Unit 1
Introduction to Business
Concept of Business
Human
beings are continuously engaged in some activity or other in order to satisfy
their unlimited wants. Every day we come across the word ‘business’ or
‘businessman’ directly or indirectly. Business has become essential part of
modern world. However, Business is an economic activity, which is related with
continuous and regular production and distribution of goods and services for
satisfying human wants.
All
of us need food, clothing and shelter. These needs are the basic human needs.
We also have many other household needs that are to be satisfied in our daily
lives. We meet these requirements from the shopkeeper. The shopkeeper gets from
wholesaler. The wholesaler gets from manufacturers. The shopkeeper, the
wholesaler, the manufacturer are doing business and therefore they are called
as Businessman.
Lewis
Henry defines business as, “Human activity directed towards producing or
acquiring wealth through buying and selling of goods.”
In
short, all those economic activities which are concerned with earning profit
and creating wealth through the production and exchange of goods and services
is called business.
Characteristics of Business
1. Human activities:
Business cannot be performed without human
efforts. The main aim of business is to produce goods and services to fulfill
the requirement of human being internally associated in the production or the
consumers.
2. Economic activities:
It is concerned with earning profits and
generating wealth, which are measured in terms of money. Economic activities
include production of goods and services, distribution of goods and services
and the benefits generated from them.
3. Production of goods and services:
The main feature of business is to produce
goods and services. Business is concerned with the production of goods and
services to the society. In this process we get goods from shopkeeper,
shopkeeper gets from wholesaler. The wholesaler gets from manufacturers. The
shopkeeper, the wholesaler, the manufacturer are doing business to earn profit.
4. Risk and uncertainty:
There is no business if there is no risk but
accidents never knock the door. In future anything may happen. So risk is a
possibility that losses may occur. Introduction of new product, change in
government policies, change in customer taste and preference etc are the risks
5. Profit motive:
Business has the main aim to earn profit. To
get maximum profit revenue of business should be maximized. Profit
generation is vital for business survival and expansion. However, profit should
be earned through legal and fair means and in ethical manner. Profit is the
reward for the investors.
6. Continuous process:
Continuous process means to provide goods
and services by the business to the customers continuously and regularly.
In business, the exchange of goods and services is a regular feature. A
businessman regularly deals in a number of transactions and not just one or two
transactions.
7. Satisfaction of customers:
The aim of business is to satisfy human
demands by producing quality of goods and also to supply right product in right
time at right place to meet the right needs. Quality goods should be provided
at reasonable price.
8. Finance:
Finance is known as “life blood” of
business. Business needs investment of capital and to run smoothly. For regular
and continuous business finance is needed, finance includes purchase of raw
materials, payment of wages, assets of business and so in.
9. Organizing:
It means integration of all activities.
Co-ordination is very important for organizing. Allocation of limited resource,
assigning job, authority and responsibility also comes under organizing.
Component of Business
Scope of business
Business covers wide area and all economic
activities. It also includes all types of industry and commerce. Industries are
related to the activities of production of goods and services and commerce is
related to distribution of goods and services from producers (industries) and
customers.
Types of industries
1. Genetic industries:
Genetic industries are also called heredity
industries that involve in production of goods from plants and animals to earn
profit. Those industries which produce medicines from herbs, perfume from
flowers, milk and meat form animals are called genetic industries
2. Extraction industries:
Industries that are involved in extracting
the resources from the sources of nature are called extraction industries. It
supplies the raw material to other industries. These types of industries are
generally based in mining, fishing etc.
3. Construction industries:
Those types of industries which are related
to construction of different infrastructures are called construction
industries. They basically construct road, bridges, houses and so on . It helps
in development of country
4. Manufacturing industry:
It is related to produce finished goods. It
processes raw materials into finished goods. There are mainly 4 types of
manufacturing industry they are :
A. Analytical industry:
It is a industry which produces goods by
analyzing raw materials in scientific way. In this industry various goods ate
purchased by single materisl. For example dairy product (milk, ghee, butter,
ice cream from milk)
B. Processing industry:
The industry which is involved for
production of goods and services by using different steps or stage is called
processing industry. For example for processing cotton into thread the
processes of spinning, weaving, dying, bleaching is used.
C. Synthetic industry:
The industry which is involved for using
various raw materials to produce a single good is called synthetic industry.
For example to produce cement limestone, red soil, chemicals etc are used.
D. Assembling industry:
The industry which is involved for
production of goods by combining different parts which are already manufactures
by different industries is called assembling industry. For example TV,
computer, mobile, watch manufacturing industries.
Commerce:
It is related with buying, selling and
exchanging of goods and services. It is related to economic activities to earn
profit. The role of bridge between manufacturer and customer is played by
commerce
Types of commerce:
Trade:
Trade is related to buying and selling goods
and services for earning profit. It supplies quality goods with reasonable
price. Those activities which are related to buying, selling and distributing
goods in market is known as trade
Types of trade
1. Home trade:
Home trade means national, domestic or
internal trade i.e. Buying and selling within a nation. In home trade both
buyer and seller are from the same nation. In home trade task is simple than
foreign trade. It is classified into two types they are.
A. Wholesale trade:
When trader buy goods in bulk amount and
resell to retail in small volume is called whole sale trade. In this trade
goods are bought from manufacturer and are sold to retail. It acts as a
middleman between manufacturer and retailer. It deals with special product
B. Retail trade:
When trader buy goods in bulk amount and
resell to customer in small volume is called retail trade. In this trade goods
are bought from wholesaler and are sold to customer. It acts as a middleman
between wholesaler and customer. It deals with various types of product.
2. Foreign trade:
Foreign trade means international, global,
external trade i.e. Buying and selling is between two or more nation. In
foreign trade buyer and seller are from different nation. In foreign trade task
is difficult than home trade. It is classified into three types they are.
A. Import:
A good or service brought into one country
from another is called import. Along with exports, imports form the backbone of
international trade. The higher the value of imports entering a country,
compared to the value of exports, the more negative that country’s balance of
trade becomes. Buying goods from India, china is called import.
B. Export:
A good or service sold to another country
from one is called export. Along with imports, exports form the backbone of
international trade. The higher the value of exports exiting a country,
compared to the value of imports, the more positive that country’s balance of
trade becomes. Exporting herbs, garments to Germany, India is the example of
export
C. Entry port:
The trade in which a country purchases the
goods from one country and sells it to another country is called entry port
trade. The goods bought from a country is not used for self benefit but is
rather exported to another country. For example India buys herbs from Nepal and
sells it to china.
Auxiliaries of trade:
It supports or assists the trade activities. It helps to run
business smoothly. It helps for transfer goods from production area to
consumption area. It creates time and place utility.
1. Transportation:
It transfers goods from one place to
another. There are many means of transportation that can assist business and
trade activities. They are air travel. Bus route, sea route, rope route etc. It
delivers right product and right time in right place. It creates time utility
2. Warehouse:
It is one of the auxiliary of trade. It
helps to protect and store goods until customers uses them. It provides the
goods hen demand is created. It also helps to provide unseasonal goods.
3. Insurance:
It acts as nutrition to trading activities.
It helps to reduce risk and uncertainties. It is a contract between
organization and their future. The system that takes the responsibility of
compensation of certain risk is called insurance system.
4. Banking:
Banks are the financial institution that
supports for traders. It provides loan, investment, credits facilities to the
trading companies. It helps for expansion and flexibility of trade.
5. Advertising:
It is a supporter to trade. It provides
information to customer about goods and services. Its aim is for creation of
demand. It also acts as a promotional tool.
Functions of business
Organizing function:
It helps to organize all the activities. It
organizes men, Machine, materials, money and methods. It performs different
activities and all activities are organized properly
Financing function:
It is related to money. It helps in maximum
utilization of resources. Bank is a financial company. All the activities
related to money are defined in this function.
Production function:
The main function of business is to produce
goods and commodities and transfer them to right place at right time. It helps
to complete needs of human beings.
Distributing function:
It helps in the transfer of goods/services
from producers to customers. It transfers right product at right time in right
place.
Personnel function:
It deals with human activities. It is
related o the utilization of people to perform different activities. It is also
called staffing function. It helps in management of resources.
Managing function:
It helps in management of business. It
includes planning, organizing, controlling, coordinating, decision making and
so on. It helps making activities of people effective.
Research and development function:
It helps in improvement of product. It works
under the taste, desire and preference of the customers. In it various
marketing, strategies, skills, knowledge and experts are used. Research and
development is the main way to achieve profit with customer satisfaction
Objectives of business
Economic objectives
The economic objectives are related to
earning profit through customer satisfaction. It is to provide quality goods
with reasonable price. Economic objectives can be defined in terms of money
too. Some of the major economic objectives are:
Earning profit:
The main economic function of business is
earning profit. It includes supply of quality goods and services to gain
profit. T is done for the survival of business and it is also reward for the
investors. It is required for expansion if business
Production of commodities:
Production of goods and services are to be
done according to the customer demand and desired. Supply of commodities is
also to be done according to needs of customer.
Creation of market:
Business can provide service only if demand
of customers are fulfilled. When production is made according to the
requirements of the customers then there is creation of new customer which
creates new market. Creation of market helps in enlargement of production and
promotes business expansion too
Technical improvement:
Use of modern technology is the base for
successful operation o business. When modern tools, techniques and technologies
are used then there is production of quality goods. Changes are the basic
factor for flexibility and changes in terms of working methods is the main
objective of business
Innovation:
New ideas, methods, men, tactics and
technology create the ways of better production and services. It helps in
survival of business too.
2. Social objectives
Business is operated in society and use
resource available in society. This is known social objectives. It fulfills
social expectation. All business operations are established in society, grow in
society and fulfill all its expectation in society. Some of the major social
objectives of business are:
Supply quality food:
It provides better quality of goods and
services by charging reasonable price. It provides right product at right time
in right place. It involve in fulfillment of social objective.
Utilizing resources:
A business house can’t continue its
operation without utilizing the resources available in the society. But there
must be proper utilization of resources and no any destruction in name of
utilization. Maintenance of environment is must.
Providing employment:
There are many people in the society. Human
needs are the basic need for operation of business. Many personnel are require
dot fulfill the job of a business. Therefore a business house without nepotism
and favoritism must employ the human from the society and provide employment
opportunities to the optimum level.
Avoiding social stigma:
Big industries are the cause of
environmental pollution. Constant noise, smoke from the industries produces
noise and air pollution. This is the social objective of the business to
control pollution and wastages. There must be establishment of industries far
from residential areas.
Human objectives
Human objectives are performed by different
human activities. It is related with satisfaction of employees, investors and
other personnel. Some of the major human objectives are
Satisfaction of employees:
The success of business depends on
employees’ performance. It provides better working environment to satisfy the
employees. It provides salary, bonus, provident funds and job security. It also
provides financial and non financial supports.
Payment to creditors:
Creditors means supplier who supply goods
and services. It is the objective to make duly payment. Satisfaction of
creditors helps in further expansion of business.
Satisfaction of customers:
Production of goods and services are to be
done according to the customer demand and desired. Supply of commodities is
also to be done according to needs of customer. It provides better quality of
goods and services by charging reasonable price
Satisfaction of shareholder:
It returns to investors the amount they have
invested in business in the name of profit earn. They should be given
reasonable returns of their investments. The objectives are to provide
reasonable rate of return to shareholder. It also provides the information
about plan of business.
Importance of business:
1. Economic development:
Business is important for economic
development. Concept of true business is used in industries and commerce.
Industries use men, money, materials, methods and machines and help to create
employment. Commerce is the concept of exchange goods/services at national and
international levels. It helps to earn foreign currency by export business too.
Therefore, business helps in economic development
2. Utilizing natural resources
Every country has diverse natural resources.
