1st PUC Business Studies Question Bank Chapter 3 Private, Public and Global Enterprises

Karnataka 1st PUC Business Studies Question Bank Chapter 3 Private, Public and Global Enterprises

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1st PUC Business Studies Private, Public and Global Enterprises Textual Questions and Answers

1st PUC Business Studies Private, Public and Global Enterprises Multiple Choice Questions

Question 1.
A government company is any company in which the paid up capital held by the government is not less than
(a) 49 percent
(b) 51 percent
(c) 50 percent
(d) 25 percent
Answer:
(b) 51 percent

Question 2.
Centralised control in MNC’s implies control exercised by
(a) Branches
(b) Subsidiaries
(c) Headquarters
(d) Parliament
Answer:
(c) Headquarters

Question 3.
PSE’s are organisations owned by
(a) Joint Hindu Family
(b) Government
(c) Foreign Companies
(d) Private Entrepreneurs
Answer:
(b) Government

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Question 4.
Reconstruction of sick public sector units is taken up by
(a) MOFA
(b) MoU
(c)BIFR
(d)NRF
Answer:
(c)BIFR

Question 5.
Disinvestments of PSE’s implies
(a) Sale of equity shares to private sector/public
(b) Closing down operations
(c) Investing in new areas
(d) Buying shares PSE’s
Answer:
(a) Sale of equity shares to private sector/public

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1st PUC Business Studies Private, Public and Global Enterprises Short Answer Questions

Question 1.
Explain the concept of public sector and private sector.
Answer:
Indian Economy consists of mixed economy. A mixed economy refers to an Economic system where both private and government enterprises co-exist. The economy is therefore classified into two sectors viz., private sector and public sector. The private sector consists of business enterprises owned by individuals or a group of individuals. The various forms of organization are sole proprietorship, partnership, joint Hindu family, co-operative and company.

The public sector consists of business enterprises owned and managed by the government. These organizations may either be partly or wholly owned by the Central or State Government with an equity stake of at least 51 % with the government. They may also be a part of the ministry or might have come into existence by a Special Act of the Parliament. The government participates in the economic activities of the country through public sector. Industrial policy resolutions announced by the government from time-to-time define the area of activities in which the private sector and public sector are allowed to operate.

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Question 2.
State the various types of organizations in the private sector.
Answer:
The various types of organizations in private sector are:

(i) Sole Proprietorship
It refers to the form of organization where business is owned, managed and controlled by a single individual who bears all the risks and enjoys the whole profit.

(ii) Partnership
It defined as an association of two or more persons who agree to carry the business together and share the profit as well as bear risks collectively.

(iii) Joint Hindu Family
This business is owned and carried on by the member of a Hindu Undivided family which is governed by the Hindu Law.

(iv) Company
It may be defined as an artificial person existing only in the eyes of law with perpetual .succession, having a separate legal entity and common seal. It’s of two types-Private and Public.

(v) Multinational Corporations .
They are huge industrial organizations which extend their industrial and marketing operations through a network of their branches in several countries.

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Question 3.
What are the different kinds of organizations that come under the public sector?
Answer:
The forms of organization which a public enterprise may take are as follows:

(i) Departmental Undertaking
These enterprises are established as departments of the ministry and are considered as part of an extension of the ministry itself. These undertakings may be under the Central or the State Government. Examples: Railways and Post and Telegraph Department.

(ii) Statutory Corporation
Statutory corporations are public enterprises brought into existence by a Special Act of the Parliament, which defines its powers and functions. It is a financially independent corporate body created by the legislature and has a clear control over a specified area or a particular type of commercial activity.

(iii) Government Company
Accordingto the Companies Act, 1956, a government company means any company in which not less than 51 percent of the paid up capital is held by the Central Government, or by any State Government or partly by Central Government and partly by one or more State Governments. These are established purely for business purposes.

Question 4.
List the names of some enterprises under the public sector and classify them.
Answer:
Some enterprises under the public sector are:

(i) Indian Railways: Departmental Undertaking
(ii) Indian Post and Telegraph: Departmental Undertaking
(iii) Steel Authority of India Limited (SAIL): Government Company
(iv) Bharat Heavy Electricals Limited (BHEL): Government Company
(v) Life Insurance Corporation (L1C) of India: Statutory Corporation, (vi) State Trading Corporation: Statutory Corporation

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Question 5.
Why is the government company form of organization preferred to other types in the public sector?
Answer:
The government company form of organization is preferred to other types in the public sector because of the following advantages it offers:

(i) Simple Procedure of Establishment
A government company can be easily formed as compared to other public enterprises. There is no need to get a bill passed by the Parliament or State Legislature. It can be formed simply by following the procedure laid down by the Companies Act.

