Suitability of Different Forms of Organization
Suitability of Sole Proprietorship
Sole proprietorship is particularly common in areas of personalised services such as beauty parlours, hair salons and small-scale activities like running a retail shop in a locality.
It requires less amount of capital. It is best suited for businesses which are carried out on a small scale.
Suitability of Partnership
Business activities like construction, providing legal services, medical services etc.
It is also considered suitable where capital requirement is of a medium size, like a wholesale trade, professional services, mercantile houses and small manufacturing units.
Suitability of Cooperative Society
Cooperative society form of business organisation is suitable for persons who are not financially strong and cannot stand on their own legs to start and run the business individually.
People can join hands to get the consumer products, to build residential houses, for marketing the products, to provide loans and advances etc. It is suitable for small and medium size business.
Suitability of Limited Liability Partnership
Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular.
LLPs are the preferred vehicle of business, particularly for service industry or for activities involving professionals.
Suitability of Company form
Company form of organisation is suitable where a large amount of capital investment is required, where there is lot of risk to be borne, and expert managerial skills are required.
Because of these major benefits along with unlimited scope of financial expansion and number of people involved, this form of is perfect for cotton and textile, cement production, automobile, sugar production, tractor manufacturing, etc.
Suitability of Different Forms of Organization
Stories Behind the Names of Some Indian Companies
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