Professional Documents
Culture Documents
Chapter,* 1
f j
/. 1 Industrial Engineering
1.2
1.3
1.4
1.5
t I i,
'
i't , . - '
Scanned by CamScanner
wi t h handli n g t a <k he woul d t rv to r educe (he am ount of m ovem ent i nvol ved t hrough chan ge i n l oad
M? C and rea rran ge m ent of the l a yout used. If it i s a m anufa ct uri ng t ask i t woul d t r y ei t he r b y
redesi gni n g or bx usi ng di f Terent i nput m at eri al s so t hat bet t er or newe r product i on t c chn.ques
coul d be ut i li z ed and provi de bet t er i nt e gr at i on and How am ong proc essi ng st eps. Thus, it m a y be
concl uded t hat indust ri al enci ne eri n g i s not r el at ed m erel y wi t h t he s yst em of m at e ri al s, m et hods
and equi pm ent but al so wi t h t he m en who i nt er act wi t h t his s ys t em . Th e i m pact of peopl e on t he
operat i n g s yst em i s bot h from wit hi n and out si de. Men who oper at e a m achi ne, who handl e m at eri al
or who pl an t he m et hod/ proc ess a re wi t hi n t he opcrat i na s ys t em . Thus work st ud y ti m e and m ot i on
st ud y, wage i ncent i ve pl ans m om at i on and e rgo n o m i c s are i nt egral pa rt of i ndust ri al en gi ne eri n g.
Si m il a rl y, t he peopl e who are oot si de the oper at i on svst em al so pl a y i m port ant rol e. C onsum ers
outsi de t he product i on s yst em det erm i ne t he dem and of product . Thi s dem and i s dependent on
product desi gn, qual i t y and sal es pri ce et c. Thus indust ri al en gi ne ers are requi r ed t o work fo r
product and process im provem ent .
Anot her im port ant asp ect of indust ri al en gi ne eri n g i s it s gen eral i t y. Ind ust ri al en gi ne eri ng i s not
confi ned onl s t o m anufact u ri ng a ct i vi t i es. It i ncl udes servi c e sect ors l i ke banki n g, t ransport at i on,
wat t e m ana ge m ent , di st ri buti on and heal t h ca re et c. Thus, t he scope of indust ri al en gi ne eri n g i s qui t e
bi g and ce rt ai nl y not const rai ned wit hi n t he bounda r y of indust ri al uni t .
The profusion in hich a hnuleje uj Sftithemuiical. Physical and social sciences obtained by
experience and practice in utitncil emnumually fur the conversion of materials into useful products
Jur the benefit uj maul in J
Had i i been t he m anufa ct uri ng of a product , t he appli c at i on of pri nci pl es of Ind ust ri al En gi nee ri ng
( IF.) woul d at t em pt t o red esi gn or t o uti l iz e di ffe rent m at eri al s in ord er to use newe r or bet t e r
product i on m et hods and provi de bel t er i nt egrat i on bet ween vari ous pro cessi ng st eps. In se rvi ce
sect or li ke hospi t al s, and t e achi ng In dust ri al En gi ne eri ng l eads to produ ct i vi t y i m provem ent .
1. Pl anni n g
2. Organi zi n g
3. Directing
Scanned by CamScanner
4. Cont rol l i ng
5. St affi ng
A pl an is an organi z ed sch em c of doi n g som et hi ng whi ch i s di rect ed t o achi ev e
i ndust ri al obj ect i ves under c ert ai n const rai nt s. An hom ogen eous worki ng
envi ronm ent is devel oped t o bri ng coordi n at i on am on g t he va ri ous el em ent s of pl an
for t he ex ecut i on of organi z ed schem e. S om e act i vi ti es are li st ed bel ow:
K To ai d i n t he dev el opm ent of sound si t e sel ect i on and ph ysi cal l a yout for t he
ex e cut i on of organi z ed work.
2. To anal yse and pl an product i on schedul es and i nvent ori es.
3. Devi s e t echni ques to i m prove product i vit y and m oral of m en at work.
4. To st ud y the equi pm ent repl a cem ent feasi bi l it y.
5. To ai d in t he det erm i nat i on of econom i c l ot si z e and t he work i n pro ccss
requi r em ent s for each phase of oper at i on.
6. To ai d in t he pr epar at i on of det ai l ed speci fi c at i ons for ev er y work and to ev al uat e
t hem .
7. To ai d i n t he devel opm ent of qual it y speci fi cat i ons and quant i t y needed fo r
vari ous i nput s m at eri al s.
