Business and Accounting Education...!
Business and Accounting Education...!
Business and Accounting Education
Contents
1.
Business Background
2.
Business Environment
3.
Business Systems
4.
Introduction to Accounting
5.
Accounting Equation
6.
Double Effect of Transactions
Business Background
Business
All
economic activities related to the production and distribution of goods and
services to satisfy the needs and wants of people are called business.
Needs
The
conditions that arise in humans and must be fulfilled are called needs.
•
Food
•
Clothing
•
Housing
•
Education
•
Health
•
Transportation
•
Communication
•
Love
Characteristics
of needs
•
Essential
•
General
•
Limited.
•
Cannot be generated
Want
•
The various ways of satisfying needs are called wants.
Food – Bittu, Roti, Idli
Clothing – Shirt, Skirt
Housing – House, Mansion, Cottage
Characteristics
of wants
•
Non-essential.
•
Various types.
•
Undefined.
•
Can be generated
Difference between needs and wants
|
Needs |
Wants |
|
Essential |
Non-essential
|
|
General |
Various types. |
|
Undefined |
Undefined |
|
Cannot be originated |
Can be originated
|
Stages
of development of business..
•
Barter period
•
Cash flow period
•
Technology application period
•
Information technology application period / Electronics application period
Barter
The
exchange of goods for goods by people to fulfill their needs is called barter
system.
Disadvantages
of barter
Incompatibility
of dual needs.
•
Inability to measure value properly
•
Inability to store goods properly.
Money
Money
is a common medium accepted by everyone and legally recognized by all and used
in the exchange of goods and services.
Countries and their currencies
Country
Currency
Unit
United
States US Dollar
England Sterling Pound
Europe
(France, Italy) Euro
India
Indian
Rupee
Japan Yen
Parties Interested in a Business
The
following are the parties interested in a business.
•
Owner
•
Manager
•
Employees
•
Customers
•
Suppliers
•
Competitors
•
Financial institutions
•
Government
•
Society
1.
Owner
•
The person who starts the business by investing capital (money, assets) in the
business
•
The financial knowledge and experience of the business owner are the reasons
for the success of a business.
•
These owners are seen as individuals or 1 group.
2.
Manager
•
The person who implements the business operations is called a manager.
•
The person who implements the decisions of the owner.
•
A manager is a person who uses the resources available in a business in the
right way to achieve the objectives of a business.
•
A manager is a person who establishes good relations between customers and
employees of the company
•
Some companies are considered to be the owner of the company.
•
Large companies have multiple managers such as financial manager, marketing manager,
manager, human resource manager, etc.
3.
Employees
•
Employees are considered to be those who use their knowledge and skills to
properly carry out the tasks assigned to them
•
Their positive attitude and dedication will be the reason for the success of
a business.
4.
Customer
•
The party that receives goods and services from a business Customer
•
They acquire these goods and services for resale/reuse or for final use.
•
The success of a business depends on the stability of the customer.
•
The business carries out its activities by knowing the needs and wants of the
customer
5.
Suppliers
•
The parties that provide various services (transportation, raw materials)
required by the business.
•
Quality raw materials and services should be provided at the right time and at
a reasonable price.
6.
Competitors
•
However, competitors are those who produce and market products and services
that are superior to the products produced by a business.
7.
Financial institutions
•
Banks and other institutions that provide loans, consulting services, etc.
required by the business are called financial institutions.
8.
Government
•
The government sets the necessary policies for the economic development of the
country
9.
Society
•
The entire population living in the country
•
Journalists
•
Pressure groups
•
Community level groups
The
purpose of stakeholders is to be concerned.
1.
Owner
•
To protect the invested capital
•
To earn sufficient profit
•
To develop the business in the future
2.
Manager
•
To achieve business objectives, make necessary decisions and implement them
•
Job satisfaction
•
Business development
3.
Employees
•
To receive fair wages
•
To ensure job security
•
To receive other benefits (extra pay)
4.
Customer
•
To receive quality goods and services.
•
Obtaining goods and services at a fair price
5.
Suppliers
•
Receiving payments on time
Receiving
money for orders placed
6.
Competitor
•
Determining the prices of their products
·
Getting
information about how other businesses are doing business Facing the
competitive situation.
7.
Financial institutions
Recovering
loans on time
Providing
more loans
8.
Government
•
Collecting tax revenues in a proper manner
Creating
employment opportunities
Increasing
national production
9.
Society
•
Observing whether business activities are carried out in a way that does not
harm the environment.
