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SEBA Class 9 An Introduction to Commerce Chapter 2 Business Organisation
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Business Organisation
Chapter – 2
| UNIT – I BUSINESS STUDIES |
| Questions |
1. Show the different forms of Business Organisation.
Ans: The different forms of Business Organisation are mentioned below:
(a) Sole Proprietorship: Sole means only and proprietor refers to the owner. Hence, Sole Proprietor means one who is the only owner of a business. It is the type of business which is controlled and managed by a single person who invests money in the form of capital, takes entire risk of business and accepts both profit and loss of the business. It is also called Sole Trade or Sole Trader.
The major features of the sole proprietorship are:
(i) Individual Ownership: The basic characteristic of sole proprietorship is that it is owned, run and controlled by one individual. He is the sole owner of all the assets and resources of business.
(ii) Sole Management: In the sole proprietorship, the owner performs all the functions of management but with the increase in the size and volume of business he can appoint managers.
(iii) Unlimited Liability: The liability of sole proprietor can be more than the capital invested. It means, in case of heavy losses, if it is not possible to make payment with the help of the assets of the business, not only the domestic assets of the sole trader can be utilized for this purpose, but can be declared bankrupt and held personally responsible.
(iv) Freedom in Selection of Business: A sole proprietor can select any trade or business as per his will. The selection of trade from among the many other forms can be made with the suggestions of many people.
(b) Hindu Undivided Family (HUF) Business: Hindu Undivided Family (HUF) business is a business which is run, controlled and managed by the eldest male member of the family, known as Manager (Karta) and other male members are known as coparceners. This is the oldest type of business that prevails only in India.
The features of Hindu Undivided Family (HUF) business are:
(i) Operating According to Hindu Law: Hindu Undivided Family (HUF) business is directed according to the Hindu Law.
(ii) Management: The joint Hindu family business is normally managed by a senior member of the family. He is known as Manager (Karta or Mukhiya).
(iii) Only Male Members: Only male members can be the Coparcener in the Hindu Undivided Family (HUF) business.
(iv) Registration: There is no need of any registration of the Hindu Undivided Family (HUF) business.
(c) Partnership: Partnership is an agreement between two or more persons to carry a similar business together, have agreed to share the profits of the business. It can be defined as, “the relationship between two or more persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.”
Characteristics of Partnership are:
(i) More than One Person: Partnership needs a minimum of two persons because a single individual cannot be his own partner.
(ii) Existence of Business: The joining of two or more persons can be called partnership only when they agree to run business together.
(iii) Contractual Relationships: Partnership comes into existence only on the basis of a contract between the partners. Hence, it is important to have an agreement between the partners.
(iv) Profit Motive & Sharing of Profit: One of the main characteristic of partnership is to earn profit. In a partnership firm, profit is divided among the partners according to their agreement.
2. What do you mean by Sole Proprietorship Business?
Ans: A sole proprietorship is a non-registered, unincorporated business run solely by one individual proprietor with no distinction between the business and the owner.
3. Write essential features of Sole Proprietorship Business.
Ans: The major features of the sole proprietorship Business are mentioned below:
(i) Individual Ownership: The basic characteristic of sole proprietorship is that it is owned, run and controlled by one individual. He is the sole owner of all the assets and resources of business.
(ii) Sole Management: In the sole proprietorship, the owner performs all the functions of management but with the increase in the size and volume of business he can appoint managers.
(iii) Unlimited Liability: The liability of sole proprietor can be more than the capital invested. It means, in case of heavy losses, if it is not possible to make payment with the help of the assets of the business, not only the domestic assets of the sole trader can be utilized for this purpose, but can be declared bankrupt and held personally responsible.
(iv) Freedom in Selection of Business: A sole proprietor can select any trade or business as per his will. The selection of trade from among the many other forms can be made with the suggestions of many people.
4. What do you mean by Hindu Undivided Family (HUF)?
Ans: Hindu Undivided Family (HUF) business is a business which is run, controlled and managed by the eldest male member of the family, known as Manager (Karta) and other male members are known as coparceners. This is the oldest type of business that prevails only in India.
5. Write the essential features of Hindu Undivided Family (HUF).
Ans: The Essential features of Hindu Undivided Family (HUF) are:
(i) Operating According to Hindu Law: Hindu Undivided Family (HUF) business is directed according to the Hindu Law.
