"Managerial Ability and Managerial Needs, are two different but most important factors to decide a suitable form of organization." Comment.

Managerial Ability It is difficult for a sole proprietor to have expertise in all functional areas of business. Further, the size of the business may not permit engagement of professional management. In other forms of organizations like partnership and company, there is division of work arriving the partners which allows the partners to specialize in specific: areas, leading to better outputs and decision making. However, this may sometimes lead to conflicts due to differences of opinion. Company form of organization is a better alternative if the operations are far flung, complex in nature and require professional management at various levels. Managerial Needs Managerial and administrative requirements also affect the decision about the form of organization. When the concern is small and it caters to local needs only then one person will be enough to manage the business. Sole proprietorship form of organization will be suitable for such a business. If business caters to more areas, then more persons will be needed to look after various business functions in various areas. When a business is run on a large scale basis, it will require the services of specialists to manage various departments. The company form of organization will be suitable for such concerns.