Definition of Organization in economics

Organization is the fourth and last factor of production.

The function of the organization is to organize and combine other factors of production, so that required amount of goods and services can be produced.

Forms of Organization:

Following are the different forms of organization:

Individual Ownership / Sole Proprietorship:

In this type single person has the full control and authority all over the business. In other words we can say that single person should be the owner of the business in this type. Moreover, he has full liability.

Partnership:

When two or more than two persons start a business jointly, according to a contract is partnership. Sometimes a partner may not play an active role but only provide the finance for business such partner is known as sleeping partner. Following are the few types of partner:

  1. Active partner.
  2. Sleeping partner.
  3. Nominal partner.
  4. Minor partner.
  5. Senior partner.
  6. Junior partner.

Co-operative Partner:

In this type of organization people of a society of the same profession, gather to achieve a specific goal. They jointly provide the capital and start the business.

Joint Stock Company:

In this type at least seven members have to participate to start a business. All details of business must be provided to the government of a country, such as limit of finance, values of shares, objectives of its formation etc.

State Enterprises:

Such type of business is operated by the government or state authorities for the general welfare of people. These types are generally of type, which cost heavy input or of long term.

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