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Quiz

1. MNC stands for a) Multibillion corporation

b)Multinational Corporation c)Multinational Enterprise d) Mega Corporation

2. Where in India are most BPO companies situated?a) Bangalore b) Greater Mumbai c) National Capital Region

3. Which US state cancelled an outsourcing contract that was already awarded to TCS?a) New Jersey b) Indiana c) Maryland

• 4: What are the merits and demerits of MNC’s?

Multinational companies

Multinational companies are the organizations or enterprises that manage production or offer services in more than one country. And India has been the home to a number of multinational companies.

Multinational Corporations

• Multinational Corporation (MNC)

– A business with extensive foreign operations in more than one county.

• Transnational Corporation

– A MNC that operates worldwide on a borderless basis.

“Fortune’s” Top 10 Multinational Corporations

1. Wal-Mart Stores 6. DaimlerChrysler2. BP 7. Toyota Motor 3. Exxon Mobil 8. General Electric 4. Royal Dutch Shell Group 9. Total 5. General Motors 10. Chevron

MULTINATIONAL ORGANIZATIONS

• Expatriate – An employee who lives and works in a foreign country.

• Global Manager

– A person who is culturally aware and informed on international affairs.

– Personal Attributes for Expatriate Success • High degree of self-awareness • Cultural sensitivity • Desire to live and work abroad • Family flexibility and support • Technical job competence • Are you willing to admit that the world isn’t just for traveling anymore, and to

embrace it as a career opportunity? Is it possible that you might stand out to a potential employer as someone with the skills to excel as a global manager?

MNCs in India have a long history and tradition … MNCs in India have a long history and tradition …

Key gains NOW……

• Outsourcing Centres for key processes setup by various MNCs

• R&D Outsourcing – Pharmaceuticals, Engineering, IT, Telecom

• Product development centres (Telecom, IT)

Indian Business House

Indian Business House

In business, a group, business group, corporate group, or (sometimes) alliance is most commonly a legal entity that is a type of conglomerate or holding company consisting of a parent company and subsidiaries. In a less common and more general sense, a business group is a hybrid organizational form between a firm and market.

Growth and persistence of large business groups in India.

The international business literature is belatedly recognizing the significance of large family-controlled business groups in emerging markets. The pre-eminent position of Tata and Birla, as the two largest business groups, remained unchallenged from 1951 until the emergence of the Reliance Group in the late 1990s. However; there has been frequent change in the relative positions of other groups in and out of the Top-20. After economic liberalization accelerated from 1991, their was significant change in the ranks of business groups in the Top-20. Existing smaller groups or newly emerging groups, particularly in the IT and telecommunications sectors, have replaced many of the previously dominant older groups.

 Examples

1 Tata Group Leading Indian business group with 93 operating companies in seven business sectors: information systems & communications, engineering, materials, services, energy, consumer products & chemicals; based in Mumbai.

2 Aditya Birla Group Indian multinational business group with interests in viscose staple fiber, non-ferrous metals, cement, branded apparel, chemicals etc; based in Mumbai; group companies: Grasim, Hindalco, Aditya Birla Nuvo, UltraTech, Birla Sun Life Insurance etc.

3 Bharti Enterprises New Delhi based telecommunications group whose flagship company is Bharti Airtel (leading mobile services company); other interests: making telecom equipment, telecom services in Seychelles, VAS products & services, agri-products etc

Business Groups Telecom Companies

4 Reliance ADA Group (Anil Dhirubhai Ambani Group) Business group headed by Anil Ambani; based in Mumbai; group companies include Reliance Capital (financial services), Reliance Communications (telecom), Reliance Energy (power utility), Reliance Health & Reliance Media & Entertainment

Public Service Undertakings

Quiz

1.How many people are employed in the Central public sector enterprises?

a) 2 million

b) 5 million

c) 10 million

2.Which of these PSU companies was never deemed a ‘Navratna'?

a) Air-India

b) BHEL

c) VSNL

3 How many PSUs did India have during the 1st 5-Year Plan?

a) 10 b) 0 c) 5

4. Which is the largest public sector company by sales in India today?a) ONGC b) IOCc) BPCL

5. Which of these PSUs has been declared 'sick'?

a) Gujarat Dairy Development Corporation

b) ITI limited

c) Hindustan Teleprinters limited

Public Sector Undertaking

• A Public Sector Undertaking is a corporation in the public sector in India, where more than 51% of equity in company rests with the Government, it can be Central Government or the State Governments. and includes any subsidiary of such Public Sector Undertaking. Below given is a partial list of Public Sector Undertakings of the Government of India: There are about 253 PSUs all over India.