(ii) Management: The joint Hindu family business is normally managed by a senior member of the family. He is known as Manager (Karta or Mukhiya).
(iii) Only Male Members: Only male members can be the Coparcener in the Hindu Undivided Family (HUF) business.
(iv) Registration: There is no need for any registration of the Hindu Undivided Family (HUF) business.
6. What is Partnership Business?
Ans: Partnership is an agreement between two or more persons to carry a similar business together, and have agreed to share the profits of the business.
7. Write the characteristic of a Partnership Business.
Ans: The characteristic of a Partnership Business are mentioned below:
(i) More than One Person: Partnership needs a minimum of two persons because a single individual cannot be his own partner.
(ii) Existence of Business: The joining of two or more persons can be called partnership only when they agree to run business together.
(iii) Contractual Relationships: Partnership comes into existence only on the basis of a contract between the partners. Hence, it is important to have an agreement between the partners.
(iv) Profit Motive & Sharing of Profit: One of the main characteristic of partnership is to earn profit. In a partnership firm, profit is divided among the partners according to their agreement.
8. What do you mean by Small Scale Industry? What are the different types of business units included under Small Scale Industry.
Ans: Small businesses play a significant role in Indian Economy. These businesses have made significant contribution in employment generation and economic development. For the last few years a range of products, i.e., from simple consumer goods to goods based on latest technology are being produced by these businesses. Even the Government has nicely understood the importance of these businesses and for this reason, special attention has been paid on the development of these businesses.
The different types of business units included under Small Scale Industry are mentioned below:
(i) Small-Scale Industry.
(ii) Ancillary/Auxiliary Small Industrial Units.
(iii) Export Oriented Units.
(iv) Small Scale Industries owned and managed by Women Entrepreneurs.
(v) Tiny Sector.
(vi) Small Scale Service and Business (Industry related) Enterprise.
(vii) Micro Business Enterprises.
(viii) Cottage and Rural Industry.
9. Write the role of small business in rural area.
Ans: The role of small business in rural area are:
(i) More Employment: These are labour-intensive enterprises. Thus, more labour is required in these industries. In Indian rural areas ample labour is available. Some of the people in rural areas remain unemployed for the whole year, some others do farming for a part of year and remain idle for the rest of the period.
(ii) Economic Strength: Small businesses provide economic strength to the rural areas in two ways. Firstly, in these businesses a limited amount of capital is required. So any person having limited capital can start such businesses. Secondly, they provide employment to the unemployed.
(iii) Opportunity for Artisan: In villages artisan/specialist/artist having expertise in different fields are found. Because of lack of opportunities their skills do not come into limelight. Small business helps them in exploring.
(iv) Regional Development: These enterprises are often dependent on local sources of production. So, these businesses can be carried on at any place, even in remote areas which helps in balancing regional development.
(v) Promotion of Standard of Living: With the establishment of small businesses in rural areas, villages get many types of facilities like employment, electricity, roads, education, banks, transportation, etc. Which helps in raising the standard of living of the rural people.
(vi) Utilization of Local Resources: In rural areas resources like labour barren land, raw material, etc. Either remains idle/unutilized or are used in very less quantity. With the establishment of small industries better utilization of such idle resources is possible.
10. Write the problems or challenges faced by the small business in India.
Ans: The problems or challenges faced by the small business in India are mention:
(i) Lack of Raw Material and Power: Often it is noticed that adequate raw material is not provided to small businesses. Apart from this the material which they get is of inferior quality and of high cost.
(ii) Lack of Finance: The main source of investment for small business is loan. In India, these businesses are unable to get adequate loan from the banks because they fail to provide the needed security against the loan.
(iii) Traditional Methods of Production: In these businesses, still the old methods of production are adopted. The first priority is given to manual than machines to work with. As a result, there is downfall in production and the end product is of inferior quality.
(iv) Lack of Marketing Facilities: The hindrances which arises in the marketing of these businesses are as follows:
(a) Because of high costs, the price of the products rises.
(b) Lack of adequate material and modern production process.
(c) It is difficult for them to cope with the frequent changing tastes of the Consumers.
(d) These businesses cannot afford to spend huge amount on advertisement.
