A Survey Report on

COMPERATIVE STUDY OF THEROTICAL AND PRACTICAL PRACTIC OF SOLE PROPRIETOR PURSUING IN JODHPUR

Jodhpur Institute of Management

Submitted by: SUMIT KUMAR PUJARI MBA Part I Submitted to: Dr. Abha Purohit Asstt. Prof

(Submitted as a Part of Practical Examination of Paper No. M-207 Research Methods in Management)
Narnadi, Jhanwar Road, Jodhpur Ph. No.: 02931-281551-5 , Fax No.:02931-281416 Dr. Abha purohit Faculty Member Faculty of Management Jodhpur Institute of Management Jodhpur Rajasthan

CERTIFICATE

Certified that Mr. SUMIT KUMAR PUJARI a student of MBA 1st year (2nd semester) JODHPUR INSTITUTE OF MANAGEMENT, JODHPUR has worked for this project report entitled COMPERATIVE STUDY OF THEORITICAL AND PRACTICAL PRACTICE OF SOLE PROPRIETOR PURSUING IN JODHPUR, under my supervision and guidance.

The project work embodies the result of his original research. The candidate has fulfilled necessary requirements under the regulation of JODHPUR NATIONAL UNIVERSITY

Dated, Jodhpur _____________

(Dr. Abha Purohit ) Supervisor

DECLARATION

I, the undersigned, hereby declare that this project written and submitted by me under the guidance of DR. ABHA PUROHIT, faculty of Jodhpur institute of management, Jodhpur is my original work. The empirical findings in the project are based on the data collected by me and I have not copied from any research report or project report submitted by anyone, to any university anywhere earlier.

Dated, Jodhpur _____________

(SUMIT KUMAR PUJARI)

Acknowledgement

Every mature individual in professional life is keenly aware of his sense of indebtness to many people who have stimulated and influenced his intellectual development. Ordinarily this feeling is expressed in customary gesture of acknowledgement. Therefore, it seems as a right to acknowledge my gratitude with sense of veneration to the almighty God and various people who helped me during the course of the project work. Their valuable guidance and wise direction have enabled me to complete my project in systematic and smooth manner. As it is said that Success is the sweetest flower in the garden of hard work but thinking of success is merely creamy fudge without an adequate guidance

I owe a great debt of gratitude and sincere appreciation to my supervisor, Mrs. Jaya Souza, of St. Andrews higher Secondarily School, who encouraged

& gave me suggestions, constructive criticism and moral support throughout the course of my project. Accurate, immanent and systematically planned working is really a precious tool to be succeeding, which I have learned from her. My heartily thanks go to her for sparing her invaluable time and guidance for me.

I am deeply indebted and thankful to MR GAURAV LODIA, DEAM, Jodhpur Institute of management, Jodhpur, who has been a perennial source of inspiration for this project. I am thankful to all teaching staff for their precious gift of knowledge. It is my real pleasure to thanks to vikash godara, & others for their selfless support, cooperation & valuable suggestion. I also thank to my friends who encouraged me during the whole tenure of my project work. Lastly, I want to thank my dearest Parents for pitching in with their patience and invaluable feedback. It was enjoyable discussing some of the aspects with them.
(SUMIT KR PUJARI)

PREFACE

In modern times different forms of business units likesole proprietor, partnership firm, joint Hindu families, and company form of business etc; forms an integral part of private business and industry. In the wake of 21st century it is seen that these business units are becoming more popular than any other. So, the present study is an ambitions attempt to highlight the influence of various factors like- psychological, personal, social and cultural factors on choosing a form of business organization. It also concerns regarding why one should choose Sole- proprietor and not the other. The project is also undertaken to analysis any difference between the theories and its implications in practical life. This study will help people to understand the differences between theoretical and practical practice of Soleproprietor.

While preparing this project, I have tried to collect the latest information available from the Sole- traders pursuing in JODHPUR, journal, articles from books and internet. I am indebted to all our friends who gave me suggestions in the preparation of this project.

JODHPUR 13 APRIL 2010

th

SUMIT KR PUJARI

Seri al no.

content

Pag e no.

