Business Concepts and Public Enterprises
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Questions and Answers

What autonomy does a government-financed company enjoy?

  • It cannot sue or be sued in a court of law.
  • It is completely independent of the Companies Act.
  • It can be easily dissolved by the government.
  • It enjoys autonomy in management decisions. (correct)

What is a requirement for the appointment of employees in a government company?

  • They are appointed according to the company’s Memorandum and Articles of Association. (correct)
  • They must be government officials.
  • They are appointed based solely on government approval.
  • They must be appointed by the Parliament.

What does the Companies Act regulate within a government company?

  • The financial records kept by the government.
  • The appointment of the government’s shareholders.
  • The management decisions and operational procedures. (correct)
  • The legislation regarding private sector companies.

What is a significant limitation faced by government companies?

<p>The government being the sole shareholder limits the relevance of the Companies Act. (D)</p> Signup and view all the answers

What happens if a public sector company is continuously making losses?

<p>It is referred to the Board for Industrial and Financial Reconstruction (BIFR) for action. (A)</p> Signup and view all the answers

What documents contain the objectives and rules of a government company?

<p>The Memorandum and Articles of Association. (A)</p> Signup and view all the answers

In what manner can a government company engage in legal matters?

<p>It can file a suit against any third party and also be sued. (A)</p> Signup and view all the answers

Which statement reflects a misconception about government companies?

<p>They are completely independent and not answerable to any authority. (C)</p> Signup and view all the answers

What is one limitation of statutory corporations compared to government companies?

<p>Their actions are subject to many rules. (A)</p> Signup and view all the answers

What is a unique feature of government companies?

<p>They have a separate legal entity. (B)</p> Signup and view all the answers

Who appoints the auditors for government companies?

<p>The Central Government. (A)</p> Signup and view all the answers

Which of the following statements is true regarding the funding of government companies?

<p>They obtain funds from government shareholdings and may include private shareholders. (D)</p> Signup and view all the answers

What is a requirement for forming a government company?

<p>It must comply with the Indian Companies Act. (B)</p> Signup and view all the answers

What does the annual report of a government company need to be presented to?

<p>The Parliament or State Legislature. (C)</p> Signup and view all the answers

In what form can a government company be established?

<p>As a private limited company or public limited company. (B)</p> Signup and view all the answers

What is true regarding the appointment of directors in government companies?

<p>The appointment is subject to regulatory requirements. (D)</p> Signup and view all the answers

What is a key characteristic of an equity joint venture?

<p>It is formed as a separate business entity owned by two or more parties. (A)</p> Signup and view all the answers

Which company is involved in the joint venture for providing natural gas?

<p>Green Gas Ltd. (D)</p> Signup and view all the answers

What advantage does a business gain by entering a joint venture with a foreign company?

<p>Access to new markets and distribution networks. (D)</p> Signup and view all the answers

Which of the following is NOT one of the areas of operation for AVI Oil India Pvt. Ltd.?

<p>Construction management (D)</p> Signup and view all the answers

Which joint venture holder is associated with the Delhi Aviation Fuel Facility Pvt. Ltd.?

<p>BPCL (B)</p> Signup and view all the answers

What is the primary benefit of forming a joint venture for companies whose products have reached market saturation?

<p>Ability to sell products in new markets. (A)</p> Signup and view all the answers

Which of the following represents a form of business entity that can be part of an equity joint venture?

<p>Limited liability partnership (A)</p> Signup and view all the answers

What is the date of establishment for Green Gas Ltd.?

<p>7 October, 2005 (C)</p> Signup and view all the answers

What was one of the key roles envisaged for public sector enterprises at the time of Independence?

<p>To develop infrastructure and support industrialisation (C)</p> Signup and view all the answers

What challenge did the private sector face in developing heavy industries during the pre-Independence period?

<p>Absence of trained personnel and finances (C)</p> Signup and view all the answers

How did the government respond to the private sector's reluctance to invest in heavy industries?

<p>By taking on the responsibility to develop infrastructural facilities (D)</p> Signup and view all the answers

What was a key focus of the Five Year Plans in the early stages of development in India?

<p>Emphasising the importance of the public sector (D)</p> Signup and view all the answers

What transition has the Indian economy been going through since the 1990s?

<p>A move towards liberalisation, privatisation, and globalisation (C)</p> Signup and view all the answers

Which basic infrastructure was primarily developed by the government in the post-Independence era?

<p>Transportation and communication facilities (C)</p> Signup and view all the answers

Why was the development of infrastructure considered a prerequisite for industrialisation?

<p>It provided the necessary support for businesses to operate effectively (D)</p> Signup and view all the answers

What was one consequence of inadequate infrastructure before Independence?

<p>Slow progress of industrialisation (B)</p> Signup and view all the answers

What is one benefit of foreign collaborations for multinational corporations (MNCs)?

<p>Increased monopolies and power concentration (D)</p> Signup and view all the answers

Which aspect enhances the international brand image of MNCs?