;
i'f
Scanned by CamScanner
Thus t hi s fa ct or y s yst em is Modern System of product i on whi ch sat i sfi es t he econom i c needs
or
i ndi vi dual s, com m uni t i es and count ri es b y m anuf act uri n g product s/ goods in fact o ri es and whi ch
uti l iz e
men,
Scanned by CamScanner
.....
U2____________.
(0 Com pl ex aut om at i c m achi ne t ool s t hat perfo rm one ope rat i on for produci ng a
product \ v h' coul d ea rl i er be produced b y a l ong seri es of sep arat e m achi ne t ool s indi vi dual l y
operat H (u) Aut om at i c fe ed ba ck devi c es t hat wat ch work and act upon t hese observat i ons i n
automati
adj usti n g t he operat i on so t hat it wil l not chan ge from the pres ent spe ci fi cat i ons.
El ect roni c devi ces to r ecord st ore pro cess, sum m ari z e and i nt erp ret i nform at i on.
Ca
" y (in)
St eam power chan ged t o h ydr aul i c and nucl ea r powe r. In aut om at i c nucl e ar power pl ant s I
produced b y at om i c ch ai n rea ct i ons, whi ch produc es st eam that run t urbi nes whi ch i n t urn T "
el ect ri cal power requi red t o run t he m achi nes. C onventi onal offi ce m achi ne r y chan ge d int o e | n
dat a pro cessi n g m achi nes/ equi pm ent , t ype wri t ers and cal cul at i ng m achi nes t o com put ers R C
organi z at i on ch anged t o boa rds and co rporat i ons. Thus i t w as bei ng ext end ed to m an's thi nh
organi z at i on and m ana gem ent pri nci pl es and m et hods. The cl assi c wri t ers of t hat ti m e li ke
Adam S -l 1776) who deal t wi t h t he topi cs of Econom i c S ci ences and Mana ge m ent S ci en ce
hTdef Z ^ thi nki ng of ev en F. W. Tayl or, who was conc erned pri m ari l y wi t h conc ept s of produ c i
v ty
B y Tayl or ini t i ati ons, t he peopl e of t hat t i m e had dev el oped a pref er ence or i nt erest for m ^h
t hi n gs and sc.ent i fi c bent to sol ve t hei r di ffi cul t i es i n sci ent i fi c m anne r P eopl t ed a p ? '
^^ Development
-W- be ^
Scanned by CamScanner
P 8n W3S t0 im
P r 0 V e ^^
" yp ot nesi s
'
of
product i vi t y wi t h wo rk forc e.
of sha ri ng t he bene fi t s of
i m p r o ve d
2. F. W. Tayl o r, probabl y t he most oft en quot ed and ^ re cogni si ng the pot enti al im provem ent s
t o be acl l v HT
^ i n v e s t i a t o r i s c r e d i t e d w i , h j ob/ t ask and desi gni n g t he t ask fo r m ax im um e
f '^ W f k C 0 ' l t e n t ^ el em ent s. The conc ept of Tim e -st ud y appl i ed t o n l n
el i m i nat i ng it s n o n
p r o d u c t i ve
y PP
"ed
to
. * .much
ed
by
work
and
wri t i ngs
and wi fe ) ext end ed T^or^ Z^^^ ^7 "
Whcreas Gi,bre,h
'
COnct
f o f
Tfans
ort c,c
fundamental
"
Hands by
^
'nx roauc e t he concept of Effective Utilization of Both
ZZ
' He'! Zi^T1't riCd t0 P ^ bC int ,lle bOUOm f the P rinci P ,f cS of administration and management.
Hen
l h 5 r 0 T S J f m a n a g e m e n t a s h e h a d o b s e r v e d ^ fi rst hand as an i ndust ri al i st . Henr y Fa yal had
devel oped P ri nci pl es of Orga ni sat i on on t he basi s of di vi si on of work such as
an aut hori t y and r esponsi bi l i ti es, st abi l i t y of orga ni sat i onal unit y, com m and and t eam spi ri t et c.
6. In 1924 W A S chewho rt devel oped fundam ent al pri nci pl es of st at i sti c al qual i t y cont rol and
encour aged t he use of st at i st i cal t echni ques for sol vi ng i ndust ri al probl em s.
7. In 193 1 L. H. C .. Tipp et devel oped work sam pl i ng t o st ud y work pat t ern.
8. In 1940 P. M. S . Bl ack et , devel oped t he conc ept of opt i mi z at i on cal l ed operat i on R ese arch
Appl i cat i ons for O. R. i n Worl d War-I I.
9. In 1947 G. B. Dantz i g and W. O. Ha ys used l i near program m i n g and ot he r pro gr am m i ng
m et hods tor sol vi n g i ndust ri al probl em s.
