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Business studies > Chapter 3 > Flashcards

Chapter 3 Flashcards

global, public and private enterprises

1
Q

What happened in 1948

A
  • industrial policy resolution
  • no of industries were reserved for public sector and the rest were given to the private through licensing
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2
Q

What happened in 1956

A
  • industrial policy resolution
  • certain objectives for the public sector to follow was laid down to accelerate the rate of growth
  • public sector was given importance but mutual dependancy was emphasisied
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2
Q

What happened in 1991

A
  • the 1991 industrial policy
  • deliberately disinvested from public sector to allow more freedom in private sector
  • companies outside of india were also invited invest in india therefore making global enterprises a part of the indian economy too
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2
Q

what economy is the indian economy

A

The indian economy is a mixed economy with both privately owned and government owned business

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2
Q

What does the private sector consist of

A

the private sector consists of business owned by individual or a group of individuals . sole propreitorship, joint hindu family, cooperative stores, joint stock company, partnership

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2
Q

What are the different types of public sector organisations

A
  • departmental undertakings
  • statutory corporation
  • government companies
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3
Q

What does the public sector consists of

A

The public sector consists of various organisations owned or manged by the government these maybe owned partly or fully by a state government or central government or both. it can be a part of the ministry or come into existence by a special act of the parliament

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3
Q

Features of departmental undertakings (5)

A
  • finance
  • accounting system
  • management
  • appointment of employees
  • accountability
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4
Q

define departmental undertakings

A
  • oldest and most traditional form of organising pubic enterprises
  • they are not independant instituitions and can be under state or central government
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5
Q

Features of departmental undertakings - finance

A

It is given from the governments treasury during the yearly allocation of budget the money earned from these organisations is also given to the governments treasury

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6
Q

Features of departmental undertakings - accounting system

A

The organisation is also subject to accounting and audit controls like any other government avtivities.

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7
Q

Features of departmental undertakings - management

A

it is subject to direct government control from the respected ministry. It is a major subdivision of a government department and is managed and controlled by it

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8
Q

Features of departmental undertakings - appointment of employees

A
  • the employees will be considered as government employees
  • they will be recruited through tests like UPSC under SSB - staff selection board
  • They are headed by indian administrative officers (IAS) officers who are transferrable from one ministry to another
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9
Q

Features of departmental undertakings - accountability

A
  • They are accountable to the ministry since they are directly under the control of the ministry
  • They are also responsible to the parliament and people as they are using money from treasury which is people tax money
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10
Q

Merits of departmental undertakings (4)

A
  • source of income
  • suitable for national security
  • answerable to parliament
  • complete government control
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11
Q

Merits of departmental undertakings - source of income

A

The revenue earned by the organisations go directly to the national treasury therefore it is a income for the government

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12
Q

Merits of departmental undertakings - suitable for national security

A

It is the safest as it is directly under a ministry and is controlled and supervised by the concerned ministry

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13
Q

Merits of departmental undertakings - answerable to parliament

A

All departmental undertakings are accountible to the parliament and have a high degree of public accountability , so they have to be careful about their progress and performance

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14
Q

Merits of departmental undertakings - complete government control

A

It is completely managed, owned and controlled by the government ministry
- it facilitates the parliament to excercise effective control over their operations

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15
Q

De merits of departmental undertakings (6)

A
  • lack of flexibility
  • delay in decision making
  • conservative approach
  • red tapism
  • undue government influence
  • indifferent to consumer needs
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16
Q

De merits of departmental undertakings - lack of flexibility

A
  • There is little scope for exercising initiative and making improvements . (ex. employees slacking)
  • Departmental undertakings lack to provide flexibility which is essential .
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17
Q

De merits of departmental undertakings - delay in decision making

A

The employees are not allowed to take individual decisions and must consult the ministry everytime which causes in delay in decision making when apt prompt decisions need to be made.

