MP Board Class 11th Business Studies Important Questions Chapter 3 Private, Public and Global Enterprises

MP Board Class 11th Business Studies Book Solutions व्यवसाय अध्ययन Chapter 3 Private, Public and Global Enterprises- NCERT पर आधारित Text Book Questions and Answers Notes, pdf, Summary, व्याख्या, वर्णन में बहुत सरल भाषा का प्रयोग किया गया है.

MP Board Class 11th Business Studies Important Questions Chapter 3 Private, Public and Global Enterprises

Question 1.
Choose the correct answer:

Question 1.
A government company is any company in which the paid up capital held by the government is not less than –
(a) 49 per cent
(b) 51 per cent
(c) 50 per cent
(d) 25 per cent.
Answer:
(b) 51 per cent

Question 2.
Centralized control in MNC’s implies control exercised by –
(a) Branches
(b) Subsidiaries
(c) Headquarters
(d) Parliament.
Answer:
(c) Headquarters

Question 3.
PSE’s are organizations owned by –
(a) Joint Hindu Family
(b) Government
(c) Foreign Companies
(d) Private Enterpreneurs.
Answer:
(b) Government

Question 4.
Reconstruction of sick public sector units is taken up by –
(a) MOFA
(b) MOU
(c) BIFR
(d) NRF.
Answer:
(c) BIFR

Question 5.
Disinvestment of PSE’s implies –
(a) Sale of equity shares to private sector/public sector
(b) Closing down operations
(c) Investing in new areas
(d) Buying shares PSE’s.
Answer:
(a) Sale of equity shares to private sector/public sector

Question 6.
Indian railway is which form of organization –
(a) Public corporation
(b) Department organization
(c) Government company
(d) None of these.
Answer:
(b) Department organization

Question 7.
Private company is related to which sector –
(a) Mixed
(b) Public
(c) Private
(d) Government
Answer:
(c) Private

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Question 8.
Which is not the profit of MNC’s –
(a) Increase in foreign investment
(b) Increase in employment
(c) Danger to domestic industries
(d) Loss of local control.
Answer:
(c) Danger to domestic industries

Question 9.
Which is not MNC’s of USA –
(a) Coca Cola
(b) Pepsi
(c) Ford motors
(d) Lipton.
Answer:
(d) Lipton.

Question 10.
When two Business undertaking get united in order to share profit and common objective, then it is called –
(a) MNC’s
(b) Company
(c) Partnership
(d) Joint venture.
Answer:
(d) Joint venture.

Question 11.
Which industry is not reserved for public sector –
(a) Sugar industry
(b) Nuclear energy
(c) Weapons
(d) Rail transport.
Answer:
(a) Sugar industry

Question 12.
How many industries are reserved for public sectors –
(a) 8
(b) 4
(c) 17
(d) 3
Answer:
(d) 3

Question 13.
Canara Bank is example of which sector –
(a) Mixed
(b) Public
(c) Private
(d) None of the these
Answer:
(b) Public

Question 14.
Indian food corporation comes under which form of organization –
(a) Department
(b) Government company
(c) Private
(d) None of these.
Answer:
(c) Private

Question 15.
Hindustan Machine Tools comes under which form of organization –
(a) Government company
(b) Departmental undertaking
(c) Public corporation
(d) None of these.
Answer:
(a) Government company

Question 16
………….. % shares of paid – up capital of government company is kept by the Indian government –
(a) 51
(b) 50
(c) 70
(d) 40.
Answer:
(a) 51

Question 17.
Which is not private undertaking –
(a) Partnership
(b) Departmental undertaking
(c) Joint stock company
(d) Sole trade.
Answer:
(b) Departmental undertaking

Question 18.
Punjab National Bank is related to which sector –
(a) Mixed
(b) Private
(c) Public
(d) None of these.
Answer:
(c) Public

Question 19.
Which bank is related to private sector –
(a) Allahabad Bank
(b) Punjab Sindh Bank
(c) Canara Bank
(d) Oriental Bank of Commerce.
Answer:
(b) Punjab Sindh Bank

Question 20.
Which is not Indian multinational company –
(a) Asian Paints
(b)Infosys
(c) Ranbaxy
(d) Brooke Bond.
Answer:
(d) Brooke Bond.