10. In 1960 L. Cum m i ngs and L. P ort er i nt roduc ed t he con cept of organi z at i onal behavi our st udv
of m en at work, i nt egrat i on of m an and m achi ne and i nt egrat i on of product i on m anagem ent
funct i ons.
A hi ghl y si gni fi cant e ra i n t he dev el opm ent of i ndust ri al engi nee ri ng began aft e r Worl d War-I I
Man y new act i vi t i es got devel oped and t he appl i cat i on of pri nci pl es and t echni ques we re broad ened
t o a l arge ext ent . In bri ef thes e act i vi t i es wer e:
(a) Devel opm ent of s yst em -anal ysi s and desi gn
(b) Use of m at hem at i cal and st at i st i cal m et hods
(c) Net work pl anni ng t echni ques and t hei r appl i cat i ons
Scanned by CamScanner
from
S
Scanned by CamScanner
ph,Sticati0n
virll,e
non
quant i t at i ve
INDUSTRIAL ENGINEERING AND DEVELOPMENT OF
FACTORY SYSTEM 15]
1.6.1.1 Developm ent of Science for each Elem ent of an Individual Work
Anal yse t he work sci ent i fi cal l y thus repl aci n g rul e -of- t hum b m et hod. It was requi r ed
t o fi nd out a what i s t o be done b y a part ,cul ar worke r how he i s to work and what
equi pm ent woul d be nec essar y t o do it Th.s i nform at i on was provi ded t o t he work er
so as to r educe t he wast a ge of m at e ri al and ti m e et c
Scanned by CamScanner
"
655601,31
^ ^^
aU S
Unde r
funct i onal
Ut
tS tlmC
'
'
f a t i g U C 3 n d C 0 S t Ta
"S
i mprovto* production
m t hl d L T P r S " S U l d b e P l a " n e d i n a d v a n c e d work er shoul d use predet e rm i ned
m et hod and gi ven t une for a defi ni t e wo rk.
J a yl or su ggest ed t hat proper c are shoul d be t ak en whil e sel e ct i ng work for ce and
due consi derat i on should be gi ven t o thei r educ at i on apt it ude and work ex peri ence et c.
Thus sci ent i fi c procedu res need t o be devi sed t o sel ect workers best suit ed to
pe rform spe ci fi c t asks and t hen t o t rai n t hem wi t hi n t he indust r y in ord er t o m eet t he
obj ect i ves of t he ent e rpri se.
Scanned by CamScanner
INDUSTRIAL ENGINEERING AND DEVELOPMENT OF
FACTORY SYSTEM 15]
Ment al revol ut i on is the m ost i m port ant feat ur e of sci ent i fi c m anagem ent as it woul d
c reat e a con ge ni al and favour abl e at m ospher e/ envi ronm ent l e adi ng t o harm on y and
coop erat i on. The obj ect i ve of m ax i m um prosperi t y of em pl o ye es and em pl o yers c an
be a chi eved onl y i f t her e is perf ect m ut ual coope rat i on bet ween t he m ana gem ent and
t he wo rk for ce.
Scanned by CamScanner
OPERATIONS MANAGEMENT
__________________________________________________________________________
__________________________________________________________________________
16
Thus t he workers rec ei ved bonus as a resul t of the i nt rodu ct i on of t hi s s ys t em .
(c) Gant t pl e aded fo r a pol i c y of pre achi n g and t eachi n g of worke rs and t hus
st ressed t he need of t rai ni n g of workers fo r im provi n g thei r produ ct i vi t y.
Ft was be cause of hi m t hat m anagem ent duri ng hi s peri od consi dered
t rai ni n g as one of t he responsi bil i t i es of t he m an agem ent .
(d) He t hou ght of ext endi n g the pri nci pl es of sci ent i fi c m ana gem ent t o the sol ut i on
of the problems
j
of an i ndust ri al soci et y as a whol e. It app eal ed for ha rm oni ous rel at i onshi p
bet w een em pl o yee s
and em pl o ye rs and di scoura ge d t he use of power i n a arbi t r ar y fashi on. He
consi der ed t hat non fi nanci al rew ards and good ph ysi cal envi ronm ent
we re essent i al for achi evi n g hi gher product i vi t y
(e) Gant t em ph asiz ed t he im port an ce of t he concept of servi c e over profi t . He
dev el oped t he con cept of i ndust ri al r esponsi bil i t y.
