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QUEENS’ COLLEGESESSION : 2011-12SUBJECT : B.STUDIESPRIVATE,PUBLIC AND GLOBAL ENTERPRISESGUIDED BY:SHALINI MA’AMMADE BY : PURVASHI VERMACLASS : XI ‘C’ROLL NO. : 11328
1. ACKNOWLEDGEMENT 2. INTRODUCTION 3. CHARACTERISTICS 4. TYPES OF BUSINESS ACTIVITIES 5. PUBLIC ENTERPRISES 6. GLOBALISATION 7. MULTINATIONAL COMPANIES 8. JOINT VENTURES 9. JOINT SECTOR ENTERPRISES 10. PRIVATE ENTERPRISES
ACKNOWLEDMENTACKNOWLEDMENT I have been privileged by Mrs. Shalini , as she has given me the I have been privileged by Mrs. Shalini , as she has given me the
task of making a project.task of making a project.
Working on the project was a very difficult task but of course Working on the project was a very difficult task but of course without any question it has widened my views. I felt a heavy without any question it has widened my views. I felt a heavy delight, working on the project.delight, working on the project.
Though I did not claim for the originality of the matter but I tried Though I did not claim for the originality of the matter but I tried my best on the whole project. This project is the cummulative my best on the whole project. This project is the cummulative result of thorough study. The help of various textbooks and result of thorough study. The help of various textbooks and references made this difficult task a feather light.references made this difficult task a feather light.
Thank you…Thank you…
BUSINESS UNDERTAKINGS
INTRODUCTION INTRODUCTION
A business undertaking is an institutional arrangement to conduct any type of business activity. The undertaking maybe run by one person or association of persons. It may be based on formal or informal agreement among persons who undertake to run the concern. According to Wheeler, a business undertaking is "a concern, company or enterprise which buys and sells, is owned by one person or a group of persons and is managed under a specific set of operating policies." The persons join together and pool their resources and conduct the activities of the undertaking for the benefit of all.
I. Separate Entity II. Separate Ownership III. Separate Management IV. Independent Risk Bearing V. Exchange of Goods and Services VI. Dealing in Goods and Services VII.Profit Motive VIII.Continuity of Transactions IX. Risk and Uncertainly X. Social Responsibility
I. Separate Entity II. Separate Ownership III. Separate Management IV. Independent Risk Bearing V. Exchange of Goods and Services VI. Dealing in Goods and Services VII.Profit Motive VIII.Continuity of Transactions IX. Risk and Uncertainly X. Social Responsibility
TYPES OF BUSINESS UNDERTAKINGSTYPES OF BUSINESS UNDERTAKINGS
SIZE BASISSIZE BASIS NATURE OF ACTIVITIESNATURE OF ACTIVITIES OWNERSHIPOWNERSHIP
SMALL ENT.SMALL ENT. MEDIUM ENT.MEDIUM ENT. LARGE ENT.LARGE ENT.
INDUSTRIAL ENT.INDUSTRIAL ENT. TRADING ENT.TRADING ENT. SERVICES ENT.SERVICES ENT.
PRIVATE SECTORPRIVATE SECTOR PUBLIC SECTORPUBLIC SECTOR JOINT SECTORJOINT SECTOR
INDIAN ECONOMYINDIAN ECONOMY
PUBLIC SECTORPUBLIC SECTOR PRIVATE SECTORPRIVATE SECTOR
DEPARTMENTALUNDERTAKINGS
DEPARTMENTALUNDERTAKINGS
STATUTORYCORPORATION
STATUTORYCORPORATION
GOVERNMENTALUNDERTAKINGS
GOVERNMENTALUNDERTAKINGS
SOLE PROPRIETORSHIPSOLE PROPRIETORSHIP
PARTNERSHIPPARTNERSHIP
JOINT HINDU COMPANYJOINT HINDU COMPANY
COOPERATIVE SOCIETYCOOPERATIVE SOCIETY
COMPANYCOMPANY
MULTINATIONAL CO.MULTINATIONAL CO.
PUBLIC SECTORPUBLIC SECTOR
ENTERPRISESENTERPRISES
PUBLIC SECTORPUBLIC SECTOR
ENTERPRISESENTERPRISES
PUBLIC ENTERPRISES…..
A public sector enterprise or a
public enterprise is one which is owned, managed and controlled by the Central Government or any State Government or any local authority.
They are also known as ‘Public Undertakings. The forms of organizing public enterprise are : Departmental undertakings, Public Corporations, Government Companies.