List of Public Sector Undertakings in India

• BHARAT SANCHAR NIGAM LIMITED(BSNL)

• ONGC Ltd.

• Bharat Heavy Electricals Limited(BHEL)

• Indian Railways

• Indian Oil Corporation Limited

• National Thermal Power Corporation

• Bharat Electronics Limited

Bharat Heavy Electricals Limited (BHEL)

• Bharat Heavy Electricals Limited (BHEL) is one of the oldest and largest state-owned engineering and manufacturing enterprise in India in the energy-related and infrastructure sector which includes Power, Railways, Telecom, Transmission and Distribution, Oil and Gas sectors and many more. It is the 12th largest power equipment manufacturer in the world. BHEL was established more than 50 years ago, ushering in the indigenous Heavy Electrical Equipment industry in India. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77. 73% of the total power generated in India is produced by equipment manufactured by BHEL.

Private Limited Company

A Private Limited Company

A Private Limited Company is the most popular form of business entity, which is used for Foreign Investors in India, including USA investors in India. It requires some time to incorporate in India as there are different steps required in forming a private limited company in India. Following are the conditions:

• Minimum Two Directors. • Minimum Two shareholders and Maximum Fifty shareholders. • Minimum Paid Up Capital of Rs. 100000/-

Procedure to Set Up a Private Limited Company is:-

• Select a name for the company.

• Apply for Directors Identification Number and Digital Signatures.

• Draft Memorandum and Articles of Association.

• Filing of documents with the Registrar.

A Private Limited Company Advantages

A private limited company is a voluntary involvement of not less than two and not more than fifty members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its debentures or shares.

Advantages:

• Continuity of existence • Limited liability • Less legal restrictions

Benefits of Registering a Company

• A company legal status.

• Company exclusive rights to the use of the company name.

• Shareholders the pride of being honest entrepreneurs.

• A company's right to enter with confidence into the competitive business using its corporate identity.

Public Limited Company

Quiz

1. Which is India's first public sector enterprise?a) Air-India b) Indian Telephone Industries (ITI)c) Bharat Sanchar Nigam Limited (BSNL)

2. Which public sector corporation has the highest ranking on the Forbes Global 500 list?

a) Indian Oil Corporation b) Oil India Limitedc) Oil and Natural Gas Corporation

Cont.

3. Till 2000, which company had the distinction of being India's highest loss-making PSU?

a) Hindustan Steel b) Steel Authority of India (SAIL)c) Fertilizer Corporation of India

4. How many PSUs comprise the Bombay Stock Exchange's PSU index?a) 34b) 22c) 19

Cont….

5. Apart from atomic energy and minerals relating to atomic energy production which is the only sector still reserved for PSUs in India?

a) Defense b) Railway Transport c) Civil Aviation

What is a Public Limited Company or Limited Company?

A Public Limited Company is a Company limited by shares in which there is no restrictions on the maximum number of shareholders. It can offer its shares or debentures to Public, can make or accept deposits from Public and there are no restrictions on the transfer of shares. The liability of each shareholder is limited to the extent of the amount of shares subscribed. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7 and Directors is 3. It also has a minimum share capital requirement of Rs.500,000. A Public Limited Company should be registered with Registrar of Companies (RoC) of the respective State under The Companies Act, 1956. Although the registration with RoC is on State level, it is free to do Business anywhere in India

The Benefits of a Public Limited Company

• Members' (the directors and shareholders) financial liability is limited to the amount of money they have paid for shares.

• The management structure is clearly defined, that makes it easy to appoint, retire or remove directors. • If extra capital is required, it can be raised by selling more shares privately. It is simple to admit more

members. • The death, bankruptcy or withdrawal of capital by one member does not affect the company's ability to

trade. • The disposal of the whole or part of the business is easily arranged. High Status

Procedure to Set Up a Public Limited Company is:-

• It offers shares to the public. • At least 7 shareholders. • At least three directors on its board. • Conduct statutory meetings regularly.

Partnership firm in India

Quiz

• Q1: Explain the Definition of Sweat Equity.

• Q2: What is the Difference between Sweat Equity Shares and Stock Options?

Match the followings

Match the followings

1. Active partner (I) Is one who lends his name to the firm

2. Dormant partner (ii) Is one who takes part in day- to-day business of the firm.

3. Nominal partner (iii) Is one who represents as a partner

4. Partner by estoppel (iv) Is one who is below 18 years

5. Minor partner (v) is one who does not take part in day to day business of the

firm. State the maximum number of partners in case

of banking and other business.

Quiz

Fill in the blanks with the appropriate word.

Partnership is basically a ________ between persons.The name under which the business of partnership is carried on is called ________.The agreement which lays down terms and conditions of partnership is termed as_________.Section 4 of the _________ Act 1932 defines partnership.Partners agree to share ____________ of business.