We t hus observe t hat Gant t 's cont ri but i ons were m ore i n t he nat ur e of
r efi nem ent s rat he r than fundamental con cept s and have been m ore useful t han
t hat of Tayl or t o t he dev el opm ent of sci ent i fi c management
1.6.3
He con ce rned him sel f wi t h the m ana ge m ent of the ent e rpri se as a t ot al i t y and not
onl y with shop m ana gem ent as w as done b y F. W. Tayl or. He popul a ri sed
sci ent i fi c m anagem ent and interpreted the con cept s of st and ard t i m e, st andard
cost and prevent age wast es of al l ki nds. In 1912 he advocated 12 pri nci pl es of
i m provi ng t he effi ci en c y whi ch are ( I) Id eas (2 ) Com m on S ense (3) Competent
Counsel (4) Di sci pl i ne (5) F ai r deal (6) Ad equat e rel i abl e, im m edi at e and
pe rm anent re cord (7) dispatching (8) S t andards and sch edul es (9) St anda rdiz ed
worki n g condi ti ons (10) St and ardi z ed Operations (11) St anda rd worki n g
i nst ruct i ons and (12) R ewa rd for effi ci enc y.
Ac cordi n g t o hi m , e ffi ci en c y and henc e product i vit y does not exi st i n ex t rem e
e ffort but i n elimination of undesi rabl e effo rt and pr event i n g wast es of al l
ki nds, t he el i m i nati on of wom en and chi l d l abour i n com pet i t i ve em pl o ym e nt ;
Effi ci enc y of a s yst em m eans t hat t he ri ght work is done i n ri ght m ann er b y ri ght
m en at ri ght pl a ce and i n ri ght t i m e.
Scanned by CamScanner
INDUSTRIAL ENGINEERING AND DEVELOPMENT OF
FACTORY SYSTEM 15]
1.6.4
F rank Gil br et h and hi s wi fe Li l l i an Gi l bret h w ere cont em pora r y of Tayl or, but
t he y worked indep endent l y on t i m e and m ot i on st ud y. The y m ade m em or abl e
cont ri but i on t o im prov em ent or worki n g m et hods and t hus to di scove r one best
wa y of a ccom pl i shi ng a t ask, wit h m arked e ffi ci en c y and l east ex pert i z at i on He
dev el oped a uni que t echni qu e of l ast work. Fast e r speed work howev er, di d not
r efe r t o hurr yi n* wi t h t he work but econom i si ng the ti m e sequenc e b y el i m i nat i ng
unne cessa r y/ m ov em ent s and ex haust i ng mot i ons and m et hods of a ccom pl i shi ng a
t ask. Whe re as Li l l i an con ce rned hers el f wit h t he hum an aspe ct of m an agem ent .
The y consi der ed t hat t he root c ause of worke r's di ssat i sfact i on was t he l ack of
m ana ge m ent i nt erest in t hem . The y st ressed that m anagem ent shoul d underst and
t hei r requi r em ent s and personal i t y. He and hi s wi f e Li l l i an M. Gi l bret h
m ai nt ai ned that t he hum an aspect must be consi dered as a m aj or ar ea of
consi de rat i on and st ud y i n t he fi el d of m anagem ent . Ac cordi n g t o L. M. Gi l bret h,
t he phi l osoph y of m ot i on st ud y sa ys, "M an i s consi dered as t he c ent re of act i vi t y
and as expr essi ng him sel f in m ot i ons, added b y tool s and m a chi nes usi ng
m at eri al s as m edi um of ex pressi on".
I us tor orderl y organi z at i on of com pl ex i ndust ri al act i vi t i es f o l l o w i n g
sequ ences o f o p e r a t i o n s shoul d be fol l owed:
(a) Id ent i fi cat i on of t he probl em and it s obj ect i ves
(b) De fi ni ng t he probl em obj ect i ves
Scanned by CamScanner
Scanned by CamScanner
INDUSTRIAL ENGINEERING AND DEVELOPMENT OF
FACTORY SYSTEM 15]
was not throu gh dom i nat i on and com prom i se on t he pl ea t hat dom i nat i on gi ves t he
f eel i ng of l oss and surr ende r t o bot h the si des. She was i n favou r of i nt egrat i on
whe reb y t he part i es t hem sel ves ex am i ned t oget her t he new wa ys of a chi evi ng thei r
con fl i cti n g desi r es si nce, thi s gi v es a mor e st abl e sol ut i on to probl em of confl i ct s.
Ac cordi n g t o her, di ffer ent si t uat i ons requi re di ffe rent t ype s of l eadershi p
m eani n g the reb y that l eaders ar e product s of t hei r t im es and t he l ead ershi p fe at ures
a re a funct i on of t he part i cul ar or speci fi c si t uati on. The succ ess of a l eade r does not
m er el y depend on t he t rai ni n g he possess es but on the speci fi c sit uat i on at a ti m e i n
whi ch he ut il i z es hi s l eadershi p.
