Question

Which of the following determines the form of the organisation ?

• A. Size
• B. Location
• C. Study
• D. None of these

Hint:

Key factors determining the form of organization include: 1) Scale of operations (Size), 2) Capital requirement, 3) Extent of liability the owners are willing to bear, 4) Legal formalities, and 5) Managerial ability. Size is one of the most important.

Answer 1

The Correct Option is A

Step 1: Understanding the Question:
The question asks which factor helps determine the 'form' or 'structure' of an organization (e.g., sole proprietorship, partnership, company).
Step 2: Analysis of Options:
Let's evaluate how each factor influences the choice of organizational form.

(A) Size: The size and scale of operations are major determinants. A small-scale business (like a local retail shop) can be easily managed as a sole proprietorship. However, a large-scale enterprise with significant capital requirements and complex operations is better suited to be a joint-stock company. As the intended size of the business grows, the need for more capital, professional management, and limited liability increases, pushing the choice towards a corporate form.

(B) Location: The location of a business does not fundamentally determine its legal structure. A company can be located anywhere, and its legal form (proprietorship, company, etc.) is independent of its physical address.

(C) Study: This is too vague. While a 'study' or analysis is conducted to decide the form, 'study' itself is not a determining factor. The factors are what you study (e.g., size, liability, capital needs).

Step 3: Final Answer:
The size of the business is a crucial factor in deciding the most appropriate legal form of organization. Therefore, (A) is the correct answer.