Tag: Auditing and Reporting Bangalore University b.com Notes

For debating the essentials for small business success, but looking at the commonalities of successful businesses can help bring focus. While some businesses can achieve success on the strength of a product, lack of competition or cheap labour or materials, in most instances, a successful business requires a solid foundation built on a good product idea, sound business plan, adequate capital, good management and proper accounting.

1. Setting Objectives:

The setting up of business objectives is the first thing to be done by the management. One must know as to what is to be done. Only after deciding the objective, the ways and the means will be determined to achieve the objectives. If it is a producing business, the nature of product to be produced, whether to produce the whole product or part of it should be decided. In case of service business the nature and type of service to be provided should be decided. It is not only the management which should be conversant with the business objectives but every person in the concern should know the aims and goals of the business.

2. Planning:

After determining, the objectives, the work should be planned in all its perspectives. Planning involves forecasting and laying down the course of action. It involves planning for both present and future. What is to be achieved and how it is to be achieved is of primary significance for the present. Future is always uncertain and the estimation of future happenings is very difficult. In planning for the future, an effort is made to estimate the future uncertainties and determine the possible course of action for the coming period. Thus, planning also helps the management to prepare itself for facing the uncertainties of tomorrow.

3. Dynamic Organisation:

Organisation is an arrangement by which tasks are assigned to employees so that their individual efforts contribute effectively to the achievement of clearly defined purposes. The duties and responsibilities of all person’s arc defined and they should know what they arc to do.

An effective organisation system is essential for the success of a business. Firstly, a decision should be taken about the form of ownership, i.e., sole trade, partnership, Joint Stock Company. Then a suitable internal organisation should be developed. No work should be left unassigned. The supervisors and subordinates should know their roles in the business.

4. Financial Planning:

The requirements of finance and its possible sources should be decided at the time of starting the enterprise. The purpose of financial planning is to make sure that adequate funds are raised at the minimum of cost. The required capital should be made available at all times, otherwise, it will hamper the work. The scarcity of capital and too much of it both will be bad for the concern.

The availability of excess capital may tempt the management to spend more money on inventory and on fixed assets. A proper plan is necessary for providing funds for the present needs and future developmental plans.

A financial plan will determine:

(a) The needs of capital

(b) Sources for collecting funds

(c) Administration of capital structure

5. Location and Layout of Plant:

One of the important decisions to be made by the management at the time of starting a concern is regarding the location of the plant. The plant should be located at a place where all factors of production arc available at lowest costs. The aim of reaching an optimum point will be achieved only if the place of location of the businesses is suitable. Raw materials, labour, power and markets for the finished products should be available near the place of location.

After deciding about location, a decision is made about layout of the plant. The setting up of the machinery and equipment should be systematic so that the flow of production should be smooth and uninterrupted. The office building and warehouse etc., should be located near the factory. Proper layout will enable the economical use of available space. Proper location and layout of the business are necessary for the success of a business.

6. Marketing Environment:

The marketing aspects of a business are more important than even production. There is no use of producing a thing if it cannot be sold. Marketing management is essential for earning profits. Management should decide about the channels of distribution. Whether to sell directly to consumers or to sell through wholesalers? It should be decided after taking into consideration various aspects of goods.

7. Research Team:

In the changing technological world, it is essential to use latest devices for production and marketing of goods. Change is the essence of business. Every day, new production methods are found. Consumers’ needs and preferences should be taken into consideration in devising production and marketing policies. Research and development should be given due place in the business.

One can compete with changing business world only through research programmes. If attention is not given to research work then it will become difficult to stay in business for a large period. So, research activities are necessary for the success of an enterprise.

8. Dynamic leadership:

The success of an enterprise will depend upon the efficiency of its management. The task of management is to plan, organize, co-ordinate and direct various activities for achieving business objectives. This will be possible only if the leadership is dynamic. The operation managing the concern should have foresight, initiative, courage and aptitude for a change. These qualities are necessary in the leadership to take the concern on the road of progress.

A Government company is one in which not less than 51% of the paid-up share capital is held by the Central Government or a State Government or jointly by both.

A Government company may either by wholly owned by the Government, in which case 100% capital is provided by Government; or may be owned by the Government (holding minimum of 51% share-capital) and private concerns/individuals (holding maximum of 49% share capital).

Features of Government Companies

1. Government companies are governed by the provisions of the Companies Act, 1956.
2. The whole of the capital or 51% or more is owned by the government.
3. Its employees excluding those on deputation are not civil servants.
4. The Government Company employs its own staff, and they do not become the employees of the government
5. Its personnel policies are subject to its Articles of Association.
6. In case it is fully owned by the government, government provides the funding and it derives income from sales of its goods and services.
7. In case it is partly funded by the government, it derives funds from the government as well as its shareholders.
8. All or a majority of directors are appointed by the Government depending on the shareholding pattern.
9. It is a body corporate and can enter into contracts in its own name.
10. It can sue and be sued in its own name.
11. The Memorandum and Articles of Association lays down its objectives, scope of activities and rules of internal management. These are prepared by the Government, and once prepared they cannot be changed without proper permission from the Company Law authorities.
12. It is generally exempt from many of the accounts and audit laws. Constant parliamentary scrutiny, budgetary, administrative and legislative controls are absent.

