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BELIEFS
A belief is something that you believe or accept as true. You might believe something based on a
fact, an opinion or an assumption. When you believe something you might not have immediate
personal knowledge but you are satisfied that something is the way it is.

Your belief system is not necessarily correct or accurate. Interestingly, not only are you driven
by your beliefs, you will unconsciously look for evidence, or other experiences that will confirm
and reinforce your beliefs as you don’t want to be wrong. Your beliefs are often your perception
of the way things are and what you believe to be true. But this does not mean that your belief is
actually true.

As Larry Harvey says,

Beliefs are thoughts at rest’.

In other words, when you believe something to be true you will rarely question or think about
the validity of that belief. You form your beliefs from a very early age. These beliefs are based
on your environment; what you were told, what you heard as well as what you observed and
experienced. Your beliefs are also the conclusions you draw from these experienced. You form
beliefs about yourself, about others and the world around you. People hang onto their beliefs
even if they are limiting or fly in the face of evidence to the contrary. This is why it is so hard to
logically reason with those who hold strong beliefs based on a ‘feeling of knowing’ rather than
evidenced based logic and scientific proof.
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FORMAL GROUPS
A formal group is formed when people come together to accomplish specific goals and
objectives. An official group has particular structures and roles where responsibilities of
members of the group are defined. Activities carried by a formal group have specific guidelines,
which members of the group are supposed to adhere to and follow to ensure good coordination.
Some of the common formal groups that exist within the organization or community include
schools, church, hospitals, government, and civic organizations.

The formal groups are formed to fulfill any of the following purposes:

 To capitalize the expertise of each individual towards the accomplishment of complex

tasks.
 To make use of synergy, i.e. collective efforts of group members yields better results than
an individual working separately.
 To facilitate a proper decision-making, as with many people in a group the conflicting
ideas and thoughts arise that could be considered to formulate a better decision.
 To help others in the group to learn new skills and to know about the details of the
organizational environment.
 To satisfy the personal needs of social affiliations, i.e. need to get accepted by others.

The several groups are formed to serve the specific needs of the organization and can be in
any of the following forms:
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The formal groups mostly relate to the organizational missions and can either be permanent or
temporary. The permanent formal groups are in the form of top management team such as the
board of directors, management committees, several departments within the organization etc.
The temporary formal groups are created to fulfill the specified set of objectives.

INFORMAL GROUPS
An informal group is formed when two or more people come together to accomplish a specific
task which is mainly socially geared. The main idea behind the establishment of the informal
group is the satisfaction of both personal and psychological needs. Informal groups are not
subjected to any rules and regulations in the company, and the members of this group willingly
belong to this group. There are no explicit guidelines that govern the operations of an informal
group.
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Groups which are not formal are informal. In other words, these are groups that are neither
formally created nor controlled by the organization. These groups are natural formations in the
work environment that appear in response to the need for social contact. Four employees
belonging to four different departments taking their lunch together represent an example of an
informal group. Informal groups arise spontaneously and voluntarily to satisfy the various social
needs, not likely to be fulfilled by the formal organization. The members of such groups are
called informal groups. The leader of the informal group is selected among the members of the
group. Authority in such groups is given to the person and to the position. Communication in
informal groups is through informal channels. The various kinds of formal groups are :

1. Friendship Groups Friendship groups are associations of people who like each other and who
like to be together. Such groups are formed because members have one or more common
characteristics, such as age or ethnic heritage, political beliefs, religious values and other bonds
of attraction.

2. Interest Groups Interest groups are composed of individuals who may not be members of the
same organization (command or task groups), but they are united by their interest in a common
issue. Example of interest groups may include a group of University Professors. They organize a
seminar on Law and Order Problems in the State of Tamil Nadu.

3. Reference Groups A reference group is a special type of informal group that people use to
evaluate themselves. A reference group may not be an actual one that meets together, it can be an
imaginary group. The reference group for a new university Lecturer, for example, may be other
scholars in the same discipline at other universities.

4. Cliques consisting colleagues and associates closely intimated to each other-cliques may be.

(i) Vertical cliques consisting of members working in the same department irrespective of their
rank.

(ii) Horizontal cliques consist of people of similar rank working more or less in the same area.

(iii) Mixed cliques consist of both vertical and horizontal cliques.

