Main causes responsible for combination / various forms of business
Causes Responsible for Combination
The following are the causes of origin or motives behind combinations or are the factors encouraging combinations :
1. Cut-throat Competition: Cut-throat competition is a danger for may feeble business and industrial unit. To provide them security from the cut throat competition, we have to take the help of combinations. According of Prof. L. H. Haney, “Competition is the mother of Combination.”
2. Lack of Appropriate Government Policy: When protection is not provided by Government to defend industries from international competition, Industries make Combination to increase their competitive power.
3. Trade Cycles: When the economy is moving towards progress, the establishment of many marginal units become beneficial. But in the situation of depression most of these units incur losses. Therefore, these units make Combinations to save their existences.
4. Technological Causes : Industrial and technological changes also inspire Combinations. Combinations are adopted to improve quality of production and to bring variety in productions.
5. Economies of Large-scale : At large-scale production, we get economies of large-scale of purchase, use of machines, scientific management, extensive research, transport and finance receipts etc., which rescue cost and increase the profits. Thus, economy has also encouraged combinations.
6. Desire to Achieve Monopoly: The desire of industrialists to achieve monopoly on extensive market and to hold maximum control over industrial power has also encouraged combinations.
7. Rationalization : Under Rationalization combined and coordinated production schemes are made to minimize the misuse of materials and efforts and inefficient units are amalgamated with efficient units. These scheme develop the combinations.
8. Development of Joint Stock Company: This form of business organization has made the combination very easy. In this organization, due to centralization of management and limited responsibility of shareholders, Combination has become more easy.
9. Development of Means of Transport and Communication: With the development of means of transport and communications, competition has also increased in the market. To remove this competition and to control trade Combinations have been encouraged.
10. Foreign Capital and Technical Assistance: Combinations with foreign firms are also made to get the benefits of foreign capital and newly developed techniques and to use them in the progress of country.
Various Form of Business
A Business organization is an organization which is engaged in some industrial or commercial activity. It may be controlled or owned by a single individual or by a group of individuals who have entered into formal or informal agreement to jointly conduct the business.
1. Sole Proprietorship- Sole trader is a person who carries on business exclusively for himself. He alone establishes the business, arrange its finances. manages its affairs and bears all its risks. He act both as the owner and manager of the business. He alone is responsible for the profits and losses of the business. Sole-trade is a one-man show.
2. Partnership- A partnership is a voluntary association of two or more person who agree to carry on some business jointly and share its profits and losses. They combine their funds and skills to carry on business together. Partnership is thus an extension of sole proprietorship.
3. Joint Stock Company-Joint stock company is a voluntary association of individuals for profits, having a capital divided into transferable shares. the ownership of which is the condition of membership. Thus, a joint stock company is an incorporated association of persons having a separate legal existence with a perpetual success and common seal. It is an artificial person created by law.
4. Cooperative Organization- Cooperative organization developed as a means of protecting the interest of the weaker sections of society against exploitation and oppression by the economically strong and powerful sections. It is a form of organization wherein persons associate together voluntarily and on equal basis to further their common interests for eff, consumers may join hands to provide goods at cheaper rates by establishing direct contacts with manufactures and thereby eliminating the profits of middlemen.
A cooperative society is based on the principles of self hAlf and mutual help and its primary motive is to render service to the member.