Which of the following statements are true.I.The number of partners should not exceed 20 in case of Banking business.Ii.There must be a written agreement between all the partners.Iii.It is compulsory to register a partnership firm.Iv.No partner can transfer his interest to any other without the consent of the other partners.v. Partnership firm has no separate legal existence.

Fill in the blanks by choosing suitable word(s) from the brackets.i. It is _______ (not necessary, necessary) to get the partnership firm registered.ii.The partnership firm is a ________ (flexible, rigid) form of business organisation.iii. In partnership, business risk is ________ (shared, not shared) by all the partners.i. Partnership is a _______ (group, individual) effort.v. In comparison to sole proprietorship, it may be possible for partnership firm to pool__________ (more, less) resources.

SWEAT EQUITY

• Sweat equity is the effort made to enhance the value of property by means of making improvements. Generally, the enhancements must be done either by the property owner or by a buyer who is interested in purchasing the property.

The Advantage of Sweat Equity

• The advantage of sweat equity for the owner is that the overall value of the property will be enhanced. While sweat equity does not necessarily increase the monetary value of the property, the work accomplished my esthetically enhance the look and thus allow the owner to command a higher sale price.

Difference between Sweat Equity Shares and Stock Options.

• Sweat Equity shares and Stock Options issued by listed companies are not the same. However, both are means for conversion of non-cash incentive or compensation to individuals who are either whole-time directors and/or employees. Sweat Equity shares are allotted shares to individuals who are either Directors or employees upfront.

what is Partnership firm in India?

A partnership is a business entity having two or more owners. Earnings are distributed according to the partnership agreement and are treated as personal income for tax purposes. Thus, like the sole proprietorship, the partnership is simply a conduit for directing income to its partners. Partnership has unique liability situation. Each partner is jointly and severally liable. Thus, a damaged party can pursue a single partner or any number of partners- and that claim may or may not be proportional to the invested capital of the partners or the distribution of the earnings. This means that if the one partner did something to damage a customer, that customer could sue all the partners even though other partner played no part in the problem.

Advantages of a Partnership

• Partnerships have many of the same advantages of the sole proprietorship, along with others:• Except for the time and the legal cost of crafting a partnership agreement, it is easy to

establish.• Because there is more than one owner, the entity has more than one pool of capital to tap in

financing the business and its operations.• Profits from the business flow directly to the partners personal tax returns; they are not

subject to a second level of taxation.• The entity can draw on the judgment and management of more than one person. In the best

cases, the partners will have complementary skills.

Disadvantages of a Partnership

• Profits must be shared among the partners.• With two or more partners being privy to decisions, decision making may de slower and more

difficult than in a sole proprietorship. Disputes can tie the partnership in knots.• As with a sole proprietorship, the cost of some employee benefits may not be deductible

from income taxation.• Depending on the partnership agreement, the partnership may have a limited life. Unless

otherwise specified, it will end upon the withdrawal or death of any partner

Features of Partnership form of business organization

• Two or more Members - You know that the members of the partnership firm are called partners. But do you know how many persons are required to form a partnership firm? At least two members are required to start a partnership business. But the number of members should not exceed 10 in case of banking business and 20 in case of other business. If the number of members exceeds this maximum limit then that business cannot be termed as partnership business. A new form of business will be formed, the details of which you will learn in your next lesson.

• Agreement: Whenever you think of joining hands with others to start a partnership business, first of all, there must be an agreement between all of you. This agreement contains-other amount of capital contributed by each partner profit or loss sharing ratio salary or commission payable to the partner, if any; duration of business, if any ; name and address of the partners and the firm; duties and powers of each partner; nature and place of business; and any other terms and conditions to run the business.

• Lawful Business - The partners should always join hands to carry on any kind of lawful business. To indulge in smuggling, black marketing, etc.,

• partnership business in the eye of the law. Again, doing social or philanthropic work is not termed as partnership business.

Types of Partners

• a) Active partners - The partners who actively participate in the day-to-day operations of the business are known as active or working partners. They contribute capital and are also entitled to share the profits of the business. They are also liable for the debts of the firm.

• b) Dormant partners - Those partners who do not participate in the day-to-day activities of the partnership firm are known as dormant or sleeping partners. They only contribute capital and share the profits or bear the losses, if any.

• c) Nominal partners - These partners only allow the firm to use their name as a partner. They do not have any real interest in the business of the firm. They do not invest any capital, or share profits and also do not take part in the conduct of the business of the firm. However, they remain liable to third parties for the acts of the firm.