5. Sub-cliques consist of member of cliques along with outsiders.

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6. Isolates who are not members of any group. Another classification of informal groups by
Sayles from the standpoint of pressure tactics is divided into four groups:

(i) The Apathetic Group: Not sincere to their demand and members do not actively engage in
union activity.

(ii) The Erratic Group: Very sensitive to their demand. Easily inflamed and easily pacified.
Engage in union activity without working. Deep rooted grievances exist without any reaction
from the group.

(iii) The Strategic Group: These groups have a well-planned strategy for fighting with the
management for their grievances. They build continuous pressure.

(iv) Conservative Group: Consists of members having critical or scarce skills. Though they have
strong position yet are least engaged in union activity.

REFERENCE GROUPS
The membership group is the one to which an individual actually belongs to. Sometimes the
membership fee is to be given to become a member of certain groups. The club membership is
the best example of membership groups. The reference groups are the types of groups with
which an individual identify himself and want to become a member of that group. An individual
could be a member of several groups, but may not participate in all simultaneously and would
like to participate in those groups whose norms are more attractive and gratifying.
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DIFFERENCE BETWEEN FORMAL GROUPS AND INFORMAL GROUPS

FORMATION OF FORMAL AND INFORMAL GROUPS

The management of the company to achieve specific tasks deliberately forms formal groups.
This means that some rules and regulations guide the formation of a formal group. One cannot
leave the group without the authority of the management.

On the other hand, an informal group is voluntarily formed by members coming together to
satisfy their personal and psychological needs. One can join and leave the group when he or she
decides.

STRUCTURE OF FORMAL AND INFORMAL GROUPS

Structures of a formal group are defined where the hierarchy and flow of information from one
member of the group to the other member is communicated. This means that there is a chain of
command through which instructions are administered.

Most of the time an informal group does not have structures, but when it does exist it is mostly
not defined. This means that there is no chain of command and the flow of information from one
member to the other.

Additionally, communication in a formal group flows from top to bottom while conversation in
an informal group moves sideways without a defined path.

RELATIONSHIP OF FORMAL AND INFORMAL GROUPS

In a formal group, the relationship between members is professional because the group is created
to achieve a specific task or goal that is controlled by the management of the organization.
Moreover, professional relationship between members is brought about by the fact that some
members are senior in the organization.

In an informal group, the relationship between members is personal. Members of an informal

group know each other at a personal level thus making their relationship to be guided by personal
aspects. Additionally, there is no seniority in the group, which means that any member can
assume a leadership position.
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SIZE OF FORMAL AND INFORMAL GROUPS

Formal groups are usually large because they are formed with the purpose of ensuring that they
can achieve goals that measure the success of the company. Members of a formal group have
skills and competencies to handle official activities on behalf of the company.

Informal groups are comparatively small because close friends or people who know one another
on a personal level form them. This makes it challenging to assemble many members since not
all persons in an organization know one another at a personal level.

NATURE/LIFE OF FORMAL AND INFORMAL GROUPS

Formal groups are usually stable and are likely to exist for a lengthy period. Additionally, the
task allocated to a formal group may last for a long duration hence making the formal group exist
until the task allocated is completed.

Informal groups are not stable because they are governed by the feelings between the members.
In case the sentiments between members become volatile, the group is likely to be dissolved.

Unlike formal groups, which existence is determined by the nature of the activity, the length of
life of an informal group is dependent on the members.

BEHAVIOR AND LEADERSHIP OF FORMAL AND INFORMAL GROUPS

The practice of members of a formal group is governed by specific rules and regulations, which
are usually formulated at the inception of the group. All members of the group are supposed to
adhere to the rules and guidelines that define the group.

Moreover, formal groups have a defined leadership structure where there is an official leader
who ensures that the group is in line to achieve its goals while at the same time enforcing rules
among members.

