There are three friends Ram, Shyam and Mohan. They decided to start a business in the name of RSM Brothers and they decided to share the profit equally. All of them decided to manufacture gel and ball pen. They thought of selling each gel and ball pen at Rs. 12 and 20 respectively. Their fixed expenses were Rs. 77,000 (Salary Rs. 12,000, Rent Rs. 65,000).

The cost of producing each gel and ball pen was Rs. 5 and Rs. 12 respectively. At the end of year they got to know that out of total revenue from sales, the sales mix percentage was 30% and 70% respectively.

Mr. Ram, Shyam and Mohan are planning to continue business at large scale in future.

On the basis of above case study, find out answer of following questions.

If all the partners plan to continue business at large scale, which form of business organisation will be suitable for them.

Joint Stock Company

The correct answer is option (2) - Joint Stock Company.

On comparing the advantages and limitations of company form of business, it is suggested that an entrepreneur should choose this form provided his/her:

1) Venture is a heavy and basic industry type

2) Large-scale operations are involved

3) Business requires huge funds

4) Enterprise involves heavy risks

5) Enterprise is technologically complex and sophisticated, banking heavily upon experts and professionals.