Business must be directed towards proper and efficient utilization of
resources. Business utilizes the resources like water, minerals,
ores and so to achieve its own goals. But resources must be
utilized without exploitation.
3. Creation of utility:
Business creates place and time utility. It
helps to satisfy the needs of human beings. Financial utility is to be
maximized.
4. Employment:
Business helps to provide job to people. It
provides various types of managerial or technical job. Many types of business
houses like hotels, industries, and transport companies are established for
business which helps to solve the unemployment problem.
5. Revenue generation:
Business is the source of revenue
generation. It pays taxes, royalties, fees, custom duties, and other things
which help to generate government revenue.
6. Earning foreign currency:
It is the source of earning foreign
currency. Business can earn foreign currency through exporting the goods and
services.
7. Development of country:
Development of industries helps to utilize
natural resources, create time and place utility, provide employment
opportunities, help in revenue generation and earning foreign currency. All
these things help in the development of the economy of the country and the
economic development is the major factor that can develop the nation to a wider
sense.
8. Provide investment
opportunities:
Establishment of new industries and commercial
fields are the major source of investment. Further the profit owned by the
investors after the successful operation of business helps to ensure larger
amount of saving which can be invested in the newer future for pension of
current business or establishment of newer business. Thus business helps in
providing investment opportunities.
9. International relations:
Business is the medium for development of
national and international relationship. It helps to maintain harmonious
relation among the various countries. There can be mutual understanding and
better diplomatic relationship among the countries. Import and export is the
major base for international relationship.
10. Self sufficiency:
It helps in achieving countries and
individuals self sufficiency. It also helps in improving the living standard of
people by reducing the dependency.
Social responsibility
of business
Capital
|
Registration
fee
|
Renewal fee
|
Registration
fee
|
Up to
1,00,000
|
Rs 700
|
Rs 100
|
Rs 700
|
From
1,00,001 to 3,00,000
|
Rs 2100
|
Rs 125
|
Rs 2100
|
From
3,00,001 to 5,00,000
|
Rs 4100
|
Rs 150
|
Rs 4100
|
From
5,00,001 to 10,00,000
|
Rs 7600
|
Rs 200
|
Registration
fee
|
Up to
10.00,001 to 50,00,000
|
Rs 10100
|
Rs 250
|
Rs 700
|
Above
50,00.000
|
Rs 15100
|
Rs 300
|
Rs 2100
|
Sole trading
concern
|
Partnership firm
|
1. low
capital
|
1.high
capital
|
2. one man
management
|
2. two or
more partners
|
3.quick and
prompt decisions
|
3. delay in
decisions
|
4. business
secrets can be maintained
|
4.
difficulty in maintaining business secrets
|
5. risk and
losses are to be born by a single person
|
5. there is
reduction of risk and losses because they are shared with proportion of
capitals by partners
|
6.no chances
of conflict
|
6. higher
chances of conflict
|
7. lack of
managerial ability
|
7.
harmonization of managerial ability
|
8.chances of
wrong decisions
|
8.
specialization in decision making
|
Capital
|
Registration
fee
|
Renewal fee
|
Registration
fee
|
Up to
1,00,000
|
Rs 700
|
Rs 100
|
Rs 700
|
From
1,00,001 to 3,00,000
|
Rs 2100
|
Rs 125
|
Rs 2100
|
From
3,00,001 to 5,00,000
|
Rs 4100
|
Rs 150
|
Rs 4100
|
From
5,00,001 to 10,00,000
|
Rs 7600
|
Rs 200
|
Registration
fee
|
Up to
10.00,001 to 50,00,000
|
Rs 10100
|
Rs 250
|
Rs 700
|
Above
50,00.000
|
Rs 15100
|
Rs 300
|
Rs 2100
|
Bases of difference
|
Private company
|
Public company
|
Number of members
|
It needs at least 1 member for
its formation. The maximum number can be 50.
|
It needs at least 7 members
for its formation. The maximum number is not limited.
|
Invitation for capital
|
It cannot invite the public
to buy its shares
|
It is free to invite the
public to buy its shares
|
Commencement of business
|
It can commence the
business immediately after the incorporation
|
It can commence the
business after receiving the certificate of commencement of business.
|
Issue of prospectus
|
It does not need to issue
prospectus
|
It must issue prospectus
|
Statutory meeting
|
It does not need to hold
statutory meeting and file statutory report.
|
It must hold statutory
meeting and file statutory report
|
Transfer of shares
|
The transferability of
share is not allowed and hence its ownership cannot be transferred
|
The transferability of
share is allowed and hence its ownership can be transferred
|
Use of word
|
It must use the word Pvt.
Ltd. at the end of its name.
|
It must use the word Ltd.
at the end of its name
|
It is based on democratic principle. It is based on equality of status of all members. Decisions and other bills are passed on the basis of majority votes.
Management is always in democratic lines. All member of organization elect its managing committee. One man can give only one vote. Managing committee will then work for common benefit of all members.
Its objective is to provide service to member. It’s not profit motive. Its aim is not to earn maximum profit as in all form of organization. Even though it can earn profit by extending their services to non members but they collectively work for service. In Nepal, these types of organizations are established under cooperative act. There must be at least 25 members and they all must be guided through common objective
In this type of organization transactions are done only through cash. There are no credit transactions. It eliminates bad debt too.
It is service motive. Even though it can make surplus, the surplus amount is used for extending the surplus facility.
The success of organization depends upon the education of its members. They should be constantly educated with objectives.
Liability of member is limited. It should use the word “ltd” after its name.
The organization must follow the rules and regulations of the government. Following things are mentioned in the application form Following things are mentioned in the application form
1. Life member
2. Ordinary member
3. Affiliated member
4. Honorary member
All the activities of NCC are planned, programmed and implemented by executive committee includes 36 members. The executive committee is formed by
1. Elected by general assembly → 29 members
2. Immediate post president →1 member
3. Nominated from among affiliated → 4 members
4. Nominated from general member → 1 member
5. Nominated by NCC president → 1member
President, 1st and 2nd vice president, secretary, general treasurer, 2 secretary and joint treasurers are elected from among elected members of executive committee are the members.
6. Elected by bi national → 11 members
7. Elected by commodity associate → 12 members
8. Elected from among associate → 16 members
9. Nominated by president → 5 members
10. Elected chairperson of regional commerce and industry associate → 5 members
2. Auxiliary or administrative management functions
Receiving and collecting different types of information from the different types of sources is the primary function of an office. The information is received from two sources. They are internal and external. Letters, invoices, circulars, notices, memos are the internal sources and supplier, customers, government, banks are the external sources
It is the most significant function of an office. The information collected and recorded cannot be readily used for the decision-making and other purposes in the organization. Therefore, it must be processes and arranged. Processing information involves preparing notes, sorting, editing t. all information are to be arranged in a systematic way. After arranging and analyzing information it is ready to supply in the management. It provides necessary information to its member whenever it I required. This information helps in decision-making process.
Retention is defined as the preservation of records for future reference. It involves collection, preservation, classification and protection of records for future reference. It is maintained in files, computers etc. Every record has a life span. It is protected according to its importance. Retention of record depends upon nature of organization. The efficiency of office depends upon the way records are retained
To make any business successful there must be good management. Office helps in effective management. It includes planning, organizing, staffing, directing and controlling. It helps in smooth functioning of the organization.
There must be good public relation of the organization. The main purpose of public relation is to make the organization look trust worthy to all people who deal with it in all its action.
Every office develops a definite office system and a fixed routine. It helps in smooth flow of office work. The system is also known as procedure of office work.
All assets, movable and immovable, documents and office records must be guarded and protected. They can protest these assets through insurance policies, locker etc.
An office designs, develops and prepares many types of form needed for office management. It helps to get maximum benefits. These office forms are important tools for collection and storage of information.
Office stationery and supplies are essential for doing work. It helps in increasing the efficiency and improving quality of works done. Office should pay attention in purchasing right type of stationery and supplies
Office requires various types of office furniture and machine for efficient performance. The quantity, quality, consistency and completeness of work basically depend upon the ability and quality if assets like office furniture and machine.
Office is also related to recruiting, training, placing, promoting the employees. Employees help in the success of the organization.
An office is an information center which provides information relating to business transactions. Such information is very useful. It is used by management for the purpose of planning, organizing, staffing, directing and controlling.
Office not only keeps record of information but also plays the role of reliable channel of communicating the information. It is required for smooth functioning of the organization.
The success of business depends on the proper coordination of people and activities of the organization. It keeps relations with all departments and deal with information necessary for effective coordination; it is a mechanism or coordination.
An office acts as a control center. Controlling is the important function of management. It helps to monitor plans and policies which help in the implementation of proper working environment. It helps to prevent from unwanted deviations. It provides data for managing and correcting deviations.
An office works as a service center. It provides services to all the department of an organization. It provides necessary information to all the department of an organization. Business cannot operate successfully without better service system and office fulfills this requirement. An office is the storehouse of records. It keeps the records of past and present. It provides necessary information for future. It helps to report letters, circulars, notifications, policies etc. It is known as ‘brain’ of organization.
An office provides wages, salaries to their employees. They also keep records of workers attendance, leave due, provident fund, and calculation of overtime. They also help to maintain the relationship between management and workers.
An office works as a middleman between department and outsiders. It links with supplier, customers, shareholders, government and general public. These office activities enhance the image of the firm.
Office management helps in increases office efficiency, smooth flow of work, maintaining public relations, minimization of cost, managing change and accepting the new challenges which help in achievement of goals of the organization.
Office management focuses on office activities and helps office in economical way.
Office management helps in performing efficient and effective office work. It helps in proper planning and effective control in office.
There must be good public relation of the organization. The main purpose of public relation is to make the organization look trust worthy to all people who deal with it in all its action. It helps in increasing the goodwill of the organization. Office management guides the use of capital, natural, financial, human and other resources effectively without leakage and wastage which helps in minimization of cost.
Office management helps in implementation of plans in right time and in right way. Bu there may be change in resources, need, technology, preferences and so on which makes it necessary to bring about the change in plans. Office management makes the office flexible which helps to manage the change.
In an office, to achieve goals, many challenges should be faced. It helps in improving the research and information system. It helps in managing all the rigid matters.
1. Shape and size of office building
It is one of the major factors that should be considered while selecting office building. It should have adequate space to accommodate all machines, equipment, and employee with furniture and enough space for flexibility. It should be considered taking the base of both present and future needs
An office building should have adequate lighting and ventilation. It helps a lot to increase efficiency and enhance worker’s morale. Well lighted and ventilated accommodation puts less pressure on the employees and also reduces the physical and mental strain and consequently the efficiency is higher.
While selecting office building it should consider the convenience of customer and employees. It should not be far from the related trade center, must have proper toilet and canteen services and food hospitality and utilities. The cost of building effects on total budget of organization. The building purchased or built must be within the budget of organization. There should be balanced between requirement of space, capacity of the organization and the cost for covering the expanses.
Flexibility of office building in its shape and size should be considered while selecting the office building. It must also match the nature of organization.
The efficiency of men and machine depend upon the layout. The proper layout makes office attraction. For this furniture, machine and other goods are necessary. This also helps in the internal arrangement of office.
It is the first step to secure the blue print of office building to know about the space available of office works. It should be secured from top management. It’s blueprint is not available then the space should be measured and the sketch of building should be made
Need of all department should be identified. Managers should consult the department heads to access space requirement. Number of employees, method and nature of works, equipment and machines. Present and future requirement should be determined. It is the second step of designing the layout
It is the third step in designing the office layout. The manager should prepare model known as template. Templates are thin plates of board or metal that represents actual space with decorations. They provide tentative design of office space. Several adjustments, change might me made before final model is finalized.