1 2 3 4 5 6

CERTIFICATE DECLARATIONS ACKNOWLEDGEMENT PREFACE contents INTRODUCTION

DEIFNATION FEATUREs ADVANTAGES DIAADVANTAGES

i ii iii-iv v-vi viiviii 113

7 8

OBJECTIVES AND HYPOTHESIS RESEARCH METHODOLOGY

DEIFNATION OF RESEARCH SAMPLE SIZE SAMPLE DESIGN RESEARCH DESIGN METHORD DATA COLLECTION QUESTIONNAIRE DESIGN

14 1517

DATA ANALYSIS AND FINDING 10 11 12 13

CHI-SQUARE TEST FINDING RESULTS

CONCLUSIONS AND RECOMMANDATIONS 29 LIMITATIONS BIBLIOGRAPHY QUESTIONNAIRE

18-

30 31 32 3335

INTRODUCTION:-

DEFINATION: Sole-proprietorship is the form of business, which is owned, managed and controlled by an individual. It is the oldest and simplest form of business, established with the limited resources, ability and capital. According to L.H.Haney,The individual entrepreneurship is the form of business organization in the head of which stands an individual as the one who is responsible, who directs its operation, who alone runs the risk of failure. According to James Stephenson, A sole trader is a person who carries on business exclusively by and for himself. He is not only the owner of the capital of the undertaking, but is usually the organizer and manager and takes all the profits or responsibility for losses. According to Kimball and Kimball, The individual proprietor is the supreme judge of all matters pertaining to his business, subject only to the general laws of the land to such as special legislation as may affect his particular business.

FEATURES OF SOLE PROPRIETORSHIP: - from d note book of 11th std

Persona l Effort

One Man control

Easy Formation

No Separate legal entity

FEATURE Promp S Decision t OF SOLE PROPRIETORSHIP

Manag ement and control Freedo m of choice of business

Bearer of Profit & Loss

Unlimi ted Liability

Undivi ded risk

SOURCE: BUSINESS STUDIES, ARYA PUBLICATIONS

EASY FORMATION: - It is very easy to form proprietorship. In most of the cases even license is not required. Peddlers, hawkers, small vendors and shopkeepers can start business at their own will, provided it is not illegal, anti-social and against the public interest. PERSONAL EFFORT: -A sole trader business is initiated by one person. He arranges the money required for the business, decides the nature and scale of business operations and arranges all other things needed for setting up and running the business. A sole trader carries on the business exclusively by and for himself. NO SEPARATE LEGAL ENTITY: -The proprietor and business are one and the same thing. The proprietor owns everything the firm has. No distinction is made between the assets and liabilities of the business and that of the owner. In

the eyes of law the owner and the business are one and the same thing. UNLIMITED LIABILITY: -The liability of a sole trader is unlimited. He is responsible for all losses arising from the business. His personal assets can be used to pay business liabilities if the business assets are not sufficient to pay its creditors. So his liability extends beyond his investments in business. MANAGEMENT AND CONTROL: -Management and control of the business remain exclusively in the hands of the proprietor. The sole trader is free to take whatever decision he thinks. He can employ assistants and is free to remove them from the employment as well. Thus, ownership, management and control are all in the hands of the proprietor. SHARING OF PROFITS AND LOSSES: -The earning of the business belong entirely to the sole trader, nobody else can claim a share of the profits with the proprietor. The same is true in case of a loss, where the entire loss has to be borne by the proprietor. ONE MAN CONTROL: -the sole proprietor acts both manager and controller of the business. He prepares various plans and executes them under his own supervision. There may be some persons to help him but ultimate control lies with the owner. UNDIVIDED RISK: -The profits and losses of sole trader business exclusively belong to the proprietor. He gains and

risks all. Nobody else shares the risks of the business with the sole trader. FREEDOM OF CHOICE OF THE BUSINESS: -The sole trader is free to choose the business of his choice, provided the business is not illegal and against the public interest. PROMPT DECISIONS: -The sole proprietor, being the sole owner of the business is capable of taking immediate decision and avails of the business opportunities, whenever available.

