Commerce Exam  >  Commerce Notes  >  Business Studies (BST) Class 11  >  Key Notes: Public, Private and Global Enterprises

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

Introduction

  • The Indian economy comprises both privately owned and government-owned businesses.
  • Private sector: Owned by individuals or groups of individuals.
  • Public sector: Owned and managed by the government, either partially or entirely.

Historical Background

  • The Industrial Policy Resolution of 1948 laid the foundation for India's economic development approach.
  • The Industrial Policy Resolution of 1956 set goals for the public sector to boost industrialization.
  • The 1991 industrial policy marked a shift towards privatization and encouraging foreign investments.

Sectors in Indian Economy

Public Sector:

  • Departmental Undertakings: Government-owned, operated by government personnel, strict government control.
  • Statutory Corporations: Created by special acts of Parliament, government-owned, legal entities.
  • Government Companies: At least 51% government-owned, regulated by the Companies Act 2013.

Merits:

  • Effective parliamentary control.
  • High public accountability.
  • Revenue goes to the government treasury.

Limitations:

  • Lack of flexibility.
  • Bureaucratic decision-making.
  • Political interference.
  • Often, poor service quality.

Private Sector:

  • Sole Proprietorship, Partnership, Joint Hindu Family, Cooperative, Multinational Corporations, Public Ltd. Company, Private Ltd. Company.

Changing Role of Public Sector:

Development of Infrastructure:

  • Crucial for industrialization.
  • Government's role in funding and coordination.
  • Expansion of transportation and communication facilities.

Regional Balance:

  • Government ensures balanced development.
  • Purposeful establishment of industries in underdeveloped regions.

Economies of Scale:

  • Government investment needed for large-scale industries.
  • Economies of scale achieved through mass production.

Concentration of Economic Power:

  • Prevents wealth concentration in private sector.
  • Public sector industries in key sectors.

Import Substitution:

  • Public sector heavy engineering firms aid import substitution.
  • Boosted exports through public sector enterprises.

Government Policy Since 1991:

  • Reduction in the number of industries reserved for public sector.
  • Disinvestment to increase private and worker ownership.
  • Board of Industrial and Financial Reconstruction (BIFR) for sick units.
  • Memorandum of Understanding (MOU) system for performance improvement.

Global Enterprises:

  • Large conglomerates with operations in multiple nations.
  • Possess huge capital, advanced technology, and global presence.
  • Examples: Majority Owned Foreign Affiliates (MOFA).

Joint Ventures:

  • Collaboration between two businesses for mutual gain.
  • Types: Equity-Based and Contractual.
  • Benefits: Resource sharing, access to technology, market expansion, product innovation.

Public-Private Partnership (PPP):

  • Collaboration between public and private entities for infrastructure and services.
  • Government provides funds and assets; private sector applies expertise.
  • Examples: Power generation, water supply, healthcare.
  • Merits: Risk sharing, project acceleration.
  • Limitations: Potential conflicts, difficulty attracting private finance. 
The document Key Notes: Public, Private and Global Enterprises | Business Studies (BST) Class 11 - Commerce is a part of the Commerce Course Business Studies (BST) Class 11.
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FAQs on Key Notes: Public, Private and Global Enterprises - Business Studies (BST) Class 11 - Commerce

1. What is the difference between private, public, and global enterprises?
Ans. Private enterprises are owned and operated by private individuals or organizations, while public enterprises are owned and operated by the government. Global enterprises, on the other hand, are companies that operate in multiple countries and have a global presence.
2. What are some examples of private enterprises?
Ans. Examples of private enterprises include small businesses, multinational corporations, and family-owned businesses. These are typically owned and operated by individuals or groups of individuals.
3. Can public enterprises be profitable?
Ans. Yes, public enterprises can be profitable. While their primary focus may not always be on generating profits, some public enterprises are able to operate in a profitable manner. This can be achieved through efficient management and the provision of essential services or products.
4. How do global enterprises benefit the economy?
Ans. Global enterprises contribute to the economy by creating jobs, generating tax revenue, and promoting international trade. They often bring in foreign direct investment and contribute to the growth and development of local industries.
5. Are there any drawbacks to private enterprises?
Ans. Private enterprises can face challenges such as competition, financial risks, and the need for continuous innovation to stay relevant in the market. Additionally, some private enterprises may prioritize profit over social or environmental concerns, leading to negative impacts on society and the environment.
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