While designing the office layout, electric wiring should be properly managed. The location should be properly wired to avoid the risk of short circuits and fluctuation of voltage.
After making plans and policies, it is submitted to the various departments. The plans must be discussed with the departmental heads and supervisors. They check the plans and finally approve it. Then only the plans are ready to be implemented
x
The major responsibilities of business are:
A. Employees
I. Provides better working environment to
satisfy the employees
Ii. . It provides salary, bonus, provident
funds and job security.
Iii. It also provides financial and non
financial supports.
Iv. Enriches employees’ performance.
V. Provide training to develop their skills.
Vi listen and handle their complaints and
issues
B. Creditors:
I. Make duly payment
Ii .satisfaction of creditors with proper
relationship
Iii. Helping them to create their own
market.
Iv. Entrusting the right of proper selling
of goods and services of their goods
V. Copyright and other legal rights.
C. Customers/consumers:
I. Better quality of goods and services by
charging reasonable price
Ii. Supply of commodities is also to be done
according to needs of customer
Iii. Helps to achieve needs and wants
Iv. Provide right goods at right place in
right time.
V. Provide proper pre-sale and post sale
information
Vi. Provide proper information about new
products
D. Investors:
I. True information about earning power of
business
Ii. The objectives are to provide reasonable
rate of return to shareholder.
ii. Provide the information about plan of
business.
Iv. Ensure safe investment
V. Promote utilization of resources without
leakage
Vi. Ensure transparency of business
activities
E. Government
I. Increase in tax i.e. Increase
in government revenue
Ii. Fulfill demand of government
Iii. Non violation of rules and regulation
of government.
Iv. Avoid unfair trade
V. Provide essential information to the
government.
Vi. Solve national problems like natural
calamities.
Vii. Avoid malpractice like black marketing,
adulteration, smuggling
F. Society
I. Good environment
Ii. Employment opportunities generation.
Iii. Socio cultural understanding
Iv. Apply anti pollution measures.
Unit 2 Evolution
of business
Evolution
of Business
The
historical development of business and its processes of development up to now
is called evolution of business. Business was not evolved in one or two days.
It can be studied in two ways.
Evolution of industry
It is dated with the evolution of human beings.
It is as old as human civilization. It was developed through various stages.
A. Hunting
stage
In ancient times people lived in caves and
fulfilled their basic needs of food an clothes through hunting the wild animals
in forest. They were not civilized and hovered here and there. Their needs were
also limited.
B. Pastoral
stage
The stage of further development of human from
barbarism is called pastoral stage. This stage is basically called the age of
keeping animals. Animals were used for milk, meat, wool, skin and so on beyond
food and clothes. The wants went on increasing and development also started.
C. Agriculture
stage
Slowly, human beings became a little bit
civilized and got idea about farming and keeping cattle. This stage was the
major stage of development of industry. In this stage people started to do
agriculture and live in river banks. They started to cultivate crops and
domesticate the animals. Development of agriculture is divided into 5 stages
they are
I. Handicraft
stage:
It is the beginning of industrial era. It is
the stage of development of industry. Simple hands made tools were also
developed. Local resources were the major source of raw materials. In the
beginning of this stage people were only limited to their own needs but later
own surplus products were used to exchange the goods with the roods basically
called barter system. Products were exchanged with product and market was
starting to develop. Capital invested was minimized.
Ii. Guild
stage:
It was the beginning of organized activities.
Organized groups of traders, craftsmen, artisans used to collect various
resources from the local areas and produced goods using them.
Iii. Age of
domestic system
After the stage of guild the age of domestic
system was initiated. Crafts men were not able to fulfill the unlimited and
increasing wants of people by using the limited resource. So, use of hands and
tools for producing quality goods was introduced. People were employed and were
paid according to the units of goods produced. However salary was very low
because the value of money was much higher at that time.
Iv. Industrial
revolution:
It began with the replacement of old system. It
is the turning point of modern industrialization. Domestic system of production
was replaced by large scale factory system. There was invention, innovation
.development of scientific techniques which encouraged mass production and
distribution. There were numerous job opportunities. Salary was increased and quality
was maintained.
V. Present age:
Today’s modern era with industrialization, use
of technology, computerization, modernization robotizing is the most developed
stage of industries. Goods are being produced meeting the demand of large
number of people. There are huge number of industries producing large number of
goods to meet large amount of needs and wants by providing many jobs and
salaries.
Evolution of commerce:
It is related with the distribution and
exchange of goods and services. It is related with transportation,
communication, Banking, warehousing import export, trade and so on. It links
between producer and consumer. It gradually develops along with the development
of human and society. There are many stages of evolution of commerce
A. Self
sufficiency stage
It is the initial stage of commercial
evolution. The wants are very limited. In this stage people produced goods
themselves to satisfy their own basic needs. They survived through hunting and
gathering foods. There was no market. There was thus no exchange of goods. They
were independent.,
B. Barter
system:
The wants of people increased with development
of society. There was both advancement and civilization of market. Self
sufficiency stage didn’t remain with advancement. They started to exchange the
goods they produced with goods that other people produced to fulfill other
requirements. This is called barter system. There was exchange of goods and
services with goods and services.
C. Origin of
money:
From the beginning of barter, people felt that
there was difficulty in deferred payment, commerce, divisibility and place of
exchange .That’s why money was originated. People developed coins but there was
difficulty in large payment. So paper money was introduced. Money was used as
medium of exchange, Measurement of value, deferred payment, redistribution of
income and wealth, credit system and many more. After the origin of money,
national and international trade started.
D. National
economy:
In this stage, buying and selling of goods and
services was done within the country. The local market converted into regional
and city market. There was division of work and specialization. Then goods were
produce not only for local people but also for national market. There was also
development in banking, advertising, insurance, warehouse and other
auxiliaries,.
E.
International economy:
International economy s called global economy.
The globalization of trade introduced to speed up the activities of trade in
the international level. It is not possible for a country to produce all
demanded goods according to needs and wants. Therefore the countries started to
import the goods and other countries exported. Slowly, import and export was
introduced in all counties. Trade started to extend in world market. WTO (world
trade organization) was also established to control the level of import, export
and evils associated with them.
Consideration before starting the business
Business means the art of being busy. The aim
of business is to earn profit. The higher number of industries has increased
competition among the investors. Before starting the business,
promoters must consider following factor in order to survive and
expand the business.
1.
Identification of business
The first factor that businessman must
consider before starting a business is the identification of
business. He has to decide about what type of business he wants to start.
Identification and selection of particular business is very important for
proper involvement and profit. It helps to give personal knowledge, interest,
reduced level of risk, size and other values. It helps in expansion of business
and earning the maximum profit.
2. Detailed
investigation and research
Business cannot be started only by imagination.
Proper and detailed study about the scope of business is very vital. It must
consider present and future risks and competition. Market survey must be
maintained. Investigation and study about raw material, finance, customer,
market, employees and interest must be done.
3. Forms of
business organization
There are different natures of business. The
types of business vary with the differences in capital, interest, merits,
demerits, risk sizes size and so on. It must be chosen from various different
forms of organization like sole proprietorship, partnership firm, joint
stock and so on.
4. Provision of
capital
Capital means finance. Finance is the blood of
business. Business cannot be established without sufficient capital.
Volume of capital to be invested is dependant upon size of business firm.
Source of capital must be properly taken into consideration. Capital is
categorized into two groups.
I. .Fixed capital i.e. Land, building,
furniture etc.
Ii. Working capital i.e. Raw material,
transactions etc.
5. Location of
business
Location means place where the business
establishes. It is very difficult to migrate from location of business after it
has been set up. Location of business where it has been established must have
better transportation. Communication, water, electricity and other utilities.
Production and distribution must have low cost and sales must be high to
minimize the profit. Selection of location must be perfect.
6. Selection of
staff.
Business deals with human activities. It is
related to the utilization of people to perform different activities. It is
also called staffing function. It helps in management of human resources. Human
activities are the major source to determine the efficiency of business. Staff
should be selected according o the nature of business. Success of business
depends upon selection of staff. Capable, skilled, experienced and honest
employees must be selected.
7. Office
equipment:
Office is the place from where all
administrative work of business has to be done. Therefore, office needs proper
equipments, machines and resources. For accurate, speedy performance
office setup must be good.
8. Government
policy:
Government makes business policy for the
welfare of people. It must follow the policy of government. It must know all
the legal rules and regulation formulated by the government.
Requisites of business success:
A.
Establishment of objectives:
There must be proper establishment of
objectives. Objectives are the aim of business. It determines the scope of
future work. Objectives must be clearly defined. It provides guidelines for
doing work. Objectives are defined for long term and short term.
B. Proper
planning and policy:
Proper planning classifies the works done.
Planning and policy formation should be done in efficient way. There must be
clear set of policies and programs to complete the work. It helps in minimizing
risk and maximizing profit.
C. Proper
location layout and size of business:
Proper location layout and size of business is
needed for progress of business. Layout means planting the business in such a
way that production work can be carried out with efficiency and true manner. It
helps in determination of proper size of business. Location also should be
suitable. It must attract the market.
D. Sound
organization:
There must be division of work among employees.
There must be effective use of human sills and knowledge. Organization should
help to answer various business problems. It ensures team work. It must ensure
best communication channels for proper decision making.
E. Separate
finance:
Finance is the blood of business. Business
can’t be established without sufficient capital. Volume of capital to be
invested is dependant upon size of business firm. Source of capital must be
properly taken into consideration. It must be flexible. It should be suitable
for both long term and short term business.
F. Efficient
management:
Its main objective is to manage all activities
of human and other resources. It must perform right job at right time in right
place. It must use effective management technique.
G. Employees
morale:
The success of business depends upon employee’s
morale. The business should be used with intensity of employees. Employee
should be encouraged, motivate. They could complete their work heartedly,
H. Modern
technology:
It brings/ uses modern technology. It provides
new idea and methods in production process. There should be proper labor and
capital adjustment.
I. Research:
It helps in improvement of product. It works
under the taste, desire and preference of the customers. In it various
marketing, strategies, skills, knowledge and experts are used. Research and
development is the main way to achieve profit with customer satisfaction
Business environment
Business establishes, grows or operates and
dies in environment. It exchanges resources I environment. It collects inputs
i.e. Man money, materials, machines etc. And provides output i.e. Goods and
services in the environment. Environment means surrounding. Business
environment defines as a force that affects on organizational performance. It
includes internal an eternal factors. It provides opportunities and threats.
1.. Internal environment
It is defined as all the forces or conditions
that are available within an environment that affects on organization and
business. It is also known as controllable factors because business can control
them. It includes
I. Employees
Business hires employees. It is the major
internal factor. It works inside the business. It can be controlled by the
business. Employees differ in skill, knowledge, morality, and attitude and so
on. When managers and employees have difference in goals an beliefs then
conflict may arise. The task of management is to divide the work and assign the
work to the suitable employee and handle the conflict.
Ii.
Shareholders:
Management deals with many shareholders.
Shareholders have the right of ownership, power of management and voting right.
The actual management of organization is carried out by elected representative
of shareholders jointly known as boar of directors. Boards of directors have
the responsibility of overseeing the management of organization. It plays the
major role in formation of objectives, policies, strategies of the organization
as well as their implementation.
Iii.
Organization structure:
It is located inside the organization. The
arrangement of various facilities, pattern of relationships among the various
department, responsibility, authority and communication is the organization
structure. It also included specialization and span of control.
Iv. Organization
culture:
The sets of values that help the members to
understand what organization stand for how it does work, what it considers,
cultural values of business forces of business and so on. It helps in direction
of activities.
2. External environment (PEST)
All the forces and condition that cannot be
controlled by the business is called external environment. . It is also known
as uncontrollable factors because business can’t control them. It is located
outside the business. It affects on organizational performance.
