BRIEF OUTLINE OF IMPORTANT TOPICS FOR PRINCIPLES OF MANAGEMENT

Ø  RE VISIONARY BRIEF LECTURES
SECTION A
 FOR PRINCIPLES OF MANAGEMENT
BUSINESS ORGANIZATION AND 

SECTION A
 FOR PRINCIPLES OF MANAGEMENT
BUSINESS ORGANIZATION AND MANAGEMENT

Ø  DIFFERENCE BETWEEN TRADE,INDUSTRY AND COMMERCE

Ø  TRADE:-IT IS RELATED TO THE PURCHASE  AND SALES OF GOODS.

Ø  COMMERCE:-IT IS CONCERNED WITH THE EXCHANGE 

OF GOODS AND IT INCLUDE ALL THOSE ACTIVITIES WHICH ARE RELATED TO TRANSFER OF GOODS FROM THE PLACE OF PRODUCTION TO THE ULTIMATE CONSUMERS.

Ø  INDUSTRY:-ALL THOSE ACTIVITIES WHICH DEALS WITH THE CONVERSION OF RAW MATERIAL INTO FINISHED GOODS

• TRADE :-THE REQUIREMENTS OF CAPITAL ARE MORE IN TRADE AS COMPARED TO COMMERCE
• COMMERCE REQUIRES LESS CAPITAL
• INDUSTRY REQUIRE HUGE INVESTMENT IN FIXED CAPITAL AS WELL AS OF INVESTMENT OF RAW MATERIAL

Ø  TRADE DEALS ONLY WITH THE PURCHASE AND SALE OF GOODS

Ø  COMMERCE INCLUDE TRADE AND AIDS TO TRADE

Ø  INDUSTRY IS CONCERNED WITH THE MAKING OF MANUFACTURING OF GOODS.INDUSTRY COVERS THOSE ACTIVITIES WHICH RELATE TO PRIMARY,MANUFACTURING AND PROCESSES ETC

• TRADE : INVOLVE MORE RISK DUE TO FLUCTUATION IN PRICES
• COMMERCE:-AS COMPARED TO TRADE IT IS LESS
• INDUSTRY : RISK IS MORE AS COMPARED TO TRADE,COMMERCE ETC

Ø  MEANING AND FEATURES OF THE SOLE PROPRIETORSHIP

Ø  A SOLE TRADER IS PERSON WHO SET UP THE BUSINESS WITH HIS OWN RESOURCES,MANAGES THE BUSINESS HIMSELF BY EMPLOYING PERSONS FOR HIS HELP AND ALONE BEARS ALL THE GAINS AND RISKS OF THE BUSINESS

Ø  FEATURES OF THE SOLE PROPRIETORSHIP

1. STARTED BY THE INITIATIVE OF A SINGLE PERSON
2. LIABILITY IS UNLIMITED
3. THE SOLE PROPRIETOR MANAGES THE BUSINESS HIMSELF
4. MORE SECRECY
5. OWNERSHIP AND BUSINESS EXIST TOGETHER
6. LIMITED AREA OF OPERATION

Ø  DIFFERENCE BETWEEN PARTNER SHIP AND SOLE PROPRIETORSHIP

Ø  MEANING

Ø  A SOLE TRADER IS PERSON WHO SET UP THE BUSINESS WITH HIS OWN RESOURCES,MANAGES THE BUSINESS HIMSELF BY EMPLOYING PERSONS FOR HIS HELP AND ALONE BEARS ALL THE GAINS AND RISKS OF THE BUSINESS

Ø  PARTNERSHIP IS AN ASSOCIATION OF TWO OR MORE PERSONS TO CARRY ON AS COOWNER A BUSINESS AND TO SHARE ITS PROFIT AND LOSSES.

