Firm is an organization owned by one or jointly by a few or many people, engaged in a productive activity, with a definite aim.
Types of firms
Private sector:
The ownership is exclusively in the hands of private individuals.
- Sole Proprietorship:
Owned and controlled by a single individual. Eg: retail trades, service industries, cottage and small scale industries. - Partnership:Owned, managed and controlled by more than one person. Profits are shared between them. It is based on Indian Partnership Act. The minimum number of partners is 2 and the maximum is 20.
- Joint Hindu family business:
head of the family manages the business and other members help him. Profits are shared according to their contribution. - Joint stock companies or corporation:
A legal entity with a perpetual succession and a common seal. It is created by law.
Public limited companies
Minimum of seven shareholder and the upper limit is open for any number. It has to publish Balance sheet and Profit and Loss Account.
Cooperative society
People associated for common interest. Eg: consumer’s cooperative credit societies, cooperative farming societies, housing cooperatives etc. Basic objective is to provide maximum service to its members.
Public sector companies
They aim for the economic development of the country rather than profits.
Departmental organizations
Eg: Posts and telegraphs, railways, broadcasting and defense undertakings.
Public corporations
These are formed under specific acts of the parliament. eg: LIC, IFC, Indian Airlines etc.
Govt. Company
A company with not less than 50 percent of the share capital is owned by the central or any state govts.
Eg: Hindustan Machine Tools Ltd., Hindustan steel Ltd. Etc.
3. Joint sector
Participation of both the govt. and the private sector in the business.
Madras Fertilizers Ltd. for example, was established as a joint enterprise in participation with Amoco Inc. (USA) and National Iranian Oil Co.(Iran). The same foreign companies were partners in Madras Refineries Ltd too. Maruti Udyog Ltd., is one of the latest cases where a foreign private corporation has been invited to join hands with the Government.
Definition of Goals and Objectives
Goals – are long-term aims that you want to accomplish. Objectives – are concrete attainments that can be achieved by following a certain number of steps. Goals and objectives are often used interchangeably, but the main difference comes in their level of concreteness. Objectives are very concrete, whereas goals are less structured.
Objectives of firms:
1. Profit maximization
2. Maximization of the sales revenue
3. Maximization of firm’s growth rate
4. Maximization of Managers utility function
5. Making satisfactory rate of Profit
Goals of firms:
1. Market share
2. Customer satisfaction
3. ROI(Return on Investment)
4. Technological advancement
5. Long run Survival of the firm
6. Entry-prevention and risk-avoidance
7. Social/ Environmental concerns