Private Public And Global Enterprises - Class 11 Commerce Business Studies - Extra Questions

Define a statutory corporation.

A statutory corporation is formed by a special act by the parliament  or state legislature.The act specifies the rules and regulations as well as the powers and functions of the employees. It is funded by the Government. It is a separate legal entity. Example: Life Insurance Corporation of India.


List the names of a few Statutory Corporations.

Following are a few statutory corporations :-
1) Reserve Bank of India
2) Life Insurance Corporation of India
3) Food Corporation of India
4) State Financial Corporation 
5) State Trading Corporation of India 


What is meant by a multinational company?

A multinational company may be defined as a company that has business operation in several countries by having its factories, branches or offices in those countries. The headquarter of such company is, usually, situated in the country of its incorporation. Examples : Coca cola, Sony and Reebok.


What do you mean by a departmental undertaking?

Department undertakings are established as the departments of the ministry and are financed, managed, and controlled by either central government or state government or jointly by both. For example, Indian railways, Post and telegraph, Doordarshan, Prasar Bharti.


Explain the functions of a secretary of the Government Department ? 

Functions of the Secretary of a government department in india are:
1 - He corresponds with the government of India and other governments. 
2 - He looks after the matters of framing the new legal rules.
3 - He sanctions expenditure from the contingency fund.



Distinguish : 
Secretary of Government Dept. and Company Secretary.

1- The company secretary is responsible for the efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented.

2- Secretary to the Government of India, often abbreviated as secretary, GoI, or, simply as secretary, is a post and a rank under the Central Staffing Scheme of the Government of India. The authority for the creation of this post solely rests with the Union Council of Ministers.


Fill in the blanks:
(a) Sole proprietorship is the _______ from of business enterprises, (latest / oldest)
(b) Sole proprietorship is most suitable form for _______  business, (small / large)
(c) Liability of a sole proprietor is  ________ (limited / unlimited)
(d) Sole proprietorship  _______ a separate legal entity, (has / does not have)
(e) It is ______ to set up a sole proprietorship firm,(easy / difficult)

Fill in the blanks:
(a) Sole proprietorship is the oldest form of business enterprises.
(b) Sole proprietorship is most suitable form for small  business.
(c) Liability of a sole proprietor is unlimited.
(d) Sole proprietorship does not have a separate legal entity.
(e) It is easy to set up a sole proprietorship firm.


Name the organisation which is formed by passing a special Act of Parliament or State Legislature. Give the features of such enterprise.

A Statutory Corporation is formed by passing a Special Act of Parliament or State Legislature. Example: Airports Authority of India. Following are the features of such an enterprise:
  • It is formed by a special Act by the parliament or state legislature which defines its power and functions.
  • It has a separate legal entity.
  • The Board of Directors are nominated or appointed by the Government.
  • Capital is either borrowed from the government or the public.
  • Free from Government Accounting and Audit Control.
  • Autonomy in framing policies within the limits of the state legislature.
  • Ease of operations and quick decisions can be taken due to less interference of government.
  • Provides better services than governmental organisations which in turn helps in increasing profit for the corporation. 


Name the company in which at least 51% shares are kept by government.

The company in which at least 51% shares are kept by government is a government company. The rest of the shares can be owned by either individuals or private companies. 
Example of a Government Company is Steel Authority of India.


Name the organisation formed by passing a special Act.

An organisation which is formed by passing a special Act is a Statutory company. The special act defines about the guidelines as well as the rules and regulations which the company needs to follow. The act also mentions about the functions and the powers of the company and its employees. 
Example of a statutory company in India is Life Insurance Corporation of India.


Name the companies having Business operations in more than one country.

A multi-national company has its business operations in more than one country other than its home country. It helps in increasing career and employment opportunites. Example: Google


"Multinational companies are a mixed blessing to the developing countries.*' In the light of this statement explain the return of MNC.

It is correctly said that MNCs are a mixed blessing to developing countries. This is because it has a great number of advantages as well as disadvantages for the developing countries. The advantages are:
  1. transfer of technology (the country gets the technology from other countries other than importing goods from other country)
  2. increase in investment and due to which employment increases
  3. greater availability of products  to consumer
  4. increase in exports and decrease in imports.


Short Answer Type Questions: Why is the government company form of organisation preferred to other types in the public sector?

Government company form is preferred to other types in public sector because it has management and financial autonomy. The goverment company comes directly under the concerned ministry.


"Indian Railway Vis a part of Railway Ministry. It is organised, financed and controlled by Railway Ministry. The finances are allocated from government treasury and what ever revenue it earns is deposited to government treasury only. It is treated as a part of government and even the appointment, recruitment and selection of employees is done in the same way as that of civil servant.
(a)  Name the type of public sector enterprise railway is considered as.
(b) What is the status of employees working in railways?
(c)  How does it get its finance?
(d)  What does it do with its revenue?

