Livestock Economics, Marketing and Business Management

FACTORS OF PRODUCTION-ORGANISATION

Meaning

• Organisation combines the other factors of production. Viz. Land, labour and capital and decides on what to produce.
• A special skill is required to combine factors of production and accomplish the difficult task of production.
• This task is undertaken by organiser or entrepreneur. Profit is known as reward of management.

Types of Organisation

• There are five forms of organisations viz.
  • Sole proprietor
  • Partnership
  • Joint stock company
  • Co-operative societies and
  • Public sector undertaking

Sole proprietor

• This is the oldest form of entrepreneurial organisation. Even today, from the point of view of numbers, small firms are predominently sole proprieter firms. Such one person firms range from farmer, shop keeper and small factory-owner who employ other workers and may even own many separate units.
• Nevertheless, all these businesses have the same characteristic of being owned and controlled by a single person.
• It is this person's task to make all decisions regarding the policy of the firm and it is he alone who takes the profit, bears the brunt of any losses made.

Disadvantages

• Development of such a firm must proceed slowly because the sources of capital are limited.
• In the event of failure, not only the assets of business but also the private assets and property of the proprietor can be claimed against by creditors. In short there is no limited liability.
• There is lack of continuity; On retirement or death of the owner, a one-person firm may cease to function.
• Because of these disadvantages, this type is confined to those businesses, which are just starting up or to certain industries such as agriculture and retailing.

Partnership

• A large amount of capital is available when persons combine together into a 'partnership'.
• Normally not more than twenty (ten in case of a banking) may so join.
• Each partner provides a part of capital required and shares the profit on an agreed basis.

Joint stock company

• Some kinds of business could not be conducted on a small scale, and these have to start as joint stock companies, either sponsored by some important interests or else developed as subsidiaries of existing large firms.
• The advantages are limited liability, continuity, and availability of capital and ease of expansion.

Co - operative societies

• They are a form of organisation where people work together or business people on the basis of natural benefit.
• It is a voluntary organisation designated to promote economic interests of its members. Members have equal right.
• Co-operative society has the motto of "each for all and all for each".

Public Sector Company

• A company undertaken and run by the local, state and central government are called as public sector undertaking or a company.
• To promote people's welfare, government directly undertakes economic activities.
• Public undertakings have been started with the following reasons,
  • To bring about rapid economic development.
  • Benefits of development are shared by all the people and.
  • Inability of private sectors to find huge amount of capital needed to take up large projects.