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18
Q

De merits of departmental undertakings - conservative approach

A

Since it is the public tax money and the government is responsible for it, it wont take many high risk ventures which will be more profitable and be conserved in their business approaches

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19
Q

De merits of departmental undertakings - red tapism

A
  • No decision is taken without going through proper channels, hierarchy.
  • This might create problems in the operation of the business.
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20
Q

De merits of departmental undertakings - undue government influence

A

There will be a lot of political interference thorugh the ministry

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20
Q

Features of statutory corporation - accounting and audit procedures

A
  • it is not subject to government rules in terms of accounting and audit
  • Since its budget is not from the governemnt treasury
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20
Q

Features of statutory corporation - staffing and terms of service

A
  • The employees here are not government employees
  • Sometimes IAS officers might be taken from government departments to head these organisations
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20
Q

De merits of departmental undertakings - indifferent to consumer needs

A

These organisations tend to be insensitive to consumer needs and do not provide adequate services to them.

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20
Q

Features of statutory corporation - formation

A

It is established by a special act of the parliament that lays down the powers and rules and regulations of the corporation

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20
Q

Define statutory corporation

A
  • It is a corporate with powers just like a joint stock company.
  • It has a seperate legal existence set up under a special act of the parliament.
  • It is managed by BOD appointed by the government .
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21
Q

Features of statutory corporation - ownership

A
  • This form of organisation is wholly owned by the state/central government.
  • The government also has the rights to share its profits and bear its losses.
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21
Q

Features of statutory corporation (6)

A
  • formation
  • ownership
  • corporate existence
  • financial autonomy
  • accounting and audit procedures
  • staffing and terms of service
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22
Q

Features of statutory corporation - corporate existence

A
  • It has a seperate legal existence other than that of the government so it can sue and be sued.
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23
Q

Features of statutory corporation - financial autonomy

A

This type of instituition is independantly financed and can obtain funds by borrowing from the government.
It can chose how to use its funds too, wheather to share as dividends or keep as retained earnings

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24
Q

merits of statutory corporation (4)

A
  • operational flexibility
  • freedom from interference
  • autonomous set up
  • facilitates economic growth
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25
Q

merits of statutory corporation - operational flexibility

A

-They enjoy independance in their functioning as they are free from undesirable government influence

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26
Q

merits of statutory corporation - freedom from interference

A

Since the funds are not from the government treasury the government doesnt interfere that much in the business operations, which means the business will be more efficient with lesser interference

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27
Q

merits of statutory corporation - autonomous set up

A

They are autonomous so they can form their own policies rule and regulations as long as they are in the act defining them and they might only need approval in some cases.

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28
Q

merits of statutory corporation - facilitates economic growth

A

They facilitate economic growth as they have the support of the government and the powers and capacity of the private sector

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29
Q

De merits of statutory corporation (5)

A
  • theoretical autonomy
  • government interference
  • undesirable practices
  • delay in action
  • rigid structure
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30
Q

De merits of statutory corporation - rigid structure

A

since the powers and all of the corporation are defined by he act and anything to b done beyond the act must first amend the act which is time consuming and hectic.

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31
Q

De merits of statutory corporation -delay in action

A
  • Government often appoints advisors to the corporation board, this affects the freedom of the corporation.
  • In case of disputes the problem is referred to government and this takes a longer time
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32
Q

De merits of statutory corporation - undesirable practises

A

officials may misuse their autonomy and indulge in activities like corruption which is against the objectives of the organisation

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33
Q

De merits of statutory corporation -government interference

A

Government and political interference is always there in case of taking a major decision or decisions regarding funds.

