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The four forms of business organization are:-

1. Sole Proprietorship

2. Partnership firm

3. Corporation

4. Limited Liability Partnership (LLP)

Sole proprietorship: Sole proprietorship is a type of a business which is owned by only one person. It
is simple to form and operate and is cheaper compared to the others.

Sole proprietorship is generally adopted by small organizations or institutions.

Partnership firm: Partnership firm is a form of business where two or more people are involved. The
profit is divided among themselves.

Corporation: It is a form which is basically owned by stockholders.

An elected group, called the board of directors from the stockholders, controls the activities of the
corporation.

Limited Liability Partnership (LLP):- It is a form of business which is a combination if both

corporation and partnership. It is basically not incorporated.

So we can see that none of the four forms of business organization has all the features of an ideal
form of business organization.

Stock exchange called the barometer of the economic & business conditions in country
because....
** It determines that what the standard of shares are present in the economy...

** Shares are the best and important way of investing and it has high % in economy so
it's Census effect all the economy...

** It analysis the prices of gold and silver in once economy....

Barometers are data points that indicate trends in the market. It is quite common for a
stock index or exchange to be used as a barometer for the national economy.

The different types of barometer are

i) Economic barometer

ii) Market Barometer

iii) Consumer - Level Barometers.

Choosing the correct medium for advertising is crucial for the success of advertising campaign.
Currently an organization has to put thoughtful efforts in choosing medium for advertising when
customer is well aware about everything, competition is aggressive and so many new option are
open. There are many traditional and modern media options available e.g. print media, TV
advertisement, Digital media, social media etc. Therefore in order to select correct medium for
advertising, one should consider following factors in mind:

- Objective of advertising: Whether you want to inform, collaborate or pursued. Some media
is useful to inform then others, while some is useful to persuade. Hence, first of objective which
organization want to achieve with advertising.

- Cost: How much cost is involved in each medium and how much budget does the
organization have.

- Coverage that any medium offers: Higher coverage or circulation of any medium is another
key factor while deciding medium for advertising.

- Buyer’s Preferences: The preferences of the audience you like to reach is another major
criteria while selecting an advertising medium.

- Nature of Product: Not all the media is useful to advertise all products, therefore it is
recommended to analyze the nature of product.
- Analyze competitor selection of media: It is suggested to analyze the industry and
competitors actions and the results which they ripped. This helps to make a wise decision.

Therefore while choosing any medium for advertising; it would be helpful if we consider all the
above factors.

Forms of Public Enterprises with their Merits and Demerits!

Public enterprise stands for a concern owned and managed by the State or any other public
authority. It also broadly refers to nationalized industries and institutions, which are engaged in
production or supply of services.

The public enterprises are organized by the following one or the other of the three important forms:

1. Government Department

2. Public Corporation

3. Government Company

1. Government Department:

This is the oldest and a traditional form of running any activity by the government and is freely
extended to the State or Central enterprises such as railways, posts and telegraphs, and defense.

The principal features of this form of organization are as follows:

i. The enterprise is managed by one of the departments of the government.

ii. The minister in charge of that department has direct control on the enterprise.

iii. It is financed by the annual budget appropriations passed by the legislatures and its revenue or its
major portion of income are paid into the treasury.

iv. Being treated as a government department, it is subject to the same rules and regulations as
applied to any other government department with regard to budgetary, audit, and accounting
controls.

v. The enterprise like any other government department is managed by the full-fledged government
employees.

Merits:

Some of the merits of this form of organization are as follows:

i. It enables the government to produce some commodity or render some service without losing
control over the enterprise.

ii. It provides service without losing control over the enterprise.

iii. It functions as government’s economic and social objective.

iv. It may also help the government to earn maximum revenue or maintain a service to society at the
minimum possible cost.

v. Further, if the public is dissatisfied with the working of an enterprise the matter can be
immediately raised in the Parliament and thus it is an advantage from the point of view of the public.

Drawbacks:

As against the above-mentioned merits of departmental form of organization, there are certain
drawbacks from which it suffers.

They are as follows:

i. There is lack of initiative and flexibility, which are quite essential for the efficient running of the
business.

ii. There is unusual delay in arriving at a decision, which has to be passed by many officials at
different levels. The bureaucratic formalities are not conductive to speedy action.

iii. The enterprises that are run by the department are at the mercy of the political parties and
ministers who do not possess knowledge of the enterprise and of its problems.

iv. Very often, the business undertakings are run on the basis of political and other considerations
rather than on business considerations.

v. The management of the enterprise is left in the hands of the civil servants that do not possess
technical knowledge and hence the enterprise may not be managed efficiently.

vi. Frequent transfer of officers is not conducive to formulating long-term policy and the efficient
management of the public enterprise.

vii. There is generally a tendency not to take losses seriously. If there were losses, no attempt would
be made to improve the efficiency or liquidate the unit as would be done if the enterprise was
privately owned.

viii. Another drawback is that generally this form of organization is extended to monopoly fields
only. When there is monopoly the interests of consumers are not protected.

However, with all its drawbacks, this form of organization is considered suitable for such industries
which require secrecy and strict government control, e.g., defense industry. It is also considered
suitable if full control on economic activity is considered necessary whether as a normal feature or
during the period of emergency.

2. Public Corporation:
Public or statutory corporation became very popular as an organization immediately after the First
World War.