MP Board Solutions

Question 21.
Which is Japanese MNC –
(a) Sony
(b) Pepsi
(c) Ponds
(d) Wipro.
Answer:
(a) Sony

Question 22.
Which is not belonging to USA MNC –
(a) Ford motors
(b) Pepsi
(c) Lipton
(d) Coca Cola.
Answer:
(c) Lipton

Question 23.
Samsung is MNC of –
(a) Germany
(b) Japan
(c) South Korea
(d) Italy.
Answer:
(c) South Korea

Question 24.
Who is Owner of PSU’s –
(a) JHF
(b) Government
(c) Foreign companies
(d) Private company.
Answer:
(b) Government

Question 25.
Disinvestment of PSU’s means –
(a) Investment in the new sector
(b) Close down of the working
(c) Selling of equity to private and general public
(d) Purchase or shares of PSU’s.
Answer:
(a) Investment in the new sector

Question 2.
Fill in the blanks:

………….. are used to keep goods safety.
In government company percentage of government capital is ……………
………….. is the example of Industrial finance company.
Government company is formed by ……………
Hindustan Machine Tools limited is a example of ……………
In …………… sector, we found perfect competition.
In public company all economic activities are done by ……………
Administration of departmental organisation in the hands of ……………
Public company is also called ……………
…………… organisations are appointed for public utility service organisation.
Joint venture has nature of private and ……………
In Industrial policy of 1991 govt, decided to de – investment of …………… to flourish the private sector.
Statutory of public company is ……………
Multinational company in a country exploit the consumer by ……………
Joint venture deemed indirectly as a ……………
Joint courage gives inspiration for ……………
Answer:

Warehouse
51
Constitution organisation
Constitution
Joint venture
Private
Government
Ministry
Statutory
Departmental
Public
Public sector
Article of Association
Monopoly
Nationalisation
Innovation.
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Question 3.
Write true or false:

1. Public sectors are of three types.
2. Departmental organisation gets finance from financial Budget.
3. Statutory organisation have independent existence.
4. In Joint organisation ownership remains in the hands of private sector only.
5. We find effective management in M.N.C.
6. Hindustan Lever is a Indian company.
7. Multinational company needs huge capital.
8. International collaboration is also called International venture.
9. Coca – Cola and pepsi are multinational companies.
10. The company which involve in business in several countries called M.N.C.

Answer:

1. True
2. True
3. True
4. False
5. True
6. False
7. True
8. True
9. True
10. True.

Question 4.
Match the columns:
MP Board Class 11th Business Studies Important Questions Chapter 3 Private, Public and Global Enterprises 2

Answer:

1. (d)
2. (c)
3. (a)
4. (b)
5. (f)
6. (e)
7. (g)
8. (i)
9. (h)

Question 5.
Give answer in one word/sentence:

Question 1.
Write names of two departmental working organizations?
Answer:

Railways and
Postage and telegraph.
Question 2.
Write names of two organizations which are working as public corporations?
Answer:

State Bank of India,
Life Insurance Corporation of India (LIC).
Indian fund Department.
Question 3.
Name two undertakings which are working as government company?
Answer:

SAIL and
GAIL.
Question 4.
Name the undertaking which arises of partnership of two companies?
Answer:
Joint company.

Question 5.
How many forms of public undertaking can be? Write their names.
Answer:
There can be three forms of public organization, they are:

Departmental undertaking
Legal corporations
Government company.
Question 6.
Why and when National Renewal Fund was established?
Answer:
National Renewal Fund was established in 1992. It was established to help for the public sector employees.

Question 7.
Write names of two industries in India working in mixed sector?
Answer:

Madras fertilizers
Gujarat fertilizers.
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Question 8.
What do you mean by privatization of public undertaking?
Answer:
The process of transferring ownership and control from the govt, to private individual is called as privatization of public undertaking.