The behavior of an informal group is governed by the expression of members, norms, beliefs,
and the values that members hold dear. There is no official leader of the group to enforce
nonexistence rules and regulations as members do what is necessary to them instead what is
imposed.
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BASIC FORMAL INFORMAL

COMPARISON ORGANIZATION ORGANIZATION

Planned&
FORMATION Spontaneous
deliberate

PURPOSE Well-set goals Social interaction

STRUCTURE Well structured Unstructured

NATURE Official Unofficial

FOCUS Positions Persons

LEADERSHIP Superior Any one

SOURCE-OF
Delegated Given by group
POWER

GUIDELINES-
FOR Rules& procedure Group norms
BEHAVIOR

SOURCES-OF
Reward/punishment Sanctions
CONTROL
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PRESSURE GROUPS
Pressure groups are collections of individuals who hold a similar set of values and beliefs based
on ethnicity, religion, political philosophy, or a common goal. Based on these beliefs, they take
action to promote change and further their goals. For example, members of Mothers Against
Drunk Driving(MADD) share a common belief that, in turn, influences the actions (e.g.,
advocacy, public awareness programs, policy research) they use to achieve their goals.Pressure
groups often represent viewpoints of people who are dissatisfied with the current conditions in
society, and they often represent alternative viewpoints that are not well represented in the
mainstream population. By forming a pressure group, people seek to express their shared beliefs
and values and influence change within communities and sociopolitical structures, such as
governments and corporations. Some pressure groups, such as the tobacco-control movement,
have been successful at influencing change across a number of sociopolitical structures. Pressure
groups are different from political parties. Political parties seek to create change by being elected
to public office, while pressure groups attempt to influence political parties. Pressure groups may
be better able to focus on specialized issues, whereas political parties tend to address a wide
range of issues. Pressure groups are widely recognized as an important part of the democratic
process. Some groups offer opportunities and a political voice to people who would traditionally
be thought of as disadvantaged or marginalized from the mainstream population. In this way,
pressure groups strengthen the democratic process by giving a voice to a variety of people.
Pressure groups also offer alternatives to the political process by providing opportunities for
expressing opinions and a desire for change. While pressure groups are acknowledged as
potentially beneficial to a democratic society, problems can arise when the democratic process
becomes dominated by a few specific groups. In this situation, the voice of a small group of
people with a particular interest can become overly influential and negatively affect the rights of
other individuals. In the democratic process, there is a need for compromise in order to reach
consensus regarding the common good. If pressure groups remain rigid and refuse to
compromise on specific issues, they can potentially monopolize the democratic process by
focusing public debate on a few specific issues.

Pressure groups may adopt a variety of strategies to achieve their goals, including lobbying
elected officials, media advocacy, and direct political action (e.g., organized protests). Clearly,
some pressure groups exert more influence than others. The degree to which such groups are able
to achieve their goals may depend on their ability to be recognized as legitimate by the
population, media, and by those in power. For example, civil rights groups, trade unions, and
professional associations are more widely recognized and accepted than a newly formed, single-
issue pressure group.

Significant gains in public health have been achieved because of efforts by pressure groups,
including important changes and advances in public health issues such as tobacco control,
occupational health and safety, air pollution, and HIV/AIDS.
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Pressure groups can fulfill a valuable function within public health. They have the potential to
raise the profile of previously marginalized issues and force action to improve the health of their
members, as well as the health of the general population. For example, mental health service
consumers have joined together to form pressure groups that have identified the issue of
homelessness as an unintended consequence of deinstitutionalization. Initiatives spawned by
these groups aim to improve living conditions for the homeless. These actions have provided
benefits not only to the homeless, they have also positively affected the well-being of entire
communities.

Individual pressure groups can form larger coalitions to advance their cause more effectively.
The tobacco-control movement provides an excellent example of how a variety of pressure
groups can work together across sectors and at many different levels to affect change. This
movement has successfully pulled together many organizations under the umbrella of the
National Center for Tobacco-Free Kids. Members include organizations from a number of
sectors including health (American Public Health Association), education (American Federation
of Teachers), medical (American Medical Association), civic (Americans for Nonsmokers'
Rights), corporate (Adventist Health Care), youth (Girl Scouts of the USA), and religious
(National Council of Churches).
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AMALGAMATION
In general, the definition of amalgamation can be stated as follows.

"Amalgamation is a union of two or more companies, made with an intention to form a new
company."

In terms of finance, the definition of amalgamation can be given as under.

"Amalgamation is an agreement (deal) between two or more companies to consolidate

(strengthen) their business activities by establishing a new company having a separate legal
existence."

TWO TERMS
Amalgamating companies are those two or more companies which willingly unite (combine) to
carry on their business activities jointly.

Amalgamated company is a newly formed union (alliance) of two or more amalgamating

companies. It has a separate legal existence with a new unique name.

