Individual ownership: if capital is prvided by single owner
Single / partnership / joint stock company / cooperative org / state or centrally owned corp
partnership: reln bw persons who have agreed to share profit of the business carried on by one or all of them acting for all. Partnerships are based on partnership agreement which is in writing. It covers all the areas of possible dispute bw the partners. It should also define the rights, duties and authorities of each partner and their liabilities.
1. active partner: involved in running the business. gets salary from profits
2. sleeping partner: not involved in working, but no salary
duties of a partner:
1. should be just and faithful
2. cooperate and accommodate each other
3. render full info about the enterprise to each shareholder
4. respect wills of one another
types of partnership:
1. general: *a partner has full agency powers ad may bind the partnership by any act.
* each partner may act as though he was an individual proprietor.
* Additional partners can be accommodated with the consent of senior partners
advantages:
1. large capital available to company
2. firm gets better talent, judgment and skills
3. incentive for success is high
4. losses, liabilities also divided
5. can borrow money easily from banks
disadvantages:
profit sharing, dilution of power & responsibility
for eg. law companies
2. Limited partnership: *assoc of 1 or more partners to manage business and 1 or more limited partners whose liability is ltd to the capital they have invested.
JOINT STOCK COMPANIES:
*an assoc of individuals or shareholders who join together fro profit and agree to supply capital divided into shares that are transferable for carrying on a specific business.
*as per rule, it possesses more than 20% for carrying out any business besides one business
* managing body for JSC is a board of directors elected by shareholders.
functions of board of directors:
*make policies for company
*run the company efficiently
*finance is raised by issuing shares, debentures, loans
*liabilities of members is wrt their shareholding
types of joint sock companies:
1. private limited 2. public limited
*tfr of shares restricted
*no. of members bw 2 and 50
*need not obtain registration formalities from registrar of companies
*all financial statements have to be uploaded at the annual general meeting of company, certified by official body
*company life assoc with shareholders' life
*mgrs are affectionate for company
*few legal formalities
*usually smaller
*shares not traded on stock exchange
*accounts not audited
*financial statements private
COOPERATIVE ORGANIZATION:
*A coöperative is an autonomous association of persons who voluntarily cooperate for their mutual social, economic, and cultural benefit
* Cooperatives include non-profit community organizations and businesses that are owned and managed by the people who use its services (a consumer cooperative) and/or by the people who work there (a worker cooperative) or by the people who live there (a housing cooperative).
Cooperative principles:
- Voluntary and open membership
- Democratic member control
- Economic participation by members
- Autonomy and independence
- Education, training and information
- Cooperation among cooperatives
- Concern for community
Types: Housing, Utility, Agricultural, Credit Unions
eg. FC barcelona, Amul
INDUSTRIAL DISPUTES:
*Affect not only industry but nation as a whole
* Any dispute or difference bw employer and employee in an organized manner.
Effects of industrial disputes:
* workers do not get wages
*management loses its profit
*public do not get their required goods
* nation suffers due to lowering of GDP
causes of industrial disputes:
psychological causes:
*difficulty in adjusting with others
*clash of personalities
*authoritarian leadership
*demand for self respect and recognition
*very strict discipline
institutional causes:
*non recognition of labour union
*matters of collective bargaining
unfair conditions n practices
*influencing workers to join a favorable union
economic causes:
*more than permitted working hours and not being paid for the same
*working in night shifts
*promotion layoff
environmental causes:
*env conditions (too hot/cold)
*old and noisy machinery
*inadequate areas
other causes:
*undesired reduction of wages
*poor fringe benefits
*low bonus
*violation of agreements (legal)
HOW TO SOLVE INDUSTRIAL DISPUTES:
1. without state intervention ( *collective bargaining [with/without conciliation], * voluntary arbitration)
2. with state intervention (*govt appointed arbitrator, *establishment of bipartite committees, *compulsory investigation, *compulsory conciliation & mediation, *compulsory collective bargaining)
BANKING:
*customers can withdraw money at their will
*it lends money to needy people at certain interest rate
*central bank of a nation issues currency and looks into the financial health of the currency
*it accepts xchg of its own currency and foreign currency
*honours cheques issued by other banks
indigenous and modern bankers:
1. accept deposits and deal in hundis. bills of exchange.
2. own capital, less deposits. depend more on deposits
3. formality and delay-free operations, flexible working hours. formal manner
4. establishments are small and economical, family concern. large businesse.
5. finance to the traders, artisans, as well as the small industrialists, but give no direct loans to the agriculturists
6. no formal banking education.
7. maintain simple accounts. maintain complete, formal logs.
8. thorough knowledge of family history etc of customers.
9. keep close watch over borrower activities.
10. lend on mortgage of land, house, ornaments etc.
11. mostly in the Western and Southern parts of India.
