GSEB Class 11 Organization of Commerce and Management Important Questions Chapter 7 Public Sector, Private Sector and Global Enterprises

Gujarat Board GSEB Class 11 Organization of Commerce and Management Important Questions Chapter 7 Public Sector, Private Sector and Global Enterprises Important Questions and Answers.

GSEB Class 11 Organization of Commerce and Management Important Questions Chapter 7 Public Sector, Private Sector and Global Enterprises

Short Answer Type Questions

Question 1.
What is mixed economy?
Answer:
An economy in which both public and private sectors co-exists is called a mixed economy.

Question 2.
What was the main agenda of industrial policy of 1956?
Answer:
To establish and expand industrial development especially through basic industries.

Question 3.
How did the policies of 1991 changed the scenario of Indian economy?
Answer:
A new economic policy of privatization, liberalization and globalization was passed in 1991. As per this policy private sector, was given due importance, foreign companies were invited to establish in India and loss making public sector units were shut down.

Question 4.
What is disinvestment?
Answer:
An act of government to sell or liquidate assets of government enterprises is called disinvestment.

Question 5.
Define privatization.
Answer:
The transfer of ownership of government entity to privately owned entity is called privatization.

Question 6.
Define liberalization.
Answer:
Relaxation of government restrictions, especially in social political or economic areas is called liberalization.

Question 7.
Define globalization.
Answer:
The process by which businesses or other organizations cross national political boundaries and start operating at international level is called globalization.

Question 8.
What is a public sector? State one example.
Answer:
An enterprise, which is own managed and controlled by government is called a public sector enterprise. For example, Postal Department, Indian Railways, LIC of India, Indian Airlines, etc. are all examples of public enterprise.

Question 9.
What is the main aim of establishing an industry in public sector?
Answer:
The basic objective of establishing units in public sector is to provide base for accelerating those industries which require huge investment.

Question 10.
Why post-independence private sector was not much interested in basic industries?
Answer:
Basic industries require huge investment for their set-up in the initial stage. However returns in initial years are quite low compared to the capital invested. As a result, private sectors were not much interested in setting up heavy industries.

Question 11.
How can public enterprise help in balanced regional development?
Answer:
Government can set-up industries in areas that are economically backward and which have less employment opportunities and balance regional development.

Question 12.
How does public sector help to attain social and economic justice?
Answer:
Public sector units need to compulsorily follow rules and regulations set by government. They also provide concessional or free services, job security, better working, conditions, women empowerment, priority to labour laws, etc. and , help to attain social and economic justice.

Question 13.
What is a government department? Give examples.
Answer:
A public sector unit run and managed either by state or central government as per the laws, rules and regulations of either state or central government or both is called a government department. The employees working in these units are called government employees. For example, Postal department, Railway etc. is government departments.

Question 14.
Define public corporation.
Answer:
Public corporation is a corporation which comes into existence through a special act of Parliament or Legislative Assembly i.e. Vidhan Sabha. The authority to run these units, the powers, duties, rights and rosponsibility and labour laws are dll as per the special act passed in the Parliament. For example, Life Insurance Corporation (LIC) of India, Food Corporation of India, Gujarat State Text-book Board etc., are all public corporations.

Question 15.
What is a government company?
Answer:
A company established as per the Company Act and in which minimum 51% stake is with State or Central Government or both together is called a government company. Since the government owns the largest stake of shares in such companies they are called government companies. For example, Hindustan Machine Tools (HMT), Hindustan Aeronautics Ltd., etc.

Question 16.
How are accounts of a government department maintained?
Answer:
The maintenance of account of government department is done by the respective department. The accounts are audited by CAG i.e. The Comptroller and Auditor General.

Question 17.
How is a public corporation established?
Answer:
A public corporation is a corporation which comes into existence through a special act of Parliament or Legislative Assembly i.e. Vidhan Sabha. The authority to run these units, the powers, duties, rights and responsibility and labour laws are all as per the special act passed in the Parliament.