To amalgamate means to unite or combine or blend. It is an act or process in which two or

more things fuse together to form a new potent thing. Amalgamation is an emerging trend of
today's business world. It results in the formation of a new, strong, stable and large company. It
also results in the growth and expansion of this newly formed company. During amalgamation,
two or more companies willingly come together to cooperate with each other and diversify
(expand) their business activities. After amalgamation, two or more companies dissolve
(disintegrate) and lose their individual legal status (existence), hence they no longer exist
anymore. However, they again re-establish themselves, but now jointly, by forming a new
company having a unique name. Thus, amalgamation results in the formation of a new (separate)
company which has a unique name, logo, identity and existence. The management of
amalgamated company is led (directed) by members of two or more companies getting
amalgamated.
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In the above example, Company 'A' and Company 'B' are operating (existing) in the market.
Company 'A' is one amalgamating company while Company 'B' is another amalgamating
company. Company 'A' and Company 'B' are getting amalgamated to form a new (separate)
Company named 'AB'. In this example of amalgamation, Company 'A' and Company 'B' will
surrender all their equity shares (ownership shares) to the newly formed Amalgamated Company
'AB'. The assets and liabilities of Amalgamating Companies 'A' and 'B' will be transferred to
Company 'AB'. The shareholders of the Company 'A' and Company 'B' will be given the shares
of Company 'AB'. The amalgamating companies 'A' and 'B' will lose their individual existence
(identity) and continue to operate jointly under the name of Company 'AB'.

Two good examples of amalgamations are as follows:

 Maruti Motors operating in India and Suzuki based in Japan amalgamated to form a new
company called Maruti Suzuki (India) Limited.
 Tata Sons operating in India and AIA Group based in Hong Kong amalgamated to form a
new company called TATA AIG Life Insurance.
 Gujarat Gas Ltd (GGL) is an amalgamation of Gujarat Gas Company Ltd (GGCL) and
GSPC Gas.
 Satyam Computers and Tech Mahindra Ltd.
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TYPES OF AMALGAMATION
AMALGAMATION IN THE NATURE OF MERGER

In this type of amalgamation, not only is the pooling of assets and liabilities is done but also of
the shareholders’ interests and the businesses of these companies. In other words, all assets and
liabilities of the transferor company become that of the transfer company. In this case, the
business of the transfer or company is intended to be carried on after the amalgamation. There
are no adjustments intended to be made to the book values. The other conditions that need to be
fulfilled include that the shareholders of the vendor company holding at least 90% face value of
equity shares become the shareholders’ of the vendee company.

AMALGAMATION IN THE NATURE OF PURCHASE

This method is considered when the conditions for the amalgamation in the nature of merger are
not satisfied. Through this method, one company is acquired by another, and thereby the
shareholders’ of the company which is acquired normally do not continue to have proportionate
share in the equity of the combined company or the business of the company which is acquired is
generally not intended to be continued.

If the purchase consideration exceeds the net assets value then the excess amount is recorded as
the goodwill, while if it is less than the net assets value it is recorded as the capital reserves.

WHY AMALGAMATE?
1. To acquire cash resources
2. Eliminate competition
3. Tax savings
4. Economies of large scale operations
5. Increase shareholders value
6. To reduce the degree of risk by diversification
7. Managerial effectiveness
8. To achieve growth and gain financially

PROCEDURE FOR AMALGAMATION

The terms of amalgamation are finalized by the board of directors of the amalgamating
companies. A scheme of amalgamation is prepared and submitted for approval to the respective
High Court. Approval of the shareholders’ of the constituent companies is obtained followed by
approval of SEBI. A new company is formed and shares are issued to the shareholders’ of the
transferor company. The transferor company is then liquidated and all the assets and liabilities
are taken over by the transferee company.
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ADVANTAGES OF AMALGAMATION
1. Competition between the companies gets eliminated
2. R&D facilities are increased
3. Operating cost can be reduced
4. Stability in the prices of the goods is maintained

DISADVANTAGES OF AMALGAMATION
1. Amalgamation may lead to elimination of healthy competition
2. Reduction of employees may take place
3. There could be additional debt to pay
4. Business combination could lead to monopoly in the market, which is not always positive
5. The goodwill and identity of the old company is lost

CONCLUSION
Amalgamation is one of the tools that can help companies avoid competition among them and
add to the market offerings. It is for the mutual advantage of the acquirer and acquired
companies. It serves as an apt method of corporate restructuring to bring about a change for the
better and make business environment competitive.