2. ASSESSMENT BRIEF- LO1
• Assess an organization’s core business structure. (1.1) (12.5 Marks)
• 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.
6. BUSINESS ORGANISATION
• Business Organisation is an entity formed for the purpose of carrying on
commercial enterprise that describes how businesses are structured and how to
produce goods or services and meet needs of the customers.
• These business entities are doing their operations differently from each other
according to the nature of business.
• The main function of the businesses is producing goods and services.
9. These business entities are doing their operations
differently from each other according to the nature of
business. The main function of the businesses is
producing goods and services.
13. 1. DEPARTMENTAL UNDERTAKINGS
• This is the oldest form of public sector enterprises.
• The departmental undertaking is considered as one of the departments of
• It has no separate existence than the government.
• It functions under the overall control of one ministry or department of
• For example, Railways, post & telegraph, broadcasting, telephone service etc.
14. FEATURES MERITS
• They operate under the
overall control of one of the ministries
of central or state government.
• They are a part of government only,
there is no separate entity.
• The revenue of departmental
undertakings is deposited in the
treasury of government.
• They are financed from the annual
budgets of the government.
• It is very easy to form a departmental
undertaking as no registration is
• There is direct parliamentary control.
The performance of departmental
undertakings can be discussed in
parliament. So there is public
• The revenue of departmental
undertaking is deposited in the
treasury of the government. So these
undertakings help to increase the
15. 2. PUBLIC CORPORATION/STATUTORY
• A statutory corporation is a body corporate formed by a special act of parliament or
by the central or state legislature. It is fully financed by the government.
• Its powers, objects, limitations etc. are also decided by the act of the legislature.
• For example: In India-
• State bank of India,
• Life insurance corporation of India,
• Food corporation of India,
• Oil & natural gas corporation, etc.
16. FEATURES MERITS
• It is created by an act of parliament or
central or state legislature.
• The powers, objectives & limitations of
a public corporation are defined in the
• Under total control of central or state
government operations of public
corporations takes place.
• a public corporation is a separate legal
entity. It gets incorporated
automatically when the act is passed in
• A public corporation is able to manage
its affairs with independence &
• A public corporation is relatively free
from red tape, as there is less file work
& less formality to be completed
before taking decisions.
• The activities of the public corporation
are discussed in parliament. This
ensures the protection of public
17. 3. GOVERNMENT COMPANIES
• The company in which at least 51% of the paid-up share capital is held by the
central or state government or partly by central or state government
is Government Company.
• The government companies are governed & ruled by the provisions of the
Country’s law and legislation, like any other registered companies.
• Example in Maldives-???????????????????
18. FEATURES MERITS
• Registration: The government company
gets incorporated under the law. All the
provisions of companies act are applicable
to a government company.
• Ownership: The government company is
wholly or partly owned by the government.
The share capital of these companies is
owned by the government of India in the
name of the president.
• Management: The government is managed
by the board of directors, who are
nominated by the government & other
shareholders. The government has the
authority to appoint a majority of the
• The government company is relatively free
from government & political interference.
• The government company is managed,
financed & audited just as any other private
sector company. It can, therefore, secure
greater flexibility, freedom of operation &
quickness of action in running
• The government companies can avail &
accommodate managerial skill, technical
know-how or expertise of the private
enterprise by conveniently collaborating
24. CHARACTERISTICS OF A SOLE PROPRIETORSHIP
• 1) Private/Single Ownership:
The sole proprietorship firm is owned by a single individual only, that’s why it is called as single ownership. In this type of
business, all the capital is invested by the owner.
• 2) Legal formalities:
There are very fewer formalities to start and close the business and also no separate law governing this form of business.
• 3)Decision Making:
Because in this type of business there is only one owner so he can take all the decision on its own.
• 4) Fund Raising:
In this type of Business, the owner can only raise fund by taking loans from other financial institutions. For example loan from
• 5) Share of Profit/Loss:
In the type of business, the owner is the only person who runs the business alone that’s why all profit is enjoyed by the
owner only and all loss will bear by the owner.
• 6) Governed by Act:
For this type of business, there is no such act is available. It is the owner’s wish to start or to close the business but in
partnership and other businesses are having separate acts/laws.