CHARACTERISTICS OFCHARACTERISTICS OFPUBLIC SECTOR ENTERPRISESPUBLIC SECTOR ENTERPRISES
CHARACTERISTICS OFCHARACTERISTICS OFPUBLIC SECTOR ENTERPRISESPUBLIC SECTOR ENTERPRISES
STATE OWNERSHIPSTATE OWNERSHIP
STATE CONTROLSTATE CONTROL
STATE FINANCINGSTATE FINANCING
SOCIO-ECONOMIC OBJECTIVESSOCIO-ECONOMIC OBJECTIVES
PUBLIC ACCOUNTABILITYPUBLIC ACCOUNTABILITY
State OwnershipState Ownership - Public Sector enterprises are - Public Sector enterprises are owned by Central or State Government or jointly by owned by Central or State Government or jointly by both or Local authority.both or Local authority.
State ControlState Control – The rights of its management vest – The rights of its management vest in the Government. The majority of the directors in the Government. The majority of the directors and top officials are appointed by the government and top officials are appointed by the government for the management of such enterprises.for the management of such enterprises.
State FinancingState Financing – The whole or major source of – The whole or major source of financing such enterprises is the government. The financing such enterprises is the government. The funds are supplied from the government treasury or funds are supplied from the government treasury or budget of the concerned Ministry Department or budget of the concerned Ministry Department or investory by government in the share capital of the investory by government in the share capital of the enterprises.enterprises.
4. Socio-economic Objectives – Such enterprises are guided by both the profit and social objectives for the benefits of the community as a whole such as:
* to set up basic and strategic industries (like steel and oil).
* to promote balanced regional development through the growth of economic activity in backward, rural and remote areas of country.
* to ensure adequate supply of essential goods at a fair price.
* to check the growth of monopoly and monopolistic tendencies in the private sector.
5. Public Accountability – Such enterprises are accountable to the public through the government. Their performance is subject to scrutiny of the Parliament or State Legislatures and is evaluated by the committee on Public Undertakings or Public Accounts Committee or Estimates Committee. Their reports are presented for discussion in Parliament or State Assembly.
OBJECTIVES OF PUBLIC ENTERPRISES
To achieve rapid economic development. To channelise resources. To ensure balanced regional development. To prevent concentration of economic power. To prevent the growth of monopoly. To control the prices of essential goods. To secure public welfare. To reduce inequalities in income distribution. To provide satisfactory employment. To mobilise savings through financial institutions to meet demands of public and private enterprises.
REASONS FOR GOVERNMENTREASONS FOR GOVERNMENTPARTICIPATION IN BUSINESSPARTICIPATION IN BUSINESS
REASONS FOR GOVERNMENTREASONS FOR GOVERNMENTPARTICIPATION IN BUSINESSPARTICIPATION IN BUSINESS
PLANNEDDEVELOPMENT
PLANNEDDEVELOPMENT
INFRASTRUCTURALFACILITIES
INFRASTRUCTURALFACILITIES
ACT AS MODEL EMPLOYER
ACT AS MODEL EMPLOYER
REGIONAL DEVELOPMENT
REGIONAL DEVELOPMENT
GENERATION OFGENERATION OFEMPLOYMENT EMPLOYMENT
GENERATION OFGENERATION OFEMPLOYMENT EMPLOYMENT
SOCIALSOCIALWELFAREWELFARE
SOCIALSOCIALWELFAREWELFARE
DISTRIBUTION OFDISTRIBUTION OFECONOMIC GAINSECONOMIC GAINS
DISTRIBUTION OFDISTRIBUTION OFECONOMIC GAINSECONOMIC GAINS
NEED FOR NEED FOR NATIONALISATIONNATIONALISATION
NEED FOR NEED FOR NATIONALISATIONNATIONALISATION
FORMS OFFORMS OFPUBLIC ENTERPRISESPUBLIC ENTERPRISES
FORMS OFFORMS OFPUBLIC ENTERPRISESPUBLIC ENTERPRISES
DEPARTMENTALDEPARTMENTALUNDERTAKINGSUNDERTAKINGS
DEPARTMENTALDEPARTMENTALUNDERTAKINGSUNDERTAKINGS
PUBLIC PUBLIC CORPORATIONCORPORATION
PUBLIC PUBLIC CORPORATIONCORPORATION
GOVERNMENTAL GOVERNMENTAL COMPANYCOMPANY
GOVERNMENTAL GOVERNMENTAL COMPANYCOMPANY
DEPARTMENT UNDERTAKINGS
Departmental Undertaking is a public enterprise which is organised, controlled and managed by the government in the same way as any other government department.
Example : Railways, Post and Telegraphs, Public works Department(PWD), Ordnance factories.
1. Formation : Departmental Undertaking is created by the government and is attached to a particular ministry.
2. No Separate legal Entity : It is not a separate legal entity. It cannot sue and cannot be sued without government’s consent.