ADVANTAGES OF SOLE PROPRIETOR: -

The sole proprietorship form of business organization has certain merits. There are given below:
Easy to form Direct Motivation Inexpensive Management

Flexibility in operations ADVANTAG ES OF SOLE PROPRIETORSHIP Retention of business secrets

Easy to raise Finance

Promptness in decision making

No legal Restriction

Benefit of Goodwill

Self Employment

SOURCE: BUSINESS STUDIES, ARYA PUBLICATIONS from d note book of 11th std

EASY TO FORM: -It is easy to set up any trading or commercial unit or a small manufacturing unit as sole proprietor. It is the only form of organization where no legal formalities are required to be performed. Anybody wishing to start a sole trade concern can do so without loss of time. RETENTION OF BUSINESS SECRETS: -A sole trader can maintain business secrets. Being the sole proprietor, he is not expected to share his trade secret with anybody else. He is not expected to publish his accounts. He can maintain secrecy from his competitors. Secrecy is very vital for small scale concern. FLEXIBLITY IN OPERATIONS: -A sole proprietorship concern is generally run on small scale basics. In case a change in operation is required, it can be possible without involving much expenditure. Even if a new line of production is to be taken up, it will not involve much effort. Because of being flexible in operations, a sole trade concern is most suitable for industries dealing in fashionable and seasonal goods. EASY TO RAISE FINANCE: -An individual entrepreneur is able to create goodwill of establish business. This helps him to establish his creditworthiness in the market. Secondary, the liability in sole trade organization being unlimited, the creditor can have a claim over the private property of the owner. The creditors feel secure in extending credit to individual

proprietors. Moreover, they try to repay the loans as quickly as possible so that they do not loss goodwill in the market. Once a sole trader loss his creditworthiness, he will not be able to get much help from the market. DIRECT MOTIVATION: -The sole proprietor takes keen interest in the working of the business. He tries to put his heart and soul in his business so to earn as much profit as he can. There is direct relationship in efforts and reward. In other forms of organization, the profit is shared by more than one person. So everybody may not put in his best efforts. PROMPTNESS MAKING OF DECISION: -All important decisions are taken by one person. He can take prompt decisions. He will not let an opportunity slip away. If more than one person is involved in decision making, then delay is bound to occur. INEXPENSIVE MANAGEMENT: -The sole trader is the owner, manages and controller of the business. He does not appoint for various functions. He personally supervises various activities and can avoid wastage in the business. He does not create managerial paraphernalia. In this way managerial costs are saved to larger extent. NO LEGAL RESTRICTION: -There is no legal requirement for starting a business. There are no special acts governing the work of a sole proprietor. The proprietor is not required to submit the result of his business to any authority. There is no restriction in changing the nature of business. Even dissolution of business can easily be undertaken. The tax liability on a

sole trader is also low. He is taxed as an individual and not as a business unit. SELF EMPLOYMENT: -The sole proprietorship form of organization offers the means of self employment to those who do not want to serve others. As everybody cannot get a suitable job to earn his livelihood in a developing country, the individually can easily start a small sized business unit as a sole trader. BENEFIT OF INHERITED GOODWILL: -A sole trader passes on the business goodwill to his successor. Technically a sole trade business is dissolved on the death of the owner but in reality the same business is continued by family member. The goodwill which one person earns during his lifetime is also passed on to those who continue his business.
Advantages of Sole Proprietor Form of Business:
Easy formation: The formation of sole proprietorship business is very easy and simple. No legal formalities are involved for setting up the business excepting a license or permission in certain cases. The entrepreneur with initiative and certain amount of capital can set up such form of business. Direct motivation: The entrepreneur owns all and risks all. The entire profit goes to his pocket. This motivates the proprietor to put his heart and soul in the business to earn more profit. Thus, the direct relationship between effort and reward motivates the entrepreneur to manage the business more efficiently and effectively. Better control: The entrepreneur takes all decisions affecting the business. He chalk out the plan and executes the same. His eyes are on everything and everyone. There is no scope for laxity. This results in better control of the business and ultimately leads to efficiency. Promptness in decision-making:

When the decision is to be taken by one person, it is sure to be quick. Thus, the entrepreneur as sole proprietor can arrive at quick decisions concerning the business by which he can take the advantage of any better opportunities. Secrecy: Each and every aspect of the business is looked after by the proprietor and the business secrets are known to him only. He has no legal obligation to publish his accounts. Thus, the maintenance of adequate secrecy leaves no scope to his competitors to be aware of the business secrets. Flexibility in operations: The sole proprietorship business is undertaken on a small scale. If any change is required in business operations, it is easy and quick to bring the changes. Scope for personal touch: There is scope for personal relationship with the entrepreneur and customers in sole proprietorship business. Since the scale of operations is small and the employees work under his direct supervision, the proprietor maintains a harmonious relationship with the employees. Similarly, the proprietor can know the tastes, likes and dislikes of the customers because of his personal rapport with the customers. Inexpensive formation and management: The cost of formation of a sole proprietorship is the minimum because no cost is involved in its formation excepting the license fee in certain cases. The management of the business is also inexpensive as no specialists are normally appointed in various functional areas of the business which is the added advantages. Free from Government control: Sole proprietorship is the least regulated form of business. Regulated laws are almost negligible in its formation, day-to-day operation and dissolution. Easy dissolution: Like that of formation, the dissolution of the sole proprietorship is also very easy. Since the proprietor is the supreme authority and no regulations are applicable for closure of the business he can dissolve his business any time he likes. Socially desirable: New and small entrepreneurs can take up business on small- scale basis. There will be no scope for concentration of wealth in few hands. Sole proprietorship continues its operation in almost each and every area of business activity and caters to the need of the society. Further, it provides ample opportunities for large-scale self-employment for rural and less skilled personnel. Thus, it is socially desirable.

Disadvantages of Sole Proprietor Form of Business:

The sole proprietorship business is not free from criticism. It suffers from certain limitations and drawbacks, because of its very nature and scope of operations. These points may be duly taken care of while entrepreneur adopting this mode of business.

Limited resources: The financial resources of any small entrepreneur as an individual is limited. He mainly finances from his own savings or borrows from financial institutions, friends and relatives as per his capacity. Thus, limited resource is the major drawback of this form of business. Limited managerial capability: Modern business requires updated managerial skills in each and every sphere of activity. Ultimately a single individual cannot possess all the managerial talents necessary to carry on a business efficiently. The limited financial resources of the sole proprietorship is a hindrance to hire the services of managers with expertise in different areas, thereby the growth of the business. Unlimited liability: Since the liability of the sole proprietor is unlimited, the private properties of the proprietor is also at risk. When the business fails, the private properties of the owner are utilized to pay off the business debts. Thus, the entrepreneur must have to look this aspect carefully. Uncertainty of continuity: The continuity of the business is uncertain because the business may come to an end due to the incapacity or death of the proprietor. Even if at all the business passes on to the successor of the proprietor, it is unlikely that they may posses the business acumen like that of the proprietor. The discontinuance of the business is a social loss. Less scope for economies of large-scale: The economies of large-scale operation is enjoyed only by a large-scale enterprise, which the sole proprietorship business normal lacks. Therefore, there is less scope for availing the economies of large-scale. Not suitable for large-scale business: The limited financial resources, limited managerial capability of the proprietor, risk to the private property etc. makes the so proprietorship business unsuitable for large-scale business. This system of business can not afford for large-scale operation Difficult to maintain personal contact: Even though there is scope for personal touch in sole proprietorship business, it is unlikely to happen when the business is undertaken in different areas. It is not so easy on the part of the proprietor to have personal contact with customers and suppliers at the same time.

DISADVANTAGE OF SOLE PROPRIETORSHIP: -

One person control is best if that one person is powerful and strong enough to have all the financial strength, managerial skills, etc. required to successfully expanding a modern commercial or business unit. Unfortunately, it I a rare phenomenon to find a combination of all these requirement in a single person. Therefore, the sole proprietorship is found to suffer from the following limitation.