25. Advantages Disadvantages
Easy to set up Can be difficult to raise finance
Sole trader retains all profits for themself Unlimited liability
Sole trader makes all the decisions Heavy workload
1. Nature Liability:
• The liability of all partners is unlimited in the type of partnership business except
one type of partnership i.e. the limited liability Partnership.
• The unlimited liability means in the worse condition when a firm has more
amount of liability than the total assets of the firm then the balance amount of
liabilities will be paid by selling personal assets of the partners.
29. 2. Decision Making:
• The decision can be taken by any one of the partners as per the requirement of
the business because all partners are allowed to manage the business activities.
• The profit earned by the firm will be shared among all partners as per the profit-
sharing ratio of the partners. If the profit sharing ratio is not mentioned in the
partnership deed then the profit will be shared equally among the partners.
30. 4. Risk Sharing:
• The risk involved in the nature of business is also shared and bore by all partners
like the profit in the profit-sharing ratio of the partners.
5. End of Business:
• On the event of the death of the partner(s) there will not need to close the
business because the remaining partners will continue the business operational
31. 6. Number of Partners:
• In the partnership, there can be a minimum of two partners, and the maximum as
per is 100 subject to the number prescribed by the government.
7. Agency Relationship:
• Agency Relationship means all partners act as an agent of the partnership firm as
well as other partners
32. Advantages Disadvantages
More equity available to finance the business
compared to a sole trader
Different partners can bring different skills Profit is shared between the partners
Workload is shared
Partners may not always agree on decisions for the
34. CHARACTERISTICS OF JOINT STOCK COMPANIES
1. Legal entity Joint Stock Companies:
• Company and its members are separate individuals. All the operations of the
company are carried on in its own name, and it can buy or sell assets in its own
name. In the company form of organisation, the board of directors can manage all
the operations of the business by using the stamp of the company they cannot
use their own name in the place of the company name.
35. 2. Artificial person:
• Company is an artificial person created by law. We can say that all business
activities are performed by all human resources but it does not mean that
company is a natural person. we use the name of the company while doing any
• This is a legal formality which is compulsory for the formation of the company.
Without registration of the company, operations can’t run smoothly.
36. 4. Common Seal:
• The company cannot sign itself, all the activities are carried through a group of
people who are connected with the company. So anyone acting on the behalf of
the company can use the common seal (stamp) in place of signature of the
• Any document without the stamp or a common seal is not considered as a legal
document of the company.
37. 5. Transferability of shares:
• The shares of the company are freely transferable by its members. Any member
who want to sell his shares then he can free to sell and withdraw his membership
from the company.
• In the case of public company transferability of shares is easy but in the case of
the private company no member can sell his share or transfer the share easily.
38. 6. Ownership and control:
• The company and its members are separate from each other and if we are talking
about the ownership, shareholders are the owners who owned and invest in the
company. If we are talking about the control, then shareholders elect a board of
directors for controlling the overall operations of the business.
• So, we can say that ownership and control are different. Company is owned by
shareholders and control of the operations of the company is in the hands of the
board of directors elected by the owners of the company.
39. 7. Liability:
• In the company, members have limited liability to the extent of their share capital
contributed by them.
• For example: if a person has purchased 2000 shares of value Rs 10 each, then his
liability is limited up to Rs. 20,000 only.
8. Continuous Existence:
• A company has continuous existence and it is independent of its members.
Members may come and may go but the operations of the company not affect.
The company can only be windup through the legal procedure.
40. Advantages Disadvantages
Owner can retain control Must be registered with the Registrar of
More able to raise money High set-up costs (legal and administrative)
Limited liability Harder to motivate and control workers
42. DEFINITION OF COOPERATIVE ORGANISATION
• The International Labour Organisation has defined cooperative organisation as
• A cooperative organisation is an association of persons, usually of limited means,
who have voluntarily joined together to achieve a common economic end
through the formation of a democratically controlled organisation, making
equitable distributions to the capital required, and accepting a fair share of risk
and benefits of the undertaking.
43. CHARACTERISTICS OF COOPERATIVE
1. Voluntary Association:
A cooperative society is a voluntary association of persons and not of capital. Any
person can join a cooperative society of his free will and can leave it at any time.
When he leaves, he can withdraw his capital from the society. He cannot transfer his
share to another person.
