Sure Shot Questions: Private, Public and Global Enterprises | Business Studies (BST) Class 11 - Commerce PDF Download

Q1: Why is the government company form of organisation preferred in the public sector? Explain three reasons.
Ans: A government company, where the government holds at least 51% of the paid-up capital under the Companies Act, 1956, is preferred due to: 
(i) Autonomy: It enjoys operational independence, allowing flexible decision-making without excessive parliamentary control, e.g., State Trading Corporation managing trade efficiently. 
(ii) Flexibility in Operations: Operates on commercial principles, enabling quick adaptation to market needs, unlike departmental undertakings, e.g., ONGC competing in the oil sector. 
(iii) Collaboration with Private Sector: Facilitates partnerships with private entities, leveraging their expertise, e.g., Hindustan Aeronautics Limited collaborating with private firms for technology.

Q2: Differentiate between public sector and private sector enterprises with three key points.
Ans: 
(i) Ownership: Public sector enterprises are owned by the government (51% or more), e.g., SAIL, while private sector enterprises are owned by individuals or groups, e.g., Reliance Industries. 
(ii) Objective: Public sector focuses on social welfare and economic development, e.g., BSNL providing affordable telecom, whereas private sector prioritizes profit, e.g., Tata Motors. 
(iii) Management: Public sector is managed by government officials, often bureaucrats, while private sector employs professional managers, enhancing efficiency, e.g., Infosys’ professional leadership.

Q3: What are multinational corporations? Provide two examples and explain their global operations.
Ans: Multinational corporations (MNCs) are companies headquartered in one country (home country) with operations in multiple countries (host countries). They manage production, marketing, and other activities globally. 

Examples: 
(i) Amazon: Headquartered in the USA, it operates e-commerce and cloud services worldwide, e.g., warehouses in India. 
(ii) Capgemini: A French MNC providing IT services globally, with offices in India for software development, leveraging global talent and markets.

Q4: Explain three roles played by the public sector in India before 1991.
Ans: Before 1991, the public sector was pivotal in India’s economy. 
(i) Regional Balance: Established industries in backward areas, e.g., steel plants in Bhilai, creating jobs and infrastructure. 
(ii) Import Substitution: Promoted self-reliance by producing goods locally, e.g., HMT manufacturing machine tools to reduce imports. 
(iii) Infrastructure Development: Built essential infrastructure like railways and power plants, e.g., NTPC for electricity, as private sector lacked resources.

Q5: Define disinvestment of shares and its purpose in the context of public sector enterprises.
Ans: Disinvestment refers to the sale of government-held equity in public sector enterprises to private entities, financial institutions, or the public. 
Purpose: It aims to raise non-inflationary funds for the government, reduce fiscal deficits, and improve efficiency by involving private sector management, e.g., disinvestment of VSNL shares in 2002 to enhance operational efficiency and fund government projects.

Q6: Name three types of private sector organisations and explain their characteristics.
Ans: 
(i) Sole Proprietorship: Owned and managed by one individual, bearing all risks and profits, e.g., a local grocery store with full control by the owner.
(ii) Partnership: Run by two or more individuals sharing profits and risks, governed by a partnership deed, e.g., a law firm with multiple partners. 
(iii) Company: A legal entity with perpetual succession, owned by shareholders, e.g., Infosys, with limited liability and professional management.

Q7: Define departmental undertaking and discuss three advantages and three disadvantages.
Ans: A departmental undertaking is a public sector enterprise operating as a government department, fully owned and controlled by the government, e.g., Indian Railways. 

Advantages: 
(i) Service Motive: Prioritizes public welfare, e.g., affordable rail travel. 
(ii) National Importance: Undertakes critical activities like defense, ensuring public interest. 
(iii) Strict Oversight: Minimizes fund misuse through rigorous audits. 

Disadvantages: 
(i) Political Interference: Decisions driven by political motives, delaying operations. 
(ii) Red Tape: Bureaucratic delays hinder efficiency. 
(iii) Lack of Competition: Monopoly status reduces motivation for efficiency.

