class 11th

1. Business
Studies

2. Private, Public and
Global Enterprises
Chapter - 3

4. Private Sector
Enterprises

5. Private Sector Enterprises
Firms owned, controlled and managed by
private businessmen
The main object of such undertaking is profit
making

6. Private Sector Enterprises
Types of Private Sector Enterprises
Sole Proprietorship Concerns
Hindu Undivided Family Business
Partnership Business Organizations
Co-operative Societies
Joint Stock Companies

7. Public Sector
Enterprises

8. Public Sector Enterprises
Enterprises owned and managed by
central government or state government
or by both
The basic purpose is to render service to society
E.g. Railways, LIC, FCI, Post Offices etc.

9. Forms of
Public Sector
Enterprises

10. Forms of Public Sector Enterprises
Post and Telegraph Reserve Bank of India Indian Telephone
Industries
1. Departmental Undertakings
2. Public Corporations
3. Government Companies
1 2 3

11. Departmental
Undertakings

12. Departmental Undertakings
✔ Undertakings created by government
✔ Financed and controlled by government
✔ Managed by government officials
✔ Under the control of a minister

13. Departmental Undertakings
Examples of Departmental Undertakings
Indian RailwayPost and Telegraph
DoordarshanAll India Radio

14. Features of
Departmental
Undertakings

15. Features of Departmental Undertakings
Funding
Financed through budget allocation
a

16. Features of Departmental Undertakings
Audit and Control
They are subject to Government audit
b

17. Features of Departmental Undertakings
Employees
Employees are Government servants
c

18. Features of Departmental Undertakings
Control
Subject to direct control by the concerned ministry
d

19. Features of Departmental Undertakings
Accountability
Accountable to the ministry and the government
e

20. Merits of
Departmental
Undertakings

21. Merits of Departmental Undertakings
Control of parliament
Better control over funds and operations as it is
controlled by the ministry
a

22. Merits of Departmental Undertakings
Public accountability
Responsibility to the government
b

23. Merits of Departmental Undertakings
Source of revenue to government
Income earned by these organizations directly
goes to the treasury
c

24. Merits of Departmental Undertakings
National security
Secrecy can be maintained especially in case of
strategic industries such as defence etc.
d

25. Limitations of
Departmental
Undertakings

26. Limitations of Departmental Undertakings
Lack of flexibility
Predetermined rules and regulations and
interference from the ministry
a

27. Limitations of Departmental Undertakings
Delay in decisions
Approval from the government is necessary
to take decisions
b

28. Limitations of Departmental Undertakings
Unable to tap business opportunities
Conservative approach of bureaucrats does not
allow them to take risky ventures
c

29. Limitations of Departmental Undertakings
Red tapism and bureaucracy
Results delay in decision making and operations
d

30. Limitations of Departmental Undertakings
Political interference
These enterprises are subject political interference
through the ministry
e

31. Limitations of Departmental Undertakings
Consumer needs
They usually do not give any consideration for
consumer needs
f

32. Statutory Corporations
or
Public Corporations

33. Public Corporations
It is generally created as an autonomous
institution by passing a Special Act in
the Parliament or State Legislature
As a body corporate, it is a separate entity for legal
purposes and can sue and be sued, enter into
contracts and acquire property in its own name

34. Public Corporations
Some Important Public Corporations
KSRTCLife Insurance Corporation
Indian Airlines CorporationReserve Bank of India

35. Features of
Public Corporations

36. Features of Public Corporations
Formed by special Act
Created under a special Act of Parliament or
State Assembly
a

37. Features of Public Corporations
Ownership
Owned by the Government
b

38. Features of Public Corporations
Separate legal existence
It has a separate legal entity, so that it can own
properties and enter into contract in its own name
c

39. Features of Public Corporations
Financial autonomy
It has the power to utilize its revenues
d
Obtains funds through borrowing from treasury or
public and from the sales of goods and services

40. Features of Public Corporations
Employees
Appointed as per the terms and conditions of the
corporation and they are not to be treated as
government servants
e

41. Features of Public Corporations
Independent accounting and audit
It has its own accounting and audit, but not subject
to government audit and budget allocation
f

42. Merits of
Public Corporations

43. Merits of Public Corporations
High degree of flexibility
It enjoys flexibility of operations and financial and
managerial freedom since it is free from undesirable
government control
a

44. Merits of Public Corporations
Least government interference
As there is no budget allocation for funds from
government there is no much government control
b

45. Merits of Public Corporations
Autonomous status
They can frame their own policies and procedure
within the purview of the Act
c

46. Merits of Public Corporations
Helps in economic development
It contributes towards economic development in a
big way
d

47. Merits of Public Corporations
Stability
Since they are not subject to political changes, they
can take long term business policies
e

48. Limitations of
Public Corporations

49. Limitations of Public Corporations
Rules and regulations
It does not enjoy much operational flexibility as it is
governed by various rules and regulations of the
Act
a

50. Limitations of Public Corporations
Political interference
In practice complete autonomy is not possible due
to interference from the ministry
b

51. Limitations of Public Corporations
Chances of corruption
Officials may misuse the autonomy status for their
personal gain
c

52. Limitations of Public Corporations
Inefficiency
Absence of competition and profit motive leads to
inefficient operations
d

53. Limitations of Public Corporations
Delay in action
Quick decisions cannot be taken by the officials
because of the involvement of government
nominees in the director board
e

54. Government
Company

55. Government Company
Public enterprises organized under the
Companies Act are Government companies
It is a company in which at least 51% of share
capital is held by the Central Government
or by the State Government or both

56. Government Companies in India
Steel Authority of India Ltd.
Bharat Heavy Electricals Ltd.Hindustan Shipyard Ltd.
Coal India Ltd.