(ii) Working on Business Principles
The government company works on business principles. It is independent in financial and administrative matters. Its Board of Directors usually consists of professionals and persons of repute.

(iii) Efficient Management
The management of a government company ensures efficiency in managing the business as it is more accountable than other forms of public enterprises because the annual report of the government company is placed before both the House of Parliament.

(iv) Competition
These companies pose a healthy competition to private sector which ensures availability of goods and services at reasonable prices and good quality.

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Question 6.
How does the government maintain a regional balance in the country?
Answer:
One of the major objectives of planning in India has been that of removing regional disparities. During the pre-independence period most of the industrial progress was limited to a few areas like the port towns. After the inception of planning in 1951, the government started paying special attention to those regions which were lagging behind and public sector industries were deliberately set up in those backward regions.

Four major steel plants were set up in the backward areas to accelerate economic development, provide employment to the workforce and develop ancillary industries, e.g., with the establishment of Bhilai Steel Plant in Madhya Pradesh, several new small industries have come up in that state.

The private businessmen hesitate to establish their enterprises in the backward areas due to lack of infrastructure facilities, skilled workforce, etc but these regions cannot be neglected in public interest. Therefore, the government located new enterprises in backward areas and at the same time prevented the mushrooming of private sector units in already advanced areas.

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1st PUC Business Studies Private, Public and Global Enterprises Long Answer Questions

Question 1.
Describe the Industrial Policy, 1991, towards the public sector.
Answer:
Government of India introduced four major reforms in the public sector in its new Industrial Policy, 1991, which were as follows:

(i) Dereservation
In the 1956, industrial Policy Resolution, 17 industries were reserved for the public sector. In 1991, only 8 industries were reserved for the public sector, they were restricted to the areas of atomic energy, arms and ammunition, defense, mining, and ~ railways. This meant that the private sector could enter all areas except these eight (now three since 2001) giving competition to public sector.

(ii) Disinvestment of Public Sector Enterprises
Disinvestment involves the sale of the equity shares to the private sector and the public. This was done with an aim to raise funds and encourage wider participation of the general public and workers in the ownership of these enterprises. This was expected to result in improved managerial efficiency and financial discipline.

(iii) Policy Regarding Sick Units
All public sector units were referred to the Board of Industrial and Financial Reconstruction (BIFR) to decide whether a sick unit was to be restructured or closed down. A National Renewal Fund (NRF) was set up by the government to retrain or redeploy labour retrenched from a sick unit and to provide compensation to public sector employees seeking voluntary retirement.

(iv) Memorandum of Understanding
Management of public sector units was granted greater autonomy but held accountable for specified results through signing of Memorandum of Understanding (MoU) between the particular public sector unit and their administrative ministries. Under this system, public sector units were given clear targets and operational autonomy for achieving those targets.

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Question 2.
What was the role of the public sector before 1991?
Answer:
Public sector had a prominent role before 1991 as discussed below:

(i) Development of Infrastructure and Heavy Industries
At the time of independence, basic infrastructure was not developed and hence industrialization was difficult due to lack of adequate transportation and communication facilities, fuel and energy, and basic and heavy industries. The private sector did not take initiative to invest in heavy industries and infrastructure due to heavy capital requirements and long gestation periods involved in these projects. Therefore, government took the lead in these projects through public sector enterprises.

(ii) Regional Balance
After the inception of planning in 1951, the government started paying special attention to those regions which were lagging behind and public sector industries were deliberately set up in those backward regions. Four major steel plants were set up as public sector units in the backward areas to accelerate economic development, provide employment to the workforce and develop ancillary industries.

(iii) Economies of Scale
Average cost of production, is lowered when the scale of production is large. But large scale industries require huge capital outlay and hence the public sector had to step” in to take advantage of economies of scale. Units of electric power, natural gas, petroleum, etc were set up in public sector as these units required a larger base to function economically which was possible only with government resources and mass production.

