Business Studies XI

Private, Public and Global Enterprises

1. Explain the concept of private sector and public sector?

Private Sector: The private sector comprises of businesses that are owned by one or a group of individuals. The sole purpose of a private sector enterprise is to earn profit. There are many types of organisations under private sector and they are:

1. Sole proprietorship

2. Partnership

3. Joint Hindu Family

4. Cooperative societies

5. Company (LLP, LLC)

Public Sector: The public sector comprises of organisations that are partly or wholly owned by government. The government may have a 51% controlling stake in the organisation. These types of organisations might have come into existence by some special act of the Parliament. By involvement with public sector, the government participates in the economic activities of the country.

2. State the various types of organisations in the private sector.

The sole purpose of a private sector enterprise is to earn profit. There are many types of organisations under private sector and they are:

1. Sole proprietorship

2. Partnership

3. Joint Hindu Family

4. Cooperative societies

5. Company (LLP, LLC)

3. What are the different kinds of organisations that come under the public sector?

The public sector consists of organisations that are either wholly or partially under government control. The following are the various forms of public sector organisations.

1. Public corporations or statutory corporations

2. Departmental undertakings

3. Government company

4. State the meaning of public-private partnership.

It refers to an arrangement where partnership forms between public sector and private sector. In such a partnership the obligations, responsibility, tasks and risks are allocated between public and private sector. The public partner includes government departments, organisations and the private partner may include local business houses or foreign organisations.

Long Questions

1. Can the public sector companies compete with the private sector in terms of profit and efficiency? Give reasons for your answer.

Public sector and private sector operate differently and hence it will be difficult for public sector to match up in profit and efficiency due to the following reasons:

1. Public sector operate for social welfare whereas private sector operate for profit maximisation, hence it will be tough to compete

2. As the ownership rests with the government, many of the decisions will be taken based on political considerations instead of getting more profit.

3. Employees are less efficient in public sectors as there involves many rules and regulations, while it is more performance oriented in private sector.

4. Public sector are slower to embrace new technologies while private sector is a fast mover.

2. Why are global enterprises considered superior to other business organisations?

Global enterprises enjoy an upper hand on all other business organisation due to these reasons:

1. Wide market: As the operations of the global enterprises expand among continents they have access to a large geography and resources.

2. Diversifying risk: By operating at different countries and forging joint ventures with organisations of that country, the multinationals can reduce risk, as loss made in one country can be compensated with profit from other country.

3. Funds: As these enterprises have good financial resources, they raise funds from many sources and borrow funds from banks having an international presence.

4. Research and Development: They have a more organised R& D network which is also well funded that makes developing new products quicker than others.

5. Marketing: Global companies have more aggressive style of marketing that drives sales, and they come up innovating marketing techniques that results in high sale volume.

3. What are the benefits of entering into a joint venture and public private partnership?

Joint venture is a type of business agreement where two organisations associate together for obtaining mutual benefits and profits. The organisations share risks and profits of the business apart from resources and finance. Here are some of the benefits of joint venture:

1. The available resources and the corresponding operating activities of the business are pooled when a joint venture is formed. It helps in growth of the business.

2. This association helps in expansion of business by expanding the geographical reach which helps reach new markets.

3. By forming a joint venture, companies get access to latest technologies with minimum investment.

4. In a joint venture, the technical knowhow is shared between companies which leads to innovation in product

5. The cost of production is reduced as raw materials are available in plenty.

A public private partnership is where all the risks of business are evenly distributed. In such a partnership the investor risk is less. Here are some benefits of PPP:

1. Risk sharing is reduced as it gets shared with the public

2. By sharing tasks and responsibility the project gets finished faster.

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