•
Observing whether they are acting with concern for social welfare
The
contribution that the business expects from stakeholders.
1.
Owner
•
Obtaining the necessary capital contribution.
•
Conducting business activities with commitment and dedication.
•
Reviewing business activities
2.
Manager
•
Implementing the business plan properly
•
Making the right decisions.
3.
Employees
•
Fulfilling the assigned responsibilities properly
•
Increasing their efficiency
4.
Suppliers
•
Providing quality raw materials
•
Providing raw materials on time
5.
Government
•
Obtaining tax benefits.
•
Obtaining other incentives such as loans at low interest rates
Purpose
of businesses
•
Main purpose
To make a profit
To satisfy the needs/wants of the people
•
Secondary purpose
Maintaining the quality of goods and services.
Creating employment opportunities.
Maintaining employee benefits.
Manufacturing
business
Companies that provide goods and services to the people are called
manufacturing businesses.
•
Based on the nature of production, businesses are divided into 2 types
1.
Goods manufacturing business
2.
Service manufacturing business
Goods
manufacturing business
•
Businesses that produce tangible physical goods that satisfy the needs and
wants of people are goods manufacturing businesses.
•
Goods manufacturing business is carried out by considering the taste, income
level, lifestyle, and social status of the consumer.
Soft drinks
Furniture
School equipment
Service
manufacturing business
•
Companies that provide services, which are activities provided to consumers to
satisfy the needs and wants of consumers through business, are called service
manufacturing businesses.
Banking
Wholesale and retail trade
Insurance
Factors
of production
The
various resources required by businesses to produce goods and services.
The
factors of production are classified as follows.
1.
Land
2.
Labor
3.
Capital
4.
Effort
Land
All
resources obtained from nature are called land.
The
resources found not only on the surface of the land but also under it are
called land.
The
resources obtained from the land are limited.
Mineral
resources
Forest resources
Labor
The
physical and mental contributions made in a business are called labor.
Physical labor providers: - Refinery workers, miners.
Mental labor providers: - Accountants, managers
Capital
The
resources created by man for production and used as an aid during production
are called capital.
Money
Machine
Furniture
Building
Enterprise
The
act of organizing the factors of production such as land, labor, and capital
required for production and starting and carrying out any production process is
called enterprise.
The
party who undertakes this enterprise is the entrepreneur
The
party who carries out new discoveries and innovations is the entrepreneur.
Factors of production and their rewards
•
Land – Rent
•
Labor wages | Salary
•
Capital – Interest
•
Effort – Profit | Loss
Consumer
•
The party who receives goods and services for final use.
Service
production business
•
Companies that provide services, which are activities provided to consumers to
meet the needs and desires of consumers through business, are called service
production business.
Bank
Wholesale and retail trade
Insurance
Unit
02
Business
Environment
•
Business environment includes various factors that can affect the operation of
a business.
•
Businesses carry out their activities considering these business environment
changes.
Types
of Business Environment
1.
Internal Environment | Controllable Environment
2.
External Environment / External Environment | Uncontrollable Environment
Internal
Environment
•
Various groups involved in the operation that can affect the operation of the
business are also called internal factors.
•
These internal factors can be favorable or unfavorable to the organization.
•
When these changes are unfavorable, they are controllable by the business, so
it is a controlling environment.
•
The following are found as internal factors
1.
Owner
•
He will be the one who invests capital in the business.
•
The financial strength, business knowledge, and experience of the owners are
the reason for the success of a business
•
2.
Manager
•
Managers are the people who make the necessary decisions to implement the
resources of the business to fulfill the objectives of a business.
•
The best relationship between the customers and employees of a business is built
by managers.
•
In some businesses, the owners are also seen as managers.
3.
Employees
•
Employees are those who use their knowledge and skills to properly perform the
tasks assigned to them.
•
Their positive attitude and dedication are the reason for the success of a
business.
External
Environment
•
The external environment is the departments and other factors operating outside
the business that affect the operation of a business.
•
Changes in these external factors can be favorable or unfavorable for the
business.
•
When it is an adverse change, it is considered uncontrollable by the company.
•
The company must change its operations according to these changes
The
following are the external factors
1.
Customer
•
Customers are the parties who receive goods and services in a business.
•
The sustainability of a business is determined by them.
•
Businesses should take action to properly identify and satisfy the needs and
wants of customers.
•
Changes in the purchase of goods and services by customers will have a major
impact on the operations of businesses.
2.