Question 18.
What is the objective of government company?
Answer:
The objective of government company is purely to do business, make profit and compete with private companies.

Question 19.
Explain the type of entity a government company holds?
Answer:
A government company has an independent legal entity and hence it can sue or can be sued as individuals in the court of law. Just like any other company it can also own property or enter into contract with any individual or company.

Question 20.
What is a global enterprise? OR multinational corporation (MNC)?
Answer:
A business enterprise operating in various countries is called a global enterprise. Global or transnational enterprises produce, sell and invest across the world. Global enterprises are highly organized companies which make use of factors of production of the world and global wealth to earn profit from the world market. Coca-Cola, Pepsi, Cadbury, Nestle, Ford, Hyundai, Tata, Bina, etc. are all very strong global enterprises.

Question 21.
What is a local (domestic) enterprise?
Answer:
An enterprise which operates within the political boundaries of a country is known as a domestic or a local enterprise. The business policies of domestic enterprises are framed by the country as per the business and social environment of the country.

Question 22.
Give an idea about economic capabilities of a global enterprise.
Answer:
Global enterprises are very strong financially, Many times they can even afford to operate at very low profits or even losses that too for a very long period in order to penetrate into the market of a country. Since they are very sound financially they can produce and sell at a massive scale.

Question 23.
How can one say that global enterprise or MNCs have political supremacy?
Answer:
Global enterprise invests very heavily ;n a country and so in return the country has compromise with some of its rules, regulations and policies. In many cases they can even ‘ influence the economic policy of the country by influencing the political leaders.

Question 24.
How can one say that global enterprises change life-style of people?
Answer:
To develop their products and services global enterprise brings changes in the life style of the people the countries in which these companies operate. For example, global enterprises have changed the way we eat. Due to their marketing strategies and options we now eat burgers and pizza and drink coffee in cafe quite frequently.

Question 25.
Define joint venture.
Answer:
When two or more business units join with each other to conduct the business activities together it is called a joint venture. Units, joining hands can be private enterprises, government owned or global enterprises. If joint venture occurs between enterprises of two different countries then it is called joint venture between two enterprises of two countries.

Question 26.
On what do joint ventures aim?
Answer:
Joint ventures aim at making maximum use of resources and expertise available with both the enterprises to expand the business, share and enjoy the profits jointly and also jointly bear the risk and loss.

Question 27.
How does a market expand or emerge due to joint venture?
Answer:
When a business unit undergoes joint venture with a business unit of a foreign country the market expands and even a new market may emerge. For example, when an Indian company enters into a joint venture with a foreign country, the market expands in India due to the new products, services, brand and strategies that the foreign country offers.

Question 28.
What do you mean by public utility or public utility services?
Answer:
Basic facilities like water, electricity, transportation, communication, cooking gas, sewage, etc. that are needed by people on a daily basis are called public utilities.

Question 29.
Who manage public utilities at local level?
Answer:
At local level the public utility services are raised and managed by village panchayat, taluka panchayat, zilla panchayat, nagar-palika or mahanagar-palika. These utilities include water supply, drainage, digging wells, street-lights, etc.

Question 30.
What kind of public utilities does a state government provide?
Answer:
Transportation, electricity, internal roads, health centers, water, etc

Question 31.
What kind of public utilities does central government provide?
Answer:
Post and telegraph, railways, airways, telecommunication, etc

Long Answer Type Questions

Question 1.
State the forms (nature) of public sectors and define each of them.
Answer:
Forms of public sector:
Out of the several forms of public sectors few are:
(A) Government department:

• A public sector unit run and managed either by state or central government as per the laws, rules and regulations of either state or central government or both is called a government department. The employees working in these units are called government employees.
• For example, Postal department, Railway etc. are government departments.