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34
Q

De merits of statutory corporation - theoretical autonomy

A

The freedom is only namesake but they to are subject to lots of rules and regulations, so there wont be that much operational flexibility

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35
Q

define government companies

A
  • A government company is established under the companies act 2013 or any other previous companys act
  • Not less than 51% shares are held by the government
  • The shares are purchased in the president of indias name
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36
Q

features of government companies (6)

A
  • incorporation
  • separate legal entity
  • management
  • governed by memorandum of association
    -accounting and audit procedures
  • finance
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37
Q

features of government companies - incorporation

A
  • The government company is registered under the companies act 2013 or any other previous act
  • It is formed by an executive rather than a legislative decision
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37
Q

features of government companies - seperate legal entity

A
  • The company has a sepearte legal existence independant of the goernment
  • It can enter into a contract acquire property sue and be sued.
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37
Q

features of government companies - management

A
  • The management is regulated by the provisions of the companies act.
  • It is managed by a BOD’s nominated by the government
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37
Q

features of government companies - governed by memorandum of association

A
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38
Q

features of government companies -accounting and audit procedures

A
38
Q

features of government companies - finance

A
39
Q

merits of government companies (4)

A
  • ease of formation
  • operational autonomy
  • independant status
  • prevents unhealthy business practices
40
Q

merits of government companies - ease of formation

A
41
Q

merits of government companies - operational autonomy

A
42
Q

merits of government companies - independant status

A
43
Q

merits of government companies - prevent unhealthy business practices

A
44
Q

de merits of government companies (3)

A
  • freedom only in name
  • lack of accountability
  • defeat of main purpose
45
Q

de merits of government companies - freedom only in name

A
46
Q

de merits of government companies - lack of accountability

A
47
Q

de merits of government companies - defeat of main purpose

A
48
Q

difference between departmental undertakings , statutory corporation and government companies - formation

A

departmental undertakings ;
It is created by order of the government and is attached to a particular ministry
statutory corporation ;
It is created by special act of the parliament
government companies ;
It is created with accordance to the companies act 2013

49
Q

difference between departmental undertakings , statutory corporation and government companies - legal status

A

departmental undertakings ;
No seperate legal entity
statutory corporation ;
Seperate legal entity
government companies ;
Seperate legal entity

50
Q

difference between departmental undertakings , statutory corporation and government companies - management

A

departmental undertakings ;
Managed by concerned officials of the ministry
statutory corporation ;
Managed by the board of directors APPOINTED by the ministry
government companies ;
manged by the board of directers NOMINATED by the government

51
Q

difference between departmental undertakings , statutory corporation and government companies - finance

A

departmental undertakings ;
fully financed by the government by allocations during the budget planning
statutory corporation ;
Funds through borrowing from the government and the revenue from sales of goods
government companies ;
at least 51% share capital owned and contributed by the government

52
Q

difference between departmental undertakings , statutory corporation and government companies - ownership

A

departmental undertakings ;
Wholly owned by the government
statutory corporation ;
Wholly owned by the government
government companies ;
at least 50% of shares contributed by government

53
Q

difference between departmental undertakings , statutory corporation and government companies - staff

A

departmental undertakings ;
government employees
statutory corporation ;
not government employees
government companies ;
not government employees

54
Q

difference between departmental undertakings , statutory corporation and government companies - flexibility

A

departmental undertakings ;
no flexibility
statutory corporation ;
considerable amount of flexibility
government companies ;
significant flexibility

55
Q

difference between departmental undertakings , statutory corporation and government companies - degree of autonomy

A

departmental undertakings ;
no autonomy
statutory corporation ;
considerable degree of autonomy
government companies ;
significant flexibility

56
Q

difference between departmental undertakings , statutory corporation and government companies - public accountability

A

departmental undertakings ;
Fully accountible to public and concerned ministry
statutory corporation ;
accountable to parliament
government companies ;
accountible to concerned ministry

57
Q

difference between departmental undertakings , statutory corporation and government companies - examples

A

departmental undertakings ;
railways and post and telegraph department
statutory corporation ;
reserve bank of india and life insurance company
government companies ;
steel authority of india and bharat heavy electricals limitted

58
Q

Difference between private sector enterprise and public sector enterprise - objective

A

private sector enterprises ;
Main motive of earning profit
public sector enterprises ;
main motive of providing services to public

59
Q

Difference between private sector enterprise and public sector enterprise - ownership