Limited Resources

Uncertain Continuity

Limited managerial ability DISADVANT AGE OF SOLE PROPRIETORSHIP

Unlimited Liability

No large scale economies

Limited scope for employees

More risk involved

Weak bargaining power

Instability

Hasty decision

SOURCE: BUSINESS STUDIES, ARYAN PUBLICATIONS

from d note book of 11th std

LIMITED RESOURCES: -The resources of a sole proprietor are limited. He makes investment from his family source only. There is a limit to which a single person can invest. He tries to

raise finances from financial institutions also. These institutions want securities for their loans. The sole trader cannot offer much security, so he does not get much help from financial institutions. The capacity for expanding business operation is limited for want of resources, even when there is a scope of expansions. Other forms of ownership are better placed in the sole proprietor for raising financial resources. LIMITED MANAGERIAL ABILITY: -The proprietor being an individual cannot be the matter of all the branches of the business. He will not be able to devote sufficient time to all types of activities. He cannot be the expert of purchase, sales, accounts, production and marketing etc. As such sole trader suffers from limited managerial efficiency. Limited managerial capacity will hinder the growth of concern. UNLIMITED LIABILITY: -The liability of a sole proprietor is unlimited; his private property can also be assigned for meeting business organizations. A loss in business may deprive him of his private assets also. Unlimited liability also restricts his working. He tries to be cautious in taking risks. Its acts as a detriment to the growth of business activities. UNCERTAIN CONTINUITY: -The business continues till the sole proprietor is there. In case of his mobility or death, the business is discontinued. The successor of the sole proprietor may not have an aptitude or ability to continue in the business. The closer of a business will causes inconvenience to the consumers. It will also result in social losses.

LIMITED SCOPE FOR EMPLOYEES: -A sole trader cannot attract trained and qualified person for reasons of limited career opportunities. Moreover, the continuity of sole trade business being offer financial incentive to employees because his activities are not of small scale. The employees will try to join good concerns wherever an opportunity arises. NO LARGE SCALE ECONOMIES: -A small-scale concern cannot economies in purchases, productions and marketing. A large-scale enterprise will be able to have favorable terms of purchasing and selling of goods. In a sole trade concern overhead expenses are also more. So this type of concern cannot enjoy the benefit of large-scale economies. MORE RISK INVOLVED: -A sole proprietor is to take all decisions by himself. So there is a possibility of taking wrong decisions. In other form of organizations the decisions are taken by more then one person. So the possibility of mistakes and wrong decisions is minimized. Lack of counseling may creat difficult situation. HASTY DECISION: - A sole trader being the wholesale in charge of the business takes immediate decision. Sometimes these decisions are taken haste, which prove to be incorrect in future. Consequently, the firm has to suffer. INSTABILITY: -The continuity of a business undertaking set up in the form of sole trading is uncertain. Its continued existence is uncertain after the death or even during the

prolonged illness of its owner since the business is dependent on single person. WEAK BARGAINGING POWER: -A sole proprietor business has a small amount of capital and operates on a relatively small scale. Its area of operation is also limited. Even its creditworthiness is as good or bad as that of its owner. For all this reasons, it cannot easily bargain for favorable terms with outside parties such as suppliers, financiers and customers.

OBJECTIVE AND HYPOTHYSIS:-

MAIN OBJECTIVE:-

The main objective of this research report is, To study the difference between theoretical and practical practice of sole proprietor.

SUBSIDIARY OBJECTIVES:-

1. To revile the challenges faced by sole trader during the course of actions. 2. To see the registration regulations and there enforcement.
HYPOTHESIS:1. Sole proprietorship is better than other business units. 2. Benefits of sole proprietor are more than other business units.

