Form of Ownership

• Choice of Suitable form of ownership – A Crucial Decision

• The form of ownership determines the -• Division of Profits• Extent of liability• Extent of Risk• Division of Power• Control of Owner• Long term commitment, cannot be altered easiliy

Forms of Ownership

1) Sole Proprietorship2) Joint Hindu Family Firm3) Partnership Firm4) Private Company5) Public Company6) Cooperative Society

Ideal Form of Ownership

1. Ease of Formation

2. Sufficient Finances

3. Limited Liability

4. Transferability of Interest

5. Efficient Management

Ideal Form of Ownership – Contd.

6. Continuity and Stability

7. Flexibility of Operations

8. Minimum Govt. Control

9. Retention of Business Secrets

10. Low Tax Burden

Factors to Choice of Ownership

1. Nature of Business

2. Size and Area of Operations

3. Degree of Control Desired

4. Amount of Capital Required

5. Degree of Risk Involves

Factors to Choice of Ownership – Contd..

6. Division of Surplus

7. Duration of Business

8. Government regulation and control

9. Managerial Requirements

Starting and Operating Small Ventures

DefinitionAccording to MSME Act, 2006-I. Small Scale Industrial Unit - Investment in P&M < 5 CrII. Ancillary Small Scale Unit - Sells > 50% of output to other

undertakings, investment in P&M < 5 CrIII. Export Oriented Unit- Exports > 50 % Output; Investment in

P&M < 5 CrIV. Tiny Units – Investment in P&M < 25 LacsV. Micro Enterprise – Investment < 1 Lac

Characteristics

1) Personal Character- Single Entrepreneur2) Independent Management3) Limited Investment4) Simple Technology5) Local Area of Operations6) Closely-Held Ownership7) Unorganized Labor

Role of Small Business – Indian Economy Perspective1) Generation of Employment2) Balanced Regional Development3) Optimization of Capital4) Mobilization of Local Resources5) Exchange Earnings6) Development of Entrepreneurship7) Egalitarian Society8) Social Advantage

Problems

1) Shortage of Materials and Power2) Lack of Adequate Finance3) Outdated Technology4) Inadequate Marketing Facilities5) Weak Orgn Management6) Lack of Trained Personnel

Measures taken by Govt.1. Protective Measures• Products reserved for exclusive production• Concessions in excise, sales tax• Govt. gives preference to products by SSI

2. Promotional Measures• Imported raw materials are provided at reasonable rates• Development of industrial estates to provide sheds to SSI• Extension of price preference to products by SSI• Preference given to SSI in land allocation• Technical assistance by Central Small Industries Orgn• Financial assistance by banks and public financial

institutes.

Questions????