• AGREEMENT:
• SOLE TRADER DOES NOT REQUIRE ANY FORMALITY TO START THE BUSINESS
• PARTNERSHIP: AN AGREEMENT IS REQUIRED IN THE FORM OF PARTNERSHIP DEED

Ø  REGISTRATION

Ø  PARTNERSHIP: MAY OR MAY NOT BE REGISTERED. BUT ON REGISTRATION IT GETS MANY BENEFITS

Ø  SOLE  TRADER DOES NOT REQUIRE ANY REGISTRATION EXCEPT SHOPS AND ESTABLISHMENT ACT

• MANAGEMENT:-
• IN PARTNERSHIP ALL PARTNERS HAVE EQUAL RIGHT TO MANAGE BUT IN SOLE TRADER THE BUSINESS IS CONTROLLED BY ONE PERSON

Ø  RISK:

Ø  PARTNERSHIP:SHARED BY ALL PARTNERS

Ø  SOLE TRADERS: BORNE BY HIM ONLY

• CAPITAL:
• PARTNERSHIP: ALL PARTNERS CONTRIBUTE BUT IN SOLE TRADER ONLY HIS RESOURCES ARE USED

Ø  SECRECY AS COMPARED TO PARTNERSHIP MORE SECRECY IS THERE

Ø  MEANING OF PARTNERSHIP DEED

Ø  IT FORM THE BASIS OF PARTNERSHIP. IT INCLUDES IMPORTANT CLAUSE LIKE THE NAME OF BUSINESS,CONTRIBUTION OF CAPITAL,SHARING OF PROFIT,MODE OF MANAGEMENT ETC.

Ø  PARTNERSHIP DEED IS DOCUMENTS CONTAINING ALL THE MATTERS ACCORDING TO WHICH MUTUAL RIGHTS,DUTIES AND LIABILITIES OF THE PARTNERS IN THE CONDUCT AND MANAGEMENT OF THE AFFAIRS OF THE FIRM ARE DETERMINED. THE DEED MUST BE SIGNED BY THE PARTNERS.

Ø  IT CAN BOTH BE ORAL OR IN WRITING. A WRITTEN AGREEMENT SHOULD BE PREFERRED BECAUSE NO BODY CAN DISPUTE THE CONTENT. AND IT ALSO CLARIFY EVERY THING.

Ø  MEANING OF JOINT STOCK COMPANY OR COMPANY

Ø  L.H HANEY,” A JOINT STOCK COMPANY IS A VOLUNTARY ASSOCIATION OF INDIVIDUALS FOR PROFIT,HAVING CAPITAL DIVIDED INTO TRANSFERABLE SHARES THE OWNERSHIP OF WHICH IS THE CONDITION OF MEMBERSHIP.

Ø  COMPANY IS AN ASSOCIATION OF PERSONS WHO CONTRIBUTE MONEY IN THE SHAPE OF SHARES AND THE COMPANY GETS A LEGAL ENTITY AND ENJOYS A PERMANENT EXISTENCE.

Ø  FEATURES OF COMPANY:-

1. ASSOCIATION OF PERSONS
2. LEGAL ENTITY
3. LIMITED LIABILITY
4. COMMON SEAL
5. TRANSFER ABILITY OF SHARES
6. SEPARATION OF OWNERSHIP AND MANAGEMENT
7. PERPETUAL EXISTENCE

Ø  CO-OPERATIVE ORGANIZATION

Ø  CO OPERATIVE SOCIETIES ARE VOLUNTARY ASSOCIATIONS STARTED WITH THE AIM OF SERVICE TO MEMBERS.THE INDIAN CO-OPERATIVE SOCIETIES ACT 192 DEFINES CO-OPERATIVE IN SECTION 4 AS “ A SOCIETY WHICH HAS ITS OBJECTIVES THE PROMOTION OF ECONOMIC INTERESTS OF ITS MEMBERS IN ACCORDANCE WITH COOPERATIVE PRINCIPLES.

Ø  FEATURES OF CO-OPERATIVE ORGANIZATION:-

1. VOLUNTARY MEMBERSHIP
2. THE MEMBERSHIP IS OPEN TO ALL IRRESPECTIVE OF RELIGION,CAST AND CREED,COLOUR AND POLITICAL AFFILIATION
3. DEMOCRATIC MGMT
4. ONE MAN ONE VOTE
5. SERVICE MOTIVES AND SURPLUS IS DISTRIBUTED ACCORDING TO CAPITAL CONTRIBUTION

Ø  LEGAL POSITION OF PROMOTERS

Ø  A PROMOTER CONCEIVES AN IDEA FOR SETTING UP A PARTICULAR BUSINESS AT  A GIVEN PLACE AND PERFORMS VARIOUS FORMALITIES REQUIRED FOR STARTING A COMPANY.A PROMOTER MAY BE AN INDIVIDUAL,FIRM,ASSOCIATION OF PERSONS OR COMPANY.