RESERVE BANK OF INDIA:
*central bank of country
*banker to other banks
*regulates total banking system of nation
*regulates issue of bank currency
*keeps reserves of nation and banks in order to secure monetary stability
*has control over cash reserves of commercial banks
*has power to licence banking companies and NBFC (non banking finance company)
Departments:
(IF)Industrial Finance
(RS)Research and Statistics
(XC)Xchg and Control
(I)Issue
(B)Banking
(OD)Operations and Development
(L)Legal
(A)Administrative
(A)Administrative
(N)NBFC
Inspection
Accounts and Expenditure
EMPLOYEE STATE INSURANCE:
OBJECTIVES:
Workers compensation act 1952
*ESIC is an autonomous corporation under Ministry of Labour and Employment, GoI
* to provide certain benefits to employees n case of sickness, disability, injury, loss of employment, death
* to provide certain benefits to employees n case of sickness, disability, injury, loss of employment, death
*1989: there was a modification to include smaller companies with even 2 permanent employees with a salary up to 10k
How is finance generated?
*financed by 3 groups of people.
*employers, employees, state govt
*inspectors are sent to employees to check
benefits of ESI for employees:
* medical benefits
*sickness benefits
*maternity leave
*disablement benefits
*funeral benefits
*unemployment benefits
MARKETING:
*means working with markets
*trying to utilize the potential exchange for the purpose of human needs and wants
*market exists, can be made, can vanish too.
Functions:
1. to give direction and purpose to mktng division as a whole
2. place present activities in right perspective
3. place tactical plans correctly in a strategic setting
4. set growth targets
5. establish organizatn and method reqd for analysis and predictn
Objectives:
1. determine when and where customer is
2. what are his needs and wants
3. what will he buy n from where
4. how will he buy
5. how much willing to pay
6. future of existing product
7. measure sales strength n potential
8. analyzes distribution, economic trends and profitability
9. determines advertisement effectiveness, cnsumer reaction and dealer reaction
10. conducts demands and price study
11. explores new markets and helps in developing new products
12. guides sales and promotion efforts.
13. safeguards interest of company against unforeseen things in mkt
14. helps business to be in touch with mkt
SALES MANAGEMENT:
process of distributing goods from producer to ultimate user
1. by area
*advertsing
*market research
*head of advertising
*export sales
2. by product
3.function wise
4. customer category
5. end user category
FUNCTIONS OF SALES MANAGEMENT:
1. analyzing market thoroughly
2. studying consumers psychologicaly and demand pattern
3. studying condtns existing in competing firms
4. studying market fluctuatuins
5. preparing mkt, sales and other business avenues
6. developing system for sales reporting and statistical analysis
7. explore newer markets in order to increase sales
8. ensuring efective contribution and coordination bw productn and distributn
9. deciding on distributn policies, methods and networks
FINANCIAL ACCOUNTING:
art and science of recording business transactions in a prescribed methodogical manner so as to show:
1. true state of affairs of business at a particular instance of time
2. deficiency or surplus which has accrued during a specific time period
3. costing (determine price of item and selling price etc)
4. COSTS :
*classifying, recording and appropriate alloc of expendityre forr determing cost of product
*relation of cost and resale value
*find profitability
5.Costing and cost accounting: internal affairs of business as process of accounting for cost from point of expenditures incurred to establishment and their relshp with cost.
6. takes care of extrnal calculations. records all dealings like purchase, svcs, cash, credits etc
. cash receipts, payments, personal accounts: credits given and taken nominal account: expenses incurred
OBJECTIVES:
1. stock exchange reqments
2. legal reqments
3. tax req
4. safeguarding shareholders' interests
5. divident policies
SCIENTIFIC MANAGEMENT:
*Frederick Taylor, founder of sc mgmt, formulated a theory that analyzed and synthesized workflows.
*he introduced a systematic approach in the mgmt of work.
*it lay emphasis on planning, standardizing and improving human efforts at the operative level in order to maximize o/p with min i/p.
* he thought that by maximizing produuctivity N of each worker, sc mgmt would also maximize earnings of employees and employers.
summarized as:
1. science,
2. harmony,
3. cooperation,
4. no individualism
,5. max output in place of restricted o/p,
6. devlepoment of each worker to his greatest N and prosperity
basic approaches:
1. analyze work scientifically and invest all aspects of work on scientific basis rather than thumb rule
2. provide specific guidelines for workers to perform
3. develop best way of doing specific task
4. select workers best suited to perform a specific task
5. develop more than one best way of doing job
6. teach n develop each worker in most N method of doing job
7. divide work so workmen n mgmt share almost equally in daily performance of each task
8. achieve support n cooperation from workers by arranging conditns, svcs, guidance
*knowledge transfer among workers
*transformation of craft production into mass production
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