Essay on the corporate business organizations

Character of Corporate Organization:

The corporate form of private business enterprise is the most important and the largest type of business group. Generally, banking, insurance, manufacture, mercantile enterprise and air transportation are the leading business occupations which have adopted the corporate form of organization.

Under this form of organization the needed capital is supplied by a number of persons who become its shareholder. Each shareholder receives his proportionate share of stock and is liable only upon the value of the shares he holds.

The-general management of the corporation is delegated to a Board of Directors who chooses the general manager-a full time officer of the Corporation. The Corporation, before starting its work generally has to receive a license from the Government.

It is regulated by the Company Act of the country. The workers generally receive a share in the profits of the corporation in proportion to their wages or according to some other scale.

The bonuses, by which profits are distributed may be given in cash or combined with a kind of retirement pay or may be transformed into shares of the same enterprise. The scheme is called profit sharing. International Cartels: In recent times a form of corporate business under the name of ‘international cartel’ has come to the forefront.

An international cartel is ‘a combination of capital groups operating in several countries to control the distribution and prices of particular articles of manufacture.

“Many of these cartels have really become manipulates of prices for private financial interests of a relatively few people. They sometimes enter into an agreement which is internationally harmful. Cartels are prone to develop totalitarian bureaucratic methods not only of national but international scope.

In 1948 the United Nations provided for an International Trade Organization to have control over international cartels and combines and to prevent them from exercising harmful practices.

Merits: The corporate business enterprise has many merits, it has eliminated competitive costs and permits the purchase of large quantities of materials at lower prices than the proprietor of the small enterprise can obtain.

Secondly, such enterprises permit the undertaking of vast enterprises requiring huge wealth and extending over many years.

Thirdly, goods are provided in large quantities so that the country does not suffer from want of goods.

Fourthly, large units of capital do bring about technological changes such as manufacture and installation of automatic machinery, development and application of electric power lastly, they create a spirit of cooperation among citizens.

Demerits: But often big business rushes into an orgy of speculation and becomes legalized gambling of a gigantic scale. Likewise if may lead to overproduction causing slump in the market large corporate groups become impersonal and ignore their responsibility to the people

They get control over the government through their money power and pollute the democratic process. Some of them develop attitudes of economic superiority, of profitism, of class aloofness, and of competitive shrewdness opposing needed economic reforms.