Ø  THE COMPANY LAW HAS NOT GIVEN ANY LEGAL STATUS TO PROMOTERS. A PROMOTER IS NEITHER AN AGENT NOR A TRUSTEE OF THE COMPANY BECAUSE IT IS NON ENTITY BEFORE THE CORPORATION. HE STANDS IN FIDUCIARY POSITION. IT IS THE DUTY OF THE PROMOTER TO GET MAXIMUM BENEFITS FOR THE COMPANY. HE SHOULD NOT GET SECRET PROFIT FROM THE COMPANY. IF HE SELLS HIS PROPERTY TO THE COMPANY THEN HE SHOULD EXPLAIN HIS INTEREST IN SUCH PROPERTY,

Ø  INCORPORATION

Ø  A COMPANY BEING AN ARTIFICIAL ENTITY INTO EXISTENCE ONLY AFTER ITS REGISTRATION WITH THE REGISTRAR OF COMPANIES. A NUMBER OF FORMALITIES TO BE COMPLETED BEFORE A REQUEST IS MADE TO THE REGISTRAR FOR ITS REGISTRATION. ALL THE NECESSARY DOCUMENTS ARE TO BE FILED WITH THE REGISTRAR. IF THE REGISTRAR IS SATISFIED THEN HE ISSUES THE CERTIFICATE OF REGISTRATION.

Ø  DIFFERENCE BETWEEN MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

Ø  MOA

1. IT IS CONSTITUTION OF THE COMPANY. IT DEFINES THE BOUNDARY IN WHICH COMPANY WORK
2. IT MUST NOT CONTAIN ANY THING WHICH IS AGAINST COMPANY LAW
3. ANY ACT DONE BEYOND  IT ARE VOID
4. IT REGULATES THE RELATIONSHIP BETWEEN OUTSIDERS AND COMPANY

Ø  AOA

1. IT CONTAINS THE BYE LAWS FOR THE DAY TO DAY WORKING OF THE COMPANY.
2. SUBORDINATE TO MOA
3. ANY THING DONE BEYOND THE SCOPE OF THE ARTICLES WILL NOT BE VOID AND CAN BE RATIFIED BY PASSING A SPECIAL RESOLUTION.
4. IT DEFINES THE RELATIONSHIP BETWEEN COMPANY AND THE MEMBERS AND AMONG THEMSELVES

Ø  SMALL SCALE INDUSTRY

Ø  THESE ARE THE INDUSTRIAL UNDERTAKING HAVING FIXED INVESTMENT IN PLANT AND MACHINERY WHETHER HELD ON OWNERSHIP OR LEASE BASIS OR HIRE PURCHASE BASIS NOT EXCEEDING RS 1 CRORE.

Ø  ANCILLARY INDUSTRIES:- HAVING FIXED INVESTMENT IN PLANT AND MACHINERY NOT EXCEEDING RS 1 CRORE ENGAGED OR PROPOSED TO ENGAGE IN THE MANUFACTURE OF PARTS,COMPONENTS,SUB ASSEMBLY,TOOLING OR INTERMEDIARIES OR THE RENDERING OF SERVICES,SUPPLYING 30% OF THE PRODUCTION OR SERVICES AS THE CASE MAY BE TO OTHER UNITS FOR PRODUCING OTHER ARTICLES.

Ø  TINY UNITS REFER TO THOSE UNDERTAKING HAVING FIXED INVESTMENT IN PLANT AND MACHINERY NOT EXCEEDING RS 23 LACS. THESE ALSO INCLUDE UNDERTAKING PROVIDE SERVICES SUCH AS LAUNDRY,XEROXING,REPAIRS AND MAINTENANCE OF CUSTOMER EQUIPMENT AND MACHINERY,HATCHING AND POLUTRY. LOCATED IN TOWNS WITH POPULATION LESS THAN 50,000