NCERT Solutions for Class 11

Business Studies

Chapter 3 – Private, Public and Global Enterprises

Multiple Type Questions

1. A government company is any company in which the paid-up capital held by

the government is not less than-

(a) 49 percent

(b) 51 percent

(c) 50 percent

(d) 25 percent

Ans: (b) 51 percent

2. Centralised control in MNC's implies control exercised by

(a) Branches

(b) Subsidies

(c) Headquarters

(d) Parliament

Ans: (c) Headquarters

3. PSE entities owned by them

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(a) The United Hindu Family

(b) Government

(c) Foreign Companies

(d) Private entrepreneurs

Ans: (b) Government

4. Reconstruction of sick government units taken by

(a) MOFA

(b) MoU

(c) BIFI

(d) NRF

Ans: (c) BIFR

5. PSE investment 'means

(a) The sale of equity shares in the private / public sector

(b) Shutdown

(c) Investing in new areas

(d) Purchase of shares of PSE’s

Ans: (a) The sale of confidential financial shares

Question 6: A shared equity business does not put in

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(a) Partnership development

(b) Company

(c) Cooperation

(d) Limited debt consolidation

Ans: (d) Limited debt consolidation

Short Answer Questions

1. Explain the concept of a public sector again private sector?

Ans: A business owned and operated by people or a group of people for the sole
purpose of the profits made are known as private sector organisations. Various types
of independent organisations, co-operation, a united Hindu family, co-operation and
company. The public sector consists of various managed organisations and is owned
by the government. These organisations it may be partial or completely controlled
in the middle or national government. Barat Heavy Electrical Ltd, Oil India Ltd and
Life Insurance Corporation of India are examples in the public sector industry.

2. Mention the different types of organisations in the private sector.

Ans: There are different types of private sector organisations in India:

(1) Sole Proprietorship: Also known as sole trader-ship or entrepreneurship, which

run by one person and there is no legal restrictions between the owner and the
business party.

(2) Partnership: It is defined as an association of two or more persons who agree

to carry on business together and share profits as well as take risks collectively.

(3) Joint Hindu Family: The business is owned and operated by a member of a
Hindu undivided family which is governed by Hindu law.

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(4) Co-operative Societies: Co-operative societies are a voluntary association of
individuals, who join together for the purpose of welfare of the members.

(5) Joint Stock Company: An organisations which is hold by its shareholders. It is

an artificial person created by the laws and having a legal entity.

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

Ans: Following are the different types of social sector organisations:

(1) Creating a Department: These businesses are set up as service departments and
are considered part or parcel of the service. This commitment can be under any
institution or state government. Example: Post and telegraph the train and the door.

(2) Legal Entity: These are public enterprises introduced by a special Act of
Parliament, which describes its powers and functions. Money is an independent
corporate entity created by the legislature as well as having clear control over a
specific location or type of business activity. .

(3) State-owned companies: Companies of India. In 1956, state-owned company

means a company where at least 51% of the cathedral charge exists, which is owned
or partly controlled by the Central Government or any other State Government. Or
more national governments. It is established for commercial purposes only.

4. List some occupations that come under the social sector and divide them.

Ans:

(1) Indian Trains - Departmental Commitment.

(2) Air India - Legal company.

(3) ONGC (Oil and Natural Gas Association) - State owned company.

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(4) India Post and Telegraph - Commitment of the Department.

(5) LIC (Life Insurance Company) - Official organisation.

5. Why does a state-owned company choose other forms of organisation in the

public sector?

Ans: State-owned company is preferred over other forms of organisation in the

public sector due to:

(1) Alternative Business: A state-owned company may sue and may be sued by third
parties. It can hold property in its own name as well as enter into agreements.

(2) A state-owned company enjoys financial re-administrative independence.

(3) Dealing with undue interference of the department involved in its operation.

(4) Along with providing goods and services at low cost, it also ensures safe
marketing activities.

(5) Registered or incorporated under the Companies Act.

6. How does the government keep it regional balance in the country?

Ans: Government maintains the regional balance in the world by focusing on those
sectors which are lagging behind the public sector industry which were deliberately
planned. It helps in creation of employment opportunities and facilitates the growth
and development of the economy of rural and rural areas. Also, the government
prohibits the arrogance of private sector units in developed areas.

7. State the definition of public secrecy cooperation.

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Ans: Public-private partnerships the participation of private companies in the
Government, projects aimed at to benefit the public with some form of management
technology as well financial contribution. The following are the main ones

PPP features:

 PPPs are related to a leading, organized Government projects.

 The main purpose of the PPP is to integrate skills, technology and experience
both public and private sectors of service delivery.
 PPPs distinguish risks between the public and private sectors.
 Government, always responds with quality and the cost of services.
 PPPs are implemented in Government, community-based projects profit.
 PPP projects lead to faster implementation as well shorten the life cycle.

Long Answers Questions

1. Describe the industrial policy in 1991, in the public domain?

Ans: Industrial Policy of 1991, For the People

The categories are:

(1) Reduction in the number of industries reserved for the public sector: 1956
Industrial Policy Decision, 17 for the public sector industries were reserved. This in
the industrial policy of 1991, this number was reduced to 8. In 2001, policy reviews
were conducted and only 3 Industries are now reserved for the public sector. Now,
only nuclear power, weapons and rail transport are in reserve public area.

(2) Investment in shares in specified public sector Entities (PSEs): Investments

include the sale of Financial shares in the private and public sector. NS Its purpose
was to mobilised resources and promote more public and employee participation
ownership of these businesses. The government had decided to withdraw from the
industrial sector again, reducing its balance in all the works. It was expected that this
would ensure better financial operations as well as better administrative
performance.