RESEARCH METHODOLOGY:RESEARCH:-

Research can be defined as a scientific and systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. Research comprises of defining and redefining problems, formulating hypothesis or suggested solutions, collecting organizing and evaluating data, making deductions and reaching conclusion and at last carefully testing the conclusion to determine whether they fit the formulated hypothesis.
hypothesis (h -p th -s s)

n. pl. hypotheses (-s z ) 1. A tentative explanation for an observation, phenomenon, or scientific problem that can be tested by further investigation. 2. Something taken to be true for the purpose of argument or investigation; an assumption. 3. The antecedent of a conditional statement.

1. Sample size:

The sample size for survey is taken 40 which is consumer preference regarding Sole proprietorship in Jodhpur.
2. Type of sample design:-

In this study, information will be collected from the different area of consumer. Thus, it is a sample investigation. Here, Judgment sampling design is referred in which using probability methods initial sampling units are selected and then additional information is obtained from information supplied by initial units.
3. Research Design:-

Descriptive research design will be made in this study in which problems faced by sole proprietor is considered.
4. Data Collection Method:-

Data collection is the most important part of any Research project. It plays a vital role in fulfilling the research objectives.

In this study, primary data collection method will be used. A structured questionnaire was developed under the supervision of experienced college faculty, which helped me to extract detailed information with the aim of fulfilling the research objective.

Questionnaire:-

A questionnaire consists of a number of questions presented to respondents for their answers. The questionnaire is varying flexible in that there are many numbers of ways to ask questions. A survey will be conducted on practical practice of sole proprietor. People will be required to fill the questionnaire. The questionnaire comprised of 19 questions covering the various avenues of sole trader.

Data Analysis:1. WHEN ASKED ABOUT REGISTRATION RESPONDANTS REPLIED:10%

REGISTRATION YES NO

90%

WHERE AS IN THEROTICAL REGISTRATION IS COMPLERSERY. 2. WHEN ASKED ABOUT STATE

WE

ARE

TOUGHT

THAT

REGULATION

RESPONDANT

STATE REGULATION
JODHPUR MUNICIPAL ACT
STATE REGULATION

35%

50%

15%

JODHPUR LICENSING AND CONTROL ACT NONE

REPLIED:WHERE AS IN THEROTICAL WE ARE TOUGHT THAT ALL STATE REGULATIONS ARE COMPLERSERY.

0%

50%

100%

150%

3. WHEN ASKED ABOUT CONTINITY RESPONDANT REPLIED:45

30
15
0 5 10 15

PERCENT
10
20 25

YEARS OF CONTINUITY
IN THEROTICAL WE ARE TOUGHT THAT DEPENDS UPON THE ABILITY OF THE PROPRIETOR. CONTINUITY

4. WHEN QUESTION OF MANAGEMENT AND CONTROL ROISE RESPONDENT REPLIED:-

89% MANAGEMENT AND CONTROL 11% SELF MANAGER

0%

20%

40%

60%

80%

100%

THEROTICALLY IT IS SEEN THAT SOLE PROPRIETOR IS AN SELF CONTROL BUSINESS. 5. FINANCIAL CAPACITY:3,00,000-MORE 1,50,000-3,00,00 50,000-1,50,000 0-50,000 0% 10% 20% 30% 40% 50% 60% 70% 80%

IN BOOKS IT IS SEEN THAT FINANCIAL LIMIT OF SOLE TRADER IS LIMITED TO ITS OWN CAPACITY OF INVESTING. 6. LIABILITY YEARLY:60%

55%
50% 40% 30% 20% 10% 0%

30%
LIABILITY(RS)

5%

10%

THEROTICALLY IT IS TRUE THAT LIABILITY OF SOLE TRADER WILL BE ACCORDING TO THE PRIVATE CAPACITY OF THE PROPRIETOR. 7. ANNUAL SALES:-

SALES
5% 35% 40% 20%
0-1,00,000 1,00,000-2,50,000 2,50,000-5,00,000 5,00,000-MORE

8. NET
10% 12% 0-40,000 40,000-1,00,000 1,00,000-3,00,000

PROFIT:-

20%

3,00,000-MORE
58%

IN BOOKS IT IS SEEN THAT PROFIT IS NOT DIVIDED SO, NET PROFIT OF SOLE TRADER IS HIGH.