(iv) Concentration of Economic Power
At the time of independence, there were very few industrial houses which had the required capital to invest in heavy industries and if public sector units were not established, wealth could get concentrated in a few hands giving rise to monopolistic practices. The public sector ensures that the income and benefits that accrue are shared by a large of number of employees and workers.

(v) Self Reliance .
One of the major objectives of Five Year Plans was self-reliance. It was difficult to import heavy machinery required for a strong industrial base due to shortage of foreign exchange. At that time, public sector companies involved in heavy engineering helped in import substitution. Simultaneously, public sector companies like STC and MMTC played an important role in expanding exports of the country.

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Question 3.
Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.
Answer:
ft is difficult though not impossible for the public sector companies to compete with the private sector in terms .of profits and efficiency due to following reasons:

(i) Difference in Objective .
Private sector firms operate with the objective of profit maximization while public sector companies have social welfare as the prime objective and hence they cannot be completely profit oriented.

(ii) Difference in Ownership
The government is the sole or major shareholder in public sector companies. The management and administration of these companies therefore rests in the hands of the government which may not make economically sound policies due to political considerations.

(iii) Difference in Management
Public sector companies are managed by government officials who may not be professionally trained while private sector companies are run and managed by professional managers. This leads to higher efficiency in private sector.

(iv) Difference in Area of Operation
Private sector operates in all areas with adequate return on investment while public sector operates mainly in basic and public utility sectors where returns are not very high.

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Question 4.
Why are global enterprises considered superior to other business organizations?
Answer:
Global enterprises are large industrial organizations which extend their industrial’and marketing operations through a network of their branches or subsidiaries in several countries. These enterprises are considered superior to other private sector companies and public sector enterprises because of certain features which are as follows:

(i) Availability of Funds
These enterprises can survive in crises and register higher growth as they possess huge financial resources as they have the ability to raise funds from different sources such as equity shares, debentures or bonds. They are also in a position to borrow from financial institutions and international banks as they have high credibility.

(ii) Diversification of Risk
Global enterprises usually operate in different countries and enter into joint ventures with domestic firms of the host country. Thus, losses in one country may be compensated by profits in another country. Risk is also shared by the domestic partner in case of joint venture.

(iii) Advanced Technology
Global enterprises conform to international standards and quality specifications as they possess superior technologies and methods of production.

(iv) Research and Development (R&D)
High quality research involves huge expenditure which only global enterprises can afford. Therefore, these enterprises have highly sophisticated research and development departments which regularly come up with product as well as process innovations making these firms globally competitive.

(v) Marketing Strategies
Global companies use aggressive marketing strategies in order to increase their sales. Their market information systems are reliable and up-to-date leading to effective advertising and sales promotion. They manage their brands effectively as they have global brand equity.

(vi) Wider Market Access
The operations and marketing of global companies extend to many countries in which they operate through a network of subsidiaries, branches and affiliates. Due to this they enjoy a far wider market access than domestic firms.

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Question 5.
What are the benefits of entering into joint ventures?
Answer:
When two businesses agree to join together for a common purpose and mutual benefit,
it gives rise to a joint venture. The major benefits of joint ventures are as follows:

(i) Increased Resources and Capacity
When two firms come together, it enables the joint venture company to grow and expand more quickly and efficiently as the new business pools in financial and human resources. It is able to face market challenges and capitalize new opportunities more effectively.

(ii) Access to New Markets and Distribution Networks
When foreign companies form joint venture with companies in a host country, they gain access to the market of host country. They can also take advantage of the established distribution channels i.e., the wholesale and retail outlets in different local markets which may be very expensive for them otherwise.

(iii) Access to Technology .
Most businesses enter into joint ventures to get access to an advanced technology which is not possible or economically feasible to be developed on their own. Technology adds to efficiency and effectiveness, thus leading to reduction in costs and superior quality products. .

(iv) Innovation
Products become outdated after sometime and demand for them starts falling. Consumers have become more demanding in terms of new and innovative products. Joint ventures enable companies to come up with innovative products because of new ideas and technology acquired from the partner in the joint venture.

(v) Low Cost of Production
When international corporations invest in developing countries through joint ventures, they are able to benefit from low cost of raw materials and labour. The international partner is thus able to produce the products of required quality and specifications at a much lower cost than what is prevailing in the home country.