Suppliers
•
The raw materials required when running a business. Suppliers are the parties
that provide various services such as transportation facilities.
•
The services of suppliers, such as ensuring the continuous availability of raw
materials and services on time and ensuring their quality, are very important
for the continuous operation of the business.
3.
Competitors
•
Competitors are companies that produce or distribute a product or service
equivalent to a business's product or service.
•
The methods in which competitors conduct their business activities, the prices
and quality of competitors' products, etc., also have a major impact on
business operations.
4.
Political Environment
•
The political environment is the various policies formulated by the government
for the economic development of the country.
•
Businesses will change their operations considering these policy changes.
Government stability
Infrastructure development policies
Budgetary policies
Labor-related policies
5.
Legal Environment
•
Laws created to protect domestic producers, consumers, the business community,
etc. It is called the legal environment.
•
Businesses should carry out their activities in accordance with the laws thus
created.
•
Institutions, boards, commissions, responsible officers, etc. have been
appointed to implement these laws
To protect consumers – Consumer Affairs Authority Act, No. 9 of 2003 (Consumer
Affairs Authority)
Companies Act, No. 7 of 2007 (Registrar of Companies Department) - Company
Registrar
Shop Office Employees Act, No. 14 of 1954. (Industrial Disputes Board)
For environmental protection – Central Environment Authority) – Public Health
Inspector (PHI)
6.
Technological Environment
•
Technological Environment The advancements in technology due to new inventions
and creations. Technological environment
•
Companies change their operations considering these technological changes
•
Computer technology and digital technology have changed the operations of the
company.
Technological
environment changes
•
Quality clothes are produced using modern computer technology instead of
hand-operated machines in garment production.
•
Accounting records recorded in books in the past are now carried out using
computer software
•
Email and fax are used instead of ordinary mail used in the past
•
Human labor is used to carry outThe production process is now carried out using
electronic devices.
7.
Economic Environment
•
The economic environment includes the economic factors that affect business.
•
The government plays a major role in formulating these economic policies.
Economic policies are formulated on the advice of the Central Bank of Sri
Lanka.
Economic
Environmental Factors
a.
Interest Rate
•
It is the rate of interest charged by a bank to its customers for deposits and
the rate of interest charged by the bank to its customers for loans.
b.
Inflation
•
Inflation is the continuous increase in the aggregate price levels of goods and
services.
•
This increase causes the value of money to fall.
c.
Full Employment
•
A country is at full employment when everyone who is looking for work can find
suitable employment.
d.
Income Distribution.
•
The income distribution of a country is the distribution of income among its
people.
e.
Savings
•
Savings are the portion of income that individuals keep for consumption
purposes rather than spending.
•
When a country's savings increase, its investments increase.
f.
Currency Exchange Rate / Foreign Exchange Rate
•
The method / rate at which one country's currency is exchanged for another
country's currency is the currency exchange rate.
g.
International Relations
•
The relations that a country maintains with other countries are international
relations.
•
These relations are established through trade zones and trade agreements
8.
Globalization
•
The close relationship between the countries of the world in terms of economy,
society and culture is called globalization
•
This globalization allows not only political and other relations but also
business activities to be carried out freely between the countries of the
world.
•
Due to the development of information and communication technology, the entire
world has become a single village today.
Positive
effects of globalization on domestic trade.
1.
Modern technologies can be obtained.
2.
Quality foreign raw materials can be obtained.
3.
Ability to obtain efficient machinery.
4.
Inflow of foreign capital into the country.
5.
Ability to obtain foreign markets for domestic goods and services
Adverse
effects of globalization on domestic business
1.
There will be a situation where there
5.
Having an accepted brand logo
Weaknesses
of a business
1.
Insufficient financial strength of the owner.
2.
Inadequate trained employees.
3.
Inadequate use of modern technologies.
4.
Negative attitude of employees.
5.
Incompetent management. = Inappropriate geographical location of the business
Business
opportunities
1.
Introduction of low-interest credit systems by the government.
2.
Providing tax incentives to businesses
3.
Creating new cities.
4.
Construction of new roads | expressways.
5.
Changing lifestyles of consumers.
Business
threats
1.
Imposition of international trade restrictions.
2.
Emergence of competitors.
3.
Natural disasters. Difficulty in adapting to new technology.
SWOT
Analysis
•
This is the analysis of the strengths, weaknesses, opportunities, and threats
of a business.
•
By analyzing the internal environment, strengths and weaknesses can be
identified, and by analyzing the external environment, opportunities and
threats can be identified
1.
