages: Amazon's trial in the UK demonstrates the potential for faster deliveries, but it's still limited by regulations and technology.
Regulations are a major hurdle: Safety concerns around drone collisions with airplanes and people have led to restrictions on flight height and location.
Other challenges exist: Who will use drone delivery the most? Is it cost-effective compared to traditional delivery trucks?
Discussion questions:
Managerial challenges: Integrating drones requires planning for new infrastructure, training staff, and navigating regulations. There are also marketing and recruitment considerations specific to this technology.
External forces vary by country: Regulations, consumer acceptance, and infrastructure all differ between countries.
Demographics matter: Younger generations might be more receptive to drone delivery, while older populations might have concerns.
Stakeholders for Amazon: Customers, regulators, aviation authorities, and competitors are all stakeholders. Regulators likely hold the greatest influence as they determine the feasibility of drone delivery.
2. INTRODUCTION OF BUSINESS
• There are different forms of business organisation which are discussed in this chapter. These include the following:
1. Sole proprietorship
2. Joint Hindu family business
3. Partnership
4. Joint-stock Company
5. Cooperative Societies
3. SOLE PROPRIETORSHIP
• Sole Proprietorship is a form of organisation owned, managed and controlled by an
individual (also known as a sole proprietor) who is responsible for bearing all the risk and
• Features
The sole proprietor can establish and close the business without any legal formalities.
The liability of the sole proprietor is unlimited.
Being the sole owner, the sole proprietor bears all the risk and receives all the profits.
All the decisions are taken and implemented in the organisation by the owner.
Owners and businesses have no separate entity and are considered one in the eyes of the
Even in case of a lack of business continuity, the business can continue until the owner
4. ADVANTAGES
Prompt decision-making as all the decisions are to be taken by the owner.
Being a sole owner, it is easy to maintain business secrecy.
The owner enjoys all the profits as there is no one to share profits.
A successful business provides satisfaction to the owner and a sense of achievement.
No legal formalities are required for a business’s formation and closure, making it easy to start and end the business.
5. DISADVANTAGES
Due to limited resources, a business can be funded from the owner’s savings or money borrowed from friends or
relatives.
The business’s continuity depends on the owner’s health and state of mind.
If the business fails to repay debts, the sole proprietor’s personal assets are at risk.
One person may not possess the ability to manage all the functions.
6. JOINT HINDU FAMILY BUSINESS
• Joint Hindu Family Business business organisation, the business is owned and managed by
the members of an undivided Hindu family, with the possibility of three successive
business.
• Features
The business is formed with at least two members of a Hindu Undivided Family having
Succession Act, 1956, governs it.
Except for Karta, all the family members have limited liability up to their share in the
Karta has the right to control all the activities in the business organisation.
The business can be discontinued based on the consent of all the members of the family.
Membership in the organisation is by birth.
7. ADVANTAGES
Karta has complete control of the business, thus effective decision-making is ensured.
The business continues till all the members wish to continue, and control is transferred to the next elder member in case
of the death of ‘Karta’.
Members of the family enjoy liability limited to their share in the business party.
All the work is done with the common objective of growth as the family members have a sense of belongingness and
loyalty.
8. DISADVANTAGES
Due to limited financial resources, businesses can be funded mainly from ancestral property.
The personal property of ‘Karta’ is at risk as he has unlimited liability.
Due to the dominance of Karta, conflict may arise due to differences in opinion among members and ‘Karta’.
Karta may not have knowledge and expertise of all the functions performed in the business.
9. PARTNERSHIP
• As per the partnership Act 1932, the partnership is a relation with people who agreed to share the profits of business that
is carried on by all or one of them acting for all.
• Features
The formation of a business is based on the provisions of the partnership Act 1932.
The liability of the partners in this form of organisation is unlimited.
All the partners share the risk that occurred in the business.
All decisions are made with the consent of all partners, and each partner is responsible for operating the firm.
The continuity of the business is determined by the partnership deed signed by the partners at the time the partnership
is formed.
Minimum 2 and maximum 50 members [as per the Companies (Miscellaneous) Rules 2014}, or maximum could be 100
( according to Companies Act, 2013).
Each partner is the owner and agent of the firm and agent to other partners.
10. ADVANTAGES
As the registration is voluntary, businesses can be formed and dissolved with the approval of all partners.
All decisions are made by consent partners, who take on responsibilities based on their competence.
All the partners contribute funds that enhance the scope for large-scale company operations.
All the partners bear the risks and responsibilities of the business
It is easy to maintain confidential business information as there is no need to submit financial results.
11. DISADVANTAGES
Each partner has an unlimited liability that is extended to their personal property.
Due to the restriction of the number of partners, there is limited availability of finance.
Due to differences in opinion, there are high chances of conflicts among partners.
Any conflict between partners or the death of a partner may bring the business to an end.
Due to a lack of public confidence and availability of financial reports, it is difficult for an outsider to ascertain the true
financial position of the business.
12. TYPES
Secret Partner: This partner contributes to the profit and losses of the firm and
participates in managerial activities secretly.