3. Management & Control : It is managed and controlled by the concerned ministry of the government.
4. Finance : It is wholly financed by the government out of budgetary appropriations.
5. No Borrowing Powers : It has no powers to borrow.
6. No Authority to use Revenue : It has no authority to use its revenues. Its revenues are paid into treasury.
MERITS OF A DEPARTMENTAL UNDERTAKINGSMERITS OF A DEPARTMENTAL UNDERTAKINGSMERITS OF A DEPARTMENTAL UNDERTAKINGSMERITS OF A DEPARTMENTAL UNDERTAKINGS
EASY EASY TO FORMTO FORM
EASY EASY TO FORMTO FORM
EASYEASYFINANCINGFINANCING
EASYEASYFINANCINGFINANCING
SECRECYSECRECYSECRECYSECRECYACCOUNTABILEACCOUNTABILE
TO PEOPLETO PEOPLEACCOUNTABILEACCOUNTABILE
TO PEOPLETO PEOPLE
DEMERITS OF A DEPARTMENTAL UNDERTAKINGSDEMERITS OF A DEPARTMENTAL UNDERTAKINGS
LACK OF FLEXIBILITY
LACK OF FLEXIBILITY
LOW EFFICIENCY
LOW EFFICIENCY
GUIDED BYPOLITICAL
CONSIDERATIONS
GUIDED BYPOLITICAL
CONSIDERATIONS
LACK OF MANAGEMENT
LACK OF MANAGEMENT
LACK OF QUICK
DECISION MAKING
LACK OF QUICK
DECISION MAKING
LACK OFAUTONOMY
LACK OFAUTONOMY
PUBLIC CORPORATION
PUBLIC CORPORATION
Public corporation is an autonomous Public corporation is an autonomous organisation which is established by a organisation which is established by a special Act of the Central or State special Act of the Central or State Legislatures. This Special Act defines its Legislatures. This Special Act defines its powers, duties, functions, immunities and powers, duties, functions, immunities and the pattern of management. It is also known the pattern of management. It is also known as Statutory Corporation.as Statutory Corporation.
ExampleExample : : Life Insurance corporation,Life Insurance corporation, Indian Air Lines,Indian Air Lines, Air India,Air India, State Bank of India,State Bank of India, Oil and Natural Gas Commission.Oil and Natural Gas Commission.
Public corporation is an autonomous Public corporation is an autonomous organisation which is established by a organisation which is established by a special Act of the Central or State special Act of the Central or State Legislatures. This Special Act defines its Legislatures. This Special Act defines its powers, duties, functions, immunities and powers, duties, functions, immunities and the pattern of management. It is also known the pattern of management. It is also known as Statutory Corporation.as Statutory Corporation.
ExampleExample : : Life Insurance corporation,Life Insurance corporation, Indian Air Lines,Indian Air Lines, Air India,Air India, State Bank of India,State Bank of India, Oil and Natural Gas Commission.Oil and Natural Gas Commission.