S he was of the opi ni on t hat for achi evi n g good resul t s va ri ous l im bs of the
orga niz i n g bod y shoul d be w el l coordi nat ed and cl osel y a ct to get he r so t hat the y
work as a si n gl e ent i t y.
S he al so advo cat ed for i nt egrat i on of i nt e rest s of invest ors, consum ers and
work ers. Mar y pa rker Fol l et pl ead ed for t he appl i c at i on of sci ent i fi t m et hod's t o't h e
sol uti on of personnel probl em s.
Scanned by CamScanner
Mnm*.
MANAGEMENT
1.6.6
[I 18
INDUSTRIAL
ENGINEERING
ft
OPERATIONS
A Fren ch i ndust ri al i st duri n g hi s l ong and suc cessful ca rri er as an i ndust ri al m ana ge r
Mr Fa to prob e i nt o the bot t om of t he pri nci pl es of adm i ni st r at i on and m ana gem ent
F aval ani l pro cess of m anagem ent as he had observed it fi rst hand, li e sai d t hat
m ana ge ri al act i vit i es i t t h l ' ) e l evel s arc mor e si gni fi cant t han ot her act i vi t i es, l i e
was t he fi rst to st at e pri nci pl es of m ana U P P C r funct i ons of h m anager. Man y of t he
t al ent s whi ch are re cogni sed t oda y as pri nci pl es of m B C m e n t a , u l wer e ori gi nal l y
spe ci fi ed b y F a yol . I li s concl usi on w as t hat al l i ndust ri al a ct i vit i es coul d h. a i ?
e m e n < i n fol l owi ng si x group;
' bc
Sl,
bdi vi ded
1. Technical Activities: Technical activities involve, technical know how production m, r
and adapt at i on et c.
uuucuon
- m anufact u re
1.6.7
El t on Ma yo, an Aust ral i an b y bi rt h and t rai ned i n P s yc hol og y is ge ne ral l y reco gni z ed
as the "F at he r o f
Hum an R el at i ons Approa ch" . Ma yo 's m ai n cont ri but i on t o m an agem ent t hought was
hi s em phas.s on
Scanned by CamScanner
hum an and soci al fa ct ors i n i ndust ri al rel at i onshi ps. He l ed the t eam whi ch condu ct ed
t he H awt hrone
i nvest i gat i on at Al a rvard i n the Uni t ed S t at es wi t h the col l abor at i on of t he West ern
El ect ri c C om pan y
bet w een 1927 to 1936 and fi nanci al support of t he R ock F el l er Found at i on. Ma yo and
hi s associ at es
st udi es rev eal ed t hat an orga niz at i on i s not onl y a form al a rran ge m ent of m en and
fun ct i on but al so a
soci al s yst em whi ch c an be operat ed suc cessful l y b y ut i l iz i ng t he pri nci pl es of
ps ychol o g y and ot her behavi our sci ences.
Ma yo was of t he opi ni on t hat c ause of i ncre ase i n product i vi t y of t he work ers i s
not a s i n gl e fact o r of ch angi n g wo rki ng pe ri od and condi t i ons but a com bi nat i on of
sev eral ot he r fa ct ors such as:
(/ ) Les s rest ri ct i ve t echni ques of supervi si on
(/ / ) P rovi di n g aut onom y t o work ers
( I/ O P erm it t i ng t he form at i on of sm al l coh esi ve sub groups of worke rs
(/ v) C re at i ng condi ti ons whi ch encour age and support t he growt h and devel opm ent
of thes e groups
(v) C ooper at i on bet ween worke rs and m anagem ent
t*
___________________PRODUCTION, PRODUCTIVITY AND BUSINESS ORGANIZATION___________
35]
5. Li m i t at i ons and rest ri ct i ons put fort h b y t he Govt . (i .e. gr ant of l oans,
for ei gn ex change and such ot he r t hi ngs.
Busi n ess m a y be defi n ed as " an ent e rpri se/ uni t/ pl ant enga ge d in t he product i on
and di st ri but i on of goods for sal e i n t he m arket or rend eri n g servi ces fo r a pri ce"
Scanned by CamScanner
Applications
Thi s form of ownershi p i s m ost sati sf act or y in t he foll owi n g c ases:
(i
1. For sm al l sc al e busi ness requi ri n g sm al l am ount of capi t al whi ch c an be
e asi l y ar ran ge d b y one m an, e.g. sm al l scal e i n d u s t r y , com m erci al shop,
r et ai l t rade or prof essi onal servi c es.