The principal characteristics of this form of organization are as follows:

i. It is a corporate body created by a special law of the country, defining its objects, powers,
functions, privileges, its relationship to other government departments and so on.

ii. It has separate legal entity and can sue and be sued and can enter into contract in its own name.

iii. All its capital is subscribed by the State and it has shareholders in the ordinary sense of the term.

iv. The employees of public corporation are employed and remunerated independently by each
public corporation. The employees are not government servants, and civil service rules are not
applicable to them.

v. It is ordinarily subjected to the budget, accounting, and audit procedures applicable to

government departments.

vi. It is managed by a board of directors or a single executive. The chief executive or members of the
board are nominated by the government.

vii. It is usually independently financed. It is set up with a capital of its own, use and re-use the
revenue derived from the sale of its goods and services.

viii. It is generally free from most regulatory and prohibitory statutes applicable to expenditure of
public funds.

ix. One more important feature is that unlike a private undertaking, public corporation works
primarily for service, and profit is only a secondary consideration.

Examples of this type of organization in India are the Life Insurance Corporation of India, Indian
Airlines Corporation, Air India International, Damodar Valley Corporation, and Tourist Corporation of
India.

Some of the merits of public corporation are that it follows a middle course between the
departmental organization with its rigidity on one side and privately owned companies on the other
side. It attempts to create initiative in planning and execution, autonomy in finance and freedom
from the rigid and persistent control and regulation by the government.

In the words of President Roosevelt, “Public Corporation is clothed with the power of the
government but possesses the flexibility and initiative of private enterprise.” Herbert Morrison
described it as a combination of public accountability and business management.

Further, as it is free from the restrictive laws of the government, it is in a position to follow the best
commercial practice in carrying on its business. Again its autonomy lends a great deal of flexibility to
its operation leading to greater efficiency of management.
While the public corporation has eliminated many weaknesses of the departmental organization,
certain problems have been encountered in its management. According to ECAFE Seminar Report,
autonomy and flexibility may be secured at the cost of public accountability. The same report also
observes that the tendency of some public corporations is to disregard statutory or constitutional
limitations on the government’s borrowing authority and budget laws.

Further, the constitution of corporation is rigid and any change in its power and function requires
amendment to the statute. Despite these weaknesses, the public corporation “is destined to play an
important part in the field of nationalized industries in the realm of capitalist organization in the
nineteenth century. In fact, all political parties now accept the public corporation as being the
appropriate instrument for operating nationally owned undertakings of commercial or industrial
character.”

3. Government Company:

The Companies Act of 1956 defines a government company as any company in which not less than
51 per cent of the share capital is held by the Central Government or by any State Government(s) or
partly by Central Government and partly by one or more State Governments. Government Company
may be registered under Companies Act as a limited company, but it is not bound by the same
provisions of the law.

The capital of Government Company may be either subscribed entirely by the government or partly
by the government and partly by the public. When the public also subscribes to the share capital of
the company in which the government holds not less than 51 per cent of the share capital, such a
company is called mixed ownership corporation.

The chief characteristics of a government company organization are as follows:

i. Government Company has most of the features of limited company organized in private sector.

ii. All the directors or majority of them are nominated by the government depending upon the
extent of participation of private capital.

iii. The entire capital or 51 per cent or more of is held by the government. With the latest
amendment to Companies Act, 1956 the share capital of the government is reduced to 26 per cent in
government companies.

iv. Generally, it is free from the budget, audit, and accounting laws that are applicable to other
departments.

v. It can sue and be sued in a court of law. It can also enter into contracts and hold property in its
own name.

vi. Generally its employees are not civil servants of the government and they are recruited
independently by the government company
vii. Funds of the government company comprise the contribution from the government and in some
cases private share-holders and revenues derived from the sale of its goods and services.

The company form is usually adopted for any one of the following reasons:

i. Government may have to take over the existing enterprise in an emergency created by a financial
or an employment crisis.

ii. The State may wish to launch an enterprise in association with private capital.

iii. The government may wish to start an enterprise entirely as a public venture or to run a concern
as public enterprise.

Advantages:

i. Flexibility is the greatest advantage of this form of organization. Articles can be drawn up and
altered without a lengthy procedure that is prevalent in the case of public corporation.

ii. When compared to public corporation, it is easier to form a government company, and the time
involved in its formation also is very little.

iii. The autonomy of management is greater in Government Company when compared to public
corporation.

iv. If foreign capital and know-how are required for starting an enterprise, this form of organization
is subjected.

The principal defects from which the company form of organization suffers are as follows:

i. It evades constitutional responsibilities of a State enterprise.

ii. The separate entity and autonomy of management exist only in name. In reality, most of the
functions normally vested in the shareholders and the management are reserved to government.

iii. As it is governed by the rules laid down in the Articles of Association, it is free from government
audit. Hence it is criticized that to constitute a State-owned enterprise in the form of Government
Company, is to commit a “Fraud on the Companies Act and on the Constitution.”

iv. As the directors are salaried persons they do not take much interest in the management of the
concern.

v. Due to official domination, the incentive to efficiency and inclination to economy to economy may
suffer a lot.

In spite of the many drawbacks of the company form of organization in India, most of the State
enterprises are organized as government companies. Of the 76 Central Government undertaking at
the end of the Third Plan period, 70 have been organized as government companies and 6 in the
form of public corporation. Similarly, State Governments have shown preference for company form
of organization.

Some prominent State enterprises that are managed in this form – the Hindustan Machine Tools
Ltd., the Bharat Electronics Limited, the Hindustan Steel Limited, etc. The company form of
organization is considered suitable for running commercial and industrial undertakings, or where the
concern is financed by more than one government or where the capital has been subscribed both by
the State and the public.