Question 9.
What are the primary objective of privatization of public undertaking?
Answer:
They have following objectives:

To reduce the load of loan and interest of public debt.
To make them free from government control.
Transfer of Risk form public to private units.
To reduce govt, monopoly to promote the facility to the consumers.
Question 10.
Give four examples of India. MNC’s.
Answer:

Tata motors
Ranbaxy
Wipro
Asian paints.
Question 11.
Give four example of foreign MNC’s?
Answer:

Brooke Bond
Lipton
Sony
Coca Cola.
Question 12.
How danger is there to domestic companies from the MNC’s?
Answer:
MNC’s have strong financial base due to which the domestic companies cannot survive for longer time and sometime they have to close down their business.

Question 13.
How MNC’s exploit the natural resources?
Answer:
MNC’s use the natural resources very carelessly. Hence, natural resources are not used properly and the loss of which is suffered by the native country.

Question 14.
List three MNC’s of U.S.A.?
Answer:

Pepsi
Ponds
Coca Cola.
Question 15.
List three MNC’s of Japan?
Answer:

Sony
Toyota motors
Suzuki.
Question 16.
List four PSU’s which have been disinvested?
Answer:

BALCO
MARUTI
VSNL
STC.
Question 17.
List three MNC’s of U.K.?
Answer:

Brooke bond
Lipton and
Cadbury.
Question 18.
Is government school a public sector unit?
Answer:
No.

Question 19.
Under which Act government companies are made?
Answer:
1956.

Question 20.
Who manages departmental undertaking?
Answer:
Concerned ministry.

Question 21.
Who appoints directors of government companies?
Answer:
Government.

Question 22.
Who owns and controls the PSU’s?
Answer:
Government.

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Question 23.
In which sector maximum of working population is employed in India?
Answer:
Private.

Question 24.
Which companies work in different contries?
Answer:
MNC’s.

Question 25.
Which sector organization does LIC belongs to?
Answer:
Public corporation.

Private, Public and Global Enterprises Very Short Answer Type Questions

Question 1.
What is Departmental undertaking?
Answer:
Departmental undertaking is one of the undertaking which is headed by minister and its work is responsible for parliament or council of minister.

Question 2.
Give meaning of statutory corporation?
Answer:
Statutory corporations are those institutions of individual existence which are formed under special act passed by the central or state legislature.

Question 3.
What is Government company?
Answer:
A government company is a company whose atleast 51 % paid up share capital is held by the government.

Question 4.
What do you mean by global enterprises?
Or, What are multinational companies?
Answer:
A multinational company is a company which operates, in addition to the country in which it is incorporated in one or more other countries.

Question 5.
What is joint venture?
Answer:
Those ventures which are jointly owned by government and private sectors and which are jointly managed by representatives of the govt, and the private sector and the income is proportionately shared by the two is called as joint venture.

Private, Public and Global Enterprises Short Answer Type Questions

Question 1.
Explain the concept of Public sector and Private sector?
Answer:
Private Sector Undertaking: The units which are owned and controlled by the entrepreneurs is called as private sector enterprises. Public Sector Enterprises: The units which are owned and controlled by the government is called as public sector enterprises. They are controlled and financed by the government agencies for social welfare motive and not basically for profit motive.

Question 2.
What are the different kinds of organizations that come under the public sectors ?
Answer:
The forms of organization which a public enterprise may take are as follows:

1. Departmental Undertaking:
   These enterprises are established as departments of the ministry and are considered as a part or an extension of the ministry itself. These undertakings may be under the Central or the State Government.
   Examples:
   Railways and Post and Telegraph Department.
2. Statutory Corporation:
   Statutory corporations are public enterprises brought into existence by a Special Act of the Parliament, which defines its powers and functions. It is a financially independent corporate body created by the legislature and has a clear control over a specified area or a particular type of commercial activity.
3. Government Company:
   According to the Indian Companies Act, 1956, a government company means any company in which at least 51 per cent of the paid up capital is held by the Central Government, or by any State Government or partly by Central Government and partly by one or more State Governments. These are established purely for business purposes.