2. Wher e ri sk i nvol ved i s not too he av y.
3. W here one m an m an agem ent i s possi bl e.
4. Wher e l ocal m arket i s avai l abl e.
Advantages
1. S im pl e and Eas y t o Man age: Thi s t yp e of ownershi p i s si m pl e i n nat ur e and
e as y t o m ana ge.
2. Le a st Le gal R est ri ct i ons: It does not requi r e m uch l egal form al i t i es or
com pl i cat ed proc edures t o st art the busi ness.
Scanned by CamScanner
3. Qui ck De ci si ons and P rom pt Act i ons: Si nce t he whol e busi ness i s
cont rol l ed b y one m an, t her efo re, he can t ake de ci si ons qui ckl y and
i m pl em ent t hem i n ri ght t i pi e.
4. Qual i t y P roduct i on: P ersonal at t ent i on and supervi si on of t he owne r l eads to
qual i t y product i on.
Scanned by CamScanner
36
is possi bl e t o pa y personal
and t o gi v e t hem ent i re
product as the busi ness is
can st art busi ness as sm al l
Lim itations
Thi s t ype of organi z at i on has t he fol l owi n g l im i t at i ons:
1. Am ount of c api t al t hat is r equi red for i nvest m ent i s sm al l , t her efor e, m odern
f act or y
c an
st art ed
wit h
t hi s
s yst em
of
organi z at i on.
'
be
ssrr
r
the mbers
* ^~
ng cooperation
adjustment
$$
P art n I t
^^ S h U , d W O r k h a r d t o e a r n
and gre at er
profi t
P art ne rshi p bus,ness i s owned b y t wo or m ore (upt o 20) who shar e t he powe rs
r esponsi b i it i . profi t s a ccordi n g t o an a gr eem ent re ach ed am ong t hem
r esponsi bi l i ti es a
A person m a y possess ex cept i onal busi ness abi l it y ex peri en ce and t al ent but no
c ani r.l h hav e a fi nanci al part ner. S im i l arl y a fi nanci er m a y requi re a m ana ge ri al
Scanned by CamScanner
ex pert a [ , ' ' " " ex pert and al l of t hem m a y fo rm a part n ershi p ent e rpri se.
" 3 techn'Cal
Types of Partners
' pX 3 '
Par
'" e , S : A "
P ar,ne rS Wh 0 a re ,h e p a rt ne rs hi
known as genen,
2
oAfCpo,tcieasr,ner!:
'
A C i Ve
PamerS
'
*h0Se
Wh
,akC
aC,iVC
in
th
'
and f r m u ,a,i
. .
........ r
,e
ulu
m e il l II I.
^^ ^
Z !,
a C , I Ve p a
"
in the lnana
n,r
S , P ar2 Z'Vt T 7 y ,
af,er aSCer,aim
t he busi ness.
app ea r.
nowhe re thei r nam e,
4
"=
lhe
or
P
P
"
par
'
,he
secr et l y
but
a *
Advantages
1
Scanned by CamScanner
in
e
ia
te
a
n
d
Lim itations
1. Due t o unl im i t ed li abi l i t y, ri sk i nvol ved i s m ore. Thi s f ri ght ens a wa y
m one yl end ers.
2. Aft er t he deat h or r et i rem ent of a part ner, t he part ne rshi p m a y com e t o
an end.
3.
It can rai s e much l ess capi t al as com pared t o joi nt st ock com pan y.
The refo re, i t i s unsui t abl e for m odern i ndust ri es r equi ri ng hu ge c api t al
and a l arge num ber of m ana ge ri al abi l i ti es.
4. A part ne r m a y wit hdr aw f rom t he fi rm and est abl ish hi s own ent e rpri se
wi t h t he knowl ed ge of t he secr et of t he busi ness.
5.
Scanned by CamScanner
...................
Scanned by CamScanner
Known ns share hol ders and the m anagi ng bod y i s cal l ed "Ho ard of Di re ct ors" i s
el c ct cd b y thes e shar > hol ders. The boa rd of di re ct ori s responsi bl e for pol i c y
m i l ki n g, t aki n g i m port ant fi nanci al and t echni c al deci si ons for effi ci ent worki n g of
t he ent erpri se.
In thi s form of organi z at i on li abi l i t y of t he sha re hol der is li m i t ed t o the ext ent
of the amount ,,r shares hel d b y hi m and l i e i s fre e from the responsi bi li t y of
debt s and cl ai m s on t he com p an y bc yo n i t he val ue of shares. P eopl e of al l sect i ons
a re encou ra ged t o cont ri but e for t he com p an y bccan - t hi s ben efi t . Th ese shares a rc
t rans fer abl e.