(a) Departmental Undertakings 

(b) Since the Indian Railway is a departmental undertaking, all its employees are Government servants. They are headed by IAS officers and civil servants. Their recruitment and conditions of service are the same as that of government employees. 

(c) The funding of these enterprises comes directly from the government treasury. The funding is an appropriation from the budget of the government. 

(d) The revenue earned by the Railways is also deposited into the treasury. Thus, its revenue is a source of income for the government.



Can the public sector companies compete with private sector in terms of profit and efficiency? Give reasons for your answer.

No, public sector companies cannot compete with private sector in terms of projects and efficiency. The reasons are:
  • Motive: The main objective of a public sector company is welfare of public but for a private sector company it is profitability.
  • Ownership: There is no or very less interference of government in the private sector compared to the public sector.
  • Management: The management of a public sector is usually less trained and skillful compared to a private sector company.


Sony Ltd. is a leader in electronics. It is registered in a company and has its business operations in many countries of world. Its headquarter is in Japan (Tokyo).To manage its branches and subsidiaries in different countries, the company employs trained and professional managers. They always make use of latest technology to remain leader in electronics.
(a)  Name the type of enterprise mentioned in above case.
(b)  State where the headquarter of Sony is located.
(c)  State two benefits of Sony mentioned in above para.

(a) The type of enterprise mentioned in above case is a 'Multinational Company'or a Global Enterprise.
(b) The headquarter of Sony is located at Japan (Tokyo).
(c) Two benefits of Sony are:
(i) Efficient management.
(ii) Use of sophisticated or latest technology.


State any three situations wherein government company is the most suitable form of public sector organisation.

The government company is suitable form of public sector organisation in following situations:
(i) Where government wants to control a company without nationalisation.
(ii) Where the project focuses on the welfare more than profitability
(iii) Where the projects require government planning and funds.


Identify the type of public sector enterprises on the basis of the following clues about it, in each of the following cases and also give an example of the same in real life.
(a)  It doesn't hold majority shareholding by the community and neither does it accept any interference in audit and accounting from the government but at the same time enjoys high dividend distribution to its members in case of profits.
(b)  It is a soul and heart of the government activities itself with parliamentary accountability.
(c)  It has its own constitutional code of conduct and is registered under a special legislation passed by the parliament.

(a) Departmental undertaking.
(b)  Government company.
(c)  Statutory corporation.


Short Answer Type Questions: What are the different kinds of organisations that come under the public sector?

The public sector usually comprises of organisations which are operated by the government. The main motive of a public sector is public welfare. Funding is usually raised through the help of public or budgets allotted for different ministries through various levels of government. The public sector mainly comprises of 3 types of organisations:
  • Departmental undertaking- It is a type of organisation which is run by a ministry or a separate department of the Government. Ex. Indian Railways
  • Statutory corporation- It is an organisation formed by a special act formed by the parliament or state legislature. Ex. State Bank of India
  • Government company- It is an organisation in which the government owns atleast 51% of the paid up share capital. Ex. Coal India Ltd


To overcome the difficulties faced by public in public transport system, the government of India started the METRO project in which the government involved private sector participation to get the benefits of efficiency of private sector. The project was great success as lacs of people are enjoying the metro service to move from one place to other.
(a)  State the type of enterprise mentioned in above last.
(b)  Name the 'PPP' providing metro service in Delhi.
(c)  Give any two features of PPP.

(a) The type of enterprise mentioned in the given para is Public Private Partnership
(b) The PPP that provides metro service in Delhi is the DMRC (Delhi Metro Rail Corporation)
(c) Two features of PPP are as follows:
  • Division of risk: The risk is divided between the private and public company.
  • Objective: Used for projects which is aimed at public welfare.


Who defines the powers, functions, roles and regulations for a statutory corporation?

Statutory corporations are public enterprises brought into existence by a Special Act of the Parliament. The Act defines its powers and functions, rules and regulations governing its employees and its relationship with government departments.


Define Global Enterprises.

Global enterprises are companies which has its operations in two or more countries. The operations spread across the home as well as the host countries. Such enterprises help in bringing new technologies to the host country and helps in innovation. It also helps in the expansion of market for the products.
Example: Coca-Cola.


Short Answer Type Questions: Explain the features of a government company.

Following are the features of a Government company:
  1. Has a separate legal entity
  2. Registered under the Companies Act
  3. The board of directors represent the government
  4. Government provides for whole or part of the capital required 
  5. The company is audited by the Comptroller and Auditor General of India
  6. It is partly or wholly owned by the government. Atleast 51% of the paid up share capital belongs to the government.
  7. It can enter into a contract and acquire property in its name
  8. The management is regulated by the company guidelines hence it has its own staffing system.
  9. It has borrowing powers from public
  10. It has the power to use the revenue that is generated from the business
  11. Employees are not civil servants
  12. Company is accountable to the government and the shareholders
  13. It can sue and be sued by others.