(vi) Established Brand Name
When two businesses enter into a joint venture one of the parties’ benefits from the other’s goodwill already established in the market. In such cases, there is a ready market waiting for the product to be launched which saves expenditure on marketing activities otherwise required to launch a new product.

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1st PUC Business Studies Private, Public and Global Enterprises Additional Questions And Answers

1st PUC Business Studies Private, Public and Global Enterprises Multiple Choice Questions

Question 1.
Consider the following statements and identify the right ones.
i. The Industrial Policy of 1948 was the first industrial policy statement by the Government
ii. It gave leading role to the private sector
a. i only
b. ii only
c. both
d. none
Answer:
a. i only

Question 2.
Consider the following statements and identify the right ones.
i. As per the 1948 policy, six industries were under the mixed sector
ii. New units could be set up by the private sector
a. i only
b. ii only
c. both
d. none
Answer:
a. i only

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Question 3.
Which of the following was not an objective of the 1956 industrial policy?
a. Development of cooperative sector
b. Expansion of public sector
c. Develop heavy and machine making industries
d. None of the above
Answer:
d. None of the above

Question 4.
Consider the following statements and identify the right ones.
i. The 1980 industrial policy emphasized “economic federalism”
ii. Liberal license policies were advocated for agro-based industries
a. i only
b. ii only
c. both
d. none
Answer:
c. both

Question 5.
Consider the following statements and identify the right ones.
i. The 1991 industrial reforms exempted all industries from compulsory licensing
ii. There are six industries under compulsory licensing today
a. i only
b. ii only
c. both
d. none
Answer:
b. ii only

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Question 6.
Which of the following industries are to be given compulsory licensing?
a. Alcohol
b. Tobacco
c. Drugs and pharmaceuticals
d. All the above
Answer:
d. All the above

Question 7.
Which of the following industries was de-reserved in 1993?
a. Atomic energy
b. Atopic minerals
c. Mining of copper and zinc
d. Railways
Answer:
c. Mining of copper and zinc

Question 8.
Consider the following statements and identify the right ones.
i. The Board for Reconstruction of Public Sector Enterprises is an advisory body for strengthening public sector units
ii. It comprises of a chairman, 3 official and 3 non official members and 3 permanent invitees.
a. i only
b. ii only
c. both
d. none
Answer:
c. both

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Question 9.
Which of the following is not a Maha-Ratna industry?
a. GAIL
b. Coal India Limited
c. SAIL
d. Airports Authority of India
Answer:
d. Airports Authority of India

Question 10.
Which of the following is a nav Ratna category unit?
a. HAL
b. Oil India Limited
c. MTNL
d. All the above
Answer:
d. All the above

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1st PUC Business Studies Private, Public and Global Enterprises Short Answer Questions

Question 1.
Define private sector enterprise.
Answer:
Private sector enterprises refer to enterprises owned and managed by private entrepreneurs.

Question 2.
Define public sector enterprise.
Answer:
According to A.H Hanse, “Public enterprises mean state ownership and operation of industrial, agricultural, financial and commercial undertakings”.

Question 3.
Define a multinational company.
Answer:
In the works of Neil H. Jocoby, “A multinational corporation owns and manages business in two or more countries”.

Question 4.
Define joint venture.
Answer:
When two or more individuals or firms join together, establish a new enterprise, contribute the required equity capital and participate in’ its business operations, the venture, business or enterprise is called a joint venture.

Question 5.
Are public sector enterprises public companies?
Answer:
Yes.

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Question 6.
Define a Government Company.
Answer:
A Government company is a company which is registered under the Companies Act and in which not less than 51 % of the paid up capital is held by the Government.

Question 7.
tfefine a public corporation.
Answer:
A statutory or public corporation is a body corporate created by special Act of the parliament to carry on a particular business.

Question 8.
Define a departmental organisation.
Answer:
Departmental undertakings are state enterprises managed by government departments

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Question 9.
Name at least two Government companies.
Answer:
The two Government companies are:

  1. Bharat Heavy Electricals Ltd.
  2. Hindustan Machine Tools Ltd.

Question 10.
Define the term ‘Public Enterprise’.
Answer:
A public enterprise is owned and managed by the Government.