L
when e X s P r s or
pavni e u
Scanned by CamScanner
'
I 90
Li qui dat i on m a y be vol unt ar y or com pul sor y or unde r t he supe rvi si on of t he C ourt If t he
z'idTiiV" , e n , h e a s s e t s r t h e b ' - s o i d .
Is di Zl d am on g t S r^ " * "" ~
am al gam at i on i s a com bi ni ng l o get he r of t wo busi ness.
I, usuall y resul t , i n Tonom l l s e "c . ^ f
eConomics
nurk enne
Will
wMch c o u M b V s e , 1 ^ a FT" a m 4 l " m , i 0 w M I " v e som e exi st i ng asset s and l uhi l hu,
ex cond L '" " 7 , t U a W n t ( ! " f a i ' s l h e
I IK
b
: : '
f n c c c pt ebl e to t he proposed part n er.
Gen er al l y, som ea
.m en.
be m ade l o one or bot h t he bal an ce sheet s t o adj ust the obj ect i ons rai sed b y .he ot her
parr
S t at e
Fi nan ce
Advantages
J oi nt st ock com pan y has t he fol l owi ng advant a ge s over ot her fo rm s of busi ness
orga niz at i ons:
1. The shar e hol ders bear no ri sk as t he li abi l i t y is li m it ed, m ore and m ore
peopl e ar e encou ra ge d t o i nvest capi t al .
2. An aver age person c an cont ri but e c api t al wi t hout m uch hesit at i on be cause of
l arge num ber of i nvest ors ri sk of loss i s di vi ded.
3. The work i s di vi ded am ong di fferent groups of persons henc e bet t er work c an
be done.
Scanned by CamScanner
Lim itations
1. La c k of personal i nt er est on the part of sal ari ed m anagers l eads t o
i neffi ci en c y and was
2. Wit h t he i nt i m at e knowl edge of fi nan ci al posi t i on pf t he com pan y t here i s
suffi ci ent scope for m em be rs of m an agem ent fo r t hei r pe rsonal profi t s.
B ec ause the y can sel l and purch ase sha res a cco rdi ngl y.
3. It r equi res a l arge num ber of l egal form al it i es t o be obse rved.
4. It i s di ffi cul t t o preserv e se cret s in t he j oi nt st ock com pani es.
Scanned by CamScanner
is lhc r
15
t hei r own m anager s The J fi l T , 5 ' f
squi red. The y e | e c ;
pr event s t he woH c^ Im 'be "T^ i S
" ^f" 3 ' 5 ' 8 ? ' C , l u l
ULm
"
e ex pl oi t ed and t each es t hem how t o work in
t eam spi ri t
i
d
d
W
s
X
;
:
'
.
S
X
*
r
p r n t di rect l y
8
at r easonabl e pri c es S eco
f' i
T" 8 t h e m c m b e r s a " d "on
m em ber
' ^SS S li
Cooperative Organizations
1
satThere
shou,d
m0ney iS S
<* " advert i sem ent s and pnbl i cit y et c pr<Tv i de honora r y
Scanned by CamScanner
or a h torn "S *
en
eXiS,e
"Ce
iS
"
>
it
is
found
t hat
Scanned by CamScanner
Scanned by CamScanner
Merits
L The e conom i cal , soci al and pol i ti c al obj e ct i ves of t he Governm ent a re
a chi eved due t o gov ernm ent cont rol .
2. S uch orga niz at i ons ore suit abl e for publ i c ut i l it y se rvi ces and def enc e
i ndust ri es.
3. C om pl et e sec rec y i s pos si bl e li ke i n ordi nan ce fact ori es due t o governm ent
cont rol .
4. C onsum er's i nt erest s arc properl y safe gu arded
5. Gove rnm ent c an afford to w ai t lon g for an ent e rpri se to yi el d profi t . Bi g
orga niz at i ons li ke i ron and st e el works, he av y cl cct ri cal s and defen ce
proj e ct s can be st art ed.
Lim itations
L B ecaus e of red t api sm (i .e. bure aucr at i c cont rol ) qui ck de ci si ons ar e not
possi bl e
2. Maj or m odi fi cat i on and innovat i ons are di ffi cul t t o i ncorpo rat e as
Gove rnm ent offi ci al s nre fp (o wo rk ac cordi n g t o ce rt ai n rul es and
r egul at i ons.
3. Offi ce rs ar c di scour aged from t aki ng qui ck deci si ons be cause of red t api sm .
4. La c k ol i ni t i at i ve bec ausc prom oti ons ar e on seni ori t y basi s rat h er t han m eri t
bas ed.