It includes:
I. Economic
environment.
It indicates the condition of economy in which
business organization operates. It has continuous and great impact on business.
It includes national income, production, inflation, savings, investment, price,
government activities. Business person must have constant watch on this factor.
Ii. Political
or legal environment
It is defined as rules and regulations
determined by the government. Business must fulfill demand of government. There
should be non violation of rules and regulation of government. Business should
avoid unfair trade and should provide essential information to the government.
Iii. Social
environment.
Business must have good environment where a
business can be established neatly. Business also helps in employment
opportunities generation. There should be socio cultural understanding and
application of anti pollution measures.
Iv.
Technological environment:
It defines about the methods available for
converting resources into product or services. It transforms inputs into
output. Inputs means material, capital, man, machine. It affects on business.
It helps to change the level of job, skill, and product and so on. There can be
innovation, development of scientific techniques which encouraged mass
production and distribution.
Unit
3 Forms of Business Organizations
Concept
of sole trading concern
Sole
trading concern :-
Sole proprietorship or individual proprietorship is the
simplest, oldest and In some respect, the most natural form of business
organization in private sector. In this form a single individual is solely
responsible for providing the capital, for bearing the risk and for overall
management and control of the enterprise. In is the one man show owned, managed
and operated by one person. According to professor Henry, ” the individual
proprietor is the form of business organization at the head of which stands an
individual as one who is responsible, who directs its operations and who alone
runs the risk of failure.”
Characteristics of sole trading concern
1. Single
ownership:
A sole proprietorship is wholly owned by one
individual. The individual supplies the total capital from which his own wealth
or from borrowed funds.
2. One man
control:
The proprietor alone takes all the decisions
pertaining to the business. He is not required to consult anybody. Ownership
and management are vested in a person.
3. No legal
entity:
A sole proprietorship has no legal entity
separate from its owner. The law makes no distinction between the proprietor
and the business. The assets and liabilities of the business and its proprietor
are not different.
4. Unlimited
liability
Proprietor is liable for all the debts of the
business. In case the assets are insufficient to meet the debts, the personal
property of the proprietor can be attached.
5. No profit
sharing:
The proprietor is all alone entitled for all
the profits and the losses of the business. He bears the compete risk and there
is nobody to share the risks, workload or any profit or losses.
6. Small size
The scale of operation carried out by sole
proprietor is generally small.
Merits and demerits of sole trading concern
Merits
1. Easy to start and dissolve:
A sole proprietorship can
be setup easily and quickly. No legal formalities and expenditures
are involved in the establishment of a proprietorship. There is no
need to associate others or to enter any agreement. Only a license may be
needed in special cases. The owner can start business operations as and when he
desires. Similarly, a sole proprietorship can be closed down very easily and
quickly.
2. Motivation
to work:
The proprietor is all alone entitled for all
the profits and the losses of the business. He bears
the complete risk and there is nobody to share the risks, workload or
any profit or losses. There is direct relationship with efforts and reward.
There is an incentive to work hard. The proprietor is motivated to make the
best possible use of his skills and resources to maximize the profits.
3. Quick
decisions:
The sole proprietor is completely free to take
all decisions and to implement the. He doesn’t need to consult or
seek others approval. Quick decisions and prompt actions are helpful to improve
the efficiency of business operations.
4. Independent
control:
The proprietor alone takes all the decisions
pertaining to the business. He is not required to consult anybody. Ownership
and management are vested in a person. There is no governmental intervention in
day to day activities.
5. Business
secrets:
The sole proprietor can keep the secrets to
himself and these secrets are not known to competitors or others.
6. Personal
contact:
A sole proprietor is in a position to maintain
intimate contacts with his customers and employees. He can enter to the
requirements of each and every customer. Close personal touch increases the
competitive strength of the business.
7. Flexibility:
A sole proprietorship is small in size and has
a simple management functions. Therefore, it can be adapted easily to suit the
changing conditions of the market. The line of business can be easily changed
or modified.
8. Economy:
The management of sole proprietorship is
inexpensive. As sole proprietor himself is the manager, the cost of management
is very low. Borrowing capacity is high owing to the unlimited personal
liability of the owner.
9. Social
utility:
Sole proprietorship provides an opportunity for
gainful self employment for the people with limited money. It offers a way of
earning an honorable living for those who do ot ant to work under other. It
also facilitates equitable distribution of income and wealth.
Demerits
1. Sole proprietorship has limited capital
2. Sole proprietor only uses his ideas and
innovation capacity. So there is limited managerial ability
3. Sole proprietor must work more to earn more
profit .higher profit generation is important. So, there is dull and monotonous
wok.
4. Death of sole proprietor causes death of
sole proprietorship.
5. There is no specialization in decision
taking. So there can be chances of taking wrong decisions
6. There is low investment resulting in limited
areas of operation.
Registration and renewal of sole trading concern in Nepal
Sole trading concerns are registered under
private firm registration act 2014.
Procedures of
registration
1. Apply for
registration.
Application form is needed to be filled up and
apply for registration. The application must include the following things
A. Name of firm
B. Address of the firm
C. Objective of the firm
D. Name and address of owner including father’s
and grandfather’s name.
E. Other particular things.
Rs. 5 and attached citizenship are required.
2. Deposit
registration fee:
Registration fee may or may not be deposited in
the Nepal Rastra Bank. Voucher is needed for the deposit of registration fee.
It should be enclosed in application form.
3. Receiving
the certificate of registration
Concerned department receive the application.
Then an authorized officer will examine. It satisfied then the form is approved
and legal business can be operated.
Procedure of renewal
The entire registered firm should be renewed
each year within 35 days of time period. He should fill application for renewal
with renewal fee to the concerned department. This amount is dependant upon the
capital invested.
Effect of non-registration and non renewal
If the sole trading concern is operated without
registration and renewal then it is considered illegal. It can’t get loan from
any financial institution. This department will charge from rs 5 to rs 50 as
fee. The effect of non-registration and non renewal is if the is not registered
and renewed then fee is charged. If same crime is done for 3 times, additional
r 10 is to be paid. If it is committed gain hen sol trading concern is closed
and no any concern can be established under his name.
Unit 3
Partnership firm
Concept of partnership
Partnership is a form of business organization
which as evolved to overcome the shortcomings of sole proprietor. As
the size of business expands, one person is unable to provide the necessary
capital and managerial skills. Therefore, two or more than two persons form a
partnership to carry on business by pooling their financial resources and
managerial skills. Thus, partnership is an extension of sole trading
concern.
Characteristics of partnership firm
Unlimited
liability
Proprietor is liable for all the debts of the
business. In case the assets are insufficient to meet the debts, the personal
property of the proprietor can be attached.
Difficulty in
transfer of shares
Partners cannot transfer their share without
the consent of other partners. There may be conflict when done otherwise.
Higher capital
Many partners invest capitals and there is
higher flexibility in capital because new partner can be agreed to be
associated and investing can be increased.
Reduced risk
Partners have right to take part in management.
They have the duty to bear risk with proportion too.
Association of
two or more persons
It must be two or more person to enter into
contract. Association of two or more persons can only create partnership.
In association of two or more persons, maximum and minimum number of persons is
not mentioned.
Agreement
It is set up by agreement between partners. It
must be written and legal agreement so that it will reduce dispute.
ifferences between sole trading and
partnership firm
Merits of partnership firm
Easy to start
and dissolve
A partnership firm can
be setup easily and quickly. There is not much legal formalities and
expenditures are involved in the establishment of a partnership.
Similarly, a partnership firm can be closed down very easily and quickly.
Higher capital
Many partners invest capitals and there is
higher flexibility in capital because new partner can be agreed to be
associated and investing can be increased.
Higher
innovation
Many partners use their own ideas and
innovation capacity. So there is unlimited managerial ability
Reduction of
work load
Partners mustn’t work more to earn more profit.
Higher profit generation is important. So, there is no dull and monotonous
work. In case of monotony, health problem to any partner then other partners
can help and reduce absenteeism.
Better
decision
There is specialization in decision taking. So
there can be less chances of taking wrong decisions
Harmonization
of different ability
There are many partners in this firm and many
partners have different skills, knowledge and capacity
Credit
facility
In this liability of partners becomes
unlimited. It will help to arrange more capital. And that’s why it has more
credit. It improves more financial function
Close
supervision
There is effective management and effective
supervision. They look the business themselves.
Flexible
There can be change in management, capital and
production. This change can be made by mutual agreement of partners
Reduced risk
Partners have right to take part in management.
They have the duty to bear risk with proportion too.
Demerits of partnership firm
No Business
secrets
The partner can keep the secrets to himself but
these secrets can be known to competitors or others when there is conflict
among the partners
Uncertain
existence
Death of any partner can sometime cause death
of entire firm. Dishonesty, conflict and lack of resource also can collapse the
firm
No Personal
contact
A partner can’t be in a position to maintain
intimate contacts with his customers and employees. He cannot be able enter to
the requirements of each and every customer. Then there is no close personal
touch which decreases the competitive strength of the business.
Unlimited
liability
Proprietor is liable for all the debts of the
business. In case the assets are insufficient to meet the debts, the personal
property of the proprietor can be attached.
Delay in
decisions
The partnership firm is completely not free to
take all decisions and to implement the. The partners need to consult or seek
others approval. Delay in decisions reduces the efficiency of business.
Danger of
conflict
Many persons are the owners of partnership
firm. There can be misunderstanding and jealousy among them and these cause
problems in operation of business and profit making
Difficulty in
transfer of shares
Partners cannot transfer their share without
the consent of other partners. There may be conflict when done otherwise.
Limited
resources
There is low investment, may be higher than in
sole trading but not sufficient for large scale production resulting in limited
areas of operation.
Types of partners:
General
partners
They provide capital and play active part in
business
Inactive
partner:
They provide capital to business and share
profit and loss to firm but do not take part in management and day to day
activities.
Nominal
partners:
They act only as a partner and give their name
to the firm. They do not take part in management and day to day activities and
share profit and loss to firm
Secret
partner:
Their membership is kept secret to the outside
world. They can take part in management
Partner in
profit only:
They share profit only but no loss is shared.
They are generally inactive but have relation in money and goodwill.
Minor
partners:
They do not enter into contract and can’t be
made partner in real sense but if there is consent of all partners then their
partnership can be taken into consideration
Retrieval
partners:
Even if this partner leaves the firm other
partners continue to operate business. They are liable for all debtor and share
profit too. But they do not take part in management and day to day activities.
Incoming
partners:
If there is consent of all partners then their
partnership can be taken into consideration. They aren’t held liable for debt
before approval of all partners.
Types of partnership
1. General
partnership
Partners have equal rights and all of them
participate in management. It is jointly involved to operate the business.
There are the types of general partnership.
A. Partnership
at will
It continues up to time of partner. It is
dissolved when all partners want dissolution. They can leave the firm at will.
There is no fixation of duration of firm
B. Particular
partnership
It is established for definite workers at
definite period. When task is finished partnership is dissolved in particular
partnership.
2. Limited
partnership
A limited partnership is that type of
partnership in which there is one or more partners having limited liability.
The liability of limited partners is limited to their capital invested. They
can’t participate in the managerial activities but they can advice. They also
don’t have right to make decision and close the firm
Rights and duties of partners
Rights of partners
Every partner
has right to take part in planning, implementation and control activities of
the firm
Every partner
has right to express his opinion, give advices and view on any subject
Every partner
has right to inspect and enquire about the account and ask for the duplicate
copy
Every partner
has right to share the profit according to the agreement
Every partner
has right to get interest on loan and advances
Every partner
has right to use the properties of the firm but only for the benefit of the
firm not or personal use
Every partner
has right to leave the firm with consent of remaining partner
Every partner
has right to have interest on the property but should not sell the property to
anyone without the consent of other partners
Every partner
has right to dissolve the firm with the consent of other partners
Duties of the partners
It is the duty
of every partners to share the loss occurred in a firm
It is the duty
of every partners to work honestly and faithfully and work for common benefit
of all partners and firm
It is the duty
of every partners to work and make decisions within the authority
It is the duty
of every partners to maintain the financial status of the firm.