(B) Public corporation :

• Public corporation is a corporation which comes into existence through a special act of Parliament or Legislative Assembly i.e. Vidhan Sabha. The authority to run these units, the powers, duties, rights and responsibility and labour laws are all as per the special act passed in the Parliament.
• For example, Indian Airlines, Food Corporation of India, Gujarat State Textbook Board etc. are all public corporations.

(C) Government Companies

• A company established as per the Companies Act and in which minimum 51% state is with State or Central Government or both together is called a government company. Since the government owns the largest stake of shares in such companies they are called government companies.
• For example, Hindustan Machine Tools (HMT), Hindustan Aeronautics Ltd., etc.

Question 2.
Explain briefly, global enterprise.
Answer:
Global enterprise:
A business enterprise operating in various countries is called a global enterprise. Generally, in the initial stages an enterprise works at domestic level. Later, with the experience of domestic business when they spread their wings in foreign countries, they become multinational or transnational enterprise. Moreover, when such enterprises starts operating in several countries they are also called global companies or global enterprise.
Global or transnational enterprises produce, sell and invest across the world. Global enterprises are highly organized companies which make use of factors of production of the world and global wealth to earn profit from the world market.

Coca-Cola, Pepsi, Cadbury Nestle, Ford, Hyundai, Tata, Birla, etc. are all very strong global enterprises.

Question 3.
What is the role of joint enterprise in an economy?
Answer:

• Joint enterprise refers to association of two or more business units having common interest.
• Joint venture is mutually beneficial to both the parties. They share each other’s strategies, rich experience and knowledge to expand or create a new market. Joint venture rolls out new products and services in the market. It also increases employment opportunities for people.
• Due to expanded market and employment, government’s tax revenue increases.
• Several innovative products are introduced in the market. These products increase the standard of living.
• Economy may also get advantage of large scale-low cost production, better and efficient processes and hence higher productivity.

Question 4.
Who provides public utility at local, state and national level?
Answer:

• At local level the public utility services are raised and managed by village panchayat, taluka panchayat, zilla panchayat, nagar-palika or mahanagar-palika. The state government company or corporations takes care of utilities like transportation, electricity, health centres, etc.
• At national level, the central government, companies or corporations provide utilities like Post and Telegraph, Railway, Telecommunication, etc. to the entire nation.

Question 5.
The post-independence objective of India was to set-up basic industries. Give reason.
Answer:

• The basic objective of establishing units in public sector is to provide base for accelerating those industries which require huge investment. Post-independence it was quite important for India to attain growth in industrialization to improve >ts economic condition.
• Basic industries require huge investment for their set-up in the initial stage. However returns in initial years are quite low compared to the capital invested. As a result, private sectors were not much interested in setting up heavy industries.
• Government invests in such industries with an objective to achieve faster economic growth.
• Moreover, basic industries always help in balanced regional development and solving employment issues at large scale. Hence, post-independence objective of India was to set-up basic industries.

Question 6.
Global enterprises prioritize regional values and aspects. Give reason.
Answer:
A very vast difference can be seen when one moves from one region to another. The differences can be seen in culture, fashion, food habits, religion, etc. Based on these aspects the preference of people living in those regions also vary. In order to tap the market of each region one needs to consider the fundamental values of each region.

Global enterprises give priority to regional aspects, while making investment, and production and distribute their resources accordingly in each country. They understand that different countries have different religions, culture and social and economic set-up. They also are very well aware about the behavioral patterns and mindset of people of each region. Based on their rich knowledge and research they plan separate strategies for each country and even state and expand their business. For example, McDonalds have highly changed their product range and taste as per the taste and preference of Indians.

Question 7.
How does joint venture helps in expanding market?
Answer:

• When a business unit undergoes joint venture with a business unit of a foreign country the market expands and even a new market may emerge. For example, when an Indian company enters into a joint venture with a foreign country, the market expands in India due to the new products, services, brand and strategies that the foreign country offers.
• Many companies who have already established market in their countries, after saturation join hands with enterprises of other countries for entering into new market and making profit.