Merits
1. Thes e ar e supposed to be bet t er m ana ge d. Th ese a re ex pect ed t o provi de
bet t er wo rki n, c o n d i t i o n s t o work ers and cheap er and bet t er produ ct s t o
consum e rs
na . t . o n s
2. Due t o absenc e of red t api sm and bure aucr at i c cont rol , qui ck deci si ons are
possi bl e
by GoVcZerrn> C 3 n U S e f U n d S g r e a t r f r e e d m " t H e 3 b S e n C e f a i ' d i t a n d ': i n B
4. More fl ex i bi li t y as com par ed t o depart m ent al organi sat i ons
5
' If h profrm ot i ve S U i t a b I e ^ m 3 n a g i n 8 P U b M C U t U i t i e S 3 1 r e a S n a b l e C S t t 0 P e 0 ? l e i n
6. In vi e w of t he m anagem ent i n t he hands of expe ri enc ed and capabl e di rect o r,
t hese are m ana ged
m ore effi ci ent l y t han t hat of Gov ernm ent dep art m ent s.
Dem erits
1 spe c? al act . f 0 r m f
of the
0I
"8aniZatin
Scanned by CamScanner
35
chan
2e
in its
2 Inde rontiirf tljCfh C 0 r P : a t i 0 n S n l y n p a p e r s - I n r e a , i t y M i " ^t ers, Gov ernm ent offi ce rs and
P oli t i ci ans i nt erf er e i n t he worki n g of such corpo rat i ons
3. t i s sui t abl e onl y for t he m an agem ent of ver y bi g ent e rpri ses
5 P ub M c 'co r on rat ' 3 ' ' egiS,ati n ^ ^ f rmati n is elaborate and time consuming.
i nt e t ed Tn .Tr
T P l y ^ t h e y a r e n 0 t t 0 f a c e com pet i t i on, so t hese are
not
i nt erest ed i n adopt i ng new t echni qu es and m aki n g i m provem ent s i n t hei r
worki n g.
Scanned by CamScanner
m ana ge d b y el ect ed board of di re ct ors whi ch m a y i ncl ude pri vat e i ndi vi dual s Thes e
a re a ccount abl e for it s worki n g t o t he con cern ed m i ni st r y and i t s annual repo rt i s
r equi red t o be pl ac ed ever y ye a r on t he t abl e of t he P arl i am ent or S t at e Le g. sl at i ve
al on gwi t h com m ent s of t he conce rned dep art m ent In i t s da y t o d a y worki n g i t i s fr ee
from Governm ent , int er fer enc e, howev er, Bur eau of Publ i c Ent erp ri ses c an i ssue
gui danc e and di r ect i ons.
Merits
1. It i s eas y t o form
2. Gove rnm ent com pan y di rect ors ar e fr ee to t ake deci si ons and a re not bound b y
c ert ai n ri gi d rul es and re gul at i ons
3. The y t r y t o sat i sf y t hei r cust om ers bec ause ot herwi se t he y m i ght l oose to t hei r
com pet i t ors. Limitations
1. Mi suse of ex cessi ve fre edom cannot be rul ed out
2. Ac count abi l i t y is i nadequ at e.
3. S i nce t he di r ect ors are appoi nt ed b y governm ent , so t he y spend m ore ti m e in
pl easi n g thei r poli t i cal m ast ers whi ch l eads t o ine ffi ci ent m anagem ent .
Contribution
In regar d t o t he i ndi vi dual vent ur es al r ead y funct i oni ng under joi nt sect or pri nci pl e
t he part i ci pat i on has not ge ne ral l y been on an equ al foot i n g and gov ernm ent i s seni or
pa rt ner. The share capi t al i s usual l y i n the rat i o of 51: 49 and in al l c ases t he
gove rnm ent hol d 51% of t he sha res.
Participation
In thi s set up C hai rm an i s a gove rnm ent nom i nee but Man agi n g Di rect o r i s nom i nat ed
b y col l abor at i ng pri vat e i ndust r y., In t he board of di r ect ors t he Governm ent has l arge
r epres ent at i on. The vi ew of Gove rnm ent is m ore li kel y t o pr evai l on m at t ers of
i m port anc e due to it s l arge shar e hol di n g and repr esent at i on. The servi c e condi ti ons
and the sal ari es of bot h offi c ers and worke rs i n t hese a re hi ghe r t han t hose enj o yed
b y t hei r count erp art s i n t he publi c sect or ent erpri s es.
Advantages
Scanned by CamScanner
Scanned by CamScanner