1. Formation : Public Corporation is created by a special Act of Central or State Legislature.
2. Separate Legal Entity : Like a company, it has a separate legal entity. It can sue and be sued.
3. Management & Control : It is managed by the Board of Directors.
4. Finance : it is wholly financed by the government.
5. Borrowing Powers : It has powers to borrow funds from government as well as public.
6. Authority to use Revenue : It has authority to use its revenue to meet its expenditure.
7. Budgeting and Audit : It has powers to prepare its own budgets.
8. Accountability : It is accountable to the public through concerned legislatures.
9. Public Service Motive : Its primary motive of formation is public service and not earning profit.
1. Formation : Public Corporation is created by a special Act of Central or State Legislature.
2. Separate Legal Entity : Like a company, it has a separate legal entity. It can sue and be sued.
3. Management & Control : It is managed by the Board of Directors.
4. Finance : it is wholly financed by the government.
5. Borrowing Powers : It has powers to borrow funds from government as well as public.
6. Authority to use Revenue : It has authority to use its revenue to meet its expenditure.
7. Budgeting and Audit : It has powers to prepare its own budgets.
8. Accountability : It is accountable to the public through concerned legislatures.
9. Public Service Motive : Its primary motive of formation is public service and not earning profit.
MERITS OF AMERITS OF APUBLICPUBLIC
CORPORATIONSCORPORATIONS
MERITS OF AMERITS OF APUBLICPUBLIC
CORPORATIONSCORPORATIONS
EASY TO RAISE FUNDSEASY TO RAISE FUNDSEASY TO RAISE FUNDSEASY TO RAISE FUNDS
OPERATIONAL AUTONOMYOPERATIONAL AUTONOMYOPERATIONAL AUTONOMYOPERATIONAL AUTONOMY
WORKS WITH SERVICE MOTIVEWORKS WITH SERVICE MOTIVEWORKS WITH SERVICE MOTIVEWORKS WITH SERVICE MOTIVE
ACCOUNTABILITYACCOUNTABILITYACCOUNTABILITYACCOUNTABILITY FLEXIBILITYFLEXIBILITYFLEXIBILITYFLEXIBILITY
MERITS OF PUBLIC CORPORATION MERITS OF PUBLIC CORPORATION MERITS OF PUBLIC CORPORATION MERITS OF PUBLIC CORPORATION
LACK OFLACK OFAUTONOMY INAUTONOMY IN
PRACTICEPRACTICE
LACK OFLACK OFAUTONOMY INAUTONOMY IN
PRACTICEPRACTICE
UNRESPONSIVEUNRESPONSIVETOWARDSTOWARDS
CONSUMERSCONSUMERS
UNRESPONSIVEUNRESPONSIVETOWARDSTOWARDS
CONSUMERSCONSUMERS
DIFFICULTY INDIFFICULTY INCHARGING CHARGING
THE ACTTHE ACT
DIFFICULTY INDIFFICULTY INCHARGING CHARGING
THE ACTTHE ACT
GOVERNMENT COMPANYGOVERNMENT COMPANY
A government company is a company which at least 51 % of the paid up share capital is held by:
(a) the Central Government (b) any State Government (c) Partly Central Government and partly State
Government (s).
Government company includes a company which is a subsidiary of such a company.
Example :
State Trading Corporations (STC), Hindustan Machine Tools (HMT), Maruti Udyog Ltd.
1. Formation : It is formed by complying with the provisions of The Company Act, 1956.
2. Separate Legal Entity : Like any other company, it has a separate legal entity.
3. Management & Control : It is managed by the Board of Directors. The members are nominated by the government and elected by the shareholders.
4. Ownership : At least 51% of the share capital is held the Central or state Government or by both.
5. Staffing and terms of service : Its employees are not civil servants. They are appointed by the company on its own terms and conditions.
6. Finance : It can raise funds from government or public.
7. Power to use revenues : It has power to use revenues.
8.8. Operational AutonomyOperational Autonomy : It runs an Commercial : It runs an Commercial principles like, private enterprise and enjoys principles like, private enterprise and enjoys higher degree of freedom from government higher degree of freedom from government interference. It can frame its own rules and interference. It can frame its own rules and regulation to govern its internal management.regulation to govern its internal management.
9.9. Annual ReportsAnnual Reports : Its annual reports and accounts : Its annual reports and accounts along with the audit reports are to be presented along with the audit reports are to be presented to the legislatures as per The Companies Act.to the legislatures as per The Companies Act.
10. 10. Appointment of AuditorsAppointment of Auditors : Its auditors are : Its auditors are appointed by the government on the advice of appointed by the government on the advice of Comptroller and Auditor General of India (CAG).Comptroller and Auditor General of India (CAG).
11. 11. Borrowing PowersBorrowing Powers : It has powers to borrow. : It has powers to borrow.
8.8. Operational AutonomyOperational Autonomy : It runs an Commercial : It runs an Commercial principles like, private enterprise and enjoys principles like, private enterprise and enjoys higher degree of freedom from government higher degree of freedom from government interference. It can frame its own rules and interference. It can frame its own rules and regulation to govern its internal management.regulation to govern its internal management.
9.9. Annual ReportsAnnual Reports : Its annual reports and accounts : Its annual reports and accounts along with the audit reports are to be presented along with the audit reports are to be presented to the legislatures as per The Companies Act.to the legislatures as per The Companies Act.
10. 10. Appointment of AuditorsAppointment of Auditors : Its auditors are : Its auditors are appointed by the government on the advice of appointed by the government on the advice of Comptroller and Auditor General of India (CAG).Comptroller and Auditor General of India (CAG).
11. 11. Borrowing PowersBorrowing Powers : It has powers to borrow. : It has powers to borrow.
MERITS OF A GOVERNMENT COMPANYMERITS OF A GOVERNMENT COMPANY
EASY TO FORMEASY TO FORM
FLEXIBILITY OF RAISING CAPITALFLEXIBILITY OF RAISING CAPITAL
OPERATIONAL FLEXIBILITYOPERATIONAL FLEXIBILITY
EASY TO AMEND DOCUMENTSEASY TO AMEND DOCUMENTS
FACILITATES PRIVATE PARTICIPATIONFACILITATES PRIVATE PARTICIPATION
DEMERITS OF A GOVERNMENT COMPANYDEMERITS OF A GOVERNMENT COMPANY
LACK OFACCOUNTABILITY
LACK OFACCOUNTABILITY
LACK OF CONTINUITY IN
POLICIES & MGMT.
LACK OF CONTINUITY IN
POLICIES & MGMT.