S-strength – Strength
2.
W-Weakness – Weakness
3.
0-Opportunity- Opportunities
4.
T- Threats – Threats
Unit 03
Business Organizations
• Business organizations are organizations that are
involved in the production and distribution of goods and services to satisfy
the needs and wants of people.
• The parties who carry out these business
organizations are individuals, groups of individuals, or the government.
Characteristics of business organizations
Have a name
Have a purpose.
Meet the needs and wants of people.
Engage in management activities
Use resources.
Classification of business organizations
Business organizations can be classified on the
following basis.
1. Ownership basis
2. Purpose basis
3. Size/quantity basis Management basis
Classification of business organizations on the basis
of ownership.
• The parties who invest the necessary funds for the
business are called owners
Based on this ownership, business organizations are
classified as follows.
Business Organizations (Based on Ownership)
|
Sole Proprietorship |
Organizations operating under the Central Government |
|
Partnership |
Organizations operating under the Provincial Council
|
|
Incorporated Company |
Organizations operating under the Local Government Councils
|
|
Cooperative Society |
|
|
Associations, Clubs
|
|
Private Sector Enterprise
• Enterprises owned by individuals / groups of
individuals are called private sector enterprises.
• Enterprises whose capital is invested by individuals
/ groups of individuals and whose management activities are carried out by them
are private sector business organizations.
Sole Proprietorship/Private Ownership
A business owned by an individual is a sole
proprietorship.
• A business whose capital is invested by an
individual and whose management activities are carried out by him and whose
profit and loss are borne by him is a sole proprietorship.
Eg:- Pillayar Sources, Keertika Sariwaiyagam, Dhanusa
Bookstore,
Ganapathi Bakeary.
Characteristics of a Sole Proprietorship Business
• Capital is invested. The owner will enjoy the profit
/ loss as an individual owner
• Unlimited liability of the owner
When a sole proprietorship business incurs a large
loss, the owner may have to lose his own assets as well.
• Lack of legal personality.
This is a situation where the legal status of a person
is not seen before the law. That is, legal actions cannot be taken in the name
of the business. (The owner can make assets, purchases in his own name)
• Non-continuous operation.
• Registration is not mandatory.
Advantages of a sole proprietorship business
• Easy to start.
• Easy to start because there are fewer legal
restrictions. Initial costs are low
• All profits belong to the owner
• The confidentiality of the business organization can
be maintained.
• Decisions can be made independently and quickly.
• The owner can use his skills to the fullest
Disadvantages of a sole proprietorship business
• Unlimited liability of the owner.
• Inability to raise a large amount of capital
• Lack of continuity
• Lack of legal personality
• Individual decision-making becomes ineffective
Registration of a sole proprietorship business
• When the owner of a sole proprietorship business
starts a business in his full name, it is not necessary to register
• When carrying on a business under a common name
other than his own name
• The business name should be registered based on the
relevant Provincial Council Business Name Act as per the Business Name
Registration Ordinance No. 6 of 1918.
• Application forms for this registration can be
obtained from the relevant Divisional Secretariats
• The application form for registration should be
submitted within 14 days of starting the business.
Procedures for registering a sole proprietorship
business
• Obtain the relevant application form from the
relevant Pradeshiya Sabha office where the business is expected to start. Two
forms are used for this
• Application form for registration of a sole
proprietorship business
• Application form for obtaining a report from the
Grama Niladhari.
• Submit the completed application form and the Grama
Niladhari report along with the registration fee to the Divisional Secretariat.
(District Secretary)
• After the above documents are verified by the
Divisional Secretariat, a certificate of registration of the business name will
be issued.
• This certificate should be displayed for public
viewing
Benefits of registering a business name
• Obtaining an identity.
• Being able to confirm the ownership of the business
name.
• Eligibility to receive incentives and concessions
provided by the government
• Being able to easily obtain loans from financial
institutions.
Partnership Business
• A partnership business is a business in which
individuals come together to run a business with the aim of earning profit.
• The relationship between the partners in this
business is a partnership.
• The owners of a partnership are called partners
• The Partnership Act of 1890 is found in relation to
this partnership.
Characteristics of a partnership business
• The number of members is found in 2-20.
• Partnership agreements can be made and executed
• Liability is not limited. But the loss. is spread.
• No legal personality.
• No continuous operation.
Note-
The maximum number of partners of a partnership is
limited to 20 by the 7-digit Companies Act of 2007
Things covered in the Partnership Act of 1890.