It is the duty
of every partners to stop the leakage in firm. There should not make any secret
profit.
It is the duty
of every partners to compensate on the loss and damage of firm.
Partnership deed
The written agreement duly signed by the
partners is known as partnership deed. It is also known as agreement or article
of partnership. It is the document, which mentions the rules and regulations,
way o operation of management and way of control of activities of the firm. It
is also required at the time of registration. It helps to minimize conflict and
misunderstanding among the partners.
Content of partnership deed
Name and
address of the firm
Name and
address o the partners
Nature of
rim’s business
Duration of
partnership
Amount of
capital invested by the partners.
Interest on
capital
Division of profit
Salary and
commission
Right and
duties of partner
Admission and
removal of partnership
Valuation of
capital and goodwill at the time of admission, death and retirement of partners
Accounts and
audits
Dissolution of
partnership.
Registration and renewal of partnership firm in Nepal
Partnership concerns are registered under
partnership act 2020.
Procedures of registration
1. Apply for registration.
Application form is needed to be filled up and
apply for registration. The application must include the following things
A. Name of firm
B. Address of the firm
C. Objective of the firm
D. Name and address of partners and address of
the partners
E. Type of partnership
F. Amount of capital invested by each partner
G. Method of sharing profit and loss
H. Duration of business.
I. Other particular things.: necessary
documents, registration fees, copy of citizenship
2. Deposit registration fee
Registration fee should be deposited in the
Nepal Rastra Bank. Voucher is needed for the deposit of registration fee. It
should be enclosed in application form. If the firm is commercial then
recommendation letter from Nepal chamber of commerce is required.
3. Receiving the certificate of registration
Concerned department receive the
application. Than an authorized officer will examine. It satisfied
then the form is approved and “certificate of registration” is issued and then
legal business can be operated.
Procedure of renewal
The entire registered firm should be renewed
each year within 35 days of time period. He should fill application for renewal
with renewal fee to the concerned department. This amount is dependant upon the
capital invested.
Effect of non-registration and non renewal
If the partnership firm is operated without
registration and renewal then it is considered illegal. It can’t get loan from
any financial institution. This department will charge from rs 5 to rs 50 as
fee. The effect of non-registration and non renewal is if the is not registered
and renewed then fee is charged. If same crime is done for 3 times,
additional rs 10 are to be paid. If it is committed gain then partnership firm
is closed and no any concern can be established under any partners’ name.
Dissolution of partnership firm in
Nepal
Existing
partners can dissolve the firm by another agreement
Dissolution by
notice, any partner can dissolve the firm by giving notice to all the partners
If any partner
is unable to take responsibility of partnership deed.
If partner do
not pay the amount payable to the firm
If shares are
transferred without consent of other partners
If right of
partners is taken over by the court of compensation
Liable for
negligence
Death of
partner
Dissolved by
concerned department
Commits
illegal work or violate the rules of the firm
If not renewed
in given time.
Unit – 4 Joint Stock Company
Meaning of Joint Stock Company
Joint stock companies first came into being in
the 18th century in
Britain, and were mainly concerned with foreign trade. Initially, the
organizational form was viewed with suspicion, it being supposed that it
encouraged managerial efficiency and corruption. A corporation, chartered by
the state in which it is headquartered is considered by law to be unique
entity, separate and apart from those who own it. A corporation can be taxed;
it can be sued; it can enter into contractual agreements. The owners of a
corporation are its shareholders. The shareholders elect a board of directors
(BOD) to oversee the major policies and decisions. The company has a life of
its own and does not dissolve when ownership changes.
A company is a voluntary association, an
incorporated association, an artificial person created by law, having a common
seal and perpetual succession. Shareholders are owners of the company but
management lies in the hands of BOD. Company means a company registered under
an act.
According to H.L Haney: “A joint company is a
voluntary association of individual for profit, having its capital divided into
transferable shares the ownership of which is the condition of membership.”
Characteristics of Joint Stock
Company
Compulsory
incorporation:
A company is a voluntary association of persons
formed and incorporated under the existing Corrine law. Only when it gets certificate
o incorporation it comes into existence as a body corporate.
Artificial
person:
A company is an artificial person created by
law. It is created by legal process and not by natural birth. Even though it
has no natural personality, it has legal personality. Therefore, it can enter
into contracts, sue and can be sued, own property, appoint employees and borrow
money like any other natural person.
Common seal:
Since a company is an artificial person having
no physical features like a natural person, it cannot sign. Hence every company
by law must have a common seal in which its name is engraved. The common seal
can serve as its signature. The common seal is fixed on all important documents
and contracts which is witnessed by signature of two directors and
countersigned by secretary where ever required. The common seal is kept under
the custody of directors.
Perpetual
succession:
Since every company has separate existence from
its members, directors and employees, their death, insolvency or insanity will
not affect its life and existence. Men may come and they may go but a company
remains forever. It can be wound up under the provision of the act.
Limited
liability:
Usually the liability of members of a company
is limited to the extent of uncalled or unpaid shares held by them. Their
personal property cannot be seized to meet the company’s liability beyond the
above mentioned liability.
Share capital:
The capital required by the company is raised
by the issue of its shares. The share is a document that acknowledges the
ownership of the company. The members who hold the share of a company can
transfer its ownership to any other person, without the company’s permission.
Separation of
ownership and capital:
In company organization the ownership and
management are separate. The shareholders who are the owners do not take active
part in the everyday affairs of the company. Instead they elect their
representative known as directors, who with the help of managers and employees
manage the company. Thus, there is division of labor and specialization.
Legal entity:
Since the company is created by law, it has
separate legal existence compared to its members. Therefore the members cannot
be personally held responsible for the acts of company and company cannot be
held liable for the acts of the members.
Large
membership:
The Company is owned by a large number of
members- maximum of 50 in the case of private limited company and unlimited
number of member in the case of public limited company.
Advantages of joint stock company
Large capital:
A company can collect huge capital for the
business through shares and debentures, public deposits, loans etc. Due to huge
capital the company can conduct business on a large scale.
Limited
liability:
Usually the liability of members of a company
is limited to the extent of uncalled or unpaid shares held by them. Their
personal property cannot be seized to meet the company’s liability beyond the
above mentioned liability.
Continuity and
stability:
Death, insolvency or insanity of any member of
the company will not affect its life and existence. Men may come and they may
go but a company remains forever. It can be wound up under the provision of the
act.
Professional
management:
The Company appoints experienced, competent and
expert to manage the business. Their services lead to managerial and
administrative efficiency and accuracy.
Economies of
scale:
A company operates on a high scale and so it
enjoys economies in production, distribution, management and financing.
Bargaining
power:
Compared to other forms of organization, a
joint stock company is a strong power in buying as well as in selling of goods
because of its large scale production.
Legal status:
Since the company is created by law, it has separate
legal existence compared to its members. Therefore the members cannot be
personally held responsible for the acts of company and company cannot be held
liable for the acts of the members.
Large
membership:
The Company is owned by a large number of members-
maximum of 50 in the case of private limited company and unlimited number of
member in the case of public limited company.
Transferability
of shares:
Shares of Joint Stock Company, especially
public companies, are freely transferable. A member who wants to sell his
shares can easily do so in the stock market. This encourages the public and
other to invest in shares.
Employment:
Joint Stock Company provides employment to a
large number of people directly and indirectly. This leads to higher national
income for the country and higher living standard of living for the people.
Government
revenue:
Joint Stock Companies provide revenue to the
government in the form of taxes charged directly and indirectly.
Research and
development:
Joint Stock Companies undertakes R&D
continuously thus bringing about new and improved products which benefits
people.
Economic
development:
Because of Joint Stock Companies there is all
round development of trade, commerce and industry. The society in general gains
the benefit of the industrial development. Large capital, government revenue,
economic development etc. are the advantages of Joint Stock Companies.
Disadvantages of Joint Stock Company
Difficult
formation:
Formation of Joint Stock Company is an expensive
and time consuming process as a number of legal formalities have to be
undertaken in order to register the company.
Lacks
flexibility:
The working of a Joint Stock Company is less
flexible s compared to other organizations. For very small thing they either
have to follow a detailed procedure or obtain sanctions from various
authorities. This results in lack of flexibility.
No business
secrecy:
This form of organization lacks business
secrecy because it is compulsory for the company to publish accounts and other
records
Excessive
government regulation:
The Company is a subject to excessive
government control. It has to follow the numerous provision of the companies
act. This makes working difficult.
Delay in
decision:
The Joint Stock Company is completely not free
to take all decisions and to implement the decisions. Due to excessive
government control and democratic set up all decisions are taken in meetings
and some decisions require shareholder’s approval. All this leads to delay in
decisions.
Lack of
contact with customer:
A company can’t be in a position to maintain
intimate contacts with customers. It cannot be able enter to the requirements
of each and every customer. Then there is no close personal touch which
decreases the competitive strength of the business due to large scale
operation.
Lack of
contact with employees:
The top management may not have contact with
their employees. This may cause friction and disputes amongst the management
and the employees with may affect the worker’s and employee’s morale.
Conflict of
interest:
Many persons are the owners of Joint Stock
Company. There can be misunderstanding and jealousy among them and these cause
problems in operation of business and profit making
Not suitable
for all type of business:
This type of organization is not suitable for
business where personalized services are required.
Exploitation
of shareholders:
Sometimes the BOD may misappropriate the fund
and mislead the shareholders by window dress report. The directors may even
manipulate the trading on the stock exchange. Thus shareholders can be
exploited by corrupt directors.
Types of companies
On the basis of incorporation:
Chartered
company
A chartered company is established by
the royal charter or a special sanction granted by the head of the state. East
India company, Hudson’s bay are the examples of this type of company. This type
of company is no more popular today.
Statutory
company
A company created by the special act of the
parliament is called statutory company. Its objectives, powers and activities
are defined by the act. Nepal Rastra Bank, Agriculture Development Bank, Nepal
Industrial Development Corporation are some examples.
Registered
company
It is formed under company act of the country.
The working of registered company is governed by the provision of the company
act. Himal Cement Company, Gorkha Biscuits Pvt Ltd is some of the examples.
On the basis of liability:
Unlimited
company
It is a company in which the liability of the
members is unlimited like that of partnership firm. If the assets of the
company are not sufficient for satisfying the claims of the creditors, the
shareholders are liable to pay more than the face or nominal value of shares
held by them even form their personal property.
Company
limited by shares.
A company limited by shares is registered under
the provisions of the Company act with a specific amount of share capital
divided into a definite number of shares. The liability of shareholders is
limited to the extent of face value of the shares they have paid for. This type
of company is quite common these days.
Company
limited by guarantee:
The company, under which each shareholder
promises to pay a specific sum as guarantee at the time of winding up of
company, is called company limited by guarantee. Such guarantee is specified in
the Memorandum of Association of the company. The amount of such guarantee may
differ from member to member.
On the basis of ownership
Government
companies
A government company is a company in which no
less than 51 % of the paid up share capital is held by the government
Non government
companies:
A company which is not a government undertaking
is called non government company. Generally, company owned, managed and
controlled by the private sector come under this category.
