Contents -

1. Meaning and Definitions of Business Decision.
2. Importance of Business Decision and Forms of Business Organisation.
3. Features of Sole Proprietorship.
4. Features of Partnership Firm.
5. Features of Joint Stock Company.
6. Features and Merits of Co-operative Organisation.

  • Meaning and Definitions -

Decision making is one of the most important skill a management need to have in organisation. Management is required to make a large number of important decision on regular basis. These decision affect the eventual out come of the business. These decision also affect other stakeholders such as customers, workers and markets.
Business decision process involves the selection of most appropriate course of action out of various alternatives available. Decision making impacts all the important aspects of business such as planning, controlling and organising.
The process of decision making is influenced by many factors such as government regulation, market conditions, competition and other related aspects.
Accounting plays an important role in the decision making process.

Following are the main steps involved in this process :
1. Recognising the need for taking an action.
2. Identifying different ways of achieving the set objectives.
3. Collecting and organising pertinent information.
4. Evaluating each course of action.
5. Choosing the most appropriate course of action.
6. Follow up the implementation.
The last step heavily involves the use of accounting. Historic data is provided by financial and cost accounting. This data may be used for making various decision. However, it should be kept in mind that decision making process is future oriented whereas the data provided by accounting is historic. Therefore, it need to be used in most periment fashion.

Importance of Business Decision -

1. Pervasive Function -
Business decision making is relevant for all the level of management. Top level management is involved with making decision at strategic level while middle management takes decision including work decision, fixing of resposibility and integration. Operating level management takes decision such as delegation of authority and scheduling. Thus, decision making function is carried out at all management level. This helps in running the business in smooth and co-ordinated manner.

2. Important Constituent -
Business decision making is an important function of management. It is essential for successful running of an enterprise. It helps in identifying management functions and involves all the facts of an organisation. Managers of every management level take decision on regular basis.

3. Evaluating Managerial Performance -
Business decision is a challenging risk. It also requires substantial time investment. It can be used for determining the efficiency of management. It shows the definite way for achieving business objective. The process help in evaluation as the achieved result may be compared with the required parameters.

4. Choosing the Best Alternative -
The decision making involves the selection of most appropriate alternative from the various options available to the business. All the available alternatives are elevated by the management and the best one is chosen, keeping in the mind the ultimate objective and resources available. It ensure that the process is carried out in the smooth Manor.

5. Setting up Plans and Policies -
Business decisions are important for setting up plan and policies. These plan and policies are important for the achievement of the business objective. The management is required to find the best possible course of action for achieving these business objectives. Determining various plans and policies aids the process of reaching the targets.

6. Successful Business Operations -
Business decision are helpful in the process of successful functioning of the business. It has in dealing with various issues which may arise at different time.

Forms of Business Organisation -

A business organisation is structured and operuled in a authorized form of ownership. These enterprises are established with a major concern of earning huge profit. A business can be operated by one or a group of person either privately by the government or under the public undertaking in the public sector. The type of business owned by a single person, and is known as sole proprietor.
Whereas, a business run by two or more person can be referred to as Co-operative, joint stock company or partnership firms.
Following are the major forms of business organisations :

  • Sole Proprietorship -

A business which is owned by an individual and is not registered as a limited liability company with this state is known as a "sole proprietorship". It is the easiest form of enterprise ownership and one can be established easily without having much knowledge about it. For example, an enterprise working as a freelancer, a commission based salesman, independent contractor, a craft man on a contract based job etc. These entrepreneurs also called as sole proprietors.

According to L.H. Hancy :
"The individual proprietorship in the form of business organisation at the head of which stands an individual as one who is responsible, who directs its operations, and who alone runs the risk of failure".

According to James stephenson :
"A sole proprietor is a person who carries on business exclusively by and for himself. He is not only the owner of the capital of the undertaking but is usually the organizer and manager and take all the profits or responsibility for losses".