Question 3.
How does the government maintain a regional balance in the country ?
Answer:
One of the major objectives of planning in India has been that of removing regional disparities. During the pre – independence period most of the industrial progress was limited to a few areas like the port towns. After the inception of planning in 1951, the government started paying special attention to those regions which were lagging behind and public sector industries were deliberately set up in those backward regions.

Four major steel plants were set up in the backward areas to accelerate economic development, provide employment to the workforce and develop ancillary industries e.g., with the establishment of Bhilai Steel Plant in Madhya Pradesh (Now present in Chhattisgarh), several new small mudstones have come up in that state. The private businessmen hesitate to establish their enterprises in the backward areas due to lack of infrastructure facilities, skilled workforce, etc.

But these regions cannot be neglected in public interest. Therefore, the government located new enterprises in backward areas and at the same time prevented the mushrooming of private sector units in already advanced areas.

Question 4.
Give names of Public Sector Undertakings and their classification?
Answer:
Departmental Undertakings:

Post and telegraph
Railway
Broadcasts
Defence.
Public Corporations:

Damodar Valley Corporations
IFCI
SBI.
Question 5.
Give names of Private Sector Undertaking?
Answer:
The names of Private sectors are:

Sole trade,
Partnership,
Joint Hindu family
Joint stock company
Cooperative society.
Question 6.
Why is the government company form of organization preferred to other types in the public sector?
Answer:
The government company form of organization is preferred to other types in the public sector because of the following advantages, it offers:

1. Simple Procedure of Establishment:
   A government company can be easily formed as compared to other public enterprises. There is’no need to get a bill passed by the Parliament or State Legislature. It can be formed simply by following the procedure laid down by the Companies Act.
2. Working on Business Principles:
   The government company works on business principles, it is independent in financial and administrative matters. Its Board of Directors usually consists of professionals and persons of repute.
3. Efficient Management:
   The management of a government company ensures efficiency in managing the business as it is more accountable than other forms of public enterprises because the annual report of the government company is placed before both the House of Parliament.
4. Competition:
   These companies pose a healthy competition to private sector which ensures availability of goods and services at reasonable prices and good quality.

Question 7.
Write characteristics of public sector.
Answer:
Followings are the characteristics of public sector:

1. State ownership:
   These public enterprises are owned by the central government or state government or jointly owned by both, where, more than 50% of share capital is held of government.
2. Service motive:
   Public enterprises are generally run with a service motive. Its primary emphasis is always to render service to the public at large. Even it may have to incur the by losses in the process of serving the society.
3. Management:
   Public enterprises are managed by persons appointed by or nominated by, government but in USA, they are owned by the government but managed by private agencies.
4. Different forms:
   To run the public enterprises, there are various forms of public enterprises.
5. Welfare of the people:
   The primary objective of the government is to establish and promote a state of welfare for the maximum benefit of the maximum number of persons.

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Question 8.
What do you mean by development in basic infrastructure?
Answer:
Economic and Industrial development rate should be increased is the main aim of development in the basic infrastructure. Industries like Iron and steel, Railway wagon, Aeroplane production and also production of Big ship comes under the basic industries. There establishment is necessary to provide base to the industrialization. Private sector do not have capacity to establish them. Hence, they are made in public sector only.

Question 9.
Write primary objectives of privatization of public sector undertakings?
Answer:
Following are the objectives of privatization of public sector undertakings:

Those public sector undertakings which do not have any political importance and the money blocked in them can be taken out and can be utilized for those undertaking which provide basic facilities.
To lesser public debts and its interest load.
To transfer commercial risk to the private sector.
To make these undertaking free from government control.
To remove monopoly of public sector undertaking.
Question 10.
Write demerits or disadvantages of public undertaking?
Answer:
Disadvantages of public undertaking are:

1. Inefficiency of employees:
   For efficient operations of business activities, the staff and employees are required to modify their working and make necessary changes in their attitude otherwise they may be required to quit from the organization in public corporation, it is not possible.
2. Red tapism:
   Since the whole government machinery works in the corporation, therefore the tactics of delayed decision making affects the working of public corporations.
3. Overstaffing:
   Most of public enterprises are having excess manpower because these have become convenient places to absorb favoured people.
4. Ill – effects of monopoly:
   An idea of monopoly is encouraged in public corporations, because in certain business spheres they work alone and due to government directives the competitors cannot enter into that field. Thus, the country suffer from monopoly.

