Every business undertaking is a separate and distinct business unit. It has its own identity and separate ownership. It can be distinguished from other undertakings on the basis of its ownership, management and control.
According to Wheeler, a business undertaking is a concern, company or enterprise which buys and sells, is owned by one person or a group of persons and is …show more content…
4. Element of risk:
Every business undertaking involves risk. Profit is the reward for bearing risk. The risk of an undertaking is borne by its owners though some of the risks may be covered through insurance.
Types of Business Undertakings
Business undertakings may be classified into three broad categories as follows:
1. Private Sector Undertakings:
These undertakings are owned, controlled and financed by private businessmen. There is no Government participation in them. The main motive of private sector undertakings is to earn profits. Their main characteristics are as under:
(a) Private Ownership and Control:
A private sector undertaking is fully owned and controlled by the private entrepreneurs. It may be owned by one individual or by a group of individuals jointly. When owned by one person, it is called Sole Proprietorship.
A group of persons may joint own the firm in the form of joint Hindu family business, partnership, joint stock company or cooperative society.
(b) Profit Motive:
The main objective of private sector undertakings is earning profits. Profits provide the reward for the risk assumed and the required return on capital.
(c) No State Participation:
There is no