2. Spirit of Cooperation:
The spirit of cooperation works under the motto, ‘each for all and all for each.’ This
means that every member of a cooperative organisation shall work in the general
interest of the organisation as a whole and not for his self-interest. Under
cooperation, service is of supreme importance and self-interest is of secondary
44. 3. Democratic Management:
• An individual member is considered not as a capitalist but as a human being and under
cooperation, economic equality is fully ensured by a general rule—one man one vote.
Whether one contributes 50 rupees or 100 rupees as share capital, all enjoy equal
rights and equal duties. A person having only one share can even become the
president of cooperative society.
• Capital of a cooperative society is raised from members through share capital. Coop-
eratives are formed by relatively poorer sections of society; share capital is usually very
limited. Since it is a part of govt. policy to encourage cooperatives, a cooperative
society can increase its capital by taking loans from the State and Central Cooperative
45. 5. Cash Sale:
• In a cooperative organisation “cash and carry system” is a universal feature. In the
absence of adequate capital, grant of credit is not possible. Cash sales also avoided risk
of loss due to bad debts and it could also encourage the habit of thrift among the
46. 6. Moral Emphasis:
• A cooperative organisation generally originates in the poorer section of
population; hence more emphasis is laid on the development of moral character
of the individual member. The absence of capital is compensated by honesty,
integrity and loyalty. Under cooperation, honesty is regarded as the best security.
Thus cooperation prepares a band of honest and selfless workers for the good of
7. Corporate Status:
• A cooperative association has to be registered under the separate legislation—
Cooperative Societies Act. Every society must have at least 10 members.
Registration is desirable. It gives a separate legal status to all cooperative
organisations—just like a company. It also gives exemptions and privileges under
• The term joint sector refers to an undertaking whose ownership as well as control
is shared between both private sector companies and public sector agencies.
• The industries in this sector are those businesses that are operated and owned by
governmental agencies, private individuals, and groups of individuals.
• These are new enterprises where both sectors public and private companies join
hands to contribute to the capital and its operations
49. • In these types of industries, the financial participation is 25% from the private
enterprise, 26% from the government, and the rest 49% from financial institutions
• If it is a foreign collaboration then the share of the governmental agency is 25%,
foreign investors 20%, Indian business concern 20%, and the public 35%. No
single party is entitled to more than a 25% share without the permission of the
50. FEATURES OF JOINT SECTOR
• Private entrepreneurs and the central agency can set up new enterprises
• The central government and one or more state governments can set up joint
enterprises with the private sector
• State governments can set up new companies with private partners with equity
participation from both of them
• Public financial institutions can transform private enterprises into joint companies
51. ADVANTAGES OF JOINT INDUSTRIES
• Governmental participation helps in controlling
monopoly, business malpractices and concentration of
• The joint venture ensures the management is conducted
as per the overall policies of the government
• The joint sector helps to mobilize the productive
resources, promote economic growth and encourage
investments in the projects from private sources
• Promotes mixed economy and achieves development
objectives by harnessing all the productive forces of the
52. DISADVANTAGES OF JOINT INDUSTRIES
• Corrupt people can use agreements with the government to make money for
themselves at the expense of public
• Reduction in the quality of services
• The chances of bias in evaluation are high
54. VOLUNTARY GROUP ORGANISATIONS
• Also known as Third Sector.
• The third sector is not about making a profit but rather making a difference to
• Third sector organisations are categorised into:
• community groups and
• social enterprises
55. 1. CHARITY
• A charity is an organisation set up for a specific cause.
• Charities receive grants from many fund raising organisations such as the National
Lottery. Money is also raised for them by sales in charity shops and through public
• All money goes to help the specific cause or to pay for the operation and running of
• Examples of charities are:
• Save the Children
• Cancer Research UK
56. 2. COMMUNITY GROUPS
• Community groups exist to provide a service for people. They are non-profit
making and all of the profit goes back into the organisation to ensure it can keep
• Examples of non-profit making organisations are:
• rugby clubs
• golf clubs
57. 3. SOCIAL ENTERPRISE
• A social enterprise is an organisation that exists with a clear goal to help the
community but runs the organisation like a business. All profits are reinvested
back into the organisation.
• Examples of social enterprises include:
• Street Soccer Scotland is a non-profit social enterprise that delivers a range of
football-related services to socially disadvantaged adults and young people across
• Social Bite is a chain of retail stores and catering concessions in Scotland which
employs a quarter of its workforce from a homeless background.