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Understanding Business Systems and Structures

Explore the meaning, components, and importance of business structures within the broader business system. Learn about private, public, and joint sectors, their roles, problems, and impact on economic development in India.

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Understanding Business Systems and Structures

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  1. Business structure

  2. Meaning of Business System: Business system is a set of all individuals, groups, organisations and resources, which are directly or indirectly connected with the production and distribution of goods & services. Business system, therefore includes, investors, financial institutions, government organisations, various types of business organisations, traders, customers, non-profit organisations like chambers of commerce; service providers like banks, etc. Com - 1 - Business Environment, Business Structure

  3. Features of Business System: • Business is a part of social system • Business interacts with social groups • Business consists of sub-systems • Varying degree of inter-dependence • Business is guided by well-defined objectives • Business & Environment Com - 1 - Business Environment, Business Structure

  4. Business Structure: Business structure refers to the established pattern of relationships among the components or parts of the business. Business structure can also be referred to a framework designed to accomplish well defined goals. Com - 1 - Business Environment, Business Structure

  5. Need & Importance of Business Structure: • Facilitates Effective Management • Growth & Development • Estimate of Resources • Optimum use of Resources • Facilitates Teamwork • Better Relations • Attainment of Objectives • Improves Efficiency • Facilitates Innovation • Enhances Corporate Image Com - 1 - Business Environment, Business Structure

  6. Components of Business Structure: Com - 1 - Business Environment, Business Structure

  7. Private sector

  8. Forms of Private Sector: • Sole Trading Concern • Partnership Firm • Joint Stock Company • Joint Hindu Family Firms • Co-operative Societies Com - 1 - Business Environment, Business Structure

  9. Role of Private Sector in India: • Employment • Contributes to National Income • Capital Formation • Social Order • Rural Development • Entrepreneurial Development • Supports Public Sector • Facilitates Economic Development • Contributes to Government’s Revenue • Facilitates Competition • Foreign Exchange Earnings Com - 1 - Business Environment, Business Structure

  10. Problems of Private Sector in India: • Government Control • Unhealthy Competition • Profit Motive • Exploitation of Workers • Problem of Industrial Sickness • Misuse of Resources • Malpractices • Monopoly & Concentration Com - 1 - Business Environment, Business Structure

  11. Public sector

  12. Forms of Public Sector Enterprises: • Departmental Form • Public Corporation • Government Company Com - 1 - Business Environment, Business Structure

  13. Role & Importance of Public Sector in India: • Employment • Rural Development • National Income • Capital Formation • Foreign Exchange Earnings • Social Order • Infrastructure Development • Reduction in Regional Disparities • Reduces Concentration of Wealth • Government Revenue Com - 1 - Business Environment, Business Structure

  14. Problems of Public Sector in India: • Low Return on Investment • Low Labour Productivity • Underutlisation of Capacities • Poor Labour-Management Relations • Wastage of Resources • Use of Outdated Technology • Lack of Professionalism • Political Interference • Surplus Staff • Other Problems Com - 1 - Business Environment, Business Structure

  15. Joint Sector

  16. Definition & Description of Joint Sector: • In the Tata Memorandum on Industrial Growth J.R.D. Tata defines; “ A Joint Sector Enterprise is intended to be a form of partnership between the private sector & the government, in which state participation in capital will not be less than 26%, the day to day management will normally be in the hands of the private sector exercised by the board of directors on which government is adequately represented.” • The history of the Joint Sector dates to pre-independence days, when several industrial enterprises were set up in the princely states of Mysore & Hyderabad with public participation in Equity. • The Companies in the Joint Sector were promoted for the purpose of industrial growth & not for controlling & restricting monopoly & concentration of wealth & income. Com - 1 - Business Environment, Business Structure

  17. Role of Joint Sector: • Acceleration of Industrial Growth • Regional Development • Improvement in Managerial Efficiency • Solves the Shortcomings of Private & Public Sector • Broad-basing Entrepreneurship • Social Control over Industries • Capital Formation • Employment Com - 1 - Business Environment, Business Structure

  18. Problems of Joint Sector: • Interference by Government • Procedure & Formalities • Problem of Board of Directors • Problem of Social Objectives • Problem of Low Returns • Underutilisation of Capacities Com - 1 - Business Environment, Business Structure

  19. Taruna R. Shroff Thank you Com - 1 - Business Environment, Business Structure

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