57. Features of
Government Company

58. Features of Government Company
Incorporation
It is incorporated under Companies Act
a

59. Features of Government Company
Separate legal entity
It can own properties, enter into contracts, sue and
be sued in its own name
b

60. Features of Government Company
Management
Management is vested in the hands of Directors,
appointed by Government
c

61. Features of Government Company
Memorandum and Articles ofAssociation
Objects of the company and its rules and
regulations are contained in these documents
d

62. Features of Government Company
Accounting and audit procedure
However government appointed auditor’s report
should be presented in the Parliament or
Legislative Assembly
e
They are exempted from accounting and audit rules
as per theAct

63. Features of Government Company
Funds
Investment in government companies is raised by
government shareholdings and from private
shareholders
f

64. Merits of
Government Company

65. Merits of Government Company
Easy formation by registration
No need of enactment of special Act in Parliament
a

66. Merits of Government Company
Separate legal entity
It has separate existence apart from the government
b

67. Merits of Government Company
Quick decisions
Prompt decisions in time as it has autonomy power
c

68. Merits of Government Company
Prevents unhealthy business
It can control unhealthy business practices by
providing goods and services at a reasonable price
d

69. Limitations of
Government Company

70. Limitations of Government Company
Autonomy is just for name sake
Since the government is the only shareholder in
some companies, provisions of Companies Act have
no relevance.
a

71. Limitations of Government Company
No accountability
Even though major investment is made by the
government, it is not answerable to the Parliament
b

72. Limitations of Government Company
Main purpose is not served
It defeats the main purpose by registering like other
companies
c
Being the major shareholder, government controls
the affairs of the company

73. Changing Role of
Public Sector

74. Changing Role of Public Sector
Public sector plays an important role in India’s
economic development
The most important objective of public sector is
economic growth with social justice and providing
service to the society

75. Importance of
Public Sector

76. Importance of Public Sector
Development of infrastructure
Transportation, communication, fuel and energy,
basic and heavy industries etc. are very essential for
economic development
1
Government has set up various PSUs in these areas
where private enterprises are unwilling to invest

77. Importance of Public Sector
Regional balance
To maintain balanced regional development the
government has taken initiative to start a number of
public sector units in backward areas
2

78. Importance of Public Sector
Economies of scale
Government has set up large scale industries in
public sector to take advantages of
economies of scale
3
Eg. Electric power plants, petroleum refinery,
telephone industries etc.

79. Importance of Public Sector
Check over concentration of economic power
The flow of economic resources to the private sector
entrepreneurs can be controlled up to a
certain extent
4

80. Importance of Public Sector
Import substitution
Government set up public sector units for production
of capital goods which were imported earlier
5
Several public sector companies are producing goods
on a large scale, thus playing an important role in
expanding exports of the country also

81. Government Policy
Towards
Public Sector

82. Government of India introduced four major
reforms in the public sector thorough the
Industrial Policy in 1991
Government Policy

83. a
Restructure and revive potentially viable
Public Sector Undertakings (PSUs)
Government Policy

84. b
Close down PSUs, which cannot be revived
Government Policy

85. c
Bring down government equity
in all non-strategic PSUs to 26% or
lower if necessary
Government Policy

86. d
Protect the interest of workers
Government Policy

87. Measures Taken by
Govt. to Reform
Public Sector

88. Measures Taken by Govt.a
Reduction in the number of industries reserved
for public sector
● 17 industries were reserved for public sector as per
the Industrial Policy 1956.
● It has been reduced to 8 industries in 1991 and
again to 3 industries in 2001.
● They are atomic energy, arms and rail transport.

89. Measures Taken by Govt.
Disinvestment
● Sale of equity shares of Public Sector Undertakings
to private sector and to the public
● Government holding in such units is thereby
reduced and private participation enhanced
Eg. Sale of shares in Indian Petro Chemicals Ltd.,
Maruthi Udyog Ltd. etc.
b

90. Measures Taken by Govt.c
Protection of sick units
Highly sick public enterprises which are unlikely to
be revived will be referred to the Board for Industrial
and Financial Reconstruction (BIFR) for
rehabilitation

91. Measures Taken by Govt.d
Memorandum of understanding (MOU)
● To improve the performance of PSUs, government
introduced MOU system by giving clear target and
operational autonomy to achieve those targets
● Here PSUs are accountable for specified results

