UNIT -3
FORMS OF BUSINESS ORGANISATION-II
3.2 REQUISITES OF AN IDEAL FORM OF BUSINESS ORGANISATION :-
→ The requisites of an ideal form of busineess organisation are as follows :-
(1) Ease of formation
(2) Scope of raising capital
(3) Extent of liability
(4) Flexibility of operations
(5) Stability and continuity
(6) Effectiveness of management
(7) Extent of goverment control and regulations.
(8) Business secrecy
(9) Tax burden
3.4 CRITERIA FOR THE CHOICE OF ORGANISATION :-
• Criteria at the Time of Starting a Business :-
(1) Nature of business
(2) Volume of business
(3) Area of operation
(4) Desire for control
(5) Capital requirements
(6) Extent of risk and liability
(7) Government regulations .
• Criteria at the Time of Expansion :-
(1) Need for larger financial resources
(2) Need for internal reorganisation and control
(3) Need for specialised services like communication, accounting, marketing, etc.
(4) Increase in govermental controls and regulations.
(5) Increase in tax liability
(6) Increase in the problem of control and coordination.
• CHOICE OF FORM OF ORGANISATION :-
→ Based on the analysis it is concluded that the sole propreitroships is the suitable form of small business.
→ If business is relatively larger, partnership is the proper form of organisation.
→ Private limited company is the ideal for medium sized business
→ The cooperative form of organisation is suitable when the interest of a particular segment of the society is to be looked after.