Advantages of Government Company:

(i) Internal Autonomy:

A government company can manage its affairs independently. It is relatively free from ministerial control and political interference, in its day-to-day functioning.

(ii) Easy Formation:

A Government company can be easily formed under the Companies, Act, just by an executive decision of the government.

(iii) Private Participation:

Through Government company device, the government can avail of the management skills, technical know-how and expertise of the private sector and foreign countries. For example, the Hindustan Steel Limited has obtained technical and financial assistance from the U.S.S.R., West Germany and the U.K. for its steel plants at Bhilai, Rourkela and Durgapur.

(iv) Discipline:

The Government Company is subject to provisions of the Companies Act; which keeps the management of the company active, alert and disciplined.

(v) Easy to Alter:

Objectives and powers of the Government Company can be changed by simply altering the Memoranda of Associating of the company, without seeking the approval of the Parliament.

(vi) Professional Management:

A Government company can employ professionally qualified managers; because it has its own personnel policies.

(vii) Public Accountability:

The Annual Report of a Government company is presented to the Parliament/ State Legislature. These reports can be discussed and debated there.

Demerits:

• There is less freedom and flexibility. It cannot modify its business or change its policies and practices in tune with the changes in the environment.
• Lack of autonomy is a serious drawback of government companies. It is subject to the interference of the Minister and bureaucrats who run the department.
• There is no incentive for individual interest and initiative. Employees who run the company are paid a fixed salary. They are not going to benefit if the company does well nor is their pay and benefits affected if the company incurs losses. Therefore, employees do not display drive and enthusiasm to make the company successful.
• Due to red-tapism, decisions are delayed. It would not be able to capitalize on new opportunities. Sometimes decisions are de1ayed for fear of making mistakes.
• Since employees enjoy job security there is no serious attempt to increase efficiency of operations. Further, the top management might be transferred if a new government comes to power. Therefore, there is not much interest is putting in dedicated efforts.
• Government companies are free from parliamentary scrutiny, budgets audits etc. Therefore, there might be a tendency to conduct its business in an inefficient and reckless manner. This might eventually lead the company to losses.

The Federation of Indian Chambers of Commerce & Industry (FICCI) is a non-governmental trade association and advocacy group based in India. Established in 1927, on the advice of Mahatma Gandhi by Indian businessman Mr. G.D. Birla and Purshottamdas Thakurdas. It is the largest, oldest and the apex business organisation in India. It is a non-government, not-for-profit organisation. FICCI draws its membership from the corporate sector, both private and public, including SMEs and MNCs. The chamber has an indirect membership of over 250,000 companies from various regional chambers of commerce. It is involved in sector-specific business building, business promotion and networking. It is headquartered in the national capital New Delhi and has a presence in 12 states in India and 8 countries around the world.

FICCI is India’s sole national issuing & guaranteeing association for ATA Carnets ATA Carnets are used by TV/Film crews, journalists, engineers, musicians and industry for temporary moving equipment across borders. FICCI issues and endorses carnets, guarantees the payment of duties and taxes to customs (both domestic and foreign) authorities.

Functions:

Jointly works with similar associations of foreign countries:

Works with joint business councils and private industrial alliances situated across the globe in the areas of trade enhancements, industry partnerships to voice the opinion of the Indian industry on global forum.

Role in policy making:

FICCI plays a pivotal role in formulation of economic and finance policies. By engaging with the policy makers, government and civil society Federation of Indian Chambers of Commerce and Industry influences the policies by way of articulating the views and suggestions of industry.

Provides guidance and education:

Provides guidance and education to its member organizations by way of publishing informative journals useful to the business community. And acts a conflict resolver among them by way of mutual discussion on the problems.

Assistance to government:

Assist the government in the areas of the trade negotiations with foreign countries and sends their experienced personnel to the abroad to study the economy and business environment.

Conducts various programs and events:

Conducts workshops, seminars, business meets and conferences to discuss, debate various upcoming and existed policies of the government.

Assists its members:

Assist its members in the areas of policy improvement, suggestions to the management.

Invites and arrange the talks with foreign business delegates:

Plays crucial role in inviting foreign business delegations of public and private levels which are very vital in improving the foreign trade and foreign investment.

Provides information on exports:

Provides credible and valuable information on potentials and new developments in foreign trade by studying the trade environment and imports regulations of many foreign countries.