Features of Sole Proprietorship -

1. Sole Ownership -
In this form, the business enterprise is solely owned by an individual. The capital require for the business is arranged from his personal funds or by borrowing fund from others.

2. No Separate Legal Entity -
A sole proprietorship does not hold any separate legal entity from that of its owner, in the eyes of law, the owner of the business exist together. But the business will have no existence, if its owner dies or become insolvent both are considered as a single unit.

3. Ultimate Liability -
The proprietor is the only person liable for all its debts. If the debts of the company are more and cannot be fulfilled by the asset then the proprietor can involve his personal property, for clearing all dues.

4. No Profit Sharing -
A sole proprietor as an individual is entitled to all profit and losses. There is no one to share the profit or losses with him. He is the only person to bear the entire losses of the company.

5. No Legal Formalities -
No legal formalities are associated with the establishment or management of the sole proprietorship business. However, only a licence is required for running the business.

  • Partnership Firms -

Partnership is a contractual agreement between two or more person who are willing the share the profit of a business which is owned by all or a single person action for all. In general it is a business relationship between different person having a common ownership or management of a business enterprise. The minimum member of persons required for the partnership is 2 and maximum limit can be of 10 members for banking industries and 20 members for other industries.

According to Section 4 of the Indian Partnership Act, 1932 : 
"The relationship between person who have agreed to share profit of a business carried on by all or any of them acting for all".

According to Kimbalt :
"A partnership or firm as it is often called is, then a group of men who have jointed capital or services for the prosecuting of some enterprise".

According to Hancy :
"Partnership is the relation between person competent to make contract, who agree to carry on a lawful business in common with a view to private gain".

Features of Partnership Firm -

1. Two or More Person -
At minimum to person and maximum 10 in banking industry and 20 in Other industries are required for establishing a partnership firm. An individual cannot form a partnership with himself.

2. Agreement of Contract -
There is an agreement or contract held between person who are willing to share the business ownership. Usually no legal problem are associated with these contracts or agreement as they are registered under specific terms and conditions.

3. Lawful Business -
Partnership is an act of managing a business and earning profit, which is legally permitted by the government. Whereas, partnership formed for other purposes such as social or charitable work, or any illegal activity like black marketing, smuggling, etc. does not come under partnership law.

4. Profit Sharing -
Under the partnership firm all the profit are equally or proportionally shared between the partners as mentioned in agreement. Likewise, losses are also shared in the same proportion among the partners.

5. Mutual Agency -
Mutual agency is considered as a fundamental characteristic of partnership firm. As it is very important to have good faith, mutual trust and confidence between the partners.

  • Joint Stock Companies -

A company legally owned by the shareholder and managed by an elected "board of directors" having limited liability is known as the "joint stock company". In today's world joint stock company is the most suitable form of business ownership. It is considered as the only systematic and standard way of managing a business. The joint stock company is an association of person in an organisation processing a separate legal entity. Perpetual succession with a unique name and a common seal. The capital of the company is divided into shares which are transferable and it also has limited liability.

According to Prof. Hancy :
"A joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership".

According to Chief Justice Marshall :
"A joint stock company is an artificial person invisible, intangible and existing only in the eyes of law. Being a mere creature of law, it processes only those properties which the charter of its created confers upon it, either expressly or as incidental to its very existence".

Features of Joint Stock Company -

1. Artificial Person with a Separate Legal Entity -
A joint stock company is intangible in nature and has no physical existence. It is an artificial person having an independent legal entity. It can purchase, sell or possess properties under its own seal.
Various properties can be owned by joint stock company and it can purchase or sell them under their seal. This company can conduct any other business and can sign an agreement with other businesses.

2. Voluntary Association -
It is a voluntary Association of individuals, which is established by the people themselves. It is not compulsory to follow any government rules and regulations while forming it.