FEAR OF PUBLIC ACCOUNTABILITY
FEAR OF PUBLIC ACCOUNTABILITY
ABSENCE OFREAL AUTONOMY
ABSENCE OFREAL AUTONOMY
LACK OFPROFESSIONAL EXPERIENCE
LACK OFPROFESSIONAL EXPERIENCE
CHANGING ROLE OF PUBLIC SECTOR
CHANGING ROLE OF PUBLIC SECTOR
Despite the considerable role in the economic development of the country, the public sector has its ills and these are many. For instance over 100 of the 242 Central Public sector Undertakings are loss making units with many of them terminally sick. In the present era of globalisation and liberalisation, it is required to bring reforms in public sector undertaking. The government has realised the need of reforming the public sector undertakings.
Reforming, Public Sector Enterprise is neither a simple nor uniform process. Each enterprise is different from the other. The objectives are often different and for these reasons it is required to do different reform measure.
The measures for reforming the Public Sector Enterprise are broadly divided into following.
1. Reforming Public Sector Enterprises by signing Memorandum of Understanding (MOU).
2. Green field Privatization
3. Reforming Public Sector Enterprises by selling their assets either partially or wholly to the private sctor or to the general public.
GLOBALIZATION Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the integration of economics and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure.
EFFECTS OF GLOBALIZATION
• Improvement of International Trade.• Technological Progress.• Increasing Influence of
Multinationals.• Power of the WTO, IMF, and WB.• Greater Outsourcing of BPO’S.• Greater Mobility of Human Resources.• Civil Society.
DRAWBACKS OF GLOBALISATIONDRAWBACKS OF GLOBALISATIONDRAWBACKS OF GLOBALISATIONDRAWBACKS OF GLOBALISATION
• Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labour.
• Corporate influence of nation-states far exceeds that of civil society organizations and average individuals.
• Greater risk of diseases being transported unintentionally between nations
• Spread of a materialistic lifestyle and attitude International bodies like the World Trade Organization infringe on national and individual sovereignty
• Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources
• Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries
MULTINATIONAL COMPANIES
MULTINATIONAL COMPANIES
MULTINATIONAL COMPANIES
A multinational corporation is a corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management.
Very large multinationals have budgets that exceed those of many small countries.
EXAMPLES OF MULTINATIONAL COMPANIES
EXAMPLES OF MULTINATIONAL COMPANIES
INFOSYSINFOSYS
BILLABONGBILLABONG
SONYSONY FORDFORD
KARGILLKARGILL
AMWAYAMWAY
FEATURES OF MNC’sFEATURES OF MNC’sFEATURES OF MNC’sFEATURES OF MNC’s
1. huge amount of capitalhuge amount of capital2. large sized plant and machinery2. large sized plant and machinery3. various activities3. various activities4. expansion on large scale4. expansion on large scale5. professional management5. professional management6. advance technology6. advance technology7. market expansion7. market expansion8. profit is the main objective8. profit is the main objective9. control of head office9. control of head office10. creation of new project10. creation of new project
1. huge amount of capitalhuge amount of capital2. large sized plant and machinery2. large sized plant and machinery3. various activities3. various activities4. expansion on large scale4. expansion on large scale5. professional management5. professional management6. advance technology6. advance technology7. market expansion7. market expansion8. profit is the main objective8. profit is the main objective9. control of head office9. control of head office10. creation of new project10. creation of new project
BENEFITS OF MNC’sraining of local labor with more sophisticated techniques which on the long run will bring external benefits to the host country when these techniques can be used in all economic sector.raise the growth rate of host nation by introducing new investment and new technology.induce their local rivals to become more innovative and competitive.promote improvement or development to various supporting industry or complementary industries
contributions of taxation, plus providing the host country with foreign exchange that can be used to purchase vital imports.
MNC may enjoys high competitive advantages over local firms that can destroy local competition rather than promote it.
they can require their subsidiaries to operate polices that may be inefficient or create distortion in local market
they may misuse the environment
they may create uncertainty because foreign firms control the country within it by controlling part of its industries.
they may not promote any development for the nation's economic activities by simply source their components from abroad. which means the they will drive local producers out of business.
avoid tax by practicing transfer pricing.
JOINT VENTURES
JOINT VENTURESJOINT VENTURES
A contractual agreement joining together two or more parties for the purpose of executing particular business undertaking. All parties agree to share in the profits and losses of the enterprise.
A contractual agreement joining together two or more parties for the purpose of executing particular business undertaking. All parties agree to share in the profits and losses of the enterprise.
BENEFITS OF JOINT VENTURE
• Provide companies with the opportunity to gain new capacity and expertise
• Allow companies to enter related businesses or new geographic markets or gain new technological knowledge
• access to greater resources
• sharing of risks with a venture partner
• Joint ventures can be flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business' exposure.
