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K.

VIDHYA / MBA / IEM / U2

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UNIT-II

DEFINITIONS OF MANAGEMENT 1. Management is an art of getting things done through others 2. According KOONTZ, management as an art of getting things done through formally organized groups. Manager directs the efforts of other people rather than performing the task himself. 3. D.J.CLOUGH: Management is the art and science of decision making and leadership. This definition highlights both practical (art) and theoretical (science) aspects of management. Management as an Art: Art involves practical application of personal sills and knowledge to achieve concrete skills. Main elements of an art 1. Personal skills, 2. Creativity, 3. Practical know how, 4. Constant practice aimed, 5. Result oriented Management as a science 1. Systematized body of knowledge to particular field of enquiry 2. contain principles and theories developed through continuous observation, experimentation and research. 3. principles applied under different situation 4. knowledge taught and learnt in classroom and outside (physics, mathematics, economics, chemistry etc.)

DIFFERENCE BETWEEN ADMINISTRATION & MANAGEMENT Administration 1. Legislative and determinative function. 2. Determination of objectives and policies 3. Provides a sketch of the enterprise. 4. Influenced mainly by public opinion and other outside forces. 5. Mainly a top level function 6. Involves thinking and planning Management 1.executive function 2.Implementation of policies 3.provides the entire body 4.influenced mainly administrative decisions 5.mainly a lower level function 6.involves doing and acting

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ELEMENTS / FUNCTIONS OF MANAGEMENT The management functions are as follows. 1. Planning, 2. Organising 3. staffing 4. directing & 5. controlling 1. PLANNING Planning is the management function anticipating future and conscious determination of a future course of action to achieve the desired results. It involves the formulation of what is to be done, who is to do and hat results are to be evaluated. Major components part of planning: 1. Initial planning which concerned with determination of objectives 2. Subsequent or route planning concerned with best alternative course of action. 3. Final or operational planning to analyze technical, financial, personal and other aspects. Nature of Planning 1. 2. 3. 4. 5. 6. Goal oriented Planning is reference in future It is primary function Involves choice and intellectual process Planning is continuous, long term or short term, It is actionable, flexible, an integrated system and efficient for future activities to Increase the productivity, to avoid labor turnover and to reduce the cost. PLANNING LEVELS STRATEGIC PLANS Objective Long-range plans Policies ADMINISTRATIVE PLANS Organisastion Motivation Managerial control OPERATIONAL PLANS Rules Method Procedure TOP Longrange plans MANAGEMENT MIDDLE Medium range plans MANAGEMENT

LOWER LEVEL MANAGEMENT

Short range plan

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STEPS IN PLANNING

BEING AWARE OF OPPORTUNITY in light of The market Competition What customers want Our weaknesses

COMPARING ALTES IN LIGHT OF GOALS SOUGHT Which alter will give us the best chance of meeting our goals at the lowest cost And highest profit?

SETTING OBJECTIVES OR GOALS Where we want to be and What we want to accomplish And when

CHOOSING AN ALTERNATIVES

Selecting the course of action we will purchase

CONSIDERING PLANNING PREMISES In what environmentinternal Or external-will our plan operate

FORMULATING SUPPORTING PLANS Such as-Buy equipment But materials Hire and train workers Develop a new product

ITENTIFYING ALTERNATIVES What are the most promising Alternatives to accomplish Objectives?

NUMBERING PLANS BY MAKING BUDGETS Develop such budgets as: Volume and price of sales Operating expenses necessary for plans.

Although the steps in planning are presented here in connections with major programs, such as the acquisition of a plant or a fleet of jets of product, managers would follow essentially the same steps in any through planning. In practice, however, manager must study the feasibility of possible courses of action at each stage. All managers should know where they stand in the light of their strength and weaknesses, understand what problems they wish to solve and why, and know what they expect to gain. Setting realistic objectives depends on this awareness. Planning requires realistic diagnosis of the opportunity situation.

