Class 11 Business Studies Chapter 3 Private, Public and Global Enterprises Question answers to each chapter are provided in the list so that you can easily browse through different chapters HS 1st Year Business Studies Notes, AHSEC Class 11 Business Studies Chapter 3 Private, Public and Global Enterprises, AHSEC Class 11 Business Studies Question Answer In English Notes and select needs one.
Class 11 Business Studies Chapter 3 Private, Public and Global Enterprises
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Private, Public and Global Enterprises
Chapter: 3
VERY SHORT TYPE QUESTIONS ANSWERS (1 MARK EACH)
1. A government company is every 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.
Ans: (b) 51 percent.
2. Centralised control in MNC’s implies control exercised by.
(a) Branches.
(b) Subsidiaries.
(c) Headquarters.
(d) Parliament.
Ans: (c) Headquarters.
3. Reconstruction of sick public sector units is taken up by.
(a) MOFA.
(b) MOU.
(c) BIFR.
(d) NKF.
Ans: (c) BIFR.
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.
Ans: (a) Sale of equity shares to private sector / Public.
Short Answer Questions
1. Explain the concept of public sector and private sector.
Ans: The private sector consists of business owned by Individuals or a group of individuals.
The public sector consists of various organisations owned and managed by the government. These organisations may either be partly or wholly owned by the Central or State Government. They may also be a part of the ministry or come into existence by a special Act of the Parliament.
2. State the various types of organisations in the private sector.
Ans: These undertakings may have any one of the following type of organisations:
(i) Sale proprietorship.
(ii) Partnership.
(iii) Joint Hindu Family business.
(iv) Joint stock company.
3. What are the different kinds of organisations that come under the public sector?
Ans: (i) Departmental organisation.
(ii) Public Corporations.
(iii) Government Companies.
4. List the name of some enterprises under the public sector and classify them.
Ans: (i) Assam State Electricity Board – Board
(ii) Assam State Transport Corporation – statutory Corporation
(ii) Assam Industrial Development Corporation Ltd.- Govt company
(iv) Nagaon Co-operative Sugar Mill-co-operative firm.
5. Why is the government company form of organisation preferred to other types in the public sector?
Ans: Because of the following advantages:
(i) Flexibility in management
(ii) Run on commercial lines
(iii) Healthy competition
(iv) Financial autonomy.
(v) Helpful in developing neglected sectors.
(vi) Providing industrial environment.
6. How does the government maintain a regional balance in the country?
Ans: The government of India has been laying emphasis on the balanced regional development of the country various industrial policy statements and five year plans emphasised the development of all regions in a planned way. Balanced regional development implies uniform distribution of planned investment among different regions of the country. The investments should be so planned that regional growth rates should be equal. To develop underdeveloped areas, the rate of growth should be more at those places so that disparities are removed. The balanced economic growth of a country is possible only when all the areas are developed in a planned way. The entrepreneurs can play an important role in bringing about the balanced development. The Government can play an important role in overcoming this problem. The govt. can play the role of entrepreneur by setting up public sector units in underdeveloped regions. It can also play the role of a promoter by extending various incentives to those who set up units at less developed regions.
Long Answer Questions
1. Describe the Industrial Policy 1991, towards the public sector.
Ans: The 1991, Industrial Policy adopted a new approach to public enterprises. The priority areas for growth of public enterprises in the future would be the following.
(i) Essential infrastructure goods and services.
(ii) Exploration and exploitation of oil and mineral resources.
(iii) Technology development and building of manufacturing capabilities, in areas, which are crucial in the long term development of the economy and where private sector investment is inadequate.
(iv) Manufacture of products where strategic considerations predominate such as defence equipment.
Government would strengthen those public enterprises which fall in the reserved areas of operation or are in high priority areas or are generating good or reasonable profits. Such enterprises will be provided a much greater degree of management autonomy through the system of memoranda of Competition will also be induced in these areas by inviting private sector participation. In the case of selected enterprises, part of govt holdings into equity share capital of these enterprises will be disinvested in order to provide further market discipline to the performance of public enterprises.
There are a large number of chronically sick public enterprises incurring heavy losses, operating in a competitive market and serving little or no public purpose.
The following measures are being adopted:
(i) Portfolio of public sector investments will be reviewed with a view to focus the public sector on strategic, high tech and essential infrastructure. Whereas some reservation for the public sector is being retained. Some areas would be opened up to the private sector selectively. Similarly, the public sector would also be allowed entry in areas not reserved for it.
(ii) Public enterprises which are chronically sick and which are unlikely to be turned around would, be referred to the Board for Industrial and financial Reconstruction (BIFR) for formulation of revival – rehabilitation schemes. A social security mechanism is to be created to protect the interests of workers likely to be affected by such Government would strengthen those public enterprises which fall in the reserved areas of operation or are in high priority areas or are generating good or reasonable profits. Such enterprises will be provided a much greater degree of management autonomy through the system of memoranda of undertaking. Competition will also be induced in these areas by inviting private sector participation. In the case of selected enterprises, part of govt holdings in the equity share capital of these enterprises will be disinvested in order to provide further market discipline to the performance of public enterprises.
There are a large number of chronically sick public enterprises incurring heavy losses, operating in a competitive market and serving little or no public purpose..