Active Partner: This partner has unlimited liability. They also contribute to the capital,
share profit and loss, and participate in management.
Sleeping or dormant partner: This partner does not participate in the management. They
contribute capital and share profit and loss. They also have unlimited liability.
Nominal Partner: Partner who does not contribute capital or share profit and loss but
permits the partnership firm to portray them as partners.
Partner by holding out: An individual who is not a partner but is portrayed as a partner
by other partners of the partnership company and has unlimited liability.
Partner by estoppel: An individual who is not a partner but projects themselves as
partners to an outsider and has unlimited liability.
• Minor as a Partner: The partner who is below 18 years of age can be admitted as a
partner with the mutual consent of all the partners but, in the eyes of the law, is not a
13. COOPERATIVE SOCIETIES
• Cooperative Society is an organisation of volunteers working for a mutual goal with the
purpose of protecting members’ economic and social interests. It must be registered
1912.
• Features
Any individual, regardless of caste, gender, or religion, who has a similar interest is free
society at any moment.
As per the capital contribution, cooperative society members have limited liability.
All decision-making authority rests with an elected managing committee chosen by
vote principle.
A cooperative society has separate identity status distinct from its members, and the
also mandatory.
The service motive of a cooperative society is to provide mutual help to the team
14. ADVANTAGES
Each member has equal voting rights and can elect managing committee members.
The liability of members is limited to their capital contribution.
Cooperative societies continue to exist despite their members’ death, bankruptcy or insanity.
A cooperative society does not require legal formalities for its formation.
The government provides support to societies in the form of lower taxes, interest rates and subsidies.
The members of the social work voluntarily, which helps in reducing costs.
15. DISADVANTAGES
Societies must adhere to the government’s laws and regulations and submit society audited financial reports. However,
such government interference impacts such a society’s freedom of work.
Members’ capital contributions are the only funding source, and low dividends hinder members from contributing to
society.
Volunteer members may lack the required competence and skills, resulting in inefficient operations and management.
Maintaining secrecy is difficult as members provide all information about the society’s operations at the meeting.
Differences of opinion as a result of individual interest over welfare may lead to conflicts amongst members.
16. TYPES
Producers cooperative societies: In this type of cooperative society, producers’ interests
are protected by societies that provide high-quality, low-cost raw materials and other
Farmer’s cooperative societies: These societies are established to provide farmers with
better inputs at affordable rates to improve productivity.
Consumer cooperative societies: To protect the interests of the consumers, the society
provides high-quality products and services at economical rates.
Marketing cooperative societies: In these societies, services are provided related to the
marketing of the products by small producers.
Cooperative housing societies: These societies are formed to construct houses for their
members at an economical rate.
Credit cooperative societies: Such societies are established to offer financial assistance to
their members at reasonable terms.
17. JOINT STOCK COMPANIES
• The Companies Act, 2013 defines “A company as an artificial person having a separate legal entity, perpetual succession
and a common seal.”
• Features of a Joint Stock Company
A company is established with the law and legal status, yet it does not function like humans and acts as an artificial
person. In the name of the corporation, the board of directors conducts all the business activities.
A company has its separate legal identity distinct from its owner with the incorporation of a company.
The company is established by fulfilling all the legal formalities according to the Companies Act, 2013.
18. CONT…
A company is created by law and can only be wound up by law. The existence of the company is not affected by the
status of members.
The Board of Directors controls and manages the company’s business affairs.
A company has limited liability only to the extent of the capital contribution.
A company cannot have its own signature because it is an artificial legal person. As a result, the common seal serves as
the firm’s official signature. To be legally binding, all official papers must bear the same seal.
All the shareholders of the company bear the risk of loss in proportion to their investment in the company.
19. ADVANTAGES
All the shareholders have limited liability for their investment in the firm. Hence, there is no risk of losing personal
assets.
Shares can be converted into cash or can be easily sold in the market.
The company’s existence continues and is not affected by the status of the shareholders.
Companies can raise public funds and borrow from financial institutions or banks.
Professional management as well as specialised individuals are required in large-scale operations.
20. DISADVANTAGES
The formation of the company is time-consuming and lengthy as the company needs to fulfil the documentation and
legal formalities.
There is no confidentiality maintained as all the information is disclosed to the public.
As professionals and not owners who manage business affairs, there is a lack of personal contact with the customers
and employees.
Due to numerous rules and regulations, there is no freedom to work, which consumes time, effort and money.
There is a delay in decision-making, as the decision needs to follow a set of hierarchies.
The decisions may get influenced due to the personal interest of the directors, as the stakeholders have minimum
control over running a business.
Management finds it challenging to satisfy everyone because many stakeholders have conflicting interests.
21. TYPES
• Private Company
A company must have a minimum of 2 or a maximum of 200 members.
Restricted right to transfer shares.
Funds cannot be generated from the general public.
Uses ‘Private Limited’ after the company name.
• Public Company
Minimum 7 members with no limit on maximum members.
Free to transfer shares.
Issue shares to the general public.
Uses ‘Public Limited’ after the company name.