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2)

ORGANISING It involves establishing an intentional structure of roles for people to fill in an organization. It is intentional sense of making sure that all the tasks necessary to accomplish goals are assigned to people who can do their best. The purpose of Organization structure is to help in creating an environment for human performance. It is an management tool not an end itself. After determining the course and make-up of action the next stop, in order to accomplish the task, to distribute the necessary work among the working groups. It is the process of by which the structure and allocation of jobs is determined in which responsibilities are defined and authorities and laid down. The process of organizing involves 1. 2. 3. 4. Divide the work into component activities Define responsibilities Delegate authority and Establish structural relationship.

3)

STAFFING The Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal and development of personnel to fill the roles designed into structure. The essence of staffing is the place of the right man on the right job and at the right time. STAFFING PROCESS

Primary phase 1. Manpower planning 2. Recruitment 3. Selection 4. Placement 5. Induction

Secondary Phase

1. Training and Development 2. Compensation and Integration 3. Promotion, demotion and Transfer 4. Personal welfare 5. Performance Appraisal 6. Human Relation. Staffing is the process by which managers select, train, promotes and retire their subordinates It involves the developing and placing of qualified people in the various jobs in the organization. Staffing is a continuous process. The aim is to have appropriate persons to move into vacated positions newly created in the enterprise. Function of staffing is from Recruitment to Retirement.

4) DIRECTING Directing is the process by which actual performance of subordinates is guided towards common goals of the enterprises. It includes: 1. Giving instructions to subordinates 2. Guiding the subordinates to do the work

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3. Supervising the subordinates to make certain that the work done by them is as per the plans established. a. Leadership: is the quality of the behavior of the persons whereby they inspire confidence and trust in their subordinates, get maximum cooperation from them and guide their activities in organized effort. b. Communication: It is the process by which ideas are transmitted, received and understood by others for the purpose of effecting desired results. c. Motivation: Motivating means inspiring the subordinates to do a work or to achieve company objectives effectively and efficiently. d. Supervision: supervision is necessary in order to ensure, 1. the work is going on as per plan established and 2. the workers are doing as they ere directed to do so. 5) CONTROLLING - Controlling is the process that measures current performance and guides it towards some predetermined goal. - Controlling means checking up to ensure that the planned work is progressing as per schedule and if not then to apply corrective action to achieve the predetermined objectives. The process of controlling involves: a. Observe continuously and study the periodic results of performance. b. Compare this performance with the present standards. c. Pinpoint deviations if any d. Ascertain the exact caused of deviations. e. Initiate and implement the corrective actions. Controlling is the last phase in the management process. whole sequence of the management process. Nature of controlling 1. 2. 3. 4. 5. Controlling makes for a bridge Planning is the basis of controlling Controlling is pervasive managerial exercise It is the continuous process, aims at future. It based on information feedback Control completes the

TYPES OF MANAGEMENT 1. Development Management process 2. Distribution Management -3. Financial Management -4. Maintenance Management-5. Purchase Management -control 6. Production Management -quality control 7. Transport Management -rail, water and road 8. Personnel Management -safety, health & -Research into materials, m/c,

Marketing, advertising, sales Economic forecasting, costing, accounting Up keeping of buildings, equipment Tendering, buying, store keeping, stock Analysis, Planning, scheduling, routing,

Packing, warehousing, transport by air, Employee section, welfare, etc. placement, training,

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9. Office Management records.