A

private sector enterprises ;
Owned by one or more private individual or corporate bodies
public sector enterprises ;
owned by central or state governments together or individually

59
Q

Difference between private sector enterprise and public sector enterprise - capital

A

private sector enterprises ;
By private resources and owners from their own resources
public sector enterprises ;
entire or at least 51% capital is provided by the government

59
Q

Difference between private sector enterprise and public sector enterprise - management

A

private sector enterprises ;
managed by owners and professional managers
public sector enterprises ;
Managed by board of directors who are representatives of the government

60
Q

Features of global enterprises - huge capital resources

A
60
Q

Difference between private sector enterprise and public sector enterprise - freedom of management

A

private sector enterprises ;
Owners are free to do whatever they want with little interference
public sector enterprises ;
There is less freedom due to political interference

60
Q

Difference between private sector enterprise and public sector enterprise - area of operations

A

private sector enterprises ;
Operate in areas in which steady and reasonable returns are expected
public sector enterprises ;
They work in areas with public utility services and other areas of social benefit

60
Q

Difference between private sector enterprise and public sector enterprise - flexibility

A

private sector enterprises ;
Can easily modify their policies as per their needs
public sector enterprises ;
follows rigid policies which cannot be modified easily and requires the approval of the government for modification.

61
Q

Define global enterprises or multinational companies

A
62
Q

Features of global enterprises (7)

A
  • huge capital resources
  • foreign collaboration
  • advanced technology
  • product innovation
  • marketing strategies
  • expansion of market territory
  • centralised control
63
Q

Features of global enterprises - foreign collaboration

A
64
Q

Features of global enterprises - advanced technology

A
65
Q

Features of global enterprises - product innovation

A
66
Q

Features of global enterprises -marketing strategy

A
67
Q

Features of global enterprises - expansion of market territory

A
67
Q

Features of global enterprises - centralised control

A
68
Q

define public private partnership

A
69
Q

features of ppp model (3)

A
70
Q

application of ppp model

A
71
Q

examples of pp model

A
71
Q

strengths of ppp model - sharing of project risks

A
71
Q

strengths of ppp model (4)

A
  • sharing of project risks
  • increased efficiency
  • innovation
  • better viability
71
Q

strengths of ppp model - increased efficiency

A
71
Q

strengths of ppp model - innovation

A
72
Q

strengths of ppp model - better viability

A
73
Q

weakness of ppp model

A
74
Q

define joint ventures

A
75
Q

types of contractual joint venture

A
75
Q

types of joint ventures

A
76
Q

types of equity based joint venture

A
77
Q

define contractual joint venture

A
78
Q

define equity based joint venture

A
79
Q

important points about joint ventures

A
80
Q

examples of joint ventures

A
80
Q

benefit of joint ventures (6)

A
  • inreased resources and capacity
  • innovation
  • access to new markets and distribution sources
  • access to technology
  • low cost of production
  • established brand name
80
Q

benefit of joint ventures -

A
80
Q

benefit of joint ventures -

A
80
Q

benefit of joint ventures -

A
81
Q

benefit of joint ventures -

A
82
Q

benefit of joint ventures -

A
83
Q

benefit of joint ventures -

A
84
Q

Define changing role of public sector

A
85
Q

The different changes in public sector (10)

A
85
Q

explain the change in public sector -

A
85
Q

explain the change in public sector -

A
85
Q

explain the change in public sector -

A
86
Q

explain the change in public sector -

A
87
Q

explain the change in public sector -

A
88
Q

explain the change in public sector -

A
89
Q

explain the change in public sector -

A
90
Q

explain the change in public sector -

A
91
Q

explain the change in public sector -

A
92
Q

explain the change in public sector -

A
93
Q

no of features , merits and de merits of departmental undertakings

A

Features: 5
Merits: 4
Demerits: 6

94
Q

no of features , merits and de merits of statutory corporation

A

Features: 6
Merits: 4
Demerits: 5

94
Q

no of features , merits and de merits of government companies

A

Features: 6
Merits: 4
Demerits: 3

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