Question 11.
Write characteristics of statutory corporations?
Answer:
Statutory corporations possess following characteristics:

1. A corporate body:
   Statutory corporation is a corporate or registered body. It is formed under special act of the parliament. The statute defines its powers, function and objects.
2. Separate legal entity:
   Since they are formed under special act so they posses a separate legal entity. These corporations can own assets, buy and sell assets, i.e., they can enter into contract. They are competent to contract. They can sue others and be sued by others.
3. State control:
   The government holds full control on these corporations. The government can provide instructions for management of these corporations.
4. Financial independence:
   Statutory corporations have independent financial policy and so they themselves look after the
   arrangement of funds and their proper utilization. Their budget of income and expenditure is not shown in government budget.
5. Management:
   The management of these corporations is vested in the hands of board of directors appointed by the government. The head of the board of directors is nominated by the government.

Question 12.
How does the government maintain a regional balance in the country?
Answer:
One of the major objectives of planning in India has been that of removing regional disparities. During the pre – independence period most of the industrial progress was limited to a few areas like the port towns. After the inception of planning in 1951, the government started paying special attention to those regions which were lagging behind and public sector industries were deliberately set up in those backward regions.

Four major steel plants were set up in the backward areas to accelerate economic development, provide employment to the workforce and develop ancillary industries e.g. with the establishment of Bhilai Steel Plant in Madhya Pradesh, several new small industries have come up in that state.

The private businessmen hesitate to establish their enterprises in the backward areas due to lack of infrastructure facilities, skilled workforce, etc but these regions cannot be neglected in public interest, Therefore, the government located new enterprises in backward areas and at the same time prevented the mushrooming of private sector units in already advanced areas.

Question 13.
Mention four elements of the new Industrial policy, 1991 ?
Answer:
The four elements of the new Industrial policy, 1991 is as under:

To form new public sector undertakings which have more opportunity of progress in future.
To close down those public sector undertaking which cannot be restarted.
As per need and less important public sector undertakings to minimize the shares of government to less than 26%.
To provide protection to public sector undertaking employees.
Question 14.
Write characteristics of private sector?
Answer:
Characteristics of Private Sector:

1. Ownership of assets:
   In private sector, ownership of factors of production and assets belong to the private entrepreneur.
2. Selection of business:
   In private sector, every individual avails equal opportunity. He is free to choose any type of business.
3. Profit motive:
   Topmost priority is given to profit in private sector.
4. Competition:
   There exists cut throat competition among the businessmen and industrialist in private sector. Each of them wants to have a monopoly over the market and root out the other from the market.
5. Conflicts:
   Conflicts between the owners (businessmen and industrialists) and labourers (employees) is a common seen in this sector.
6. Topmost priority:
   Topmost priority is given to consumers goods are produced as demanded by the consumers.

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Question 15.
Write disadvantages of government company?
Answer:
Disadvantages of Government Company:
Apart from the above merits, a government company possesses some disadvantages too. They are:

1. Red tapism:
   The biggest demerit of any government undertaking or organization is red tapism. a government company can never attain it objectives till red tapism prevails.
2. Lack of motivation:
   The employees of government undertakings are permanent employees and they are aware that the profit earned by these undertakings will go to the government sharing no part of the profit with them. Thus, they show less interest in their work which affects their efficiency adversely.
3. Inefficient management:
   The Board of Directors of a government company usually consists of politicians and civil servants who lack in managerial efficiency and technical know – how. This results in inefficient management.
4. Chances of corruption:
   The accounts of a government company need not be audited by the comptroller and Auditor General of India. Thus, it bestows more power in the hands of government officials which provide ample opportunities for mismanagement of accounts of government undertakings.