Question 11.
What is private enterprise?
Answer:
A private enterprise is owned and managed by private individual or individuals.

Question 12.
What is departmental undertaking?
Answer:
Departmental undertakings are state enterprises managed by government departments

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Question 13.
What is statutory corporation?
Answer:
A statutory or public corporation is a body corporate created by special Act of the parliament to carry on a particular business.

Question 14.
What is Government Company?
Answer:
A Government company is a company which is registered under the Companies Act and in which not less than 51% of the paid up capital is held by the Government.

Question 15.
Define the term ‘global enterprises’.
Answer:
In the works of Neil H. Jocoby, “A multinational corporation owns and manages business in two or more countries”.

Question 16.
Give three features of global enterprises.
Answer:
The three features of global enterprises are:

  1. It operates in a certain minimum number of countries, say, at least in six countries.
  2. It produces rather than just distributes goods at home and abroad.
  3. It occupies a dominant position in the world market due to its great size.

Question 17.
Give nay three merits of a departmental undertaking.
Answer:
The three merits of a departmental undertaking are:

  1. The government enjoys full control over the departmental undertaking.
  2. The risk of misuse of public funds is comparatively less in the case of a departmental undertaking, as it is subject to budgetary, accounting and audit controls.
  3. It has greater accountability to the parliament.

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Question 18.
Give any three demerits of a public corporation.
Answer:
The three demerits of A public corporation are:

  1. Though it has autonomy in administrative matters, in practice, it is subject to ’ interference by the ministers, political leaders and government officials; As a result, the smooth working of the corporation is disturbed.
  2. Its formation takes a long time, as it requires the passing of a special act in the parliament.
  3. The board of directors of the corporation consists of persons with different interest. This disturbs the working of the corporation.

1st PUC Business Studies Private, Public and Global Enterprises Long Answer Questions

Question 1.
Explain the meaning and features of private enterprises.
Answer:
Private sector enterprises refer to enterprises owned and managed by private entrepreneurs.

Features of private enterprises:

  1. Ownership and Management: Private sector enterprises are owned and managed by private entrepreneurs.
  2. Profit Motive: The main objective of private sector enterprises is to earn profit instead of rendering services to the society.
  3. Independent Management: These enterprises are managed by the owners themselves or through their elected representatives. There is no interference by the Government in internal management.

Question 2.
Explain the meaning and features of public enterprises.
Answer:
According to A.H Hanse, “Public enterprises mean state ownership and operation of industrial, agricultural, financial and commercial undertakings”.
Features of public enterprises:

  1. A public enterprise is organized for the benefit of the public at large.
  2. A public enterprise is usually large in size.
  3. A public enterprise is not does not enjoy flexibility of operations.

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Question 3.
Explain the features of departmental undertakings. What is their suitability?
Answer:
The features of departmental undertakings are:

  1. A departmental undertaking is the oldest form of state enterprise.
  2. It is established by a ministry.
  3. It does not have a separate legal entity.
  4. It is not run on commercial lines.
  5. It is answerable to the parliament for its performance.

Suitability: The departmental form of organisation is not suitable for those undertakings which are required to be run on business lines. It is suitable only for those industries where strict control and secrecy are required, e.g., defence industries.

Question 4.
What is statutory corporation? Explain its features.
Answer:
A statutory or public corporation is a body corporate created by special Act of the parliament to carry on a particular business.
The features of statutory corporation are:

  1. It is a modern form of state enterprise.
  2. It is free from budgetary, accounting and audit controls applicable to a departmental organisation.
  3. It is responsible to the parliament for its performance.
  4. Service, and not profit, is its main motive.
  5. It is a body corporate. It has a separate legal entity.

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Question 5.
What is Government Company? Explain its features.
Answer:
A Government company is a company which is registered under the Companies Act and in which not less than 51% of the paid up capital is held by the Government.
The features of Government Company are:

  1. It is run purely on commercial principles.
  2. It is free from budgetary, accounting and audit controls.
  3. Its accountability to the parliament relatively less.
  4. It can borrow funds from the public.
  5. It provides for mixed ownership.

Question 6.
Discuss the merits and demerits of departmental undertakings.
Answer:
The merits of departmental undertaking are:

  1. The government enjoys full control over the departmental undertaking.
  2. The risk of misuse of public funds is comparatively less in the case of a departmental undertaking, as it is subject to budgetary, accounting and audit controls.
  3. It has greater accountability to the parliament.

