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Private - Public and Global Enterprises

Private - Public and Global Enterprises

Action PlanNotesQuestionsMock-Test
Study Action Plan (Sorted by Difficulty)
Industrial Policy 1991
Accuracy: 38%
Total Attempted32
Total Correct12
Total Incorrect20
Difficulty Level:
High
Changing Role of Public Sector
Accuracy: 46%
Total Attempted41
Total Correct19
Total Incorrect22
Difficulty Level:
High
Public and Private Sector
Accuracy: 55%
Total Attempted56
Total Correct31
Total Incorrect25
Difficulty Level:
Medium
Forms of Public Sector Enterprises
Accuracy: 61%
Total Attempted57
Total Correct35
Total Incorrect22
Difficulty Level:
Medium
Joint Ventures
Accuracy: 65%
Total Attempted31
Total Correct20
Total Incorrect11
Difficulty Level:
Medium
Global Enterprises
Accuracy: 88%
Total Attempted42
Total Correct37
Total Incorrect5
Difficulty Level:
Low
Public Private Partnership (PPP)
Accuracy: 100%
Total Attempted8
Total Correct8
Total Incorrect0
Difficulty Level:
Low

Learning Objectives

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Learning Objectives

  • Explain the concept and characteristics of business.
  • Explain the features of different forms of public enterprises, viz., departmental, statutory corporations, and government companies.
  • Critically examine the changing role of the public sector.
  • Explain the features of global enterprises.
  • Appreciate the benefits of joint ventures.

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Revision Notes & Summary

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Chapter 3: Private, Public and Global Enterprises

Learning Objectives

  • Explain the concept and characteristics of business.
  • Explain the features of different forms of public enterprises viz., departmental, statutory corporations, and government companies.
  • Critically examine the changing role of the public sector.
  • Explain the features of global enterprises.
  • Appreciate the benefits of joint ventures.

Summary

  • Private Sector and Public Sector: The Indian economy consists of both privately owned and government-owned business enterprises, classified into private and public sectors.
    • Private Sector: Owned by individuals or groups (e.g., sole proprietorship, partnership, joint Hindu family, cooperative, company).
    • Public Sector: Owned and managed by the government, either partly or wholly.
  • Forms of Organising Public Sector Enterprises:
    1. Departmental Undertaking: Established as departments of the ministry, integral to government functioning.
    2. Statutory Corporation: Created by a Special Act of Parliament, financially independent with defined powers.
    3. Government Company: At least 51% of paid-up capital held by the government.

Key Terms

  • Public sector
  • Public enterprises
  • Statutory corporation
  • Joint ventures
  • Departmental undertaking
  • Government companies
  • Disinvestment
  • Public accountability
  • Globalisation
  • Global enterprises
  • Public Sector Undertakings
  • Public Private Partnership
  • Privatisation

Joint Ventures

  • Meaning: A joint venture is the pooling of resources and expertise by two or more businesses for mutual benefit.
  • Benefits:
    • Increased resources and capacity.
    • Shared ownership and management.
    • Shared responsibilities regarding capital investment.

Changing Role of Public Sector

  • Post-1991 economic policies emphasized liberalization, privatization, and globalization, redefining the public sector's role to actively compete with private sector companies.
  • Development of Infrastructure: Government mobilizes capital and coordinates industrial construction.
  • Regional Balance: Government aims to develop all regions equally and prevent concentration of industries in advanced areas.
  • Economies of Scale: Public sector necessary for large-scale industries requiring huge capital.
  • Check Over Concentration of Economic Power: Public sector acts as a counterbalance to private sector monopolies.
  • Import Substitution: Public sector companies established to reduce reliance on imports.
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Practice Test – MCQs, True/False

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Multiple Choice Questions

A.

The public sector was given a monopoly over all industries.

B.

The public sector was required to compete with private companies.

C.

The public sector was completely privatized.

D.

The public sector focused solely on international trade.
Correct Answer: B

Solution:

Post-1991, the public sector in India was redefined to actively participate and compete in the market with private sector companies.

Chapter Concept:

Changing Role of Public Sector

A.

Only in the technology sector

B.

In sectors like power generation, water and sanitation, and transportation

C.

Exclusively in the healthcare sector

D.

Only in the education sector
Correct Answer: B

Solution:

PPPs have been successfully implemented in various sectors including power generation, water and sanitation, transportation, and more.

Chapter Concept:

Public Private Partnership (PPP)

A.

By focusing solely on domestic markets

B.

Through a network of subsidiaries, branches, and affiliates in host countries

C.

By limiting operations to a single country

D.

By reducing their product lines
Correct Answer: B

Solution:

Global enterprises expand their market territory through a network of subsidiaries, branches, and affiliates in host countries, enabling them to become international brands.

Chapter Concept:

Global Enterprises

A.

The public sector retains full ownership and control.

B.

The private sector is solely responsible for all risks.

C.

Tasks, obligations, and risks are optimally shared between public and private partners.

D.

It involves only local businesses and excludes international partners.
Correct Answer: C

Solution:

The PPP model involves a relationship where tasks, obligations, and risks are shared between public and private partners to optimize project outcomes.

Chapter Concept:

Public Private Partnership (PPP)

A.

To increase government control

B.

To raise resources and encourage wider participation

C.

To eliminate private sector competition

D.

To reduce foreign influence
Correct Answer: B

Solution:

The primary objective of disinvestment was to raise resources and encourage wider participation of the general public and workers in the ownership of these enterprises.

Chapter Concept:

Industrial Policy 1991

A.

Immediate access to established distribution networks.

B.

Complete control over the new market operations.

C.

Guaranteed elimination of all competitors.

D.

Exclusive rights to all market resources.
Correct Answer: A

Solution:

One major advantage of forming a joint venture is gaining immediate access to the partner's established distribution networks, which facilitates market entry.

Chapter Concept:

Joint Ventures

A.

Telecommunications

B.

Rail transport

C.

Steel production

D.

Textiles
Correct Answer: B

Solution:

After the 1991 policy reforms, rail transport was one of the few industries reserved exclusively for the public sector.

Chapter Concept:

Industrial Policy 1991

A.

By restricting local innovation

B.

By introducing outdated technologies

C.

By providing advanced technology and conforming to international standards

D.

By focusing solely on local resources
Correct Answer: C

Solution:

MNCs contribute to technological advancement by providing advanced technology and conforming to international standards, which leads to industrial progress in the host country.

Chapter Concept:

Global Enterprises

A.

Limited capital resources

B.

Local market focus

C.

Centralised control

D.

Minimal product range
Correct Answer: C

Solution:

Global enterprises are characterized by centralized control, where they have their headquarters in their home country and exercise control over all branches and subsidiaries.

Chapter Concept:

Global Enterprises

A.

It is established under a Special Act of Parliament.

B.

It is entirely owned by private individuals.

C.

It is subject to the same accounting procedures as government departments.

D.

It cannot sue or be sued in its own name.
Correct Answer: A

Solution:

Statutory corporations are public enterprises created by a Special Act of Parliament, granting them specific powers and functions.

Chapter Concept:

Public and Private Sector

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Private - Public and Global Enterprises

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True or False

Correct Answer: True

Solution:

In a PPP, the public sector plays a crucial role in ensuring that social obligations are met and that sector reforms and public investments are successfully implemented. This is part of the collaborative framework where the public sector provides capital and assets, while the private sector brings in expertise and innovation.

Chapter Concept :

Public Private Partnership (PPP)

Correct Answer: True

Solution:

Post-1991 economic reforms emphasized liberalization, privatization, and globalization, redefining the public sector's role to actively participate and compete in the market with private sector companies.

Chapter Concept :

Changing Role of Public Sector

Correct Answer: False

Solution:

The public sector in India consists of organizations that may be partly or wholly owned by the central or state government.

Chapter Concept :

Public and Private Sector

Correct Answer: True

Solution:

Public enterprises are owned by the public and are accountable to the public through the Parliament, contributing to the economic development of the country.

Chapter Concept :

Public and Private Sector

Correct Answer: True

Solution:

The 1991 industrial policy was radically different from earlier policies, focusing on disinvestment of public sector enterprises and allowing greater freedom to the private sector.

Chapter Concept :

Industrial Policy 1991

Correct Answer: True

Solution:

The private sector is defined as consisting of businesses owned by individuals or a group of individuals, as described in the text.

Chapter Concept :

Public and Private Sector

Correct Answer: False

Solution:

Statutory corporations are not subject to the same accounting and audit procedures as government departments.

Chapter Concept :

Forms of Public Sector Enterprises

Correct Answer: True

Solution:

Global enterprises maintain centralized control from their headquarters, which are located in their home country. This control is primarily over the broad policy framework, while day-to-day operations are not interfered with.

Chapter Concept :

Global Enterprises

Correct Answer: True

Solution:

Global enterprises, also known as multinational corporations, have distinct features such as significant capital resources, foreign collaboration, advanced technology, product innovation, effective marketing strategies, expansion of market territory, and centralized control.

Chapter Concept :

Global Enterprises

Correct Answer: True

Solution:

Joint ventures may involve businesses from different countries, and they pool resources and expertise to achieve specific goals, sharing both risks and rewards.

Chapter Concept :

Joint Ventures

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