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

Q1: Can the public sector companies compete with the private sector in terms of profit & loss efficiency? Give reasons for your answer.
Ans: No, public sector companies cannot compete with the private sector in terms of profit & efficiency. Following are the reasons for this:
(i) Public sector enterprises (PSEs) are owned by the government which has social services as the main motive. They do not operate fully on commercial basis. They are launched to achieve social objective like development of backward region, creation of employment opportunities, etc.
(ii) Working of public sector enterprise is subject to interference of the government. Autonomy &flexible enjoyed by PSEs are only in name.
(iii) Due to the bureaucratic control, the management is very poor inefficient. They are managed by bureaucrats & not by professional.

Q2: Public sector enterprises have played vital role in the economic development of india. however, Government of India vigorously pursues the policy of disinvestment of such units. What is the rationale of disinvestment at this time?  
Ans: Public sector enterprises played a significant role in the economic development of India by filling gaps in the industrial sector, generating employment opportunities, balance regional development, check over concentration of economic power & so on. despite their impressive role, public sector undertaking (PSUs) in India suffered several problems shortcoming such as excessive overhead, under-utalization of production capacity, inefficient management, low return on investment or even losses, etc. therefore, government of India pursued the policy of disinvestment of sick PSUs. disinvestment involves the sale of the equity shares to the private sector& the public, i.e., reducing equity of the government.

Q3: State any three situations wherein Government Company is the most suitable form of organizing public enterprises?
Ans: Government Company is the most suitable form of organizing public enterprises in the following situations:

1. When the government wants to control a company in the private sector without nationalization because of financial or employment crises, e.g., Indian iron steel co.
2. When the government feels necessary to promote & develop a field of economic acidity, e.g., STC.
3. When the government wishes to launch an enterprise in association of certain private interests, domestic or foreign, e.g., Hindustan Machine Tools.  

Q4: What motivates a company to go global?
Ans: Desire to expand its business motivates a company to go global. If a company wants to enjoy the fruits of larges-cable production (i.e., increased profit reduces costs), it needs a bigger market spread over to many countries.