Commercial Applications
What is a commercial organisation? State its characteristics. Distinguish between commercial and non-commercial organisations.
Commercial Orgs Intro
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Answer
Commercial Organisation — A commercial organisation is an organisation which is engaged in some business or commercial activity with the purpose of earning profits. The commercial activity may be production, purchase and sale of goods and services. It is also known as a business enterprise, business firm, business concern or business undertaking.
According to Adams, "Commercial organisation is any organisation which is involved in production, trading of goods and services and is owned by an individual or group of people and has a profit motive."
Main Characteristics of a Commercial Organisation:
- It is an organisation — A formally structured group of persons.
- Engaged in industrial or commercial activity — Activities like manufacturing, trading, banking, transportation, etc.
- Owned and controlled by a single person or a group of persons — Ownership may be individual or collective.
- Based on a formal or informal agreement — Among the persons forming the organisation.
- Separate ownership and management — Owners may or may not be managers.
- Profit motive — Its primary motive is to earn profits.
- Exposed to various risks — Such as market risk, financial risk, and operational risk.
- Ownership by businessmen or government or both — Can be private, public, or joint sector.
Distinction Between Commercial and Non-Commercial Organisations:
| S.No. | Basis of Distinction | Commercial Organisation | Non-Commercial Organisation |
|---|---|---|---|
| 1. | Main objective | The main objective of commercial organisations is to earn profits for the owners. | The main objective of non-commercial organisations is to render services to society. |
| 2. | Types of activities | Buying and selling of goods. | Social, religious, patriotic and other similar activities. |
| 3. | Forms of organisation | Proprietorship, partnership and company. | Clubs, Cooperatives, NGOs, etc. |
| 4. | Examples | Trade, transport, banking, insurance, etc. | Temple, university, trust, etc. |
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