Business Organisation and Management Review

Flashcards covering forms of business organisations, factors governing choice of organisation, fundamental management functions, levels of management, and the evolution of management theories including Scientific Management, Administrative Management, and Modern approaches.

Organisation (as a noun)

A formal structure where a group of people work together to achieve a common goal, such as Infosys or the Red Cross.

Organisation (as a process)

The act of arranging resources—people, materials, and finance—and assigning duties to achieve specific objectives.

Sole Proprietorship / Proprietary Concern

A one-person business where a single individual owns, manages, controls, and bears all risks; it is the oldest and simplest form of business organisation.

Unlimited Liability

A condition where the owner's personal assets—such as a house or savings—can be used to repay business debts because there is no distinction between personal and business assets.

Partnership (Indian Partnership Act, 1932)

The relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Partnership Deed

A written agreement between partners that defines their roles, capital contribution, and profit-sharing ratio.

Mutual Agency

A characteristic of partnership where every partner is both an agent and a principal, able to bind the firm and all other partners by their actions.

Active / Working Partner

A partner who participates actively in the day-to-day management of the firm and is fully liable for its debts.

Sleeping / Dormant Partner

A partner who invests capital but does not participate in management, though they remain liable for the firm's debts.

Nominal Partner

A partner who lends only their name or reputation to the firm and is not entitled to share in the profits.

Partner by Estoppel

A person who, through their conduct, leads others to believe they are a partner in a firm even if they are not.

Joint Stock Company

A sophisticated, regulated business form where capital is contributed via shares, members enjoy limited liability, and the entity is separate from its owners.

Perpetual Succession

A feature of a company where its existence is continuous and unaffected by the death, insanity, or retirement of its members or directors.

Separate Legal Entity

A legal concept where an organisation exists as a legal person independent of its members, capable of owning property and entering contracts in its own name.

Public Sector Undertaking (PSU)

Also known as Government Undertakings, these are business entities created by the government to provide essential services, prevent monopoly, or develop strategic industries.

Departmental Undertaking

A form of government undertaking run as a government department without a separate identity, such as Indian Railways.

Statutory Corporation

A government undertaking created by a Special Act of Parliament, which is government-owned but autonomous in operations, such as LIC or ONGC.

Trust

A legal arrangement where a Settlor transfers property to Trustees to be used for the benefit of a third party (Beneficiaries) or a specified purpose.

Cooperative Society

A voluntary association of persons who come together on the basis of equality to protect their common economic interests, guided by the principle 'Each for all and all for each.'

Management (Harold Koontz)

The art of getting things done through and with people in formally organised groups.

Planning

The fundamental management function of deciding in advance what to do, when to do it, how to do it, and who will do it.

Organising

The management function of arranging resources and tasks, defining roles and responsibilities, and establishing the chain of command.

Staffing

The managerial function of filling and keeping filled positions in the organisation, including recruitment, selection, and training.

Directing / Leading

The function of guiding, motivating, and leading employees to convert plans and structures into action.

Controlling

The feedback mechanism of management that ensures actual performance matches planned performance by setting standards and taking corrective action.

Top Management

The strategic level of an organisation (e.g., CEO, Board of Directors) responsible for setting the long-term vision, mission, and overall goals.

Middle Management

The tactical or functional level (e.g., Department Heads) responsible for translating top-level strategy into action plans.

Lower / Supervisory Management

The operational level (e.g., Foremen, Team Leaders) that directly supervises workers and ensures daily tasks are completed.

Functional Manager

A manager responsible for a specific function such as finance, marketing, human resources, or production.

Line Manager

A manager directly responsible for achieving organisational goals as part of the primary command chain, such as a Sales Manager.

Staff Manager

A manager who provides support, advice, and expertise to line managers, such as a Legal Advisor or HR Manager.

Mintzberg's Managerial Roles

A framework identifying 10 specific roles for managers across three categories: Interpersonal, Informational, and Decisional.

Scientific Management

A classical era management theory by F.W. Taylor focusing on efficiency, time-motion studies, and finding the 'one best way' to perform tasks.

Soldiering

A term used by F.W. Taylor to describe workers deliberately working slowly to protect their jobs.

Mental Revolution

F.W. Taylor's concept that both management and workers must change their mindset to focus on maximising output and creating harmony.

Administrative Management (Henry Fayol)

A top-down management approach defined by 14 general principles of management and 5 primary management functions.

Unity of Command

One of Fayol's 14 principles stating that an employee should receive orders from only one superior to avoid confusion.

Scalar Chain

A clear chain of authority from top to bottom; it includes the 'gangplank' for horizontal communication to avoid delays.

Hawthorne Studies

A series of experiments led by Elton Mayo proving that social and psychological factors influence productivity more than physical working conditions.

The Hawthorne Effect

The phenomenon where people change their behaviour or increase performance because they know they are being observed and recognized.

Acceptance Theory of Authority

Chester Barnard's theory that authority flows upward and an order only has authority if the subordinate accepts it.

Zone of Indifference

Chester Barnard's concept describing the range of orders that employees will accept without question.

Management by Objectives (MBO)

Peter Drucker's process where managers and subordinates jointly set specific, measurable objectives to align individual and organisational goals.

Knowledge Worker

A term coined by Peter Drucker to describe workers whose primary tool is knowledge rather than physical skill, such as programmers or engineers.

Systems School

A management approach that views an organisation as an open system continuously interacting with its external environment.

Contingency School

A management approach that rejects the 'one best way' and argues that the best management style depends on the specific situation or context.

Total Quality Management (TQM)

A contemporary approach focusing on continuous improvement in quality across all processes to achieve zero defects and customer focus.

Learning Organisation

An organisation that continuously learns, adapts, and transforms itself to survive in changing environments, popularized by Peter Senge.