On the basis of number of members
Private company
A private company is a company which, by its
Memorandum Of Association, limits the number of its members not exceeding 50
and prohibits the sales of its shares to the general public. A private company
must use the words ‘private limited (Pvt. Ltd.) in its name.
Privileges of private company
Established by
single person
Does not need
to publish prospectus at the time of issue of its shares
It can refuse
transfer of shares form one member to another.
It is not
necessary for such a company to obtain the certificate of commencement of
business before starting its business activities
It is not
necessary to held statutory meeting.
Public company
A public company is a company which, by its
Memorandum of Association, limits the number of its members not to be at least
7 and to open the boundary of having the maximum number of shareholders to the
fullest. It doesn’t prohibit the sales of its shares to the general public but
rather it allows collecting major capital by offering shares to the public. The
public company is governed by the authorized capital with which is registered.
The shares are transferable. A public company must use the word ‘limited (Ltd.)
in its name.
Privileges of public company
Established by
at least 7 promoters
Needs to
publish prospectus at the time of issue of its shares
It cannot
refuse transfer of shares form one member to another.
It is
necessary for such a company to obtain the certificate of commencement of
business before starting its business activities
It is
necessary to held statutory meeting.
ifference between private company and
public company
Found
mistakes?? Report Here
Difference
between private company and public company
Memorandum of association
It is the main document of the company. It
defines the objectives, powers and its relationship with the outside world. The
company works within the framework of the memorandum. The memorandum of
association sets out the constitution of the company. It is so to speak, the
charter of the company and provides the foundation on which the structure of
the company is built. It enables persons who deal with the company to know its
permitted range of activities.
The main content of memorandum of association
are:
Name
clause:
It includes about the name of the company. Name
of the company should end with word ‘limited’ or ‘private limited’. Care should
be taken while enclosing name of the company. The names that already registered
should not be used. Change in name of the company requires special resolution
and approval from the concerned department.
Situation
clause:
It is also dominant clause. It must have
registered office. All the official communication may be sent by concerned
office or other organizations in a specified location. Therefore there is need
to maintain registered office location. Once the location is set then it is
very difficult to change the location.
Object
clause:
It is important part of memorandum. It must
clearly state the objective of the company foe which it was established. It
informs the members about the objectives. It can carry out only those
activities which meet the objectives in the memorandum.
Functional
clause:
It includes the functions of the objectives of
the company. It should be within the objectives.
Capital
clause:
It includes the amount of authorized capital
which can be utilized by the company. It includes the amount of share capital
and the considerations of issuing and subscribing the share capital. It must
include the nature of shares and face value of share with the prices of shares.
Liability
clause:
Memorandum must clearly state that the
liability of shareholders up to the extent of face value of shares. In company
limited by guarantee it must state the guarantee sum too.
Association
and subscription clause:
It states that the member themselves agreed to
organize and carry out business. In case of private company at least one
signature from promoter and in case of public company at least 7 signatures is needed.
Agreement
clause:
According to company act 2063, clause 18 .p.,
public company is desired to do following things.
If promoter or
any other partner is entitled to subscribe share, they must pay in each.
If Company is
to enquire any property from promoter at the time of commencement of its
transaction.
If Company
itself is to bear expenses incurred on the corporation.
Articles of association
It is another important document of company.
The document which defines the rights, powers and duties of the management, the
modes and manners of carrying the company’s business, is called articles of
association. It shows the relation between the company and its members and
relation among the members. It is subordinate to memorandum. The information
related is:
Director
related
Number of
directors
Provision of
alternative directors
Minimum number
of shares to be directors of the company
In case of
public company, qualification and number of independent directors
Power and
duties of BOD
Authorities of
directors
Delegation of
authority
Provisions
relating salary, allowances and facilities of directors
Meeting
related
Procedure for
conducting general meeting and notice for such meeting
Provision
relating to decisions of general meeting and BOD and duplicate copies and
inspection
Quorum for
meeting of BOD, notice and proceeding of meeting.
Share
related
Right, powers
and restriction attached to share
Provision
relating to transferability of share
Matters on
altering the authorized share capital
Matter of forfeiture
and reissue of share.
Other
particulars
Appointment of
company’s secretary
Account books
and audits of the company
Provision on
power to raise the loans
Prospectus
It is an invitation to the public to purchase
shares or debentures of the company. Any circular, advertisement, offer or any
other document by which a company gives invitation to the public to subscribe
to its shares and debentures is known as prospectus. According to the company
act 2063, the prospectus contains the following matters.
Information
related to management and the objectives of the company
The number of
shares to the subscribed by directors and the cash to be received from them.
Capital
structure of the company divided into authorized, issued, subscribed and paid
up share capital.
Terms and mode
of payment, issue of shares on discount or premium
Details about
brokerage, underwriting commission and preliminary expenses.
Estimated
expenditures for the company and estimated income at least for coming 3 years.
Other necessary
particulars.
Incorporation of joint stock company
in Nepal
Following things are to be observed for
incorporation of Joint Stock Company in Nepal:
1. File an application
It is the first step. In any company
registration, promoters have to file application in company registrar office.
The application has to be signed by at least 1 promoter in case of private
company and at least 7 in case of public company. Along with application,
following document should be submitted,
Memorandum of
association
Article of
association
Copy of
agreement (public company)
Copy of
consensus agreement (private company)
License
Promoters
certified copy of citizenship (Nepalese)
Permission
letter obtained under law to make investment or run business in Nepal
(foreigner)
Citizenship of
concerned country
2. Submitting registration fee
Registration fee should be deposited in the
Nepal Rastra Bank. Voucher is needed for the deposit of registration fee. It
should be enclosed in application form
3. Certificate of incorporation:
After submitting the application form along
with necessary document and registration fee, the office of the registration
examines all these documents submitted by the promoters and it will register
company name within 15 days the receipt of the application. After registering
the office, the registrar issues the certificate of incorporation to the
company. Now a private company can run its business.
4. Certificate of commencement of business
A report of proof about the full payment of
shares by the promoters with signature by at least 1 director and 7 promoters
must be filled. The registrar examines all the documents. If it gets satisfied
then it issues certificate of commencement of business. Then only public
company is legally able to run business and it can issue prospectus also.
5. Allotment of shares
After receiving certificate of commencement of
business, public company can issue prospectus. It helps to attract investors
for investing the money in the company. Then they send application with
application money. Generally application form is attached with prospectus. The
time of subscription must be kept open for at least 7 days. After receiving
application shares are allotted. The BOD makes the allotment. There can be full
allotment or pro-rata allotment. Shares must be allotted within 3 months after
application is called. There must be more than 50% o share allotment. If
allotment couldn’t be made within 3 months then promoters must apply
application for extending time with reasons. The time is again extended for 3
months. If company couldn’t allot the share for extended period then the
company must return all the money with interest.
Company meeting
Company is an artificial legal person. It is
not capable to think or decide any important matter. But through meeting it can
think and easily make any decisions. Meeting means gathering of people who are
connected with the company for discussion in certain place. It can be defined
as assembly of number of person for predominated purpose and by previous notice
for discussion and decision on the same business matter.
Types of meeting
General
meeting
The meeting of shareholders is known as general
meeting. The types of general meeting are
1. First or
preliminary general meeting
First official meeting of shareholder is known
as first general meeting. It is also known as preliminary general meeting. It
must be conducted within one year after receiving certificate of commencement
of business. It occurs only once in the lifetime of public company. Its main aim
is to give details of company to all shareholders about the number of shares
issued. Share holders must be pre-noticed about place, time, date and agenda in
advance of 21 days of conducting the meeting. Following things are discussed in
the meeting.
Authorized
capital
Number of
share
Issued share
capital of company
Paid up
capital
Total amount
of installment paid
Loan borrowed
from any bank
Financial
institution
Name and
address of current director
2. Annual
general meeting
It is held in each financial year within six
months from the date of expiry of its financial year. It is held to inform
shareholders about progress of the company, about the ongoing performance and
future plan of company. . Share holders must be pre-noticed about place, time,
date and agenda in advance of 21 days of conducting the meeting. Following
things are discussed in the meeting
Annual
financial statement
Audit and
directors report
Matter related
to the distribution of dividends
Appointed of
any directors
Appointment of
any auditor
The information and report may be printed in
newspaper too. If any shareholder request for the copy of annual financial
statement, director’s repost and auditor report then company should provide it.
3. Extra
ordinary general meeting:
If any important matter arise and it should be
discussed sooner and cant be waited till the annual general meeting then this
meeting is held. It is also called special circumstances and is held when
special and urgent decisions have to be made. . Share holders must be pre-noticed
about place, time, date and agenda in advance of 15 days of conducting the
meeting. This meeting is conducted by
a. By board of
directors
In case of emergency
b. By auditor
In auditing
the account there can be need of shareholder’s idea and so auditor calls this
meeting with a reasonable cause
In case BOD
fail to call meeting then auditor may submit application to company registrar
offices for stating reasons about not conducting meeting.
c. By
shareholder
10% of paid up capital or at least 25% of total
shareholders demand to call this meeting with reasonable cause. They request to
board and submit application. If there is no meeting within 30 days then
application is submitted to company registrar with reasonable reason. Then
registrar office can call a meeting.
Extra ordinary general meeting is called for
following purposes
Increasing
authorized capital of the company
Decreasing the
share capital of the company
Altering name
or objective of the company
Issuing bonus
shares
Selling shares
at discount
Converting
private company into public company or vice versa
2. Board of
directors (BOD) meeting
It is also called meeting of directors. Board
means collective name for directors. When directors of company come together to
determine its policy and to take decisions according to its act then the
meeting of BOD is called. It is held at regular interval. In public company it
is held when there is attendance of 51% of total number of directors. Its main
agenda are management of company about share, recommendation of dividend,
appointment of officers and fixation of data. Decisions are taken by passing resolution.
If any director is not satisfied with decision then s/he can write the note of
dissent of proof of his rejection.
Agenda
It is the most important base for all meeting.
It includes the subjects to be discussed in the meeting. It is prepared with consultancy
of chairman. Its main objective is to conduct meeting in a systematic way
without missing any item. It is the deal about the subject mater of the meeting
and is informed to all meeting members. It allows the member to have sufficient
time in preparation of their own matter of discussion on the topic of the
agenda before the meeting.
Resolution:
Resolution is all the activities of company
which are conducted after the resolution is passed in various meeting of
shareholders and directors. All the decisions that are taken in the meeting are
in the form of resolution. It can be defined as the resolve to do or not to do
things. When any proposal is accepted by required majority in the meeting then
the proposal becomes resolution. There are two types of resolution. They are
1. Ordinary
resolution
It is passed by simple majority of member
present a general meeting. Majority is taken by voting. For this purpose, in
this meeting, in the public company, there must be presence of 50% share with
at least 3 shareholders are presented. It cannot be held due to quorum
They are passed for following purpose
Profit and
loss account
Balance sheet
of previous years
Declaration of
dividends
Appointment of
directors and auditors
Salary and
facility for directors and auditor
2. Special
resolution
The resolution requires passing 75% majority of
members. It must be submitted to take decisions for following matters
Increasing
authorized capital of the company
Decreasing the
share capital of the company
Altering name or
objective of the company
Issuing bonus
shares
Selling shares
at discount
Converting
private company into public company or vice versa
Winding up of Joint Stock Company
Winding up of Joint Stock Company is the
process of bringing the existence of the company to the end. It refers to the
closure of business forever. In this time company being a legal person created
by law can dissolve its own business in the following way
1. By company registrar office
According to company act, registrar office may
order to wind up company under following condition:
If promoters
of the company makes application showing reasons for failure to commence the
business of company
If company is
in default in submitting office return notice, information and facts to pay
fine as required by the act
2. By voluntarily
In the following condition company can wind up;
Company has
become insolvent with accordance with law on insolvency
Shareholders
of company can wind up the company either by adopting special resolution in
general meeting
If company is
able to pay its debts and other liabilities in fault.