<p>Operating through subsidiaries and affiliates (A)</p> Signup and view all the answers

How do MNCs ensure conformity with international standards?

<p>Through technological superiorities in production methods (B)</p> Signup and view all the answers

What is a characteristic feature of product innovation in MNCs?

<p>Sophisticated research and development departments (D)</p> Signup and view all the answers

What is a primary advantage of the marketing strategies used by global companies?

<p>Aggressive strategies for quick sales increase (C)</p> Signup and view all the answers

What type of control do MNCs exercise over their branches and subsidiaries?

<p>Centralized control limited by a policy framework (D)</p> Signup and view all the answers

What enables MNCs to optimally exploit local resources?

<p>Their technological advancements (B)</p> Signup and view all the answers

What is a significant characteristic of joint ventures?

<p>Collaboration for mutual benefit between businesses (C)</p> Signup and view all the answers

What was a significant change regarding the public sector industries?

<p>Reduction in reserved industries from 17 to 8 (B)</p> Signup and view all the answers

What is the primary objective of disinvestment in public sector enterprises?

<p>To raise resources and encourage public participation in ownership (B)</p> Signup and view all the answers

How are sick units in the public sector treated according to the policy?

<p>They are referred to the Board of Industrial and Financial Reconstruction (A)</p> Signup and view all the answers

What does a Memorandum of Understanding (MoU) primarily seek to improve?

<p>Management autonomy and accountability for results (A)</p> Signup and view all the answers

Which of the following is NOT a feature of global enterprises?

<p>Limited regional operations (B)</p> Signup and view all the answers

What best defines a joint venture?

<p>Pooling of resources and expertise by two or more businesses (B)</p> Signup and view all the answers

What role have multinational corporations (MNCs) played in the Indian economy?

<p>They contribute largely to technology and marketing strategies (A)</p> Signup and view all the answers

Which of the following is a characteristic of global enterprises?

<p>Centralized control with products spanning multiple countries (B)</p> Signup and view all the answers

Flashcards

Government Company

A company owned and controlled by the government, formed under the Companies Act, and distinct from other organizational structures.

Operational Flexibility of Statutory Corporation

Statutory corporations have less freedom in operations compared to the description given, governed by numerous rules and regulations.

Director/Manager Appointment (Govt. Co.)

The appointment and retirement of directors and managers in government companies are subject to specific government rules.

Government Control over Govt. Co.

Government companies are ultimately controlled by the government due to significant government shareholdings and involvement in the company management.

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Company Formation

Government companies can be established by following the Indian Companies Act, but may not need a separate act passed in Parliament.

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Legal Entity of Govt. Co.

Government companies maintain a separate legal status from the government itself.

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Funding of Govt. Co.

Government companies secure funds primarily through government shareholdings, but can also seek capital from the market/private investors.

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Accounting/Audit of Govt. Co.

Government companies are exempted from typical accounting and audit procedures and have their accounting audited by the central government with reports presented to parliament/state legislature.

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Public Sector Company

A company where the government is the sole shareholder, controlling its management and administration.

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Company Autonomy

The power of a company to make decisions and act in its own best interest, within legal and regulatory frameworks.

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Companies Act Regulations

Regulations that govern how a company is managed, particularly for Public Sector companies; it is a framework from the government to regulate.

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Memorandum & Articles of Association

Key documents outlining a company's objectives, rules, and regulations.

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Government's Sole Shareholder

A situation where the public sector company has only the government as its shareholder.

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Limited Constitutional Responsibility

Public sector companies' actions might not directly be accountable to Parliament while a private company is

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Legal Suitability

Public sector companies are able to initiate lawsuits and be sued in courts of law.

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Loss Accountability

Public sector companies are accountable for losses and returns on investments.

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Public Sector Role (Early)

Public sector enterprises were expected to be crucial for nation-building, building infrastructure, and investing in key areas.

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Infrastructure Development

Essential for industrialization; involves basic services like transport, communication, energy, and basic industries.

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Private Sector's Role

Unwilling to invest heavily in long projects like infrastructure and heavy industries initially.

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Five Year Plans

Government planning documents emphasizing the public sector's role in development.

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Economic Liberalization

Post-1990s economic policy shift emphasizing private sector involvement.

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Public Sector's Shifting Role

The role of government has changed since independence, from initial nationalization to a more balanced approach with the private sector.

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Inefficient Public Sector Units

Public sector companies facing issues with management and profitability.

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Changing Role of Public Sector

The public sector's role has evolved from being the primary investor to a more balanced approach with the private sector.

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Foreign Collaboration

Business partnerships between companies from different countries.

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Market Expansion

Increasing a company's sales territory beyond its home country.

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Technological Superiority

Possessing advanced and better production methods.

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Product Innovation

Developing new products or improving existing ones.

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Marketing Strategies

Methods used to promote and sell products.

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Monopoly Growth

Increased dominance of a market by a few large companies.