EXAMPLES OF JOINT VENTURESEXAMPLES OF JOINT VENTURES
SONY ERICSSONSONY ERICSSON
COLGATE AND PALMOLIVCOLGATE AND PALMOLIV
VIRGIN MOBILE INDIA LIMITEDVIRGIN MOBILE INDIA LIMITED
NEWYORK LIFE INSURANCENEWYORK LIFE INSURANCE
DRAWBACKS OF JOINT VENTUREDRAWBACKS OF JOINT VENTURE
• It takes time and effort to build the right relationship and partnering It takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise with another business can be challenging. Problems are likely to arise ifif
• The objectives of the venture are not 100 per cent clear and The objectives of the venture are not 100 per cent clear and communicated to everyone involved.communicated to everyone involved.
• There is an imbalance in levels of expertise, investment or assets There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners.brought into the venture by the different partners.
• Different cultures and management styles result in poor integration Different cultures and management styles result in poor integration and co-operation.and co-operation.
• The partners don't provide enough leadership and support in the The partners don't provide enough leadership and support in the early stages.early stages.
• Success in a joint venture depends on thorough research and analysis Success in a joint venture depends on thorough research and analysis of the objectives.of the objectives.
JOINT SECTOR
ENTERPRISES
JOINT SECTOR ENTERPRISESJOINT SECTOR ENTERPRISES
A joint sector enterprises is one which A joint sector enterprises is one which is owned, managed and controlled is owned, managed and controlled jointly by the private entrepreneurs jointly by the private entrepreneurs and the government. For example, and the government. For example, Cochin Refineries, Gujarat State Cochin Refineries, Gujarat State Fertilizers Company. Such enterprises Fertilizers Company. Such enterprises are organized to encourage private are organized to encourage private entrepreneurs to participate in entrepreneurs to participate in industrial development jointly with the industrial development jointly with the government. government.
CHARACTERISTICS OF CHARACTERISTICS OF JOINT SECTOR ENTERPRISESJOINT SECTOR ENTERPRISES
CHARACTERISTICS OF CHARACTERISTICS OF JOINT SECTOR ENTERPRISESJOINT SECTOR ENTERPRISES
JOINT OWNERSHIPJOINT OWNERSHIPJOINT OWNERSHIPJOINT OWNERSHIP
JOINT MANAGEMENTJOINT MANAGEMENTJOINT MANAGEMENTJOINT MANAGEMENT
JOINT FINANCINGJOINT FINANCINGJOINT FINANCINGJOINT FINANCING
SOCIO-ECONOMIC OBJECTIVESSOCIO-ECONOMIC OBJECTIVESSOCIO-ECONOMIC OBJECTIVESSOCIO-ECONOMIC OBJECTIVES
JOINT ACCOUNTABILITYJOINT ACCOUNTABILITYJOINT ACCOUNTABILITYJOINT ACCOUNTABILITY
CHARACTERISTICSCHARACTERISTICS
Joint OwnershipJoint Ownership : Joint sector enterprises are : Joint sector enterprises are owned by private entrepreneurs and the owned by private entrepreneurs and the government.government.Joint ManagementJoint Management : Such enterprises are mainly : Such enterprises are mainly managed by private entrepreneurs.managed by private entrepreneurs.Joint FinancingJoint Financing : Such enterprises are financed : Such enterprises are financed jointly by private entrepreneurs and the jointly by private entrepreneurs and the government. The proportion of capital to be government. The proportion of capital to be continued is decided by mutual consent.continued is decided by mutual consent.Socio-Economic ObjectivesSocio-Economic Objectives : Such enterprises : Such enterprises are guided by both the profit and social are guided by both the profit and social objectives.objectives.Joint AccountabilityJoint Accountability : Such enterprises are : Such enterprises are accountable both to the private entrepreneurs and accountable both to the private entrepreneurs and the government.the government.
PRIVATE SECTOR ENTERPRISESPRIVATE SECTOR ENTERPRISESPRIVATE SECTOR ENTERPRISESPRIVATE SECTOR ENTERPRISES
A private sector enterprise or a private A private sector enterprise or a private enterprise is one which is owned, enterprise is one which is owned, managed and controlled by private managed and controlled by private entrepreneurs. For example, business entrepreneurs. For example, business houses managed by Tata such as TELCO, houses managed by Tata such as TELCO, TISCO, TATAPOWERS, business houses TISCO, TATAPOWERS, business houses managed by Birlas such as managed by Birlas such as Century,MPRL, Birla Yamaha, Grasim Century,MPRL, Birla Yamaha, Grasim Industries, business houses managed Industries, business houses managed by Ambanies such as Reliance by Ambanies such as Reliance Industries, Reliance Petroleum, Reliance Industries, Reliance Petroleum, Reliance Capital etc….Capital etc….