Different types of partners are - Active Partner, Dormant Partner, Nominal Partner

Minor as a Partner, Partner by Estoppel and Partner by Holding out. ! Partnership form of business is most suitable for retail or wholesale trade and for small manufacturing units. Persons having different specialization can also form partnership firm like construction firm or legal firm.

Activity for learners

• Activity for The Students

Ask any sole proprietor of your locality whether he/she is interested in converting his/her Business to a partnership firm. Note down the reasons given by the sole proprietor.

Non Profit Organizations

A non-profit organization

• A non-profit organization (abbreviated as NPO, also known as a not-for-profit organization is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples of NPOs include charities (i.e. charitable organizations), trade unions, and public arts organizations. Most governments and government agencies meet this definition, but in most countries they are considered a separate type of organization and not counted as NPOs. They are in most countries exempt from income and property taxation.

Non-profit organizations and access to public information

• When government agencies outsource basic services to third-party non-profit contractors, one consequence is that the public may lose its access to information about the service that the public would have retained, had a government agency carried out the service directly. A concern that previously public information will become privatized and inaccessible to the public when a government agency moves to contract out services to third-party vendors arises whether the third-party vendor is a non-profit organization or a for-profit organization. However, a number of key court cases in this area have arisen when non-profits have rebuffed requests for information under a state's right-to-know laws.

Public V Nonprofit

• Public organizations have implied or stated mandate of equity in their service (obliged to serve any eligible for assistance).

• Few nonprofit organizations see themselves offering services to everyone.

• Board must define its constituency and how large/diverse a public to serve.

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Why Nonprofits?

There are economic, historical, and political theories regarding the reason why nonprofit organizations exist in today's society.

Economic Theories:

• Market failure - This theory is based on the premise that not enough people desire a service or program to attract for-profit corporations to provide such services. Also, the fact that an organization exists without a profit-motive instills trust in the constituent.

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Cont.

Government failure - The government will not provide a service because of high cost or limited interest by the public. If there is not a large presence of constituents demanding a response from government, then the government is not likely to act. A small group of individuals can create a nonprofit organization to provide mutually desired services rather then trying to convince a majority of citizens to support such efforts. There is also a cultural resistance to "big" government. Citizens are skeptical about the government being involved in all aspects of community life.

Non-Governmental Organization (NGO)

• Non-Governmental Organization (NGO) is a legally constituted organization created by natural or legal persons that operates independently from any government. In the cases in which NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from membership in the organization.

Types of NGOs

• NGO type by orientation

• Charitable orientation.

A charitable Trust

Questions

:1. Cash received by an on governmental NPO in year 1 that the donor stipulates is to cover operating. Expenses of the following year should be recognized as an "increase in temporarily restricted net assets"in year 1and as "net assets released from restrictions "in year 2.

True False

2. All not-for-profit organizations covered by the AICPA Audit and Accounting Guide Not-for-Profit Organizations are under the standards-setting jurisdiction of the FASB.

True False3. All of the following are characteristics of not-for-profit organizations(NPOs) that distinguish them from

Business organizations exceptA. Contributions by resource providers who do not expect are turn on investment.B. Ability to impose taxes on citizens.C. Operating purposes other than to earn a profit.D.Absence of ownership interests.

4. An example of an increase in net assets for an ot-for-profit organization that would be label ed revenueRather than supports

A. An unconditional promise to give.B.Investment income.C. Are stricted gift.D.All of the above.

5.RevenuesandexpensesofbothpublicandprivatecollegesanduniversitiesareaccountedforontheAccrual basis.True False

A charitable organization

• A charitable organization is a type of non-profit organization (NPO). The term is relatively general and can technically refer to a public charity (also called "charitable foundation," "public foundation" or simply "foundation") or a private foundation. It differs from other types of NPOs in that its focus is centered around goals of a general philanthropic nature (e.g. charitable, educational, religious, or other activities serving the public interest or common good).The legal definition of charitable organization (and of charity) varies according to the country and in some instances the region of the country in which the charitable organization operates. The regulation, tax treatment, and the way in which charity law affects charitable organizations also varies.

Trusts can be broadly classified into two categories• (i) Public,• (ii) Private.• However, there may be trusts which are a blend of both and are known as Public-cum-Private Trusts. • 1A Public trust: A public trust is one which benefits the public at large or some considerable portion of it.

A public trust can be of two types, viz., (a) Public charitable trust, (b) public religious trust.• 1B Private trust: In case of private trust, the beneficiaries are individuals or families. Private trusts are

further broadly classified into:—• (i) Private specific trust, also referred to as Private Discretionary Trust with beneficiaries and shares

determinate in respect of both.• (ii) Private Discretionary Trust where the beneficiaries or their share or either is indeterminate.

THE END