The demerits of departmental undertaking are:

  1. A departmental undertaking is subject to interference by the ministers, members of political parties and chief Government officials. Therefore, the smooth working of a departmental undertaking is disturbed.
  2. Business losses are not taken seriously by a departmental organisation.
  3. A department undertaking suffers from the absence of continuity of policies because of frequent change of government officials and ministers and change of government.

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Question 7.
Discuss the merits and demerits of statutory corporations.
Answer:
The merits of statutory corporations are:

  1. It has accountability to the parliament.
  2. As a public corporation has independence in administrative matters, it can take quick decisions and prompt action independently.
  3. A public corporation has administrative autonomy. So, it can change its policies and practices according to the circumstances, Thus, it enjoys flexibility of operations.

The demerits of public corporation are:

  1. Though it has autonomy in administrative matters, in practice, it is subject to interference by the ministers, political leaders and government officials; as a result, the smooth working of the corporation is disturbed.
  2. Its formation takes a long time, as it requires the passing of a special act in the parliament.
  3. The board of directors of the corporation consists of persons with different
    interest. This disturbs the working of the corporation.

Question 8.
State the merits and demerits of Government companies.
Answer:
The merits of Government companies are:

  1. A Government Company can be formed very easily, as no special Act of parliament is needed for its formation.
  2. Unlike the officers who manage a departmental undertaking, the directors of a Government company are free to take decisions. Therefore, they can take quick decisions and prompt action according to the circumstances
  3. In a Government company, there is room for joint ownership by the government and the members of the public.

The demerits of Government companies are:

  1. The directors of a Government company are merely paid officials. They do not get any share in the profits of the company. Therefore, they may not take active interest in the management of the company.
  2. The directors of a Government company are appointed by the Government. So, they spend more time in pleasing the ministers, top Government officials and political leaders than in managing the business of the company.
  3. In practice, the directors of a government company are not answerable for their action either to the parliament or to the general public. Therefore, they may be tempted to do certain things which may go against public interest.

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Question 9.
Discuss the merits and demerits of global enterprises.
Answer:
The merits of global enterprises are:

  1. They help to equalize the cost of factors of production around the world.
  2. Through capital investment, multinational companies help to increase the investment level in host countries.
  3. Multinational corporations help in the transfer of technology, especially to the developing countries.

The demerits of global enterprises are:

  1. The technology of multinational corporations is designed for profit maximization, and not for the developmental needs of host countries.
  2. Multinational corporations may destroy competition and acquire monopoly powers in host countries.
  3. Multinational corporations have been accused of not respecting human rights.

Question 10.
Discuss the merits and demerits of joint venture.
Answer:
The merits of joint venture are:

  1. Joint venture provides access to advanced technology, i.e., advance technique of production. Advanced technology contributes to the efficiency of the joint venture, enhancement of the quality of products and cost reduction.
  2. In a joint venture, the financial resources and physical facilities and capabilities of two or more firms are combined for a specific business. As a result, the joint business or joint venture can grow more, quickly and more efficiently.
  3. Because of the pooling of resources and capabilities, an joint venture is able to face challenges and take advantage of new opportunities.

The demerits of joint venture are:

  1. There are also legal restrictions on foreign investment. For instance, the foreign Exchange Regulation Act has laid down the limit of permissible foreign shareholders in Indian companies.
  2. Joint ventures between unequal partners often amount to quasi-mergers and attract antimonopoly regulations.
  3. Lack of proper co-ordination among the parties to the joint venture may adversely affect the efficient functioning of the joint venture.

