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Public, Private and Global Enterprises

Q. Describe the meaning of Private Sector Enterprise  

Ans.  A private sector enterprise or a private enterprise is one, which is owned, managed and controlled by an individual or group of persons (individuals) jointly.


Q. What is the meaning of multinational companies (MNC)?

Ans.  A multinational company is that company which is incorporated in one country but hasits goods produced, assembled and sold in many countries.


Q. Describe the four features of Private Sector Enterprise

Ans.  Its features are:

(1) It is owned by private individual or groups

(2) It is managed by owners or managers appointed by them.

(3) Its main objective is to earn profits.

(4)Managers are accountable for its financial result to its owners.


Q. Describe the benefits of Joint Ventures.

Ans.  Benefits of Joint Ventures are as follows:

(1) Joint venture makes it possible to undertake a big project requiring huge capital.

(2) The risks involved in the new project are shared by the partners in the joint venture

(3) It allows a company to expand its operations in forcing markets.

(4) The local partner is benefited as the foreign partner contributes foreign capital and foreign technology.

(5) The foreign partner is benefited from local partner’sdistribution/marketingset up and knowledge of economic social and political environment of the host country.

(6) The competitive strength of a smaller firm is increased by entering into a joint venture agreement with multinational corporations.


Q. What is the meaning of Public corporation?  

Ans.  A public corporation, known as Statutory Corporation, is an autonomuscorporate body set up under a special act of the Parliament or of State Assembly.The Life Insurance Corporation of India, Air India, Indian Airlines, Food Corporation of India, Oil and Natural Gas Commission and Central Warehousing Corporation are few of the prominent public corporations in India.


Q. What do you mean by Departmental Undertaking?

Ans.  A departmental undertaking is a public enterprise, which is organized, financed and controlled by the government as a government department. E.g. in India railways, post and telegraph and ordinance factories have been established as government departments


Q. What is the meaning of Joint Venture?

Ans.  Joint Venture is a contract between two or more parties, with each party contributing their equity share, to undertake an economic activity subject to joint control. No single venturer can unilaterally control the activities.

It is a common method for foreign companies to enter Indian markets by creating a joint venture with an Indian company.


Q. Explain the features of Multinational Company.       

Ans.  A multinational company has the following features:

(1) It is of huge size and has control over large assets. It operates in more than one country

(2) It attempts to maximize profits world over by eliminating competition

(3) Its operations are controlled from its headquarters of the company's home country

(4) It carries out production, marketing and research activities in a number of countries.

(5) Policies are consumercentric and production techniques are more efficient


Q. Describe all the forms of organization of Public Enterprises.

Ans.  Public Enterprises are organised under three forms:

(1) Departmental Undertakings such as Posts and Telegraph, Railways, Defence establishment etc.

(2) Statutory or PublicCorporations such as Life Insurance Corporation of India, Food corporation of India etc.

(3) Government Companies such as Hindustan Machines Tools Ltd (HMT), Bharat Heavy Electrical Ltd. (BHEL).


Q. Describe the role of Public Sector in India.

Ans.  Role of Public Sector in India:

(1) Rapid economic development

(2) Provision of infrastructure

(3) Sound industrial base

(4) Development of backward regions.

(5) Generation of surplus

(6) Creation of employment opportunities

(7) Take over of sick industrial units

(8) Serving of strategic national interests

(9) Control of monopoly and restrictive trade practices.


Q. What do you understand by the Government Company?

Ans.  Government Company means any company in which at least 51 per cent of the paid up share capital is held by the Central Government or State Governments or partly by central Government and partly by one or more of the State Governments.


Q. Classify all the forms of business enterprises.

Ans.  Business enterprises or business undertakings may broadly be classified into two categories on the basis of ownership:

(1) Private Sector

(2) Public Sector


Q. List out the limitations of a Government company.

Ans.  Limitations of a Government company:

(1) Autonomy in name only.The company is subject to government control in matters of policy as well as operations.

(2) Lack of initiative on part of the directors and officers as they do not gain or loose anything by the company's performance.

(3) Political considerations - Change in the political system or the rules directly affect the companies.

(4) Evasion of constitutional Responsibilities of the government


Q. What are the advantages of Multinationals?       

Ans.  Advantages of Multinationals:

(1) Foreign Capital Investment: With the setting up of multinational companies foreign capital inflow is automatic. These companies bring in much needed capital for establishment and development of industries, production facilities and the market.

(2) Employment Generation: Multinationals create large scale employment opportunitiesfor local population in host country and set new standards of employment in terms of salaries, facilities and quality.

(3) Healthy competition: Coming up of MNCs increases competition and there by break domestic monopolies and compel domestic employers to improve their standards.

(4) Economic and technological Growth: By employing their high capital, advanced technology and high managerial skills for theits own growth the MNCs automatically generategrowthfor the host country


Q. How will you define features or characteristics of joint sector enterprises?            

Ans.  The main characteristics of joint sector are as follows:

(1) Joint Ownership: The Government, private entrepreneurs and the investing public jointly own a joint sector enterprise

(2) Joint Management: the management and control of a joint sector enterprise lies with the nominees or representatives of the Government, private entrepreneurs and the public

(3) Socio – Economic objectives: Such enterprises are guided by both the profit and social objectives

(4) Joint Accountability: Such enterprises are accountable both to the private entrepreneurs and the government .

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