Private, Public and Global Enterprises

Everything we buy today is connected to businesses whether it is a pen, any grocery item, a toy or traveling tickets, etc. Every moment in our life, we remain connected to someone's business. The only difference is that some are from the private sector, some are public and some are from the global sector.


Private Enterprises

Private enterprises are those in which people open their shops. The shop is owned by themselves on sole proprietorship, partnership, joint family, cooperative and company.


Public Enterprises

In the public sector, the government (whether state government or central government) owns the company or the business. The government manages everything and the profit also goes to the government. The public sector government controls the economy of the country. Whatever money or capital they get are distributed among both central and state governments.

Whether the money goes to the central government or state government, the main perspective is the welfare of the people and improving their livelihood. If something goes wrong or the public money is misused or there is some bungling, then the government should be accountable to the people.


Forms of Public Enterprises

Given below are the forms of Public Enterprises

Department Undertaking

Departmental undertaking is the oldest form of public sector enterprises. The overall control of this is in the hands of the government. However, some departments are looked by the central government and some are looked by the state government. It has no separate intervention; the government itself runs it. The government makes its rules and regulations which the department has to follow.

Example: Indian railways, defence department, post and telegraph, broadcasting, etc.


Features

  • They operate under the overall control of one of the ministries of the Central or state government.

  • They are part of government only. There is no separate entity.

  • The government gives them a budget; the amount is declared from the government's annual budget.

  • Whatever income the department earns goes to the treasury of the government. It is the source of income for the government.

  • Those who work in the departmental undertaking are called government servants or civil servants.

  • They can be sued in the same manner as one can file a suit against the government.


Merits

  • Formation of the department undertaking is easy. Parliamentary discussion occurs. If both the opposition and the ruling government get to agree, the formation of the department takes place.

  • Control is effective. There is a control mechanism to manage or to use resources.

  • Optimum utilisation of funds. They get minimum funds. All the resources or funds gathered have to be used wisely. They have to maintain accounts, etc.

  • It is accountable to parliament for all its actions which ensure proper utilisation of funds.


Demerits

  • Department undertakings are not flexible. They have to do all the work that their departmental heads say. They have to obey their head.

  • There is no motivation. Awards and rewards are fixed, no matter how much hard work you do, the salary is fixed here.

  • Lack of financial authority. If the revenue of the work they are doing is too much, workers cannot use that profit for themselves. All the money is being deposited in the government treasury. The government will decide what to do with that money.

  • Insufficient management. People who run these departments are burdened with so much work. They do not get much time to think about the productivity of the department.

  • Red tape and Bureaucracy. Because there is a lot of delay in doing anything, the work does not happen faster. Since there is no single person responsible for any decision, getting permission is difficult.


Government Company

Any such company, where the central government or state government has taken over 51% of the paid-up share capital from work, will be called a government company.

Examples: Hindustan Insecticides Ltd., State Trading Corp. of India, Hindustan Cables Ltd.


Features

  • Registration is compulsory. It is mandatory to register every company under the Companies Act, 1956. When the company is registered, it gets a Certificate of Incorporation, which is required to corporate the company.

  • It remains under the ownership of the government, either the central government or the state government. The individual departments do not get ownership.

  • The management of these companies is done by the Board of Directors, who is appointed by the ministry or by the government.

  • A company becomes a legal entity as soon as it registers to Certificate of Incorporation.

  • Ministerial control stays on every government company.

  • They have autonomy of money, whatever profit they make, they can decide how to spend that money and they do not need to be dependent on others' decisions.

  • The government can select staff efficiently.

  • They have to take responsibility for their work because there is a discussion of their work in Parliaments.


Merits

  • There is administrative autonomy.

  • There is the flexibility to work and flexibility to make decisions more than the departmental undertaking.

  • The staff is efficient.

  • They can collaborate with the private sector.


Demerits

  • Its autonomy is on paper only. The departments have to run according to the government.

  • There is a lot of political interference.

  • Board packed with government representatives.

  • These organisations are usually insensitive to consumer needs and do not provide goods and adequate services to them.


Statutory Corporation

It is also known as public cooperation. A statutory corporation is a body corporate formed by a special act of parliament. The government fully finances it. Its power, objects, limitations, etc. are also decided by the Act of Legislative.

Example:-LIC, food cooperation, etc.


Features

  • It is created by the act of parliament.

  • The main motive of Public Cooperation is to serve the general public.

  • It is accountable to parliament for its operation.

  • It has its own rules of recruitment and remuneration of its staff. 


Merits

  • In this, you can work by yourself. It is a separate entity, and there is very little government interference. You can run a company on your own will.

  • Here, the decision can be taken fast. Here, the paperwork is not as much as departmental undertaking and government company.

  • There is an efficient staff.


Demerits

  • In reality, there is not much operational flexibility. It suffers from a lot of political interference.

  • Usually, they enjoy a monopoly in their field and do not have a profit motive due to which their working turns out to be inefficient.

  • Where there is dealing with the public, rampant corruption exists. Thus public corporation is suitable for undertaking requiring monopoly powers, e.g. public utilities.


Global Enterprises

Global enterprises are also known as multinational companies. Multi means many and Nation means Countries or Nations. So multinational companies are the companies that operate in a lot of countries. Such companies have many branches, factories and workshops in different countries. They are also known as transnational corporations, global enterprises or international enterprises.


Features

  • These companies are giant, and there are huge capital resources.

  • They have centralised control. Global companies have a centrally located office meaning they have one headquarter.

  • These organisations possess advanced and superior technology which enable them to provide world-class products and services.

  • MNCs use aggressive marketing strategies. Their brands are well-known and spend huge amounts on advertising and sale promotion.

FAQ (Frequently Asked Questions)

1. What Are The Three Main Types of Enterprises?

The three main types of enterprises are

  1. Private Enterprises: In such enterprises, people open their shops. The shop is owned by someone on sole proprietorship, partnership, joint family, cooperative and company.

  2. Public Enterprises: In the public sector, the government owns the company or the business.

  3. Global Enterprises: Global Enterprises are the companies that operate in a lot of countries. It is also known as Multinational Company.

2. What Are The Different Forms of Public Enterprises?

Following are the different types of public enterprises:

  1. Department Undertaking: Departmental undertaking is the oldest form of public sector enterprises. The overall control of this is in the hands of the government. 

  2. Government Company: Any such company, where the central government or state government has taken over 51% of the paid-up share capital from work, will be called a government company.

  3. Statutory Corporation: It is also known as public cooperation. A statutory corporation is a body corporate formed by a special act of parliament. The government fully finances it.

3. What Are The Merits of Departmental Undertaking?

Given below are the merits of Department undertaking:

  • Formation of the department undertaking is straightforward. Parliamentary discussion occurs. If both the opposition and the ruling government get to agree, the formation of the department takes place.

  • Control is effective. There is a control mechanism to manage or to use resources.

  • Optimum utilisation of funds. They get minimum funds. All the resources or funds gathered have to be used wisely. They have to maintain accounts, etc.

  • It is accountable to parliament for all its actions which ensure proper utilisation of funds.

4. What Are The Salient Features of A Statutory Corporation?

Given below are the salient features of Statutory Corporation:

  • It is created by the act of parliament.

  • It serves the general public.

  • It is accountable to parliament for its operation.

  • It has its own rules of recruitment and remuneration of its staff.