Question

Shonali Sharma after completing her MBA, began to help her father Mr.
Shiv Sharma, in his business. The business had a limited capital
investment. Shonali wanted to use the modern business techniques in
every area of business, namely purchase, sales, production, finance etc.
in fact she wanted to implement the methods which she had learnt in
her MBA course in her father’s business. As soon as she started adopting
the latest techniques, the workers began to protest and resist the
changes. She became disappointed and left her father’s business. She
started working in an MNC. Mr. Shiv Sharma was unable to assume the
responsibility of all managerial task such as purchasing, selling, financing
etc. Good workers started leaving the organization. The goodwill of the
business in the market went on declining. In no time the liabilities of the
business became many times more than the assets. On account of the
pressure exerted on him by the creditors, Mr. Shiv Sharma had to repay
the debts of the business by disposing off his personal properties.
a) Identify the form of business organization discussed in the above
Para.
b) Quoting relevant lines from the Para explain any three limitations of
the form of business organization identified in (a).

Answer 1

Answer:

As the workers are mentioned here it can't be a sole trading concern cause if the workers protest they may be in a pretty good number ,and the business has unlimited liability, it can be a normal Pvt LTD. CO. NOT necessarily a joint stock company .

limitations:-

1.The business had a limited capital.

2.Traditional technolgy.

3.Unlimited liability.

4.Lack of scope of expansion

Hope it may help you have a nice day

Answer 2

(a) Sole proprietorship

(b) (i) Limited resources

The business had a limited capital investment .

Resources of a sole proprietor limited to his/her personal savings and borrowings from others .

Banks and other lending institutions may hesitate to extend a long-term loan to a sole proprietor .

(ii) Limited managerial ability

Mr. Shiv Sharma was unable to assume the responsibility of all managerial tasks such as purchasing , selling , financing, etc . Good workers started leaving the organisation .

The owner has to assume the responsibility of all managerial tasks such as purchasing , selling , financing etc . Due to limited resources , he may not be able to employ talented employees .

(iii) Unlimited liability .

Sole proprietors have unlimited liability . In the case of business losses , if

the business assets are not sufficient to meet all business liabilities , the proprietor may have to sell his personal property to pay off the liabilities .