Professional Documents
Culture Documents
Private sector companies are companies which are not run by the
government. They are the part of a country’s economic system and is
run by individual and companies with the intention to earn the profit.
1. Departmental undertakings
2. Public corporations/statutory corporations
3. Government company
1. Departmental Undertakings
For example Indian airlines, air India, state bank of India, life
insurance corporation of India, food corporation of India, oil & natural
gas corporation, etc.
3. Government Companies
The company in which at least 51% of the paid-up share capital is held
by the central or state government or partly by central or state
government is Government Company. The government companies are
governed & ruled by the provisions of the companies act, 2013 like
any other registered companies. For example, steel authority of India,
state trading corporation, Hindustan machine tools.
Departmental Undertaking
So we know that Air India or Indian Railways are under the control
and the ownership of the government. But how are these organisations
set up? Who is responsible for their performance, and their day to day
activities? So let us learn more about Departmental Undertaking.
Departmental Undertaking
3. Sovereign Immunity
Advantages
1. Provides easy information
It is easy to set up departmental undertaking. The departmental
undertaking is created by an administrative decision of the
government, involving no legal formalities for its formation.
Answer:
Statutory Corporations
1. It is a Corporate Body
2. Owned by State
5. Financial Independence
Government Companies
The public sector companies in India were incorporated into two main
objectives:
(Source: stockguidance)
1. Economies of Scale
The sectors where a large amount of capital is required, which in
general terms private sector companies don’t accommodate are dealt
in by the public sector companies. Industries like, electric power
plants, natural gas, petroleum etc are under the control of public sector
companies.
2. Regional Balance
All the heavy industries were very less in number and low capacity at
the time of independence. These industries were like, engineering,
iron, and steel, oil and gas refineries, heavy goods machinery, etc.
5. Import Substitution
a. 100%
b. 50%
c. 51%
d. 66%
As we know that in 1991 India opened up its economy and started the
process of globalization. But also, through the same changes in
economic policies, we embraced privatization. Up until then in the
post-independence period, the public sector was an integral part of the
development and progress of our country.
The first few Five Year Plans were all designed to promote and
safeguard the public sector. But then came the era of privatization and
globalization in 1991. The role of public sector companies was
reevaluated. Now the public sector was to actively participate in a
competitive market with the private enterprises. Inefficiency and
uninspired management were not tolerated.
The public sector was also held responsible for the huge losses of their
companies. And so the role of public sector in our economy saw an
overhaul. Let us take a look at the Changing Role of Public Sector.
(Source: purpledrive)
In the first Five Year Plan, the government had reserved seventeen
industries for the public sector. This meant that only the government
could operate in these industries, no private capital would be involved.
But by 1991 this number was down to 8. And now there are only 3,
which include the railways and atomic energy.
2] Disinvestment
Since the government was not able to sustain such sick units they had
to be shut down. The workers were provided with a safety net as to
their loss of income. A National Renewal Fund was set up to finance
Voluntary Separation Scheme and Voluntary Retirement Scheme for
such workers. But in the end, they were insufficient measures.
4] Memorandum of Understanding
This was a system to give the public sector units a chance at revival.
The management of the unit and the concerned government authorities
would sign a MoU. Clear standards will be given for the enterprise to
meet. If the targets were met the company would continue. Otherwise,
it would be shut down or disinvested.
Q: Just like in air transport, public companies can also invest in rail
transport of India. True or False?
Joint Venture
Joint Ventures
(Source: globalcompliancenews)
3. No Separate Laws
At the same time, the Indian company has the advantage to access the
markets of the United States which is geographically scattered and has
good paying capacity where the quality of the product is not
compromised. Unique Indian products have big markets across the
globe.
3. Innovation
When two or more companies join hands together, the main motive is
to provide the products at a most efficient price. And this can be done
when the cost of production can be reduced or cost of services can be
managed. A genuine joint venture aims at this only to provide best
products and services to its consumers.
5. Brand Name
A separate brand name can be created for the Joint Venture. This helps
in giving a distinctive look and recognition to the brand. When two
parties enter into a joint venture, then goodwill of one company which
is already established in the market can be utilized by another
organization for gaining a competitive advantage over other players in
the market.
For example, a big brand of Europe enters into a joint venture with an
Indian company will give a synergic advantage as the brand is already
established across the globe.
6. Access to Technology
Global Enterprises
Global Enterprises
Global enterprises are the companies that operate around the world.
There are categories based on their huge size, a large number of
products, advance in technology, marketing, strategy and network of
operations all over the world.
These enterprises have huge financial resources. They have the ability
to raise funds from different sources. Funds are raised by the issue of
issuing equity shares, debentures, etc to the public. The investors of
the host countries are always willing to invest in them because of their
high credibility in the market.
Foreign Collaborations
With companies of the host countries, these enterprises enter into
agreements. These agreements are made in respect of the sale of
technology, production of goods, patents, resources, etc.
Advanced Technologies
Product Innovations
Despite the fact the branches of these branches of these enterprises are
spread over in many countries, they are managed and controlled by
their Head Office (HO) in their home country only. All these branches
have to work within the broad policy framework of their parent
company.
Ans- The term is used in a neutral sense simply to indicate the very
large size and participation in global markets. A more negative
connotation of the term is that: