Today we will discuss private-public and global enterprises. We will provide you with Notes, videos, case studies, CBSE objective questions, and many more.
Firstly, we want to share with you what are all the topics which we are going to cover in this article. Also, you can watch all the chapters videos on my YouTube channel by clicking here.
To sum up, the topics which we will cover today will be in the following ways:-
- Departmental Undertakings
- Public Corporations
- Government company
- Changing the role of the public sector
- Multinational Company
- Public-private partnership
- Joint Venture
- Case Study
So, firstly guys let’s start and cover all the topics in a brief
The business owned controlled and managed by the government called Public Enterprise.
Public Enterprise divided into three parts:-
- Departmental Undertakings
- Public Corporations
- Government companies
We will also discuss some more topics here like:-
- MNC
- Public-private partnership
- Joint Venture
So, now let’s start the first topic that is departmental undertakings
Departmental Undertakings of Private Public And Global Enterprises
“It is one of the departments of government that has no separate legal existence and functions under the control of one ministry or department of government.”
Some examples are Railways, post-telegrams, broadcasting, telephone services, defense, etc.
Separate Legal existence:- In this, if the owner expires then the business will continue to run irrespective of the owner’s death.
No separate legal existence:-Business expires/ends as soon as the owner dies, means business only depends on the owner. It is just the opposite of the Separate legal existence.
Features of Departmental undertakings
1) It has overall control of the government like railways, etc.
2) No separate identity.
3) Financed from the annual budget of the government.
4) Revenue deposited in the treasury.
5) Employees/Staff who work under the Departmental undertakings are called Civil servants. They have to follow certain rules prescribed by the government.
6) Accountability means answerable. The government has to whenever there is a problem.
7) Anyone can file a case against the system if there is any problem.
Merits/Advantages of Departmental Undertakings
1) Easy formation because is part of the government.
2) Accountability means answerable. The government has to whenever there is a problem.
3) Public revenue goes directly to the government so the government plans some suitable facilities for the benefits of the Public.
4) Secrecy is there means all the plans kept secret and the only the government knows them.
Demerits/Disadvantages of Departmental Undertakings
1) Inflexibility or government interference is there because it is the part of the government so the government always asks the public that how there work is going on and what improvement they have to do to make it more facilitated for the public.
2) Lack of motivation is there also, the employees take much more time to do the minimum work i.e., less efficiency is there from the side of the workers.
3) Lack of Financial Autonomy.
4) Red tapism and Bureaucracy. Always delay decision making because of the different opinions of different persons in the staff.
Public Corporations of Private Public and Global Enterprises
Public Co-operation also called Statutory Corporation.
It is a corporation formed by a special act of parliament or by the central os state legislature, and also financed by the government.
Their power, main objective(i.e., public welfare), and limitations prescribed by the government in the special act of parliament.
Some examples of Public Corporations are:- Indian railways, Air India, State Bank of India(SBI), Life Insurance Co-operation of India(LIC), Food Co-operation of India(FCI), Oil & Natural Gas Co-operation, etc.
Features of the Public Corporation
1) Created/Formed by the Act of Parliament.
2) Financed by the government.
3) Powers, objectives & limitations defined in the Act.
4) The main objective is to do Public welfare.
5) Separate legal identity
6) Managed by the Board of Directors
7) Staff members and their payments/salaries decided by the company itself, not the Government
8) Accountability (answerable), Public Co-operations are answerable to the government because the government gives financial funding to it
Merits/Advantages of Public Corporation
1) Administrative autonomy
2) Quick decisions
3) The main objective is Public welfare
4) Efficient staff members to handle the problems easily.
5) Professional management because of the Board of Directors(BOD) highly educated and experienced persons.
Demerits/Disadvantages of Public Corporation
1) Autonomy on paper only
2) Lack of motivation
3) Rigid structure means they have to do the work strictly according to the prescribed Act of the government.
Government Companies of Private Public and Global Enterprises
“Government companies mean where 51% of government share held partially by central or state government.”
The share capital of companies owned by the government of India in the name of the president.
Government companies run according to the provision of Company Act, 1956.
Features of Government Companies
1) Government companies run according to the provision of Company Act, 1956
2) Ownership means that 51% of government shares held partially by central or state governments.
3) Management means staff is well managed and directed by the Board of Directors(BOD).
4) It also has Separate Legal Identity
5) Financial Autonomy is also there.
6) The staff is well managed and educated.
7) Accountability means all the Profit/loss of the company has to be shown in parliament by the company.
Advantages of Government Companies
1) Financial/Administrative Autonomy is there means that all the company profit or surplus goes to the company itself and they can invest according to the company requirements.
2) Flexibility means that the problem can be easily solved by the staff members and the company.
3) The staff well managed and educated.
Disadvantages of Government Companies
1) Autonomy on paper only
2) Political interference because the government is involved here
Changing role of Public Sectors
Restructure and revive potentially viable PSUs (Public sector units).
Close down PSUs that cannot be revived.
Fully protect the interest of workers.
Multinational Companies (MNCs)
Multinational Companies also known as Global Enterprise, Transnational Corporation, International Enterprise. MNC owned and managed the business in two or more than two countries.
Some examples of MNCs are, In shoes like Nike & Bata, Car companies like Ford, Lamborghini, Ferrari, BMW, electronics like Samsung, SONY, etc.
Features of Multinational Companies(MNCs)
1) They have a Giant size. Also, they have branches in many countries across the world. Their Assets, sales, and revenues are very high. Their sales or turnover sometimes becomes more than the GNP(Gross National Product) of the developing country.
2) International Operations mean that they have branches in many countries.
3) Professional Management means that employees are expert, skilled & experienced.
4) Centralized Control means that all the activities of the company managed and controlled by the Headquarters of the company.
5) Oligopolistic Power means that they are so powerful that they sometimes buy big famous or rising companies.
6) Sophisticated Technology means that they use the latest technology and machines.
Joint Venture
When two or more than two firms join together to establish a new firm called Joint Venture.
Example of Joint Venture is Maruti Suzuki (It is a combination of two companies Maruti from India and Suzuki from Japan).
Features of Joint Venture
1) Competition reduced because companies share their resources with each other
2) Risk reduced because risk shared between two or more companies
3) Protection for a small company because after merging they become powerful
4) Advanced Technology because technology shared between two or more companies.
5) Better Competition in the market for other companies
6) Capital becomes large because after merging of two or more companies they share financial resources with each other
Public-Private Partnership
Public-Private Partnership can also be written as PPP or P3.
When the private sector and the public sector join together to work called Public-Private Partnership.
An example of a Public-Private Partnership is Delhi Metro (DMRC).
Features of Public-Private Partnership
1) The contract between the public and private sectors.
2) Provision of Capital subsidy(Financial support by the government). The government provides financial help & helps to control prices.
3) Sharing of Revenue(Income). Government and private share revenue between them.
4) Pertaining to high priority projects and public welfare. They deal with high projects.
5) Problem with PPP(Public-Private Partnership).The main problem is the major part taken by private itself.
So, Guys, we have finally over with this chapter.
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