CHARACTERISTICS OF PRIVATE SECTOR ENTERPRISES
CHARACTERISTICS OF PRIVATE SECTOR ENTERPRISES
PRIVATE OWNERSHIPPRIVATE OWNERSHIP
PRIVATE FINANCINGPRIVATE FINANCING
PRIVATE MANAGEMENT PRIVATE MANAGEMENT
PRIVATE ACCOUNTABILITYPRIVATE ACCOUNTABILITY
PROFIT OBJECTIVEPROFIT OBJECTIVE
• Private OwnershipPrivate Ownership : These enterprises are owned by private entrepreneurs.
• Private ManagementPrivate Management : The rights of management vest in the owner but professionals can be employed for the efficient management of such enterprise.
• Private FinancingPrivate Financing : Such enterprises are financed by the private entrepreneurs.
• Profit ObjectiveProfit Objective : Such enterprises are mainly guided by profit objective.
• Private AccountabilityPrivate Accountability : Those who manage such enterprises are accountable to the owners for the performance of such enterprises.
CHARACTERISTICS
SOLE PROPRIETORSHIP
SOLE PROPRIETORSHIP 'Sole' means single and 'proprietorship' means
ownership. It means only one person or an individual becomes the owner of the business. Thus, the business organisation in which a single person owns, manages and controls all the activities of the business is known as sole proprietorship form of business organisation. The individual who owns and runs the sole proprietorship business is called a ‘sole proprietor’ or ‘sole trader’. A sole proprietor pools and organizes the resources in a systematic way and controls the activities with the sole objective of earning profit.
1. Single Ownership2. No sharing of Profit and
Loss3. One-man’s Capital4. One-man Control5. Unlimited Liability6. Less legal formalities
ADVANTAGES
Easy to Form and Wind up Direct Motivation Quick Decision and Prompt Action Better Control Maintenance of Business Secrets Close Personal Relation Flexibility in Operation Encourages Self-employment
LIMITATIONS
Limited Capital Unlimited Liability Lack of Continuity Limited Size Lack of Managerial Expertise:
PARTNERSHIP
PARTNERSHIP
A legal contract entered into by two or more persons in which each agrees to furnish a part of the capital and labor for a business enterprise, and by which each shares a fixed proportion of profits and losses.
FEATURES Formation according to the Partnership Act of 1932. Financing with the help of partners.
All have right to take part in Management .
Restriction on Transfer of Interest, no partner can transfer the interest.
Unlimited Liability of Partners.
Duration is according to the type of partnerships.
Taxation. Implied Authority.
ADVANTAGES Easy to set up. More capital can be brought into the
business. Partners bring new skills and ideas to a
business. Decision making can be much easier with
more brains to think about a problem. Partners share responsibilities and duties
of the business. Division of labour is possible as partners
may have different skills.
LIMITATIONS
o Instability of the firm.o Limited resources due to restriction
maximum membership.o Unlimited liability.o Scope for friction and quarrel.o No continuity.
JOINT HINDUFAMILY BUSINESS
JOINT HINDU FAMILY
Joint Hindu Family Business is a different type of organization, which is found only in India. As the name suggests, it is type of organization in which all the members of Hindu Undivided Family manage and control the business with the direction of head of the family.
It is not a Partnership. It is just like a Partnership where only the members of the family can take part. It is not even sole trading concern, but it is enlargement of sole trading concern in which continuity is guaranteed. The business is carried on from generation to generation. It comes into existence by the operation of Hindu law.
FEATURESComes into existence by Hindu Law.
No outside membership. Male members up to three successive generations of a family own the business jointly.
The senior most co-parcener, known as KARTA has the implied authority to run the business.
Even if the co-parceners have equal share, it fluctuates with every birth and death of a male in the family.
The liability of the members are limited to the extent of their share but the liability of the karta is unlimited.
ADVANTAGES
Assured share in profits. Sharing of knowledge and
experience among members. Co-operative efforts. Unlimited liability of the karta. Continued existence.
LIMITATIONSLIMITATIONSLIMITATIONSLIMITATIONSa.Limited resources.b.Lack of motivation among members.
c.Scope for misuse of power by karta.
d.Scope for conflict and instability.
a.Limited resources.b.Lack of motivation among members.
c.Scope for misuse of power by karta.
d.Scope for conflict and instability.
COOPERATIVE
SOCIETY
COOPERATIVE SOCIETY
Any ten persons can form a co-operative society. It functions under the Cooperative Societies Act, 1912 and other State Co-operative Societies Acts.
A co-operative society is entirely different from all other forms of organisation. The co-operatives are formed primarily to render services to its members. Generally it also provides some service to the society. The main objectives of co-operative society are:
(a)rendering service rather than earning profit,(b)mutual help instead of competition, and(c)self help in place of dependence
COOPERATIVE SOCIETYCOOPERATIVE SOCIETY
CONSUMERCONSUMER
CREDITCREDITMARKETTINGMARKETTING
FARMINGFARMING HOUSINGHOUSING
PRODUCERSPRODUCERS
FEATURES
o It is a body corporate that enjoys certain privileges like a joint stock company.
o Its primary objective is to render services to its members in particular and society in general.
o Its management is most democratic in nature as compared to other forms of business organisations.
o Its major finance is raised through government loans, grants, subsidies and outside donations.
o Members get return on capital at a fixed rate of dividend from the profit as per the Societies Act.