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Question 11.
Distinguish between private enterprises and public enterprises.
Answer:
There are many differences between a private enterprise and s state enterprise. The main differences are:

Private Enterprises State Enterprises or Public Enterprises
1. A private enterprise enjoys more flexibility of operations. 1. A state enterprise does not enjoy flexibility of operations
2, A private enterprise is considered to be more efficient. 2. A state enterprise is not as efficient as a private enterprise in not as efficient as a private enterprise.
3. A private enterprise is free from political interference. 3. A state enterprise may not be completely free from political interference.
4. Private enterprises often result in exploitation of laborers. 4. State enterprises give a fair deal to laborers.
5. A private enterprise is owned and managed by private individual or individuals. 5. A state enterprise is owned and managed by the Government.
6. A private enterprise is organized for the benefit of a few private individuals. 6. A state enterprise is organized for the benefit or the public at large.
7. A private enterprise may be small or large in size. 7. A state enterprise is usually large in size.
8. Profit is the main motto of a private enterprise. 8. Service is the main motto of a state enterprise.
9. A private enterprise may not come forward to undertake risky ventures. 9. A state enterprise often undertakes risky ventures avoided by the private enterprises.
10. Private enterprises lead to concentration of wealth and income in the hands of a few individuals. 10. State enterprises lead to distribution of wealth and income among the entire public.

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Question 12.
Distinguish between departmental undertakings and statutory corporations.
Answer:
The main differences between a departmental undertaking and a public corporation are:

  1. As a departmental undertaking does not have a separate legal entity, it cannot be used. On the other hand, statutory corporation has a separate legal entity, it can be sued.
  2. The funds of a departmental undertaking consist of budgetary allocation made by the Government. But the funds of a statutory corporation consist of share capital wholly contributed by the government and funds borrowed by the corporation from the government or from the public.
  3. A departmental undertaking is subject to more government control and regulation than a statutory corporation.
  4. A departmental undertaking does not enjoy flexibility of operations, whereas a statutory corporation has considerable flexibility of operations.
  5. A departmental undertaking cannot borrow funds from the public. But a statutory corporation can borrow funds from the public.
  6. A departmental oranisation is an old type of state enterprise, whereas a statutory corporation is a modern type of state enterprise.
  7. A departmental organization is not created by any act, whereas a statutory corporation is created by a special act of the parliament.
  8. A departmental undertaking is established by a ministry. But a public corporation is established by the parliament or legislature.
  9. A departmental undertaking does not have a separate legal entity. On the other hand, a statutory corporation has a separate legal entity.
  10. A departmental undertaking is subject to more government control and regulation than statutory corporations.

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Question 13.
Distinguish between departmental undertakings and Government Companies.
Answer:
The main differences between a departmental undertaking and a Government company are:

  1. A departmental undertaking does not enjoy autonomy, whereas a Government company has some autonomy.
  2. A departmental organisation is liable to political interference, whereas a government company is comparatively free for political interference.
  3. A departmental organisation does not enjoy flexibility. But a Government company has enough flexibility.
  4. A departmental undertaking has more public accountability than a government company.
  5. A departmental undertaking is not run on commercial principles, whereas a Government company is run purely on commercial principles.
  6. A departmental undertaking is an old form of state enterprise, whereas a Government company is a modern form of state enterprise.
  7. A departmental undertaking is not brought into existence under any act, whereas a Government company is brought into existence under the companies Act.
  8. A departmental undertaking does not provide for mixed ownership, whereas a Government company provides for mixed ownership.
  9. A departmental undertaking does not have separate legal entity. But a Government company has separate legal entity.

KSEEB Solutions

Question 14.
Distinguish between departmental organisations, statutory corporations and Government companies.
Answer:
The main differences between departmental organisations, public corporations and
Government companies are as follows:

  1. Departmental organisations are the oldest form of state enterprises, whereas public corporations and Government companies are the modem forms of state enterprises.
  2. A departmental organization is not governed under any act. A public corporation governed under a special act. A Government company is governed under the Companies Act.
  3. A departmental organization does not have a separate legal entity. A public corporation has a separate legal entity.
  4. A departmental organization cannot borrow funds from the public. On the other hand, a public corporation and a Government company can borrow funds from the public.
  5. A departmental organization is established by ministry. A public corporation established by ministry. A Government company is established by the Government or by the government and private investors.
  6. A departmental organisation is liable to more political interference than a public corporation and a government company.
  7. A departmental organisation is subject to more Government control in respect of accounting, audit, etc. than a public corporation and a government company.
  8. A departmental organisation does not enjoy flexibility of operations. A public corporation has considerable flexibility. A government company has enough flexibility.
  9. Departmental organisations and public corporations have more public accountability than the Government companies.
  10. Departmental organisations are not run on commercial principles. Public corporations are run more with service motive than with profit motive. Government Companies is run purely on commercial principles.

KSEEB Solutions

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