Private, Public and Global Enterprises Long Answer Type Questions

Question 1.
Differentiate between Private sector and Public sector?
Answer:
Differences between Private and Public sector:
MP Board Class 11th Business Studies Important Questions Chapter 3 Private, Public and Global Enterprises 1

Question 2.
How joint venture can be established?
Answer:
When two companies combine their business with same objective then it is called as joint venture. There units can be private, government or foreign and their size may also be variating and tenure may be long or can be for short span of time. There is flexibility in the formation but both the companies have to follow the rules of their country as per the norms.
Joint venture can be established by the following methods:

Any two units in India can be formed.
One party and transfer their business to another party or new company.
Two parties can purchase share of joint stock companies in agreed proportion in cash and can start new company.
Question 3.
Can the public sector companies compete with the private sector in terms of profits and efficiency ? Give reasons for your answer?
Answer:
It is difficult though not impossible for the public sector companies to compete with the private sector in terms of profits and efficiency due to following reasons:

1. Difference in Objective:
   Private sector firms operate with the objective of profit maximization while public sector companies have social welfare as the prime objective and hence they cannot be completely profit oriented.
2. Difference in Ownership:
   The government is the sole or major shareholder in public sector companies. The management and administration of these companies therefore, rests in the hands of the government which may not make economically sound policies due to political considerations.
3. Difference in Management:
   Public sector companies are managed by government officials who may not be professionally trained while private sector companies are run and managed by professional managers. This leads to higher efficiency in private sector.
4. Difference in Area of Operation:
   Private sector operates in all areas with adequate return on investment while public sector operates mainly in basic and public utility sectors where returns are not very high.

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Question 4.
What was the role of the public sector before 1991?
Answer:
Public sector had a prominent role before 1991 as discussed below:

1. Development of Infrastructure and Heavy Industries:
   At the time of independence, basic infrastructure was not developed and hence industrialization was difficult due to lack of adequate transportation and communication facilities, fuel and energy, and basic and heavy industries. The private sector did not take initiative to invest in heavy industries and infrastructure due to heavy capital requirements and long gestation periods involved in these projects. Therefore, government took the lead in these projects through public sector enterprises.
2. Regional Balance:
   After the inception of planning in 1951, the government started paying special attention to those regions which were lagging behind and public sector industries were deliberately setup in those backward regions. Four major steel plants were setup as public sector units in the backward areas to accelerate economic development, provide employment to the workforce and develop ancillary industries.
3. Economies of Scale:
   Average cost of production is lowered when the scale of production is large. But large scale industries require huge capital outlay and hence the public sector had to step into take advantage of economies of scale. Units of electric power, natural gas, petroleum, etc. were setup in public sector as these units required a larger base to function economically which was possible only with government resources and mass production.
4. Concentration of Economic Power:
   At the time of independence, there were very few industrial houses which had the required capital to invest in heavy industries and if public sector units were not established, wealth could get concentrated in a few hands giving rise to monopolistic practices. The public sector ensures that the income and benefits that accrues are shared by a large of number of employees and workers.

Question 5.
What are the benefits of entering into joint ventures?
Answer:
When two businesses agree to join together for a common purpose and mutual benefit, it gives rise to a joint venture. The major benefits of joint ventures are as follows:

1. Increased Resources and Capacity:
   When two firms come together, it enables the joint venture company to grow and expand more quickly and efficiently as the new business pools in financial and human resources. It is able to face market challenges and capitalise new opportunities more effectively.
2. Access to New Markets and Distribution Networks:
   When foreign companies form joint venture with companies in a host country, they gain access to the market of host country. They can also take advantage of the established distribution channels i.e., the whole¬sale and retail outlets in different local markets which may be very expensive for them otherwise.
3. Access to Technology:
   Most businesses enter into joint ventures to get access to an advanced technology which is not possible or economically feasible to be developed on their own. Technology adds to efficiency and effectiveness, thus leading to reduction in costs and superior quality products.
4. Innovation:
   Products become outdated after sometime and demand for them starts falling. Consumers have become more demanding in terms of new and innovative products. Joint ventures enable companies to come up with innovative products because of new ideas and technology acquired from the partner in the joint venture.