The following measures are being adopted
(iii) Portfolio of public sector investments will be reviewed with a view to focus the public sector on strategic, high tech and essential infrastructure. Whereas some reservation for the public sector is being retained. Some areas would be opened up to the private sector selectively. Similarly, the public sector would also be allowed entry is areas not reserved for it.
(iv) Public enterprises which are chronically sick and which are unlikely to be turned around would be referred to the Board for Industrial and Financial Reconstruction (BIFR) for formulation of revival/ rehabilitation schemes. A social security mechanism is to be created to protect the interests of workers likely to be affected by such rehabilitation packages.
(v) In order to raise resources and encourage wider public participation, a part of the government’s share holding in the public sector would be offered to mutual funds, financial institutions, the general public and workers.
(vi) Boards of public sector companies would be made more professional and given greater powers.
(vii) There would be a greater thrust on performance improvement and managements of understanding (MOLLS) and would be held accountable.
2. What was the role of the public sector before 1991?
Ans: Before 1991, the role of public sector are follows:
(i) Helping all round industrialisation.
(ii) Establishing enterprises.
(iii) To provide necessities.
(iv) For balanced economic growth.
(v) For avoiding concentration of economic power.
(vi) For establishing socialistic pattern of society.
(vii) To run monopoly sectors.
(viii) Exploitation of natural resources.
(ix) Helping in implementing Government plans:
(x) To increase Government resources.
(xi) To provide healthy competition to private sector.
3. Can the public sector companies compute with the private sector in terms of profits and efficiency? Give reasons for you answer.
Ans: The public sector companies can not compete with private sector in terms of profits and efficiency because of the following reasons as drawbacks of public sector companies –
(i) Delay in completion: Public enterprises take long period for completion. The delay may be due to non-release of funds in time, too much time taken in completing etc. This delay escalates cost estimates and difficulties crop up in completing these units. The benefits expected from such units are also delayed and it upsets various calculations on demand and supply side.
(ii) Faulty Evaluation: Public enterprises are sometimes set up on political consideration. There are no clear cut objectives to be formed and everything is done in a hurry. The projects are not properly evaluated on sound industrial principles. Faulty evaluation of projects results in their failure and wastage of national resources.
(iii) Heavy Overhead costs: Public enterprises spend heavy amounts on unproductive expenses. Large amounts are first spent on providing housing facilities and other amenities to employees even before the unit starts production. This takes away a large chunk of investments and the project suffers from financial difficulties. Though such investments are useful for the employees but these should come out of profit/supplies from the units.
(iv) Inadequate Returns: The past experience in India shows that public enterprises have failed to earn a fair return on investments. In Spite of many privileges enjoyed by these units many of them are either running into losses or are earning inadequate returns on compared to investments.
(v) Political Interference: There is frequent interference in the working of such units from politicians: The members, of party in power try to influence the policies of public enterprises. These units are not allowed to be run on sound business policies.
(vi) Inefficient Management: The important posts in public enterprises are occupied by those who have no business experience but have political support. Such leaders are not able to inspire and motivate employees in improving their performance.
(vii) Lack of manpower Planning: Public sector units employ persons disproportionate to their needs. The jobs are created to fulfil employment needs of the govt and not as per the needs of the organisation. Over staffing of those units brings inefficiency and lethargy.
(viii) More Labour Problems: Public sector enterprises face more labour problems as compared to private sector units. The main reason is more expectations of employees from govt. run units. The employees expect frequent wage hikes and resort to strikes for achieving their goals. Their job safety in these units makes them militants in pursuing their aims.
4. Why are global enterprises considered superior to other business organisations?
Ans: Global enterprises as Multinational Companies are considered superior to other business organisations because of their following advantages –
(i) MNCs help increase the investment level and thereby the income and employment in host company.
(ii) The transactional corporative have become vehicles for the transfer of technology, especially to the developing countries.
(iii) The MNCs enable the host countries to increase their exports and decrease their import requirements.
(iv) They work to equalise the cost of factors of production around the world.
(v) MNCs provide an efficient means of integrating national economics.
(vi) MNCs also stimulate domestic enterprises because to support their own operations. The MNCs may encourage and assist domestic suppliers.
(vii) MNCs help increase competition and break domestic monopolies.
(viii) They make a commendable contribution to inventions and innovations.
5. What are the benefits of entering into joint ventures?
Ans: Following are the benefits of entering into joint ventures.
(i) Increased resources and capacity: Joining hands with another or teaching up adds to existing resources and capacity enabling the joint venture company to grow and expand more quickly and efficiently.
(ii) Across to new markets and distribution networks: When a business enters into a joint venture with a partner from another country. It opens up a vast growing market.
They can also take advantage of the established distribution channels i.e., the retail, outlets in different local markets. Otherwise establishing their own retail outlets way prove to be very expensive.
(iii) Access to technology: Technology is a major factor for most business to enter into joint ventures Advanced techniques of production leading to superior quality products saves a lot of time, energy and investment as they do not have to develop their own technology. Technology also adds to efficiency and effectiveness, thus leading to reduction in costs.
(iv) Innovation: The markets are increasingly becoming more demanding in terms of new and innovative products Joint ventures allow business to come up with something new and creative for the same market.
(v) Low cost of production: When international corporations invest in India, they benefit immensely due to the lower cost of production. They are able to get quality products for their global requirements.
(vi) Established brand name: When two business enter into a joint venture one of the parties benefits from the other’s goodwill which has already been establishing in the market.
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