If directors
of company have after due, company makes declaration in written form that the
company is able to pay its debts or other liabilities in full.
Concept of cooperative
organization
Meaning and concept
Co-operative
organization is the form of organization where in persons voluntarily associate
together as business being a basis of equality for promotion of economic
interest of themselves. It is a voluntary association of persons with same
interest. It is guided by service motive. It is established for economical and
social development of weaker section of the society. It tries to solve similar
problems. In all form of business organizations, the objective of owner is to
make profit. But its objective is to provide services. Its motto is all for one
and one for all. It helps through mental support too. it can be defined as
voluntary association of person usually of limited means forming together in
equal basis for promotion of certain economic or business interest.
Features of cooperative organization
Features:
1. Voluntary
association and open membership
2. Equal
voting right
3. Democratic
management
4. Service
motive:
5. Legal existence:
6. Cash transactions
7. Disposal of surplus:
8. Education
9. Liability:
10. Government control
Types of cooperative
organization
Types of
cooperatives:
Producer co-operatives: Some co-operatives process and market their members’
products and services directly while others may also sell the input necessary
to their members’ economic activities. Examples: Agriculture co-operatives,
pooling of equipment, advisory services, etc.
Multi-stakeholder co-operatives: The membership of these
co-operatives is made of different categories of members who share a common
interest in the organization. Examples: home care services, health services,
community services, etc.
Worker co-operatives: The
purpose of these co-operatives is to provide their members with work by
operating an enterprise. The co-operatives are owned by their employee members.
Examples: forestry, leisure, production and manufacturing, tourism,
communications and marketing, etc.
Worker-Shareholder co-operatives: These
are incorporated co-operatives that hold partial ownership of the business in
which the co-op’s members are employed. Because of its share capital, the
co-operative may participate in the management of the business and the workers
may influence work organization. Examples: production and manufacturing,
technology, etc.
Consumer co-operatives: They
provide their members with goods and services for their personal use. Examples:
Food, credit unions, housing, insurance co-operatives, etc.
Role of cooperative
organization in developing countries
Role of
cooperatives in developing countries
Works for the
economic progress of the nation
Uplifts the
poor people.
Develop the
weaker section of the country
Bring balance
between economic and social development of the country
Mobilization
of resources in rural areas
Employment of
the people in agricultural sector
Provide
better qualities of seeds, fertilizers, pesticides, insecticides to the farmers
Help to get
agricultural loan.
Helps to
establish business in low capital
Enhance the
economic activities like banking, shares, investment and so on
Encouragement
in saving
Farmers,
employee, and small retailers who are often neglected for loan are provided
credit facilities.
Provides loan
to poor farmers at low interest rate.
Elimination
of poverty
Increase the
living standard of people
Registration of cooperative organization in Nepal
Registration of cooperatives in Nepal
A cooperative organization
can carry out its functions only after its registration under the cooperative
act 2048. For registration of cooperatives following procedures should be
followed.
1.
Preliminary meeting:
According to the
cooperative act 2048 there should be at least 25 members to form a cooperative
society. Preliminary meeting must be held before applying for the registration.
The meeting is held in the presence of 25 members under 1 chairman among them.
The following things should be discussed in the meeting:
Commencement
of the business
The name and
address of the society
The
objectives of the society
The value of
each share
Membership fee
2. Filing an application for registration
After
preparing and passing proposed by laws and working schemes in the preliminary
general meeting. In application should be submitted to the office of registrar,
department of cooperatives, and government of Nepal
Proposed name of society
Address
Objectives
Working areas
Liabilities
Total share capital
Total number of shares to be paid
Two copies of law of proposed society
Original copy of working scheme
Copies of citizen certificate
Application must be signed by chairman
3. Receiving the certificate of
registration
After
filing application for registration, certificate of registration is to be
received. After applying application along with document, they are submitted at
the registration office. Then the registrar checks all the documents. If the
documents are satisfactory then registrar will issue certificate of
registration. After receiving certificate of registration, the society can
operate.
Legal provisions for dissolution of co-operative society
According
to the cooperative act 2048 cooperative society can be dissolved under
following circumstances
Two third majority of total number of society can take
decisions of dissolution.
Registrar can dissolve it, if application with reasonable
clause is received.
Registrar can dissolve it, if the society is found inactive
and not operating since two years.
The registrar can dissolve it, if it is found operating
against the law and objectives of it.
Registration of cooperative organization in Nepal
Registration of cooperatives in Nepal
A cooperative organization
can carry out its functions only after its registration under the cooperative
act 2048. For registration of cooperatives following procedures should be
followed.
1.
Preliminary meeting:
According to the
cooperative act 2048 there should be at least 25 members to form a cooperative
society. Preliminary meeting must be held before applying for the registration.
The meeting is held in the presence of 25 members under 1 chairman among them.
The following things should be discussed in the meeting:
Commencement
of the business
The name and
address of the society
The
objectives of the society
The value of
each share
Membership fee
2. Filing an application for registration
After
preparing and passing proposed by laws and working schemes in the preliminary
general meeting. In application should be submitted to the office of registrar,
department of cooperatives, and government of Nepal
Proposed name of society
Address
Objectives
Working areas
Liabilities
Total share capital
Total number of shares to be paid
Two copies of law of proposed society
Original copy of working scheme
Copies of citizen certificate
Application must be signed by chairman
3. Receiving the certificate of
registration
After
filing application for registration, certificate of registration is to be
received. After applying application along with document, they are submitted at
the registration office. Then the registrar checks all the documents. If the
documents are satisfactory then registrar will issue certificate of
registration. After receiving certificate of registration, the society can
operate.
Legal provisions for dissolution
of co-operative society
According
to the cooperative act 2048 cooperative society can be dissolved under
following circumstances
Two third majority of total number of society can take
decisions of dissolution.
Registrar can dissolve it, if application with reasonable
clause is received.
Registrar can dissolve it, if the society is found inactive
and not operating since two years.
The registrar can dissolve it, if it is found operating
against the law and objectives of it.
National
cooperative development board : formations and functions
National cooperative development board (NCDB)
It was established an enacted in kartik 21, 2049. It has been
established for economical and social development of weaker section of the
society according to the cooperative principles under the co-operative
development board act, 2049. It is established under national cooperative
development act, 2049. It is autonomous and corporate boy with perpetual
existence. It has its own common seal. Board can purchase, sale or manage
property. It is managed by an executive committee under the chairperson of the
minister of agriculture and corporate.
Features
It is established under national cooperative development act,
2049.
It is autonomous and corporate boy with perpetual existence.
It has its own common seal.
Board can purchase, sale or manage property.
It is managed by an executive committee under the chairperson
of the minister of agriculture and corporate.
Formation of NCDB
NCDB was established on kartik 21, 2049. Its main aim is to
support economical and social development of weaker section of the society by
formulating plan, policies and programs etc. The board is managed by an
executive committee of 25 members. It consists of following member
Minister of agriculture → chairman
Person appointed by the mister of agriculture → joint
chairman
Chairman, national cooperative → member.
Governor of Nepal Rastra Bank → member
Secretary ministry of finance → member
Secretary ministry of supply → member
Secretary ministry of industry → member
Secretary ministry of agriculture → member
Secretary ministry of local development → member
Representative from national planning commission → member
Registrar of cooperative department → member
Any two chairmen elected among chairman of central
cooperative association→ members
Any 5 person nominated by government from among cooperative
(1 from each development region) → members
One from female cooperative worker → member
Any two expert → members
General Manager of agricultural development bank → member
Person nominated by Nepal’s government → member secretary
Functions of NCDB:
To formulate plan and policies
Promotion for development of cooperative societies
Provide cooperation to government for policy formation
To prepare and implement the development plans and policies
To undertake research studies for the development of
cooperatives
To invest in cooperative society
To provide necessary security if cooperative society demands
for issuing debentures or obtaining loan from the bank and financial
institution
To provide technical cooperative for the promotion and
protection of cooperative society
To make agreement for joint investment with local and foreign
investor
Concept of public enterprises
Concept
Public enterprise is an
organization which is owned, managed and controlled by the government. It is
necessary for the active participation of government in individual and
commercial level. It is financed and operated by the government. It provides
service to the public. It provides goods and services to the public at
reasonable price. It is guide by service motive but it can earn nominal profit.
It helps in maintaining the state of ownership and operation of industrial,
agricultural, financial and commercial undertaking. It is one autonomous body
which is managed and owned by government and which provide goods/ services for
public.
Characteristics of
public enterprises
Features
Government ownership: It is totally owned by government. Its majority shares are
taken up by the government. In this enterprise, sometimes 50% of share is owned
by the government.
Government management and control: It is one autonomous body which is
managed and owned by government. Government controls and manages organization
by appointing key personnel. It is like board of directors, managing directors,
chairman and so on which manage the appointing, transfer of members and so on.
Public accountability: They are operated by government fund. It is also
accountable to general public. It is carried out by the parliament and helps in
providing goods and services for public.
Service motive: It provides
service to the public. It provides goods and services to the public at
reasonable price. It is guide by service motive but it can earn nominal profit.
Autonomous: It is one
autonomous body which is managed and owned by government. It receives fund from
the government. But government doesn’t interfere in the day-to-day activities
of the organization.
Monopoly: Government
has monopoly in this sector.
Separate legal entity: It is
established under acts and is rum under a law. It can purchase and sell
securities, can enter into any contract, can sue and can be sued.
Stability: It is
generally stable and perpetual in nature.
Importance of public
enterprises
Importance
Planned development: Its main aim is to promote economic and social development
in the weaker section. It helps to run all the works of development in an
efficient manner. It follows government plans and policies. It generally
focuses on private sector. It also earns profit. It provides planned
development by setting up industries too.
Balanced development: Development works are done in planned and balanced way. It
also provides decentralization of industries. It tries to develop all regions
in harmonious ways. Balanced development is the main aim of public enterprise.
Accelerating the rate of economic growth: In developing countries, increasing
the rate of economic growth always gets the first priority. It tries to remove
deficiency of economy. It provides infrastructural facilities for economic
development. It provides employment opportunities. Government invests the
money. Amount of capital, technical empowerment and other facilities can be
easily arranged by the government.
Public utilities: Public enterprises provide the utility of transportation,
water supply, irrigation, electricity, communication, education, health
facilities and so on to the general public.
Supply essential goods and services: public
enterprise provides goods and services to the public at reasonable price. The
government helps in manufacture and distribution of goods. These types of
services are not done for earning profit.
Provide job opportunities: They help to
create the employment opportunities in the society and work as the model
employer. They help in uplifting the living standard of the people.
Reducing economic inequality: It removes
economic inequality. It helps to develop different regions of the country.
Therefore, it maintains living standard of the public.
Establishment of social welfare: They help in
planned development and balanced development of the country. They also try in
accelerating the rate of economic growth. They are also established for supply
essential goods and services. They help in providing job opportunities to many
people. They further help in reducing economic inequality. Thus, they establish
social welfare.
Concept of multinational companies
MEANING OF
MULTINATIONAL COMPANIES
Multinational companies are
those companies whose management, ownership and control are spread in more than
one country. It does business in two or more countries. It is a large
industrial organization. They are established in one country as parent country
and in other countries as subsidiaries or as host countries. They produce and
distribute goods and services in all these countries where they operate. The
main aim of these companies is to operate business in most of the part of the
world. Popular multinational companies of the world are IBM Company (USA), Sony
Company. Wai wai, nestle company, coca cola company.
Merits of
multinational companies
Merits of
multinational companies
Quality: it provides and produces quality goods. It produces goods which can
satisfy the international customers too. It has huge investment and consists of
trained and qualified personnel and specialists. It uses advanced
technology to produce quality goods.