3. Perpetual Character -
This company exists permanently, it continuous until it is dissolved or sold off. It involves shareholders, who may join or leave the company or may change hands, as and when required.

4. Common Seal -
Since the company has no physical existence, it is not liable to sign in in document. For this purpose, the company has a common seal with a unique name on it, which is used for the purpose of Signature. This seal is always kept safe and secure. There must be two directors present as a witness whenever the seal is used by the company on any document.

5. Limited Liability -
In this business form, the shareholder or owner of the company have limited liability. This liability is limited up to the amount of capital invested by each shareholder.

  • Co-operative Organisation -

A Co-operative organisation is a legal entity which is owned and controlled by a group of person having a common motive. There are server attribute of co-operative like an elected board of directors an administrative staff, indefinite life span, limited liability etc. The owner of the company is liable to pay a fixed amount of fee to the Co-operative. The company profit is shared by all the member in proportion to their contributions. This form of organisation if free to pay any kind of tax as they retain no profits.
It is an independent organisation which is owned and managed by the its members or customers who buy the company goods and services. Investors do not have any kind of role to play in a Co-operative organisation.
The main purpose of co-operative is to fulfill the needs of its members and owners, unlike a joint stock company, it is not just about accumulating capital from the investors. This organisation follow three principal of "one member, one vote" and each member has equal control over the Co-operative.
The Co-operative organisation stands on five pillars, i.e. equality, mutual trust, supervision, self-reliance and spontaneity. The main strength of an organisation is its co-oprative spirit.

According to the International Labour Organisation :
"A Co-operative organisation is an association of person, usually of limited means, who have voluntary jointed together to achieve a common economic and through the formation of a democratically controlled organisation, making equitable contribution to the capital required and accepting a fair share of risks and benefits of the undertaking".

According to Mr. N. Barrow :
"A voluntary organisation of person with unrestricted membership and collectively own funds consisting of wage-carners and small producers, United on democratic basis for the establishment of enterprises, under joint management for the purpose of improving their household or business economy".

According to Indian Co-operative Society Act, 1912 :
"A co-operative society has its objective, the promotion or economic interest of its members in accordance with Co-operative principles".

Features of Co-operative Organisation -

1. Voluntary Association -
A Co-operative organisation is a voluntary Association of members. It is not at all mondatory to become its members.

2. Legal Entity -
A Co-operative organisation is an autonomous legal entity with a distinctive identity. After getting registered, it attains a common seal and a permanent succession.

3. Equal Voting Right -
Regardless of the member of share owned by the member of co-operative society. Each member is eligible to vote only once. These confirm that a rich member or members with more shares is not allowed to apply his own terms and condition as everyone is treated equally.

4. Service Objective -
Co-operative are service oriented organisation. They provide non profit services preliminary to their members  However, they can earn profit by rendering their services to outsider other than its members.

5. Economic Objective -
Along with service objectives, every Co-operative organisation also has economic objective. These objectives include delivering marketing Services, providing land resources, distributing consumer goods etc.
For example : For an agriculture based Co-operative economic objective will be circulation of enhanced seeds, providing best fertilizers, low priced credit facilities etc.

Merits of Co-operative Organisation -

1. Easy to Establish -
A Co-operative organisation can be formed very easily. A group of 10 individuals, with common interest can start a Co-operative organisation by getting in registered with a registrar of co-operative societies.

2. Open Membership -
Any individual having a common interest can become a member of a Co-operative organisation. They can join or leave the organisation at their own will.

3. Autonomous Control -
It is an autonomous body, where the member can elect a representative by casting their votes. A representative is responsible to run and administer the organisation.

4. Limited Liability -
In a Co-operative organisation the member have a limited liability. This acts as an advantage for them, since it is only extended to the amount of capital invested by them.

5. Government Support -
This support provides all type of assistant to Co-operative organisation. This can be provided in form of capital funds, low rate loans, tax releases, subsidies in loan repayment etc.