ADVANTAGES
Formation is easy. Democratic management. Assistance from the government. Elimination of middlemen’s profit. Fairly stable life.
LIMITATIONS
Limited capital. Lack of managerial talent. Lack of motivation. Lack of secrecy. Dependence on the government.
COMPANYCOMPANY
JOINT STOCK COMPANY
A Joint Stock Company form of organisation is a voluntary association of persons to carry on business.
It is an association of persons who generally contribute money for some common purpose. The money so contributed is the capital of the company. The persons who contribute capital are its members. The proportion of capital to which each member is entitled is called his share, therefore members of a joint stock company are known as shareholders and the capital of the company is known as share capital. The total share capital is divided into a number of units known as ‘shares’. You may have heard of the names of joint stock companies like Tata Iron & Steel Co. Limited, Hindustan Lever Limited, Reliance Industries Limited, Steel Authority of India Limited, Ponds India Limited etc.
The companies are governed by the Indian Companies Act, 1956. The Act defines a company as an artificial person created by law, having separate entity, with perpetual succession and a common seal.
COMPANYCOMPANY
PUBLIC LIMITED COMPANY
PUBLIC LIMITED COMPANY
PRIVATE LIMITEDCOMPANY
PRIVATE LIMITEDCOMPANY
EXAMPLES OF PRIVATE LIMITED COMPANIESEXAMPLES OF PRIVATE LIMITED COMPANIES
Reliance Industries LimitedReliance Industries Limited
Tata Consultancy Services (TCS)Tata Consultancy Services (TCS)
Hero Honda Motors LimitedHero Honda Motors Limited
TATA Steel LimitedTATA Steel Limited
EXAMPLES OF PUBLIC LIMITED COMPANIESEXAMPLES OF PUBLIC LIMITED COMPANIES
Indian Oil Corporation (IOC) Indian Oil Corporation (IOC)
Bharat Heavy Electricals Limited (BHEL)Bharat Heavy Electricals Limited (BHEL)
Indian AirlinesIndian Airlines
Steel Authority of India Limited (SAIL) Steel Authority of India Limited (SAIL)
FEATURES Artificial Person. Separate legal Entity. Common Seal. Perpetual Existence. Limited liability of Members. Transferability of Shares. Minimum membership– 2 for Private limited
company for public limited company. Maximum membership – 50 for Private limited
company and unlimited for Public limited company.
ADVANTAGES
Limited liability
Continuity of existence
Benefits of large scale operation
Professional management
Contribution to the society through creation of employment, promoting ancillary industries etc.
Research and Development
LIMITATIONCompliance with several laws and
fulfillment of a number of legal.formalities during formation.Management and control by a group.Shares are subject to manipulation and
speculation.Government interference.Scope of misuse of resource power.
CHANGING ROLE OF PRIVATE SECTORCHANGING ROLE OF PRIVATE SECTOR
The private sector has done more than expected.The private sector has done more than expected.
India's software industry is world class. Indian manufacturing has finally India's software industry is world class. Indian manufacturing has finally become competitive.become competitive.
Indian companies are making foreign acquisitions galore and becoming Indian companies are making foreign acquisitions galore and becoming MNCs - Tata Steel, Bharat Forge, Tata Motors and Ranbaxy are a few MNCs - Tata Steel, Bharat Forge, Tata Motors and Ranbaxy are a few examples.examples.
Power was long a state monopoly, and state electricity boards were bankrupt Power was long a state monopoly, and state electricity boards were bankrupt when reforms began in 1991.when reforms began in 1991.
The second green revolution is being energised by the private sector, not The second green revolution is being energised by the private sector, not the public sector.the public sector.
Reliance has led the charge into rural areas in Punjab with a farm-to-fork Reliance has led the charge into rural areas in Punjab with a farm-to-fork operation - managing the chain from seeds and crops to processing and operation - managing the chain from seeds and crops to processing and hypermarket sales.hypermarket sales.
ITC is rapidly expanding its e-choupals.ITC is rapidly expanding its e-choupals. The Mahindras, Tatas and Shrirams are setting up rural supermarkets.The Mahindras, Tatas and Shrirams are setting up rural supermarkets.
The government developed the idea of deficiency payments for roads, with The government developed the idea of deficiency payments for roads, with the contract going to the bidder requiring the lowest toll subsidy.the contract going to the bidder requiring the lowest toll subsidy.
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