Question 6.
Should unskilled and ill public industries be transferred to private sector?
Answer:
Public industries were made in order to provide speed to progress. Lift the standard of living of the people and to increase the employment opportunities but with the changing time and technological advancement some of the firm were not able to upgrade.
Now for its upgradation and proper development should they be privatized or not. Normally following problems are generally faced by the public concern to be privatized:

It is not necessary that if they are transferred to private then they will be working efficiently.
If they will be transferred to private undertaking then the morale of their managers will come down.
Private sector will be to upgrade and increase its pannier.
The aim of public sector undertaking will not be fulfilled and the exploitations.
Following steps can be taken instead of privatizing the public undertaking:

Instead of Government officers, professional managers should be appointed.
Liberty should be given to Chief Executive officers.
Each and every public undertaking should have decided target of production.
There should be minimum interference of the govt, officers and politicians.
There should be arrangement of the training of the Employees from time to time.
There should be change in relations of the employer and employee.
There should be strict control or the unnecessary expenses which the incurred by this organizations.
Question 7.
Why are global enterprises considered superior to other business organizations?
Answer:
Global enteiprises are large industrial organizations which extend their industrial and marketing operations through a network of their branches or subsidiaries in several countries. These enterprises are considered superior to other private sector companies and public sector enterprises because of certain features which are as follows:

1. Availability of Funds:
   These enterprises can survive in crises and register higher growth as they possess huge financial resources as they have the ability to raise funds from different sources such as equity shares, debentures or bonds. They are also in a position to borrow from financial institutions and international banks as they have high credibility.
2. Diversification of Risk:
   Global enterprises usually operate in different countries and enter into joint ventures with domestic firms of the host country. Thus, losses in one country may be compensated by profits in another country. Risk is also shared by the domestic partner in case of joint venture.
3. Advanced Technology:
   Global enterprises conform to international standards and quality specifications as they possess superior technologies and methods of production.
4. Research and Development:
   R and D, High quality research involves huge expenditure which only global enterprises can afford. Therefore, these enterprises have highly sophisticated research and development departments which regularly come up with product as well as process innovations making these firms globally competitive.
5. Wider Market Access:
   The operations and marketing of global companies extend to many countries in which they operate through a network of subsidiaries, branches and affiliates. Due to this they enjoy a far wider market access than domestic firms.

MP Board Solutions

Question 8.
Write disadvantages of MNC’s?
Answer:
Disadvantages of Multinational Companies:
Though the benefits of multinational companies are numerous yet they are also not free from criticism for their demerits. Some of them are listed below:

Natural resources are exploited in a wrong way.
They create problems of foreign currency.
They create economic and social disparity.
They tend to become monopolistic in a very short time.
They produce harmful goods and so nation suffers loss, e.g. Pepsi, Coca Cola.
Price is determined by the office of the company which may sometimes not be favorable for the country.
It is very harmful for small and cottage industries.
Question 9.
Explain the role of public sector in Industrial Development of the country?
Or, Explain the importance of public sector in the Development of a country?
Answer:
Following is the importance of public sector in the Development of a country:

1. Development of Infrastructure:
   It is very important to have development in the transportation communication, energy generation and fuel for the development of Ba-sic industries. Infrastructural development is not possible without the development in the basic industries.
2. Regional balance: It is the moral responsibility of the government to have overall development in all the regions of the country. After independence same sectors of course developed but some sectors remained undeveloped now also. Public sectors undertaking can play important role in development of such regions.
3. Economies of Scale:
   Public sector can come forth to have working in those fields where investment is required in public and profit is earned after same longevity.
4. Check over concentration of Economic power:
   Some big private companies invest in public industries and earn huge profits which give rise to economic gap. Hence public sector undertakings should have establishment of industries in those sectors where private people or Houses are earning big profits.
5. Import Substitutions:
   In India government started trying to get self sufficient in some sectors since second five year plan only. For establishment of big industries huge amount was spent on the purchase of big machines and whole amount was spent. Hence, focus was given on the establishment of public sector undertaking in there areas to avoid these situations.