--

Planning and control of office, keeping

LEVELS OF MANAGEMENT The different levels of management may be classified into three categories Management /industrial management has got the following activity levels. 1. Top-level management: Top level management includes a) Board of Directors b) Managing Director, c) Chief executive, d) General manger, e) Owners, f) Shareholders. Setting basic goals and objectives. Expanding or contracting activities Establishing policies Monitoring performance Designing/Redesigning organization system Shouldering financial responsibilities etc. 2. Upper Middle Management Upper Middle Management includes a) sales executive (manager), production executive, financial executive, R&D executives, Accounts executive - Establishment of the organization. Selection of staff for lower levels of management Installing different departments Designing operating policies and routines Assigning duties to their subordinates etc. 3. Middle Management It includes a) Superintends, Branch manager, General foreman, etc. - To cooperate to run organization smoothly - To understand interlocking of departments in major policies - To achieve coordination between different parts of the organization - To conduct training for employee development - To build an efficient company team spirit 4. Lower Management It includes a) Foremen, Supervisors, or charge-hands, office superintendent, inspectors, etc. - Direct supervision of workers and their work - Developing and improving work methods and operations - Inspection function - Imparting instruction to workers - To give finishing touch to the plans and policies of top management - To act as a link between top management and the operating force (i.e workers) - To communicate the feeling of workers to the top management. 5. Operating Force

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It includes a) Workers, rank and file workman, skilled, semi-killed and unskilled. - To do work on machines or manually, using tools, etc - To work independently (in case of skilled worker) or under the guidance of supervisor. MANAGEMENT SKILLS By managerial skills, we mean the skills or qualities desired in managers, the possession of which would enable them to act better as practicing managers. 1. Technical skill - Technical skill might be termed as technical expertise. - It is an imperative sill for managers at the lower level management. Because it is actually these people who guide and supervise work of operators under their subordination. - Accordingly, it may range from knowledge regarding operation and repair of a machinery, storage of materials, to training of subordinates. 2. Human skill - By human skill we mean the ability to tactfully deal with human beings and mould their behavior at work in the desired manner to help attain the common objectives of the enterprise-most effectively and efficiently. - A manager has to provide effective supervision, motivation and leadership that part of his subordinates. - A human skill is equally needed by all manages- from highest to the lowest authority in the management hierarchy. - Application of human knowledge and skill may involve motivating the sales force to achieve revised targets, or persuading the subordinates to effect economies, and so on. 3. Conceptual skill - It is concerned with concepts or ideas. - It is imperative for top management level, necessary for the middle management level and desirable for the lower level management - Application of conceptual knowledge and skills may involve formulation of a plan to introduce a new product, to explore new markets, or trying out new methods of production. PRINCIPLES OF MANAGEMENT Henri Fayol published certain principles for the soundness and good working of mgt. According to him, the principles of mgt should be o Flexible and not absolute o Used with intelligence and with a sense of proportion He listed 14 principles which are 1. Division of Labour / work -Dividing work on the principle that different workers are best fitted for different jobs based on its capacity. The advantage/disadvantage is that it leads to specialization. 2. Authority and Responsibility -Both should go hand in hand. An executive can do justice with his responsibility only if he has authority.

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3. Discipline This is required for efficient functioning of the organisation. Discipline is described as respect for agreements that are directed at achieving obedience, application and the outward of market respect. 4. Unity of Command -This essentially means that only one Boss should give the instructions. This avoids confusion, mistakes and delays. 5. Unity of Direction -Like the previous one which concerns for personnel, this one deals with the functioning of the body as a Corporate. It also implies that there should be one plan and one head for each group of activities. 6. Subordination of Individual to General Interest -Interest of Individual should not be permitted or superseded. This is necessary to maintain unity. 7. Remuneration -Its the price paid to the employee for the services rendered by him to the enterprise. It can be fair to bring maximum satisfaction to both the employers and the employee.

8.