• The capital must be invested by the partners in equal
amounts.
• Profits and losses must be divided equally.
• Partners of a partnership can make debts and take
out loans and cannot charge interest.
• 5% interest is charged on partner loans
• Partners can participate in the management of the
company but cannot receive a salary.
Partnership Agreement
• An agreement made between partners regarding the
administrative matters of a partnership and the method of resolving disputes
that may arise between the partners is called a partnership agreement.
• This partnership agreement can be made in the
following ways
1. Orally
2. By conduct
3. In writing
Written partnership agreement / partnership agreement
• Regarding the administrative matters of a
partnership If the partnership agreement is prepared in writing and
signed by all the partners and maintained as a document, it is called a
partnership agreement.
Note
• According to the Prevention of Frauds Ordinance,
1940, when the initial capital of a partnership is more than Rs. 1000, the
partnership agreement must be made in writing.
Matters included in the partnership agreement
(written)
• The ratio of capital to be invested
• The ratio of profit and loss to be shared
• The ratio of interest on the debts of the partners
Salary details of the partners involved in the
management
• The ratio of interest on the loans received by the
partners in the partnership.
The partnership and its registration.
• The name of a partnership business does not need to
be registered when carrying on the business in the full name of the partners.
• It can be carried on in a common name other than its
own name. Registration is mandatory as per the Business Names Registration
Ordinance No. 6 of 1918.
Advantages of Partnership Business
• Easy to start
Like a sole proprietorship business, it can be started
easily with fewer legal restrictions.
• More capital can be raised.
Since there are 2-20 partners, more capital can be
raised.
• It can be operated successfully using the various
skills found among the partners.
• Liability is shared among the partners.
• Better decisions can be made as the partners make
decisions collectively.
Disadvantages of Partnership Business
• Unlimited liability.
• No legal personality
• No ability to continue as a going concern.
• Profits are shared among the partners.
• Conflicts may arise among the partners
• Decision-making by the partners will lead to delay
in decision-making.
Laws to be followed by a partnership business
• Companies Registration Act No. 6 of 1918
• Partnership Act No. 1890
• Prevention of Fraud Ordinance No. 1940
• Companies Act No. 7 of 2007 (maximum number of
partners in a partnership is 20)
Incorporated Company
• A company is a profit-oriented business organization
that is registered under the Companies Act No. 7 of 2007 and is started by
raising capital by issuing shares, has limited liability and has legal
personality.
• The owners of this company are the shareholders by
purchasing shares.
• Their liability will be limited to the value of the
shares they have purchased
Keertika pvt Ltd
Efron Company Limited
Characteristics of an incorporated company
• It will be registered under the Companies Act No. 7
of 2007.
• Liability is limited.
• It has legal personality.
• It will be managed by a board of directors/board of
directors.
• Capital will be raised by issuing shares
Registration of an incorporated company
• It is mandatory to register with the Registrar of
Companies, Department of Companies, as per the Companies Act No. 7 of 2007.
Documents to be submitted to the Registrar of
Companies regarding company registration.
• Affidavit that the name of the company does not
contain any official words similar to the name of an existing company
• Consent letter of the person elected as a director.
• Company constitution (internal administration
matter)
• Company secretary's consent letter.
Advantages of an incorporated company
• Ability to raise more capital.
Since capital is raised by issuing shares, more
capital can be raised.
• Legal personality.
• Limited liability.
The liability of the company's shareholders is limited
to the capital they have paid up.
• Going concern.
• Management is carried out by the board of directors.
The management is carried out by directors elected by
the votes of the company's shareholders.
Disadvantages of an incorporated company
• Greater legal influence.
Legal requirements regarding the establishment,
management, and dissolution of the company are more similar to other
businesses.
• Sharing of ownership and profits.
Since the number of shareholders of the company is
large, profits and rights are shared among the shareholders.
Cooperative Society
• Institutions established under the Cooperative
Society Act No. 5 of 1972 with the aim of meeting the general need with
democratic management and independent activities and enjoying equal rights are
called Cooperative Societies.
• The minimum number of members to establish these
cooperative societies is 10.
Multipurpose Cooperative Society
Thrift Credit Cooperative Society
Sea Workers Cooperative Society
Characteristics of a Cooperative Society
• Having common needs and objectives
• Democratic management system.
The Board of Directors for the management of the
cooperative society will be elected by all the members by voting
• Equal rights for the members
The rights of the cooperative society belong to the
members and the assets found there also belong to the members.