Give two examples of government company.

Two examples of government company are: Oil and Natural Gas Corporation (ONGC), Coal India Ltd (CIL)


Short Answer Type Questions: Explain merits of departmental undertaking.

Following are the merits of departmental undertaking:
  • Ease of formation: It is formed by the administrative decision taken by the government. It does not include any legal acts or formalities for formation.
  • Accountability: The department is fully accountable to the parliament
  • Control: The government has direct control over it which helps it to achieve government objectives effectively.
  • Social welfare: The objective of departmental undertaking is social welfare. Hence, it focuses on the economic growth and development by effective control over production and distribution of goods and services.
  • Less misuse of funds: Since the government oversees the expenditure incurred by the department, there is less misuse of funds.
  • Secrecy: Secrecy of policies are maintained as there is no one to question the policies or to reveal them. Hence it is best suited for organisations related to National security.


Long Answer Type Questions: Explain the characteristics of global enterprise.

A global enterprise or a multi-national company is a commercial enterprise which has its business operations in two or more countries.
Important features of MNCs are:
  1. Wide area of operations: MNCs usually have a wider area of operations spread across two or more countries.
  2. Control: MNCs have a centralised control over its subsidiaries or branches. Usually all decisions are taken from the headquarters located at the host country.
  3. Advanced Technology: MNCs use advanced and sophisticated technology in their production process.
  4. Huge wealth: MNCs have huge physical and financial assets. It keeps on increasing with increase in network of operations.
  5. Efficient management: MNCs have expert and skillful employees in their teams which help in efficient management.
  6. Delegation of power: Appropriate delegation of power is given to fulfill the needs of the host country.


Long Answer Type Questions: What are the benefits of entering into joint ventures?

Benefits of entering into Joint Ventures are as follows:
  1. Since the local partner also contributes to the equity capital of such a venture, the international firm finds it financially less burdensome to expand globally. 
  2. Joint ventures make it possible to execute large projects requiring huge capital outlays and manpower. 
  3.  The foreign business firm benefits from a local partner’s knowledge of the host countries regarding the competitive conditions, culture, language, political systems and business systems.  
  4. In many cases entering into a foreign market is very costly and risky. This can be avoided by sharing costs and/or risks with a local partner under joint venture agreements.


What are the features of a Statutory Corporation?

Features of a statutory corporation are:-
1. It is established under a special act that defines its objectives, powers, and functions.
2. It has a separate legal entity.
3. There is no government interference in day-to-day functioning.
4. It has its staff, recruited and appointed as per the provisions of the act.
5. Its initial capital is provided by the government and then it is independent to obtain funds by borrowing from the government or public or through earning.


What do you mean by government company?

Government company means any company in which at least 51 percent of the paid-up share capital is held by the central or state government or partly by central or state government. The government companies are governed and ruled by provisions of the Companies Act, 1956 like any other registered companies. For example:- Steel Authority of India, Steel Trading Corporation, etc. 


How many forms of public sector enterprise in India?

There are three different forms of organization used for the public sector enterprises in India:-
  1. Department Undertaking:- Departmental Undertaking is the oldest form of public sector enterprise. It functions under the overall control of one ministry or department of government.  For example:- Railways, Defence, Post and Telegraph etc.
  2. Public Corporation:- A statutory corporation is a body corporate formed by a special Act of Parliament or by the central or state legislature.  For example:- Indian Airlines, Air India, State Bank of India.
  3. Government Companies:- Government company means any company in which at least 51 percent of the paid-up share capital is held by the central or state government or partly by central or state government.  For examples:- Steel Authority of India, Steel Trading Corporation etc


What are the features of a Multinational company?

Features of a multinational company:-
1. Huge capital Resources: Multinational corporations possess huge capital resources and they are able to raise a lot of funds from various sources.
2. International Operation: Multinational corporations do business in several countries. For this, it has a business, factories, and offices in several countries.
3. Centralized control: Multinational corporations have headquarters in their home countries from where they exercise control over all branches and subsidiaries and there is no interference in their day-to-day operations.
4. Foreign Collaboration: Usually they enter into agreements relating to the sale of technology, production of goods, use of the brand name, etc. with local firms in the host countries
5. Advanced technology: These organizations possess advanced and superior technology that enables them to provide world-class products and services.
6. Product Innovation: Multinational corporations have highly sophisticated research and development departments. These are engaged in developing new products and superior design of existing products.


Class 11 Commerce Business Studies Extra Questions