Centralizations of Authority -This means that the Centre has the authority. This is required for the best overall performance of the organisation. Centralization depends upon nature, size and the prevailing complexity. 9. Scalar Chain -Managers may be regarded as chain of Superiors. This Chain of Superiors when short-circuited and following it strictly will be detrimental to performance. 10. Order -It implies that everything and everyone has his place in the organisation. It should be arranged in such a way so that the person/material should be in the right place at the right time. 11. Equity of Treatment -A Manager should treat his subordinate equally and with kindness and justice. This makes the employees more royal and devoted towards the enterprise. 12. Stability -A stable and secure workforce is an asset to the enterprise, because unnecessary Labour turnover is costly. When instability occurs it will be mainly due to bad mgt. 13. Initiative -It is one of the keenest satisfaction for an intelligent employee. A manager should sacrifice his own personnel vanity in order to let his subordinates exercise their own initiative. Also, he should encourage them to take initiatives. 14. Esprit De Corps - This principle emphasizes the need for teamwork.

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TAYLORS SCIENTIFIC MANAGEMENT Scientific Management consists in knowing what the management want the men to do exactly and seeing to it that they do it in the best manner. Principles of Scientific Management: 1. Science: not the rule of thumb: The basic principle of S.M is the adoption of scientific approach to managerial decision making. 2. Harmony- not discord: Harmony refers to the unity of action, while discords refer to differences in approach. 3. Co-operation-not individualism: Co-operation refers to working on the part of people towards the attainment of group of objectives. 4. Maximum production: in place of restricted production: His view, the most dangerous evil of the industrial system was a deliberate restriction of output. He encourage the maximum production to increase the productivity. 5. Development- of each person to the greatest of his capabilities: Management must endeavor to develop people to the greatest of their capabilities to ensure maximum prosperity for both employee and employers 6. A more equal division of Responsibility between management and workers: This principle of S.M recommends a separation of planning from execution 7. Mental Revolution- on the part of Management and worker: It involves a complete mental revolution on the part of both sides to industry viz workers and management. Contribution to SM by: Henri Fayol: Fayol believed that if any kind of business was to operate successfully, the following six functions has to be performed. If any one was neglected, the enterprise would suffer accordingly. The six functions are: 1. Technical Activities such as production and manufacturing 2. Commercial Activities such as buying and selling 3. Financial Activities such as capital 4. Security Activities such as protection of property and persons. 5. Accounting Activities such as Stock taking, balance sheets and costs. 6. Managerial or Administrative Activities such as planning, organizing and command Elton Mayo: His idea was that logical factors were far less important that emotional factors in determining production efficiency. He also concluded that work arrangements in addition to meeting the objective requirement of production must at the same time satisfy the employees subjective requirement of social satisfaction at his work place. Gilberth:

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He suggested the first definition of Motion Study. He defined it as the science of eliminating wastefulness resulting from unnecessary ill directed and inefficient motions. According to him, the purpose of motion study was to discover and establish the scheme of least waste methods of labour. Gantt: He developed the daily balance chart, known as Gantt chart. It shows the graph of Output vs. Time. This proved to be revolutionary in the area of Production planning and control. The Gantt chart is still being used and is the fore runner of some of the commercial scheduling techniques. ORGANIZATION Organization involves the grouping of activities necessary to accomplish goals and plans, the assignment of these activities to appropriate departments and the provision for authority delegation and co-ordination. Organisation is the form of every human association for the attainment of a common purpose. Organizing consisting of the following steps: 1. Determination of the total workload and division of work 2. Grouping and sub-grouping of activities i.e., (Departmentation) 3. Assignment of duties 4. Delegation of authority FORMAL AND INFORMAL ORGANISATION Formal organisation Informal organisation 1. Origin -achieving the objectives of the -It is a self-generating process. enterprise. -certain socio-psychological factors 2. Objectives -different departments have -No specific objectives specific objectives 3. Functioning -pre-planned rules, polices, procedures and programmes. 4.Authority-responsibility relationships -clear-cut and properly defined, authority and responsibility relationship shown in the organizational chart. 5. Leadership -group manager, is a leader with official status and authority. 6. Communication system -communication through the scalar-chain. 7. Stability -It is most stable -It is least stable. 8. Political domination -away from political domination. -possible politically dominated. -no such rules and procedure