Q8: Explain the Industrial Policy of 1991 and its impact on public sector enterprises.
Ans: The Industrial Policy of 1991 introduced reforms to enhance public sector efficiency: 
(i) Disinvestment: Sold government shares in PSUs to private entities, e.g., VSNL, raising funds and improving management. 
(ii) Dereservation: Reduced reserved industries to eight, allowing private sector entry in others, boosting competition. 
(iii) Memorandum of Understanding (MoU): Granted PSUs autonomy with accountability, e.g., SAIL signing MoUs for operational freedom. These reforms reduced government control, encouraged efficiency, and integrated private sector expertise.

Q9: Define foreign collaboration and its significance for Indian businesses.
Ans: Foreign collaboration is a joint venture between Indian and foreign entities, sharing ownership, management, and profits. 

Significance: 
(i) Combines financial and technical resources, e.g., Maruti Suzuki leveraging Suzuki’s technology. 
(ii) Enhances access to global markets, boosting exports. 
(iii) Facilitates technology transfer, improving product quality, e.g., Indian firms adopting advanced manufacturing from foreign partners under liberalized policies (post-1991).

Q10: How does the government maintain regional balance through public sector enterprises? Explain three methods.
Ans: The government promotes regional balance via public sector enterprises by: 
(i) Establishing Industries in Backward Areas: Setting up steel plants like Rourkela to create jobs and stimulate growth. 
(ii) Developing Infrastructure: Building roads, railways, and power facilities in underdeveloped regions, e.g., NTPC power plants. 
(iii) Supporting Ancillary Industries: Encouraging related sectors like banking and transport in rural areas, boosting local economies.

Q11: Define multinational corporations and discuss three ways they contribute to economic growth.
Ans: Multinational corporations (MNCs) are companies with headquarters in one country and operations in multiple countries, e.g., Coca-Cola. Contributions: 
(i) Job Creation: Establish facilities generating employment, e.g., Amazon’s warehouses in India. 
(ii) Technology Transfer: Introduce advanced technology, improving productivity, e.g., Samsung enhancing India’s electronics sector. 
(iii) Foreign Investment: Bring capital to host countries, boosting industrialization, e.g., FDI in India’s telecom sector post-liberalization.

Q12: Why are public sector enterprises less competitive than private sector in terms of profit and efficiency? Explain three reasons.
Ans: Public sector enterprises (PSEs) lag in profit and efficiency due to: 
(i) Social Objectives: PSEs prioritize welfare over profit, e.g., BSNL offering low-cost services in rural areas. 
(ii) Government Interference: Bureaucratic control hampers quick decisions, unlike private firms like Reliance. 
(iii) Management Quality: Managed by bureaucrats lacking business expertise, unlike professionally-run private firms like TCS.

Q13: Discuss three key features of global corporations with examples.
Ans: 
(i) Giant Size: MNCs have vast assets and sales, e.g., Apple’s global revenue exceeds many countries’ GDPs. 
(ii) Centralized Control: Headquarters in the home country oversee global operations, e.g., Microsoft’s US base controls Indian subsidiaries. 
(iii) International Operations: Operate through branches worldwide, e.g., Unilever producing and selling in multiple countries.

Q14: Why are global enterprises considered superior to other business organisations? Explain three reasons.
Ans: Global enterprises (MNCs) are superior due to: 
(i) Product Innovation: Advanced R&D facilities develop cutting-edge products, e.g., Google’s AI innovations. 
(ii) Massive Financial Resources: Access global capital markets, e.g., Amazon raising funds internationally. 
(iii) Market Expansion: Operate across borders, enhancing brand presence, e.g., Nike’s global retail network.

Q15: What is a public-private partnership? Explain three key features.
Ans: A public-private partnership (PPP) is a collaboration between government and private entities to undertake high-priority projects, sharing risks and rewards. 

Features: 
(i) Shared Resources: Combines public funding and private expertise, e.g., Delhi Metro with private technology partners. 
(ii) Public Welfare Focus: Aims to deliver public services efficiently, e.g., highway projects improving connectivity. 
(iii) Revenue Sharing: Profits and risks are distributed per agreement, ensuring mutual benefits, e.g., airport PPPs sharing toll revenues.