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Joint Venture

A partnership between two or more companies for mutual gain.

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Centralised Control

Managing subsidiary operations through central headquarters.

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Equity Joint Venture (EJV)

A separate business entity formed by multiple parties with joint ownership, following an agreement. The entity can be a company, partnership, trust, LLP, or venture capital fund.

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Joint Venture Examples

Real-world examples like AVI Oil India, Green Gas Ltd., and Delhi Aviation Fuel Facility illustrate how different entities collaborate for shared goals.

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Joint Venture Holders

The entities or parties involved in jointly owning a joint venture, as seen with Balmer Lawrie, NYCO, and others.

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Areas of Operation (Joint Venture)

The specific fields or sectors where a joint venture focuses its activities, as seen in areas like mineral-based lubricants, aviation, and natural gas services.

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Joint Venture Date of Establishment

The specific date when the joint venture was formally created or registered

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Access to new markets (Joint Venture)

Joint ventures enable businesses to enter new geographical areas and utilize existing distribution networks.

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New Market Growth (Joint Venture)

Businesses expand to new geographic regions via joint ventures, using distribution channels.

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Joint Venture Formation

Joint ventures involve the creation of a new entity or the acquisition of an existing one, with joint ownership.

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Reduced Public Sector Industries

The Indian government reduced the number of industries reserved for public sector operation, allowing private sector entry.

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Disinvestment

Selling public sector company shares to private investors or the general public.

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Sick Unit Policy

Public sector units facing financial difficulties are handled by industrial reconstruction boards, similar to private sector procedures.

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Memorandum of Understanding (MoU)

An agreement granting more autonomy to managements, holding them accountable for specific results.

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Multinational Corporations (MNCs)

Large companies with global operations, often characterized by significant size and advanced technology.

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Joint Venture

Collaboration between two or more businesses to achieve a shared goal, sharing risks and rewards.

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Features of MNCs

Key characteristics of MNCs include huge capital, foreign collaborations, advanced technology, product innovation, and widespread reach through global marketing.

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Government's role change

India's government has shifted its role from a significant investor in industries to a more balanced approach, including involvement with the private sector.

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Study Notes

Learning Objectives

  • After studying this chapter, students should be able to explain the concept and characteristics of business.
  • Explain features of different types of public enterprises, including departmental, statutory corporations and government companies.
  • Critically examine the changing role of the public sector.
  • Explain the features of global enterprises.
  • Appreciate the benefits of joint ventures.

Introduction

  • Businesses of all types exist in daily life, from single-owner shops to large retail chains.
  • Businesses owned by individuals (private) and those owned by the government (public) exist.
  • Global enterprises operate across multiple countries.
  • Both private and public sectors are critical for the economy, whether in one country or globally.

Private Sector and Public Sector

  • Private sector: Businesses owned by individuals or groups of individuals.
    • Includes sole proprietorships, partnerships, joint Hindu family businesses, cooperatives, and companies.
  • Public sector: Businesses owned or managed by the government.
    • Enterprises may be wholly or partly owned, or they might be created by a special act of parliament.
    • The government participates economically through these ventures.

Forms of Organising Public Sector Enterprises

  • Departmental undertakings
    • Are part of a government ministry.
    • Staff are government employees.
    • Funding comes directly from the government's treasury.
    • Accountable directly to its ministry.
  • Statutory corporations
    • Established by a special act of Parliament.
    • Independently funded.
    • Controlled by a board.
    • Typically deal with specific operations (e.g., a particular industry or area of services).
  • Government companies
    • Created as a company under the Companies Act.
    • Often share similar characteristics to public/private companies.
    • Subject to less direct government oversight than departmental undertakings.

Changing Role of Public Sector

  • Prior to 1991, public sector enterprises were expected to play a significant role.
  • Policy after 1991 led to:
    • Restructuring and revival of efficient State-owned enterprises.
    • Closing down inefficient government entities.
    • Reduction in the number of government-controlled businesses.
  • A significant shift in the role of the public sector.

Global Enterprises

  • Large-scale corporations operating across multiple countries.
    • High capital resources.
    • Significant global market influence.
    • Many characteristics set them apart from other types of enterprises.
  • Include:
    • Access to new markets.
    • Access to technology.
    • Innovation.
    • Low cost of production.
    • Established brand names.

Joint Ventures

  • Cooperative business arrangement between two or more entities (public, private or global).
  • Entities participate together for mutual profit, sharing resources and risks. There are two main kinds:
    • Contractual joint ventures: No separate company is created.
    • Equity-based joint ventures: A company is formed, with shared ownership.

Public Private Partnership (PPP)

  • A collaborative model for large projects.
  • Public and private sectors work together with shared responsibilities.
  • Public involvement in projects or services.

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NCERT Class 11 Business Studies Chapter 3 PDF

Description

This quiz focuses on the characteristics of business, including the distinctions between private and public enterprises. Examine the role of the public sector and explore features of global enterprises and joint ventures. Ideal for students studying business principles.

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