9. WHEN QUESTION OF SECERECY WAS ASKED RESPONDENT REPLIED:100% 80% 60% 40% 20% 0%

COMPLET SECERECY

PARTIAL SECERECY

IN BOOKS IT IS SEEN THAT DUE TO ITS SELF CONTROL THERE IS COMPLET SECERECY OF INFORMATIONS.

10. WHEN ASKED ABOUT INSURANCE AND BANK FACILITIES RESPONDENT REPLIED:-

FACILITIES
32%

NO

42% 78%

YES 0% 20% 40% INSURANCE

58%

60% BANK

80%

THEROTICALLY ITS IS SEEN THAT BANK FACILITIES IS LESS COMPARED TO INSURANCE FACILITIES TO SOLE TRADER. 11. WHEN QUESTION RESPONDENT ABOUT THEIR SATISFACTION COME REPLIED:-

SATISFACTION

40% 60%

YES NO

WHEN ASKED ABOUT THE REASON FOR SATISFACTION OF THEIR BUSINESS FORM REPLY WAS: LESS BANK FACILITIES. WANT A BIG MARKET.

NON

12. AND THE OTHER FORM OF BUSINESS THEY PREFERE ARE:-

OTHER PREFERED UNITS

JOINT HINDU FAMILY COMPANY PARTNERSHIP PARTNERSHIP COMPANY JOINT HINDU FAMILY

0% 20% 40% 60% 80%

Chi- Square Test Description of Chi-square test:The chi-square test provides a method for testing the association between the row and column variables in a two-way table. The null hypothesis H0 assumes that there is no association between the variables (in other words, one variable does not vary according to the other variable), while the alternative hypothesis Ha claims that some association does exist. The alternative hypothesis does not specify the type of association, so close attention to the data is required to interpret the information provided by the test. The chi-square test is based on a test statistic that measures the divergence of the observed data from the values that would

be expected under the null hypothesis of no association. This requires calculation of the expected values based on the data. The expected value for each cell in a two-way table is equal to (row total*column total)/n, where n is the total number of observations included in the table.

Once the expected values have been computed (done automatically in most software packages), the chi-square test statistic is computed as

In which the square of the differences between the observed and expected values in each cell, divided by the expected value, are added across all of the cells in the table. The distribution of the statistic X2 is chi-square with (r-1)(c-1) degrees of freedom, where r represents the number of rows in the two-way table and c represents the number of columns. The distribution is denoted (df), where df is the number of degrees of freedom. That is, chi-square is the sum of the squared difference between observed (o) and the expected (e) data (or the deviation, d), divided by the expected data in all possible categories.

The table given below shows the data gathered from a survey made on 40 Peoples Preference Regarding Sole trader.

Favor able Persons satisfied With Trader 15 Sole

Unfavorable 7

Total 2 2

Persons satisfied With other business Units.

13 8

----TOTAL 20

--------20 0

-4

Test your result with the help of X2 at 5 % L.O.S.

Findings:Null hypothesis:Sole proprietor is not better than other business units. Alternative Hypothesis:Sole proprietor is better than other business units. 1. Calculation of expected frequency by following formula in following table:-

Expected freq. of any cell =

(Row total for row of that cell * Column total for column of that cell) / GRAND TOTAL

Persons satisfied With Sole Trader Persons satisfied With other business Units.

Favorable 11

Unfavorable 11

Total 22

18

-----

------

------

TOTAL

20

20

40

Degree of freedom = (r-1)(c-1) = (2-1)(2-1) =1 The table value of X2 for 2 degree of freedom at Level of Significance at 5% is 5.991.

2. Calculation of calculated value of X2 Gr oup A 5 7 B .F. 1 11 11 5 9 1 9 O .F. E -E O (OE) /E

2

4 -4

1.45 1.45

1.77 -4 1.77 4

Here, Group A includes data of Persons satisfied with Sole proprietorship. Group B includes data of Persons satisfied with other business units.

O.F. stands for Observed Frequency. E.F. stands for Expected Frequency. O.-E. stands for Observed Frequency Expected Frequency.

