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?

The government being the sole shareholder limits the relevance of the Companies Act. Signup and view all the answers

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

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

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

The Memorandum and Articles of Association. Signup and view all the answers

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

It can file a suit against any third party and also be sued. Signup and view all the answers

Which statement reflects a misconception about government companies?

They are completely independent and not answerable to any authority. Signup and view all the answers

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

Their actions are subject to many rules. Signup and view all the answers

What is a unique feature of government companies?

They have a separate legal entity. Signup and view all the answers

Who appoints the auditors for government companies?

The Central Government. Signup and view all the answers

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

They obtain funds from government shareholdings and may include private shareholders. Signup and view all the answers

What is a requirement for forming a government company?

It must comply with the Indian Companies Act. Signup and view all the answers

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

The Parliament or State Legislature. Signup and view all the answers

In what form can a government company be established?

As a private limited company or public limited company. Signup and view all the answers

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

The appointment is subject to regulatory requirements. Signup and view all the answers

What is a key characteristic of an equity joint venture?

It is formed as a separate business entity owned by two or more parties. Signup and view all the answers

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

Green Gas Ltd. Signup and view all the answers

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

Access to new markets and distribution networks. Signup and view all the answers

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

Construction management Signup and view all the answers

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

BPCL Signup and view all the answers

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

Ability to sell products in new markets. 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?

Limited liability partnership Signup and view all the answers

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

7 October, 2005 Signup and view all the answers

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

To develop infrastructure and support industrialisation Signup and view all the answers

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

Absence of trained personnel and finances Signup and view all the answers

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

By taking on the responsibility to develop infrastructural facilities Signup and view all the answers

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

Emphasising the importance of the public sector Signup and view all the answers

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

A move towards liberalisation, privatisation, and globalisation Signup and view all the answers

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

Transportation and communication facilities Signup and view all the answers

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

It provided the necessary support for businesses to operate effectively Signup and view all the answers

What was one consequence of inadequate infrastructure before Independence?

Slow progress of industrialisation Signup and view all the answers

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

Increased monopolies and power concentration Signup and view all the answers

Which aspect enhances the international brand image of MNCs?

Operating through subsidiaries and affiliates Signup and view all the answers

How do MNCs ensure conformity with international standards?

Through technological superiorities in production methods Signup and view all the answers

What is a characteristic feature of product innovation in MNCs?

Sophisticated research and development departments Signup and view all the answers

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

Aggressive strategies for quick sales increase Signup and view all the answers

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

Centralized control limited by a policy framework Signup and view all the answers

What enables MNCs to optimally exploit local resources?

Their technological advancements Signup and view all the answers

What is a significant characteristic of joint ventures?

Collaboration for mutual benefit between businesses Signup and view all the answers

What was a significant change regarding the public sector industries?

Reduction in reserved industries from 17 to 8 Signup and view all the answers

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

To raise resources and encourage public participation in ownership Signup and view all the answers

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

They are referred to the Board of Industrial and Financial Reconstruction Signup and view all the answers

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

Management autonomy and accountability for results Signup and view all the answers

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

Limited regional operations Signup and view all the answers

What best defines a joint venture?

Pooling of resources and expertise by two or more businesses Signup and view all the answers

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

They contribute largely to technology and marketing strategies Signup and view all the answers

Which of the following is a characteristic of global enterprises?

Centralized control with products spanning multiple countries Signup and view all the answers

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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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.