Mass production: it produces huge number of quality goods to satisfy the
customers from all around the world. It must supply the goods constantly
worldwide. Advanced technologies are used for mass production.
Low cost of production: the cost of production is also low. It produces goods in
huge quantity which increases the rate of return and decreases in the cost of
production. Low cost of production is the major benefit for multinational
companies
Employment: it provides employment opportunities to large number of people from all
around the world. Most of the host countries can help to solve the unemployment
problems. It helps to maintain the living standard of people. It helps in
consumer satisfaction too.
Increase in government revenue: multinational companies produce and
sell the goods in large number of quantities. It earns abnormal profit.
Government from both parent and host countries can collect custom duty, income
tax, sales tax etc. In that way, government can earn more revenue.
Increase in export: it produces commodities in international standard.
They are not produced to meet the needs of local people only. Host countries
have the benefit of exporting the goods in other many countries of the world
where the company has been or not established. It helps largely in the export
business
Industrialization: multinational companies help in industrialization. It
brings more capital in the business and help to establish industries. It also
uses advance technologies to establish industries. It helps in establishment of
industries in host country too.
Defects of
multinational companies
Defect of
multinational countries:
Outflow of foreign exchange: It uses local capital for their industrial
development. They earn industrial development. They earn huge amount of
dividend too. The foreign currencies from host countries also go out in the
form of royalty and technical fees.
Negative effect on local industries: Multinational companies have huge
market in national as well as international market. This has negatively
effected on local industries. They have increased competition on local
industries and are slowly replaced by multinational companies.
Economic exploitation: The main aim of multinational companies is to earn maximum
profit. They use unused natural resources and labor, . They produce goods and
services at lower cost but the market price is very high. They earn maximum
profit by unfair exploitation of host country
Exploitation of consumers: Multinational companies produce goods and services at
lower costs by using cheap local resources and labor in the host country. Due
to the high cost of royalties of these commodities they charge higher price to
the local consumers. As a result, local consumers are exploited.
Inequality of employment: There is distinction on employee between parent and
host country. They provide minimum employment to local people. They provide
minimum wages to the local people. They use advanced technology for the
production of goods so that only highly skilled manpower which may not be
available in the host countries are employed. They appoint low level employee
from host countries and give low salary and high level employees from their own
country and give high salary. This creates inequality in employment.
Nepal chamber of
commerce : formation and functions
Nepal chamber
of commerce (NCC)
Formation
Any
individual firm, Company Corporation engaged in trade, industry and commerce
can receive membership of Nepal chamber of commerce. It has introduced 4 types
of membership.
Function
Help in economic development of the country.
Promote and protect the trade, commerce and industries
Maintain good relationship with trading community and
industrialist
Develop link with commercial and industrial communities
around the world.
Cooperation among all trading, commercial and industrial
communities for betterment of economy
Conduct and organize industrial and trade markets and fare
Issue the certificate of origin for Nepalese product
Establish academic institution regarding trade, commerce and
industries
Finance technical management
Conduct seminar, training, workshop and research programs
Federation of Nepalese
chamber of commerce and industries: formation and functions
Federation
of Nepalese chamber of commerce and industry (FNCCI)
It was
established in 1965. It is umbrella organization of private sector. It was
established for promoting, protecting right and interest of business
communities. It provides information advice, consultation and promotional
services to business. It organizes training, workshop, seminar and research
programs.
Formation
of FNCCI
It’s all
activities, functions, plans policy are managed and controlled by executive
committee. Its executive committee consists of 74 members. It is formed in
following way
Types of membership
Ordinary member
Associate member
Specific member
Foreign member
Honorary member
Elected by general assembly from ordinary member and
associate members → 1 president
Immediate post president → 1 member
Elected from various groups → 5 vice presidents
Elected from various sector of commerce and industry
associating representing each region
EDR → 3 members
CDR → 3 members
WDR → 3 members
MWDR → 3 members
FWDR → 2 members
5. Elected by commerce and industry association →
14 members
Presidents, post president, vice president, chairperson of
committee from standing committee are the members. Standing committee take the
urgent things on behalf of executive committee.
Functions:
It plays a catalytic role in the business and industrial
development and establish sound industrial relationship in the country
it reinforces business community’s commitment for the society
it gives advice to Nepal government time to time about
formulation of plans and policies regarding industry and commerce
it provides up to date data and information services to
business and government.
It creates awareness and support for business and industry
effort on issues affecting business like social responsibility
it fosters cooperation with related national and foreign
organizations
it provides business information and research services
it provides expertise service for exporter, importer as well
as investor.
It helps to promote joint venture.
It facilitates participation in national and international
trade and seminars
It organizes training, workshop, seminar and research
programs.
Trade and export
promotion center : functions
Trade and
export promotion center (TEPC)
Trade and
export promotion center is a national trade promotion organization of Nepal. It
was established in 2006. It is formed by merging three organizations. They are;
Trade
promotion center
Export
promotion center
Carpet and
wool development board.
Its main aim
is to prevent foreign trade and export trade. It helps increase country’s
export capacity. At initial stage it was limited with few countries.
Afterwards, trade was extended with India. It helps to identify, promote trade.
It helps in developing new market. It also helps in establishment of
relationship between exporter and importer. It tries to maintain positive
result. It links Nepalese product in international market.
Functions:
It provides advice to the government of Nepal in formulation
of policies for the development and expansion of trade and export
It helps in expansion of export business and increases
national economy
It tries to reduce poverty through developing rural economy
by enhancing internal and external market for agro based and other products
It conducts programs for increasing the products of
exportable products
It assists to diversify trade by identifying potential market
for exportable products
It cooperates in operating institutions for export promotion
and diversified trade and extend support to such institutions
It pleads for technical assistance with national and
international organizations for improving quality and standard of exportable
products
It organizes buyer and seller meet and conduct training
seminar and workshop
It assists in market test of exportable products
It studies and identifies the problems of foreign trade and
advises the government of Nepal with appropriate measures to solve those
problems
Concept of an office
Definition of an office
Office is
an important pace of the organization where different functions are performed
to achieve the objectives of the organization. It is the integral part of any
business. If business starts to be rigid and complex, office helps by
simplifying the activities and promotes the expansion of business. It is set up
to handle the information and daily transactions in s systematic way. The
definition of office can be interpreted in two ways. They are traditional and
modern viewpoint. In traditional view, office is defined as the place where
clerical functions like receiving, recording, processing and supplying
information are performed. In modern view it is defined as the part of
organization which involves in performing all management as well as
administrative functions such as planning, policy making, organizational
activities, coordination and communicating in order to achieve the objectives
of the organization.
Functions of an office
Functions of an office
1. Primary or basic
functions
1. Primary or basic functions
An office basically
performs those functions that are related to information management. It helps
in receiving, recording, arranging, analyzing and transmitting information
A. Receiving and collecting
information
B. Processing and arranging
information
C. Supplying
information
D. Retention
of records
2. Auxiliary or administrative
management function
A. Management process
B. Public relations
C. Development of office system and procedure
D. Safe guarding the assets
E. Form designing and control:
F. Purchasing stationery and supplies
G. Purchasing office furniture and machine
H. Personnel function
Importance of an office
1. Information
center
2. Channel of
communication
3.
Coordinating center
4. Control
center
5. Service
center
6. Memory center
7. Help employees
8. Office as intermediary
Importance of office management
1. Achievement
of goals
2. Increases
office efficiency
3. Smooth flow
of work
4. Public
relations.
5. Minimization of cost
6. Managing change
7. New challenges
Office accommodation and layout
Meaning of office
accommodation
It is the process of
selecting appropriate building in a favorable location, establishing different
sections and departments, proving or arranging resources in a scientific way.
The purpose of office accommodation is to create sound working environment and
to bring efficiency and rapidness in office work. It is important for both
employees and outsider. Office employees spend a long time office. Bad
accommodation can cause boredom and frustration among employees. Bad
environment also may cause bad impression to outsiders.
Selection of office
building
2. Lighting
and ventilation
3. Convenience
to customers and employees
4. Cost
5. Flexibility
6. Layout facility
Selection of office location:
Nearness to customer: The office
should be accessible to customers. They do not like long distances to make
business inquiries. The office should be accessible to other parties who are in
regular contact.
Nearness to related
business: It is desirable to locate the office near the offices of
related business. It should be established in the same line of trade.
Availability of
infrastructure: The infrastructure should be available in office location.
It consists of transport, communication, power, water and parking facilities.
Nature of
business: The nature of business affects location of office. Office of
manufacturing business in located near the source of raw materials, labor and
service facilities. Office of trading and banking business is located in
commercial centers near the customers. Office of perishable goods business is
located near the market for such goods.
Availability of human
resources: Needed human resources should be
available for office. They can be skilled, semi-skilled and unskilled. All
facilities must be available for employees
Environment: The
office location should have healthy environment. It should not be near polluted
rivers or waste disposal sites. It should be free from noise, dust and
pollution.
Cost of space: Sufficient
space should be available at reasonable cost for the office. Space should be
available for future expansion.
Government
laws: The selection of location should comply with government laws and
regulation at national and local levels.
Office layout
Meaning of office layout
It
is systematic arrangement of office amenities. It is arrangement of staffs,
machines, equipment, furniture and other physical facilities within the limit
of available floor space. Its purposes are to utilize space in the best
possible manners, to make the outlook of the office attractive and to increase
efficiency of the staff. It is defined as arrangement and placing of men,
material, machines and money to the optimum level.
Main
aims are
To utilize the floor space properly
To run the office work smoothly
To help for the motivation of person.
To help for the minimization of physical hazards and accident
To make proper supervision
To maintain the attractiveness for impressing the customers
and visitor.
To try for the provision of comfort and satisfaction of
employees
To help to provide security
Principle
of office layout
Principle of flow of work:
It
is the layout which helps for smooth and effective flow of office works.
Simple, easy and prompt work flow and essential for work progress
Principle of free movement and
observation:
Office
layout should allow the free movement of employees. There should also be proper
supervision and observation of works of movement too
Principle of effective supervision:
There
should be free supervision of flow of works, movement of personnel, cost,
wastage, balance of budget, quality of office works etc.
Principle of departmental relationships:
For
the office layout related departments are inter related and those inter related
departments should be placed side by side.
Principle of flexibility:
Office
should be flexible enough to facilitate the expansion in the future.
Principle of maximum utilization:
As
the time flows, there is increase in cost of every thing as per the situation
of the economy if the country and the area where office is established. There
are very les cases of deflation basically in developing countries. Therefore,
when office is set up then there must be maximum utilization of employees,
materials, space, machines and resources. There should be reduction of wastage.
Principle of pleasing appearance:
Interior
design, lighting, ventilation and cleanliness should be maintained. Office must
be well furnished and pleasing enough to make it attractive to all the
customers and visitors
Principle of good ventilation:
Office
must have enough doors, windows, and ventilation for constant supply of fresh
air.
Principle of good lighting:
Office
should try to provide natural light that is sunlight. Dark places should be
avoided for establishment of office.
Principle of safety:
An
office layout must be based on the safety. It should reduce office accidents
like theft, fire, damage and so on .office machine must be implemented properly
Principle of service facilities:
There
must be provisions of good canteen, lights, lifts, telephone, and toilets.
Principle of providing private offices:
In
an office. Separate rooms should be provided to some important employees. If
the work is confidential in nature then private room should be provided. It is
better to use movable partition to provide privacy
Steps in designing office layout:
1. Securing the blue print of the organization
2. Assessing the need of the organization
3. Arranging templates:
4. Indicating the electric wiring:
5. Submitting the plan to top management for approval:
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