-no such specific relationships

-Personal power. - grapevine in nature - spread from any person to any person

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PRINCIPLE OF ORGANISATION OR FEATURES OF ORGANISATION 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Unity of objective: - common objectives Efficiency: - objective at minimum possible cost Division of work: - tasks are divided with efficient breakdown Span of control: - effective number of employees under the superior Scalar principle: clear unbroken line Delegation: - lowest possible level Functional definition: clearly defined duties and authority Correspondence: - proper correspondence Unity of command: - orders from only one superior Unity of direction: - group of activities towards the same objectives. Balance: - none of the functions should be given at the cost of others. Exception principles: - decisions within the scope of his authority Coordination: - secure unity of effort. Flexibility: - free from complicated procedures Continuity: - structured, continuity of operations

TYPES OF ORGANISATION I. Line, Military or Scalar Organisation This is the oldest type of organisation. Direct vertical relationships. No provision for staff specialists. Simple, Direct instructions the subordinates. Decisions within the authority.
Authority Flow Shareholders Directors M.D

Production Manager

Finance Manager

Marketing Manager

Personnel Manager

Works Manager Workers

accounting officer clerk

advertising Training section section salesman HR executive

Line Authority Advantages of line organisation 1. Simplicity: Simple and old. Easy to establish and operate. Easy to explain to the workers. 2. Flexibility Changes can be made quickly and easily.

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Adjustments can be easily made to suit the changing conditions. 3. Quick decision: Decisions quickly and promptly. 4. Unified control: There is unity of command and control. Orders by one superior only. Activities are under the control of one executive. 5. Fixed responsibility: Every person knows responsibility. 6. Effective discipline: Strong discipline among the employees. 7. Economy: Less expensive in terms of overhead costs. 8. Speed action: Decisions can be made and executed promptly. Limitation of line organization: 1. Overburdening: Overloaded with administrative work. Top executives have to be superman Business grows in size, needs staff assistance. 2. Instability: Success and survival depends upon a few individuals. 3. Lack of specialization: No scope for specialization. Over dependence lower efficiency of operation. 4. Autocratic control: Complete control of one executive, there is danger of authoritarian. 5. Delayed communication: Subordinates hesitate to offer suggestions. II. LINE AND STAFF ORGANISATION Line authority: Work is not delegated. But authority can be delegated, indicate the line of authority. Staff authority: Staff authority denotes a supportive and advisory work to the line authority. Board of Members Board of Director

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Personnel manager Taxation expert Labour expert Chief Executives

Private Secretary PRO Account Officer

Production manager

finance manager

marketing Manager subordinates

Subordinates LINE STAFF

subordinates

Advantages of Line and Staff Organisation: 1. Discipline: Unity of command is maintained, as staff is not given executive authority. 2. Expert advice: Line executives get expert advice and guidance by the staff officers. 3. Balance decisions: Line executes can take better and more sound decisions. 4. Relief to line executives: Big relief to the line officers. Disadvantages of line and staff organization: 1. Conflicts: Conflict between Line and Staff. 2. Advice ignored: Line executives may ignore staff advice. 3. Expensive: Expensive in terms of overheads. 4. Conflict between line and staff: Allocation of responsibility may not be very clear. Staff advice may be confused. Line and Staff authority: Line authority Staff authority - responsibility and authority - provide advice - primary objectives - supportive activity communication through expert and specialized scalar chain knowledge.. - make the salient decisions by exercising command authority. III. COMMITTEE ORGANISATION A committee is a group of people who meet by plan to discuss or make a decision for a particular subject. Eg.: executive committee, finance committee, audit committee, bonus committee, grievance committee, etc.