So, X2

=6.44 approx.

Result
The calculated value of X2 is higher than the tabulated value of X2 at 5% Level of Significance. Thus, Null hypothesis is rejected and Alternative hypothesis is accepted which means Sole proprietorship is better than the other business units.

Conclusion

It is concluded that sole proprietorship is popular form of business among other form of business units due to its: Complete secrecy of information. Undivided profit. Self control. We see that our practical survey almost tallies with theoretical study/concept. Thus the survey fulfills its objective and stands true at its position containing positive results.

Recommendations

1. It is recommended that if govt. involvement/ regulation is less than popularity of sole proprietorship will increases. 2. If risk involvement is less in sole proprietorship then more and more people will be attracted to it and self employment will increase.

LIMITATIONS
1. Time constraint:-

This survey study requires a long span of time to do more elaborative study but because of having lengthy syllabus and tight schedule, lack of time being a limiting factor.

2. Sample Size:This is an emerging topic now days, so sample size is not sufficient, it should be 100 in one city to get more effective results.

BIBLOGRAPHY

BOOKS 1. Comprehensive Business Studies, Author: S.A.SIDDIQUI LAXMI PUBLICATIONS (P) LTD 2. Business studies, Author: T.N.CHHABRA ARYAN PUBLICATIONS (P) LTD

3. Oxford Business Studies, Author: R.K.ARORA NEERU SETHI OXFORD UNIVERSITY PRESS

WEBSITES 1. www.google.com 2. www.classontheweb.com 3. www.foundationwebsite.org. 4. www.yahoo.co.in

APPENDIX 1

Schedule for the topic- Comparative study between practical and theoretical practices of sole proprietor perusing in Jodhpur

________the questionnaire has been designed in such a manner that most of the answers require only a tick mark from you. So please spare a few moment for us

NB: INFORMATION GIVEN IN THIS QUESTIONNAIRE SHALL BE CONSIDERED AS STRICTLY CONFIDENTIAL AND WILL BE USED FOR ACADEMIC PURPOSE ONLY.

QUESTIONNAIRE
Survey of sole proprietor

1. Name of the business unit. ______________________________________________________________________________ 2. Name and age of the proprietor NAME _________________________________________________________________________ AGE __________________________________________________________________________ 3. Proprietors Address__________________________________________________________ ____________________________________________________________ ____________________________________________________________ 4. Nature of business.___________________________________________________________ ______________________________________________________________ 5. Location or area covered ______________________________________________________ ______________________________________________________ 6. Registration: YES NO

7. State Regulations:a) Jodhpur Municipal Act b) Jodhpur Licensing and control Act c) None 8. Continuity: a) 1 - 5 years b) 5 -10 years c) 10 - 15 years d) More than 15 years

9. Origin of idea: -_______________________________________________________________ ________________________________________________________________ ________________________________________________________________ 10. Management and control: a) Self b) Manager 11. No. of staff/members: a) One b) Two or more 12. Financial capacity: a) 00000 - 50,0000 b) 50,000 - 1,50,000 13. Liability yearly: c) more than 10

c) d)

1,50,000 - 3,00,000 3,00,000 & more

a) 00,000 - 25,000 b) 25,000 - 75,000 14. Annual sale: a) 00000 - 1,00,000 b) 1,00,000 - 2,50,000 15. Net profit earned: a) 00,000 - 40,000 b) 40,000 - 1,00,000 16. Business secrecy: a) Partial secrecy b) Complete secrecy 17. Insurance facilities: YES 18. Banking facilities: YES

c) d) c) d) c) d)

75,000 - 1,50,000 1,50,000 & more 2,50,000 - 5,00,000 5,00,000 & more 1,00,000 - 3,00,000 3,00,000 & more

NO NO

19. Satisfaction regarding your performance: a) Satisfied b) Not satisfied If satisfied, WHY? AND If not satisfied, which form of business do you prefer? _________________________________________________________________________ _________________________________________________________________________ THANK YOU FOR YOUR VALUEABLE TIME

(SIGNATURE)