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Organization is also one of the factors of production like land, labour, and capital. Organization is the process of bringing together physical, financial and human resources and establishing productive relations among them for the achievement of specific objectives. Business organizations have to use land, labour, capital, etc for the production and it pays rent, interest, wages, etc in return from the factors of production. Therefore, the task of allocating the others factors of production is also known as the organization.
According to L.A. Allen, "Organization is the process of identifying and grouping the work to be done, defining and delegating responsibility and authority and establishing the relationship for the purpose of enabling t work most efficiently to obtain the objectives."
FORMS OF BUSINESS ORGANIZATION
There are various types of business organization. Sole proprietorship, Partnership, Joint Stock Company, Co-operatives, Multinationals, etc. are the main types.
Capital is a man-made means of production which is used in a further production of goods and services. It is taken as a stock of financial assets which can be used to provide an income.
According to prof. Fisher, “Capital is that property which is the production of past labour but which is used as a means of further production.”
According to Marshall, “Capital consists of those kinds of wealth other than the free gifts of nature, which yield incomes.”
Capital formation means the increase in the stock of real capital in the country. This concept was introduced by Prof. Ragnar Nurkse. According to him, “A society doesn’t spend all income to meet present needs. It saves some parts of its income. Such savings are collected by banks and financial institutions and they provide it to the business sector in the form of loan for further production purpose.”
Economic development depends on capital formation.
The process of capital formation entirely depends on how to save more moey and how to utilize them in best ways. The objective of saving and investment is to formulate more capital, more employment opportunities, increasing per capita income and national income to meet the goal of economic development of a nation.
a. Ability to save: The income level of the people or nation determines the power to save if their unnecessary consumption is controlled by themselves. Therefore, higher the income, higher will be the capacity to save and lower the income, lower will be the saving capacity.
b. Willingness to save: It is determined by several factors. Some major factors are social status, culture, tradition, consumption habits ,government policy, a position of law and order, security of life and wealth ,existing banking facility, etc. which helps to increase the rate of capital formation. On the contrary, if their willingness to save decrease, it reduces the rate of capital formation.
c. Government Saving: Budget surplus, expenses of government, export promotion, etc. determines the saving capacity of a public and individual as well.
(Karna, Khanal and Chaulagain)(Khanal, Khatiwada and Thapa)(Jha, Bhusal and Bista)
Jha, P.K., et al. Economics II. Kalimati, Kathmandu: Dreamland Publication, 2011.
Karna, Dr.Surendra Labh, Bhawani Prasad Khanal and Neelam Prasad Chaulagain. Economics. Kathmandu: Jupiter Publisher and Distributors Pvt. Ltd, 2070.
Khanal, Dr. Rajesh Keshar, et al. Economics II. Kathmandu: Januka Publication Pvt. Ltd., 2013.