Business Environment

The most important component of any company is its environment. A company’s business environment consists of a range of external entities such as suppliers, competitors, the media, the government, customers, economic conditions, investors, and several other external entities. So let’s start with learning about the business climate and why it’s important to succeed in business.

The type of organization used by a corporation is determined by a range of factors, including the nature of the company, the scope of its activities, and many more.

The Prevalent Business Structures in India

Business organizations, as they are commonly known, are the settings in which enterprises are conducted. That there are ten different types of business structures is something that is probably not known to most people! While the most common six to seven types of business organizations will be prioritized in this discussion, the least common six to seven types of business organizations will also be discussed.

Business organization is essential knowledge for any business aspirant student because it is the primary foundation upon which he or she will select how to create his or her own business. As a result, let us go deeper into the subject matter and become familiar with the many types of commercial organizations.

Factors Influencing the Forms of a Business

Business organizations can be classified into a variety of categories based on variables such as their nature, the scope of their operations, ownership, laws, terms, financial structure, liabilities, and so forth. . As a result, members of an organization must make an informed decision on the type of business that would be most suitable for them.

The qualities of a corporate organization are the most important factor to consider while deciding on its structure. Among the various elements that influence the nature of a business are the following:

1.Ease of Formation

2.Capital or Financial Requirements

3.Nature of Liability

4.Control

5.Stability and Continuity

6.Flexibility to Conduct Operations.

7.Secrecy

8.Legal Aspects

The Different Types of Business Structures

There are seven different types of business organizations that can be formed based on the elements listed above. The names of them are as follows:

1.Sole Proprietorship

2.Hindu Undivided Family

3.Company

4.Partnership

5.Corporations or Statutory Bodies

6.Co-operative Societies

7.LLP (Limited Liability Partnerships)

However, if we were to look at the three most common types of business organizations, we would see that they are sole proprietorships, corporations, and partnerships .

The entrepreneur who chooses to go it alone – sole proprietorship

Having sole proprietorship over a business implies that a single individual is responsible for all aspects of that organization’s operations. This is one of the most common types of business organizations in which an individual not only owns the entire company but also manages it on a one-to-one basis. In this case, the company organization and the owner are considered to be a single legal entity.

A sole proprietorship is one of the most straightforward types of business organization, which is why it requires little or no formal documentation to be established. This is the most appropriate organizational structure for small and medium-sized organizations. The most significant advantage of these business organizations is that the owner has full access to the complete incentive package. He is not obligated to distribute any of the proceeds to anyone else. A significant degree of personal liability, on the other hand, can be viewed as a setback in these commercial entities.

The Bodies made by the Parliament of India – Corporations / Statutory Bodies

A statutory body is any authority or organization that does not have the authority to be established under the Constitution. Such bodies, which are established by the parliament and have the authority to make decisions on behalf of the entire nation, have been established. The following are some significant examples of statutory bodies in India:

1.National Green Tribunal

2.National Commission for Women

3.National Human Rights Commission

4.National Commission for Backward Classes

5.National Law Commission

6.Armed Forces Tribunal

Corporations, on the other hand, are business organizations that are comprised of a large number of stockholders, as opposed to partnerships. A company possesses the legal ability to act as a single legal body in all situations. It is often governed by a board of directors (who are elected by all of the shareholders), which is managed by a president. The board of directors has the authority to make decisions regarding the company’s management. Setting up this legal form of business organization necessitates the completion of necessary documents and the conduct of legal actions.

The Partners Business – Partnerships

If we look at the corporate landscape in India, we will find that firms formed through partnership agreements are the most common and fundamental type of business organization. A partnership is a legally binding agreement between two or more persons that agree to work together to carry out a joint enterprise. Individuals, businesses, educational institutions, and governments are examples of parties who might come into a partnership.

The Indian Partnership Act of 1932 specifies the rules and regulations that must be followed by this type of business organization. Partnership firms are the legal names for such organizations. Profit is the joint goal of the firm, and the partners strive to achieve it together.

Businesses that are operated for philanthropic or non-profit purposes are not eligible to be designated partnership firms. Partnerships are one of the three primary types of business organizations, and the nature of the partnership is influenced by the types of partners who are involved.

HUF, or Hindu Undivided Family Business, is a type of business that only exists in India.

This is a unique type of business entity that can only be established in India and no other country. Various sorts of commercial entities are governed by the Hindu law that is practiced throughout the nation. Any member of a Hindu Undivided Family has the right to participate in the ownership of the business owned by the family. In the business world, these individuals will be referred to as coparceners. The ‘Karta’ is the title given to the head of a joint family business in India. He is typically in complete command of the company’s management and financial operations.

Sharing the  Bread – Corporations

“Com” is an abbreviation for “together,” and “Panies” is an abbreviation for “bread.” As defined by the Indian Corporations Act of 2013, different types of companies are defined as distinct sorts of business organizations. It is not necessary for a firm to be international or to have operations in multiple areas to be successful. Whether it’s a small-scale firm or a start-up effort, it doesn’t matter.

The Indian Companies Act defines a business as either a private or a public entity, depending on its size. Private corporations are those in which the minimum paid-up share capital is Rs.1 lakh, and in which there is no such requirement. Public corporations, on the other hand, are separate legal entities that must have a paid-up share capital of at least Rs.5 lakh in order to operate. People can invest in these enterprises by purchasing shares in their respective companies.

Common Interest and Benefit Type Business – Co-operative Societies and Trusts

Unincorporated cooperative societies (UCSs) are a type of business structure that combines joint ownership with shared management. Such types of corporate groups are popular in a variety of industries, including healthcare, banking, food, and agriculture, among others. Co-operative societies and trusts are organizations that aim to improve the lives of a certain group of people.

A Blend of Company and Partnership – Limited Liability Partnerships

Businesses that are experiencing financial difficulties as a result of a variety of liabilities operate under this style of company organization. Limited Liability Partnerships, often known as LLPs, allow partners to have separate liabilities in the firm. In this case, the partners continue to split profits in the same manner as they would in a traditional partnership firm. However, unlike conventional corporations, the partners in an LLP are free to determine their own profit-sharing ratio. The minimum number of partners in this type of corporate organization is two, while the maximum number is unlimited.

CONCLUSION

The phrase “business organization” refers to the way in which firms are structured and how their structure aids them in achieving their objectives. In general, businesses are supposed to be focused on either creating profit or enhancing the quality of life for their customers. Ultimately Contributing to the betterment of the Society