92. Global Enterprises
or
Multinational
Companies

93. Multinational Companies
● Company carrying on business in two or more
countries
● Company that operates in several countries
● Company has factories, branches or offices in
more than one country
● Branches are also called Majority Owned
Foreign Affiliates (MOFA)
Global Enterprises

94. Multinational Companies
It is also known as Multinational corporation,
Transnational Corporation, Global Giant, World
Enterprise, International Enterprise, MNCs etc.
Global Enterprises

95. Multinational Companies – Examples
Global Enterprises

96. Features of
Global Enterprises

97. Huge capital
They have large capital investment as they are
running large scale business units
a
Investors and financial institutions of the host
country will be ready to invest in MNCs because
of their credibility
Features of Global Enterprises

98. Foreign collaboration
Global enterprises usually collaborate with Indian
companies, both private and public sector, by this
both the parties will be benefited by sharing
technology, brand name etc.
b Features of Global Enterprises

99. Advanced technology
MNCs are able to provide world class products
of international standards by using advanced
technology in the areas of production,
marketing etc.
c Features of Global Enterprises

100. Marketing strategies
They adopt aggressive marketing techniques
to increase the sales in a short period
d
They have advanced marketing information
system, advertising and sales promotion
techniques and a good brand name
Features of Global Enterprises

101. Expansion of market territory
They can extent their markets very easily to
the foreign countries as they are running the
branches in various nations
e Features of Global Enterprises

102. Product innovation
Their products are always highly innovative as they
are running their own research and development
wing for developing new products and superior
designs for existing products
f Features of Global Enterprises

103. Centralized control
The headquarters of an MNC can exercise better
control over the operations of its branches in
various countries as they operate within the policy
framework of the parent organization
g Features of Global Enterprises

104. Joint Ventures
JVs

105. An association of two or more individuals or
organizations formed by agreement for a common
purpose or mutual benefit is called a joint venture
These organizations may be private, government or
a foreign company
Joint Ventures

106. Usually JVs are formed to share strengths,
minimize risks and to increase competitive
advantage in the market place
Eg. Bajaj Allianze Insurance Co., Mahindra –
Renault Ltd, Air Asia India, Maruthi andSuzuki,
Yamaha and Mahindra.
Joint Ventures

107. Benefits of a
Joint Venture
Business

108. 1 Increased resources and capacity
JVs can easily expand their business and they are
able to face market challenges, reap the benefits of
economies of scale
Benefits of Joint Ventures

109. 2 Access to markets
When a foreign company enters into JV with an
Indian company, they gain access to the vast
Indian market
Benefits of Joint Ventures

110. 3 Access to technology
Technology adds to efficiency and effectiveness and
thus reduces the cost
Benefits of Joint Ventures

111. 4 Innovation
● JVs comes up with some new ideas and
techniques
● Especially foreign partners can introduce innovative
products in the market based on their experience
Benefits of Joint Ventures

112. 5 Low cost of production
When two firms join hands, they can operate on
large scale and reap the benefits of
economies of scale
Benefits of Joint Ventures

113. 6 Established brand name
● Goodwill of one party can be enjoyed by the other
party also
● New organization need not take much effort to
establish their new brand
Eg. Toyota Kirloskar, Maruthi Suzuki etc.
Benefits of Joint Ventures

114. Types of Joint Ventures

115. Types of Joint Ventures

116. Types of Joint Ventures
1. Contractual Joint Ventures (CJV)
In this case a new entity is not created
There is only an agreement to work together
The parties do not share ownership of the
business but exercise some elements of
control in the joint venture
Franchisee relationship is
a typical example for
contractual joint ventures
Franchise Business

117. Types of Joint Ventures
2. Equity Based Joint Venture (EJV)
In this case a separate business entity is formed
jointly owned by two or more parties based on an
agreement
The ownership of this organization is shared by
these parties
Formed by: Bajaj Finserve Ltd. Bajaj
Group of India and Allianz SE a
European financial services company

118. Examples of JVs
No. Name of JV Established Joint Venture Holders
1. AVI Oil India Pvt. Ltd 1993
Balmer Lawrie & Co. Ltd and NYCO SA
France
2. Green Gas Ltd 2005 GAIL (India) Ltd. and IOCL
3.
Delhi Aviation Fuel
Facility Pvt. Ltd
2010 BPCL and DIAL

119. Private Public Partnership
P P P

120. Private Public Partnership
It is a relationship between public and private
entities in the context of infrastructure and
other services

121. Private Public Partnership
Under PPP model public sector plays an
important role and ensures that the social
obligations are fulfilled and public investments
are successfully met
The public partners in PPP are Government
entities like ministries, government
departments, municipalities etc

122. Private Public Partnership
The government’s contribution to PPP is in the
form of capital for investment and transfer of
assets that support the partnership
Expertise
The role of private sector is to make use of its
expertise in operation, managing tasks and
innovation to run the business efficiently

123. Private Public Partnership
Power generation and distribution, water and
sanitation, pipelines, hospitals, school
buildings and teaching facilities, stadiums, air
traffic control, prisons, railways, roads, billing
and other information technology system,
housing etc. are the major sectors in which
PPP operates
Power generation