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CHARACTERISTICS 1. Group of persons - at least two 2. Dealing specific problems 3. Constituted at any level 4. Go into details of the problems. TYPES OF COMMITTEE 1. Standing or Ad Hoc committee: Standing: it exists continuously for indefinite period. Ad hoc committee: specific purpose or to solve a specific problem. 2. Decision-making committee: Making and executing decisions. 3. Line and staff committee. Line committee: Controlling and coordinating functions within a chain of command. Staff committee: Advisory capacity, to implement its decisions. 4. Formal and informal committee: Formal: Constituted by organizational rules, regulations with specific authority. Informal: Not as per any policies or rules of the organization. Advantages of committee organisation: 1. Pooling of knowledge and experience. 2. Facility of coordination 3. Motivation through participation 4. Easy communication 5. A tool of management development 6. Consolidation of authority. Disadvantages of committee organisation: 1. High cost 2. Slowness in decisions 3. Dividend responsibility 4. Misuse of committee. IV. MATRIX ORGANISATION When an enterprise undertakes a large number of small projects; a matrix organisation is more suitable. A matrix organisation is characterized by two major features: i. It undertakes a large number of small projects; ii. There is a dual line of command, in a matrix organisation. Matrix organisation = Dual line of command + matrix culture + matrix behaviour. Matrix organisation represents a combination of functional departmental organisation and project organisation. Different project managers share resources and authority with functional heads. When one project is over; its personnel and resources are diverted to some new project. General Manager

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Production personnel Manager Manager Project Mgr 1 Project Mgr 2 Project Mgr 3

Finance Manager

marketing Manager

Project Mgr 4 -- Authority of project manager Advantages: 1. It is oriented toward end results 2. Professional identification is maintained 3. Pinpoints product-profit responsibility

--- Authority of functional head.

Disadvantages: 1. Conflict in organisation authority exists 2. Possibility of disunity of command exists 3. Requires manager effective in human relations. V. STRATEGIC BUSINESS UNIT (SBUs)

Companies have been using an organizational device generally referred to as a strategic business unit (SBU). SBUs are distinct little businesses set up as units in a larger company. In some cases companies have also used the device for a major product line. Eg. Chemical Company, used such products as phosphates, alkalies, and resins. An SBU, for example must: 1. Have its own mission, distinct from the mission of other SBUs, 2. Have definable groups of competitors, 3. Prepare its own integrative plans, fairly distinct from those of others SBUs, 4. Manage it resources in key areas, and 5. Have a proper size- neither too large nor too small.

General

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Manager
Business manager

Production Manager

accounting Manager

Marketing Manager

sales Manager

product development

Works man Manager Altanta

works manager Chicago

works manager dallas

Regional manager new york

Regional manager chicago

Regional manager los angeles

Product Manager A

product manager B

product manager C

INDUSTRIAL OWNERSHIP (BUSINESS ORGANISATION / TYPES OF INDUSTRY) Every business based on any one or other accepted legal form. Such legal form gives the organization distinct states and helps the outsider to determine its identity. Ownership can be divided into 1. 2. 3. 4. 5. Single ownership Partnership Joint Stock Companies Co-operative Organisation State and Central Government owned.

A)

SINGLE OWNERSIP Ownership means title to possession of assets of the enterprise. Individual enjoy and exercise all rights of his own interest. One man business, one person responsible for providing capital and bearing risk of undertaking and management of the business. Example: Printing Press, auto repair shop, wood working plan, Furniture mart, small fabrication shop etc; Advantages: Easy to establish, does not require complete legal formality. Flexible, owner enjoy profit, personal motivation. Minimum legal restriction and can maintain secrecy of business.

B)