• Free and open membership
Anyone has the right to join the association at their
own discretion and to withdraw from the association at any time.
Advantages of the cooperative society.
• Democratic management system
• Acting for the benefit of the members.
• Surpluses are shared among the members
Disadvantages of the cooperative society
• Capital is limited.
Since capital is raised based on the membership money
of the members, it is not possible to raise more capital.
Cooperative policies must operate in accordance with
the Cooperative Act
Associations, Clubs
• Associations are organizations that operate based on
social welfare and member welfare.
• These social organizations operate to provide social
services, charity work, educational assistance, etc.
• These associations must register with the
responsible officer at the relevant divisional secretariats.
Sports clubs
Community centers.
Agricultural clubs
Public sector business organizations / Government
sector business organizations
• Business organizations that are owned by the
government with capital provided by the government are public sector business organizations
• The following business organizations are found under
this public sector.
Government corporation
Government department.
Government company
Government corporation
• An organization that is fully owned by the
government / majority owned by the government is called a government
corporation.
• These organizations are created based on general
laws | special laws passed by Parliament
• These government corporations are also called
bureaus, commissions, councils, boards, etc.
Rupavahini Corporation
Ceylon Electricity Board
Central Environmental Authority
Foreign Employment Bureau
University Grants Commission
Consumers Authority
Characteristics of a Corporation
• Ownership and management are vested in the
government.
• Individual status before the law (legal personality)
• Created through a special law / existing general law
• Continuous operation.
Advantages of a Corporation.
• Suitable for essential needs.
Since the private sector does not come forward to
provide most of the services needed by the public, the public corporation
system is suitable for fulfilling them
Electricity Board
Water Supply and Drainage Board
• Helps reduce the monopoly of the private sector
A competitive environment can be created by using a
public corporation to reduce the adverse impacts caused by the power of the
private sector.
Transport Board
• Surpluses reach the general public.
A portion of the surpluses earned by corporations are
added to the government's consolidated fund and then used for social welfare
projects.
Consumer Affairs Authority
Disadvantages of a public corporation
• The government finance law is subject to regulations
• No independence in decision-making
• Influence of relevant ministries is seen
Government Department
• An institution is a government department that is
fully funded by the government and operates under government administration
under the ministry to provide various services needed by the people
Sri Lanka Postal Department.
Auditor General's Department
Election Department
Note;-The Elections Department and the Auditor
General's Department operate as departments operating under the ministry.
Disadvantages of Government Departments
• There will be a delay in decision-making as they
operate under the administration of Parliament and the Ministry.
• They cannot function independently as they have to
carry out various activities in accordance with government financial
regulations, administrative regulations, various regulatory bodies, etc.
Government Companies
• Commercial organizations that are registered and
started under the Companies Act No. 7 of 2007 by raising capital by selling
shares and more than 51% of the capital is owned by the government are called
government companies.
Classification of business
organizations based on purpose
Business organizations (purpose)
Profit-oriented
business Non-profit
organization
business
Private sector
Private sector
Public sector
• Private ownership *Public company Cooperative
Public corporation
• Partnership
• Associations, * Government departments and
associations
Profit-oriented businesses
• Business organizations that operate with the main
objective of earning profit are profit-oriented business organizations
Non-profit business organizations
• Business organizations that operate with the main
objective of benefiting members and society are non-profit business
organizations
Classification of business
organizations based on size
Business organizations
1. Small and medium-sized enterprises
2. Large/large-scale enterprises
Generally followed rules for classifying business
organizations based on size
• Amount of capital invested
• Number of employees.
• Size of the market / market for the business
• Amount of energy used.
Note - SANA | Department of Population and Statistics
Enterprises with less than 25 employees are classified as small/medium
enterprises.
Small and medium-sized enterprises
• Enterprises with relatively small capital, fewer
employees and less market share are small and medium-sized enterprises.
Large enterprises
• Enterprises with large capital, more employees and
more market share are large enterprises
• A factory that dominates a particular industry is a
large enterprise.
Classification of business organizations
on the basis of management.
Management
• Management is the process of planning, organizing,
directing and controlling a business so that it can achieve its objectives.
On the basis of this management, business
organizations can be classified as follows
1. Companies managed by an individual owner
Sole proprietorship
2. Companies managed by partners
Partnership business organization
3. Companies managed by a board of directors, a
director or a company.
Incorporated company
4. Companies managed by the government
Public corporation, government department
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