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(3) Policy on sick units: Sick PSUs should Treated like private companies. Sick The
PSU was referred to BIFR to determine whether to renew or discontinue the PSU.
There was a lot of anger among the employees of the company who were close to it.
But the government issued a decree renewal and compensation policies those
employees.

(4) MoU: New MoUs were signed between the Management and the stakeholders
services. These MoUs have given great freedom management for performance and
clear cut objectives can be improved.

2. Discuss the role of the public sector before the year 1991?

Ans: Before 1991 the role of the public sector was:

(1) Development of Infrastructure: Infrastructure like such as communication,

transportation, energy supply and banking. There are basic pre-requisites for
industrial development. Private sector showed no initiative to invest heavy industry
or develop it in any way they did do not have the trained personnel or finances to
urgently setting up heavy industries that required economy. Therefore, it was only
the public sector that could mobilise the required large amount of investment.
Therefore, the region was assigned the role of infrastructure development.

(2) Maintaining Regional Balance: During the 1960s and in the 1970s, India faced
sharp regional disparities development. Some areas were comparatively much better
developed than other areas regional inequalities hindered the growth and
development of the nation. Public Sector Enterprises (PSEs) were set up in backward
and rural areas to bring about regional balance. These PSUs did not only provide the
employment but it also encouraged the development of banking, transport and
ancillary industries in these areas.

(3) Economy: Large enterprises, such as natural gas and petrol, enjoy economies of
scale (the benefits largely outweigh the cost). In the years immediately after
independence, I private companies were not big enough to run these things big
industries because they needed big money funds. Running these industries on a small

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scale was not an option as it would lead to losses. Therefore, the government sector
had to resume the use of these industries.

(4) Import and Export: Achieving Independence satisfaction was one of the most
important goals of India economic plan. Its purpose was to curb imports at the same
time to increase exports. So, PSEs were the ones that were also developed to make
heavy equipment household engineering materials, which can clog import. Also,
with a view to expanding exports, Public Sector Undertakings such as Metals and
Minerals Sales Indian Corporation (MMTC) and State Business Corporation (STC)
was established.

(5) Focus on Economic Powers: The public sector acts as a control over the private
sector. In the private sector, only a few industrial houses existed committed to
investing in heavy duty industries as this resource is concentrated in a few hands.
This shows income inequality. Therefore, the public sector is able to set up large
industries that require investment to save and thus provide income and profits. They
are distributed by a large number of employees as well as employees.

3. Can public sector companies compete and private sector can compete in
terms of profit as well as efficiency? Give reasons for your answer.

Ans: It is quite difficult for public sector companies compete with the private sector
for profit efficiency because:

(1) Difference in purpose: the main objective off or a private company to make
profit whereas in public sector companies social welfare is also as the main
objective, so they could not get full benefit.

(2) Difference in ownership: In state-owned enterprises, the government is only

one or a major shareholder. The management and administration of these companies
is therefore in the hands of the government so that it may not make sound economic
policies for political reasons.

(3) Management Difference: Public Sector Companies Organised by government

officials who cannot attend professionally trained While private sector companies

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do exist, are run and managed by professional managers. This results in higher
efficiency in the private sector.

(4) Diversity of Workplace: Private Sector Operates in all sectors with substantial
profitability investment whereas the public sector mainly operates on basic and
government resource categories where refunds are very high.

4. Why do global businesses rank higher than other business organisations?

Ans: Global businesses are considered the best in other business organisations
because:

(1) Major Financial Resources: MNCs have huge financial resources as they were
able to make money in all sectors earth. With a good heart, they can borrow again
foreign banks and large number of investors who are willing to invest in them to
make a huge profit.

(2) External partnership: MNCs usually file market with the help of local private
companies. This is cause of the restrictions exploit on them. Take advantage of the
product image of the government and an Indian company.

(3) Advanced Technology: These companies are making huge value investments in
research and technology development. Therefore, new technologies are helping
them to increase efficiency and achieve a higher position in the market.

(4) New Product Innovation: International organisations have sacred research and
development facilities for new products. This helps them to be able to support them
internally in the market and maintain their large consumer base.

(5) Marketing Strategies: Marketing Strategies for International companies are

more efficient than others companies. They use aggressive marketing strategies in
order to increase their sales in the short run. They know it is a reliable and state-of-
the-art market information system and their marketing and sales strategies are
advertising which usually works very well.

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(6) Market Expansion: They're Performance and exceeds the physical limit of
operation their country. Their international image is also creative high and their
market segment is growing enabling them to become an international brand.

(7) Central Control: Their Headquarters is in their home country and they control
all the branches and subsidiaries. However, this control is limited A comprehensive
policy framework for the parent company. There is no interruption in daily work
here.

5. What are the benefits of admission To participate?

Ans: Following are the benefits of joining a joint venture:

(1) Resource and Enhanced State: Shared the business, resources and potential of
the individual business are pooled. A joint venture is capable expand and grow better
than a personal business enterprise.

(2) Access to new markets and distribution networks: Entering into a joint
venture with an enterprise located in another region expands the market base for
each individual enterprise.

(3) Access to technology: through a joint venture, the company can achieve new
and modern technology and more easily with less time consumption and less
investing and efforts compared with technology that individual enterprises may be
able to operate independently.

(4) Innovation: A joint venture, especially with a foreign partner gives the company
access to new ideas and technology that helps in innovation of new products. These
new products enable businesses to survive in today's complex and competitive
market.

(5) Low cost of production: Raw material cost and labor etc. are very less in India
as compared to others country. Thus, international corporations that enter into joint
ventures with Indian companies get huge profits.

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(6) Established brand name: When in a joint venture enters two business. Both
good will that has already been established in the market.

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