PARTNERSHIP

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As the size of the business enterprise grows, it needs more capital and inadequate a single owner. At this stage, the individual owner may wish to associate with his more persons who have either to invest or to possess special skill, knowledge to make business more profitable. Partnership is defined as the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. It is association of two or more (minimum 2 and maximum=20 and 10 in case of Bank) persons carry on as co-owners of a business for profit earning. Features are: Run through agreement by written or oral agent Principal relationship business carried on by all or any of them acting for all Kinds of Partnership 1. Active Partners (Take part in management) General Duties of Partners 1. Faithful to one another 2. Render true accounts for information 3. Co-operate and accommodate each other 4. Have confidence in each other 5. Mutual understanding 6. Respect the views of one another TYPES General partner Limited partner General Partner: each partner have full agency of power and each act as individual proprietor. Advantages: Large capital is available and posses much better talents, judgment skills etc; G.P easy to form, inexpensive in cost Incentive for success is high There is definite legal status Partners have full control and posses full rights to all profits Partners associate tax advantage with it and can borrow quite easily from bank Loss shared by all partners. Unlimited liability , can suffer if wrong steps or decision taken Application: General partnership dies very well in Law firms, Retail Trade, Medical Clinics, Small engineering Firm etc; Limited Partnership: It have one or more general partners Liability is limited and limited partners share the profit Limited partners do not interfere with control or management of the firm. 2. Sleeping Partner (Do not take active part)

1. 2.

C)

JOINT STOCK COMPANY

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A Joint Stock Company is an association of individuals called shareholders who join together for profit and agree to supply capital divided into share. J.S.C overcomes many advantages, Difficulties in raising capital and lack of facility for centralized management Unlimited liability Death insolvency, insolvency, disablement, lunacy does not affect the business of J.S.C It consists more than 20 persons Persons give name to the company and register it Managing body is Board of Director (BOD) elected by shareholders to make policies, take decision and runs the company efficiently. Types of Joint Stock Company Private Limited - In Private Limited capital is collected from the private partners, restricted right to transfer shares. - No of members 2 to 50 excluding employees. - The company not file document such as list of directors with the Registrar of Joint Stock Company and need not obtain certificate from Registrar for commencement of business. Public Limited Capital collected from public in the form of shares, face value Rs.10, 100/. Number of shareholders should not be less than 7 and maximum no limit. The company has to Registrar list of directors, documents, and has to get consent of Directors, Memorandum of Association. 1. Public Limited has to issue a prospectus to public and has to allot shares within 180 days, 2. It start business only after receiving certificate to commence business. 3. Hold statutory meeting, Report to all members 4. No restriction to transfer of shares 5. Have accounted audited every year by registered auditors. 6. It hold general meeting every year. 7. Managing agents gets fixed percentage of Net Profit as remuneration. Advantages Huge amount raised, Limited liability, share transfer is possible, Company life not affected due to death, risk or loss divided by partners. Examples are Steel Mills (SAIL, POPSCO at Orissa), Fertilizer Factories and Engineering Concerns etc; D) CO-OPERATIVE ORGANISATION It is the forms of Private ownership contain features of large partnership, aims to eliminate profit and to provide goods and services to members of co-operative at cost. Members pay fees or buy shares. Special laws for formation and Taxation. It based on ideal of co-operation and formed by persons to satisfy common needs through mutual co-operation and collective efforts. Forms 1. Consumers Co-operatives (in retail trade) 2. Producers Co-operatives service (Buying & selling-dairy, grain, fruit) 3. Co-operative farming(good quality forms)

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4. Co-operative Housing 5. Co-operative Credit Society (provide loans) E) PUBLIC SECTOR (Public enterprise)

It owned, managed and controlled by state and operated by the Government. Public Sector accountable in terms of their results to parliament and State Legislature. Example: Hindustan Steels, Hindustan Machine Tools, BHEL, Indian Airlines, Life Insurance Corporation of India (LIC) Objectives: 1. to provide infrastructure facilities 2. to promote economic development and create employment opportunity 3. to earn foreign exchange to export commodities (petroleum, oil, weapon) 4. to look after well being and welfare of public. F) PRIVATE SECTOR Serve personal interest, non-government sector. Constitutes mainly consumers goods industries where profit possibilities are high, does not undertake risk-having low-profit margin. Capital is collected from Private Partners. Merits: Efficiency is high, wastage of material and labor minimum. Decision making is very important No interference of political or government Competent persons occupy high levels (M.D, GM, CEO).