Class 11 Private, Public and Global Enterprises

Business Studies Class 11 syllabus is meticulously designed to cover the quintessential aspects and contemporary methods for establishing flourishing businesses. There is a specific chapter on Private Public and Global Enterprises which familiarizes students with how corporate organizations work along with business, commerce, and trade concepts, collectively and the dissimilar forms of business organizations. This blog brings you a detailed guide on these varied types of enterprises and their salient features.

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Private, Public and Global Enterprises

Indian economy consists of both government and privately owned business enterprises. In the private sector, the business is owned by a single person or a group of persons. In the public sector, the government will manage owned organizations. These organizations may be partly or entirely owned and managed by the central or the state governments. The government allowed Foreign Direct Investment (FDI) from business houses outside India. Therefore, the public sector, global enterprises, and private sectors exist in the Indian economy.

In this chapter on Private, Public and Global Enterprises, you will get to know about the essential features of the businesses in the public and private sector, classification of enterprises, a form of public sector ventures, departmental undertakings, statutory corporations, government companies, and global enterprises.

Class 11 Formation of a Company

Classification of Enterprises

The below-mentioned figure depicts how enterprises are classified under public and private sector enterprises. The public sector is categorized as departmental undertakings, government companies, and statutory corporations. The private sector is divided into sole proprietorship, joint Hindu family, partnership, cooperative, company (public limited company, and a private limited company) and multinational companies. Detailed explanations will be provided further through the topic.

Social Responsibilities of Business and Business Ethics

Structure of Public Sector Ventures

Business Studies Class 11 Chapter titled Private, Public and Global Entreprises also explains the forms of public sector ventures. The public sector included with different organizations managed by either central or state governments or sometimes both governments. Here the government is involved in the financial activity of all enterprises. The following figure illustrates the form of public sector ventures and classified as departmental undertakings, government companies, and statutory corporations.

Departmental Undertakings

These enterprises are set up by the ministry departments of the government and are believed as an integral part of the ministry. Such enterprises are financed and managed by either the central government or state government. They operate through the government officers, and undertakings are under the control of the central or the state government with the applicable rules. Examples include railways, telegraph/postal departments, and more.

These enterprises have no separate legal entity and financed by yearly budget allocation done by the government. The profits will go to government funds, and accounting/auditing is appropriate to it. The staffing is done by recruiting and appointing as per government rules and accountable to the related ministry.

Forms of Business Organization

Merits

• The revenue received by the enterprise goes straight to the government treasure and therefore acts as a source of income.
• It is appropriate for activities wherever strict control and secrecy is required, as the defence department.

Limitations

• Lack of flexibility that is necessary for the smooth operation of a business.
• The heads of departments are not permitted to take self-sufficient decisions, without the approval from the concerned ministry.

Class 11 Sources of Business Finance

Statutory Corporation

The next topic covered in Private, Public and Global enterprises is the statutory corporation. The public enterprises that come into existence through a unique act of the parliament are known as the statutory corporation. The act describes its functions, powers, objectives, rules and regulations, and its association with the departments of government. These enterprises have a substantial amount of operational versatility of private ventures with government power. Examples of statutory corporation include Life Insurance Corporation, Unit Trust of India.

Merits

• This corporation plays a valuable role in economic development.
• Statutory Corporation has more freedom of framing their procedures and policies as per the act.

Limitations

• Government interference will be there in all important decisions where huge money is involved.
• Employing advisors to the corporation board controls its liberty by entering into contracts and other decisions.

Emerging Modes of Business Class 11 Notes

Government Company

In these types of companies, the government has equal or more than 51% of the capital investment. This company is handled by both the central government and the state government. Here the government will be the main shareholder; these companies’ shares are purchased in the president’s name. As per the chapter on Private, Public and Global Enterprises, the examples of Government Companies in India include the State Trading Corporation of India, Hindustan Insecticides Limited and Hindustan Cables Limited.

Merits

• It has its own legal entity by enjoying freedom in all supervision decisions regarding business care.
• These companies offer supplies and services at reasonable prices to reduce unhealthy business methods.

Limitations

• It avoids constitutional responsibility that a company funded through the government has.
• The administration and management power rests on the government.

Private and Global Enterprises

This chapter of Business Studies Class 11 also describes the process of how private and global enterprises work. Private enterprises are owned and managed by a single person or a group of persons. While studying this chapter on Private, Public and Global Enterprises, you must know that the government does not interfere in any decisions of private enterprises and has no power over it. These enterprises are a type of business unit that is agreed on to make profits. The private limited company can accept private funding through private investment and may be small or large size.

Global Enterprises are large organizations that enlarge their industrial operations via numerous countries. These enterprises function in several areas, making various products with their business strategy and aims to capitalize on profits. These enterprises are in a position to control the world economy because of private investment, modern technology, and goodwill. Examples include Coca Cola, LG, and more.

Business Quiz for Students

Features

• These enterprises have giant capital resources and are able to increase the funds through private funding and from private investment methods.
• They accept foreign collaboration by entering into agreements with the local enterprises. The agreement relates to technology sale, production of goods, and use of their brand names.
• Advanced and superior technologies make these enterprises offer outstanding products and services. The produced products will meet international quality and standards.
• The private limited company has centralized control to monitor all branches and their subsidiaries. 
• They have research and development teams for product innovations. These teams are occupied in developing new products and the advanced design of their products.
• The aggressive marketing strategies result in more sales in less period of time. These enterprises have a good place in the global market.

MCQs

Here are a few practice MCQs for Private Public and Global Enterprises.

• A government company is any company in which the paid up capital held by the government is not less than?

1. 49%
2. 51%
3. 50%
4. 25%

•  PSE’s are organizations owned by:

1. Joint Hindu Family
2.  Government
3.  Foreign Companies
4. Private Entrepreneurs.

• Disinvestment of PSE’s implies:

1. Sale of equity shares to private sector/public sector
2. Closing down operations
3. Investing in new areas
4. Buying shares PSE’s.

• Which is not MNC’s of USA:

1. Coca Cola
2. Pepsi
3. Partnership
4. Joint venture

• Which industry is not reserved for public sector:

1. Sugar industry
2. Nuclear energy
3. Weapons
4. Rail transport.

• Canara Bank is example of which sector:

1. Mixed
2. Public
3. Private
4. None of these

• Which is not private undertaking :

1. Partnership
2. Departmental undertaking
3. Joint stock company
4. Sole trade.

• Samsung is MNC of:

1. Germany
2. Japan
3. South Korea
4. Italy

• Centralized control in MNC’s implies control exercised by :

1. Branches
2. Subsidiaries
3. Headquarters
4. Parliament.

Answers: 2,2,1,4,1,2,2,3,3

Important Questions

Here are a few practice questions for Private, Public, and Global Enterprises.

1. What are the major objectives of public enterprises?
2. Differentiate between Private and Public Sector Enterprises.
3. Mention, in brief, the significant features/characteristics of Global Corporations.
4. Explain in brief: Foreign Collaboration.
5. Explain “Disinvestment of Shares”.
6. What are the advantages and disadvantages of Departmental Undertaking.
7. What are statutory/public corporations?
8. Give the advantages and disadvantages of statutory/public corporations.
9. Define Government Company.
10. What are the suggestions for improvement in public sector operations?

private, public and global enterprises from Sruthy Ajith

Hopefully, you have understood the key concepts of this chapter through these notes on private, public and global enterprises. Unsure about the right career path? Our Leverage Edu counsellors are always here to help you find your dream career as per your interests and aspirations! Sign up for a free career counselling session with us now!