Multiple Choice Questions

Question 1.
Post-independence, India adopted ______ mode of economy.
(A) Capitalist
(B) Mixed
(C) Democratic
(D) Public sector
Answer:
(B) Mixed

Question 2.
The ownership of public sector is ______ owned by government.
(A) Fully
(B) Half
(C) Partially
(D) Both (A) and (C)
Answer:
(D) Both (A) and (C)

Question 3.
In industrial policy of which year were several objectives of public sector mentioned?
(A) 1950
(B) 1956
(C) 1965
(D) 1991
Answer:
(B) 1956

Question 4.
What can be called as the basic objective of a public enterprise?
(A) To set-up basic enterprise
(B) To earn profit
(C) To have balanced development
(D) To remove monopoly
Answer:
(A) To set-up basic enterprise

Question 5.
Private sector is not keen in setting-up basic industries because
(A) Such industries are partially controlled by government
(B) Such industries require very huge investment
(C) Unnecessary intervention of government in such industries
(D) Such industries are to be established in backward regions
Answer:
(B) Such industries require very huge investment

Question 6.
Which of the following is not a characteristic of public sector?
(A) Social welfare
(B) Low profit
(C) Social justice
(D) Product innovation
Answer:
(D) Product innovation

Question 7.
Public sector enterprises can be classified in ______ parts.
(A) 2
(B) 3
(C) 4
(D) 6
Answer:
(B) 3

Question 8.
A unit established by state government does not has a separate entity and is allotted budget from government’s budget is an example of
(A) Government company
(B) Government department
(C) Public corporation
(D) Both (B) and (C)
Answer:
(B) Government department

Question 9.
Who audits the accounts of government department?
(A) CAG
(B) Central government
(C) PSU
(D) Depends upon the department type
Answer:
(A) CAG

Question 10.
Who is responsible for the efficient working of a government department?
(A) Parliament
(B) Board of Directors
(C) Legislative Assembly
(D) Minister
Answer:
(D) Minister

Question 11.
Which of the following can operate BSNL?
(A) Private enterprise
(B) Government company
(C) Government department
(D) Public corporation
Answer:
(C) Government department

Question 12.
With respect to autonomy, government department employees
(A) Have autonomy
(B) Have autonomy to take major decisions
(C) Have complete autonomy
(D) Have autonomy to take decisions based on majority
Answer:
(A) Have autonomy

Question 13.
Which of the following enjoys a separate entity as per Companies Act?
(A) Government department
(B) Public corporation
(C) Government company
(D) Both (B) and (C)
Answer:
(C) Government company

Question 14.
in which year did India adopt policy of liberalization, privatization and globalization?
(A) 1956
(B) 1965
(C) 1991
(D) 2001
Answer:
(C) 1991

Question 15.
Which public sector units were closed after 1991?
(A) Those which did not generate sufficient employment
(B) Those which did not generate sufficient profit
(C) Those which did not focus on regional department
(D) Those which created monopoly in market
Answer:
(B) Those which did not generate sufficient profit

Question 17.
Which of the following can make to need based changes?
(A) Public corporations
(B) Private enterprise
(C) Government company
(D) Both (A) and (B)
Answer:
(B) Private enterprise

Question 18.
Generally, which of the following will have a very strong economic capacity?
(A) Government company
(B) Public corporation
(C) Private enterprise
(D) MNC
Answer:
(D) MNC

Question 19.
Which of the following is not a main reason for joint venture?
(A) Expanding business
(B) Creating new market
(C) innovation
(D) Higher profits
Answer:
(C) innovation

Question 20.
In which of the given cases a government may not prefer PPP model?
(A) Housing scheme
(B) Shopping mall
(C) Express ways
(D) Railway line
Answer:
(B) Shopping mall

Question 21.
Which of the following cannot be considered public utility?
(A) Electricity
(B) Transport
(C) Water
(D) Internet
Answer:
(D) Internet