PRIVATE SECTOR ENTERPRISES

The private sector consists of business owned by individuals or a group of individuals. The varios forms of organisation are- sole proprietorship, partnership, joint hindu family, cooperative and company.

PUBLIC SECTOR ENTERPRISES

Meaning: The public sector consists of various organizations owned and managed by central or State or by both governments. The govt. participates in economic activity of the country through these enterprises.

FEATURES:

1. Capital is contributed by central or state or both govts.
2. Public welfare or Service is the main objective.
3. Management & control are in the hands of govt.
4. It is accountable to the public.

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<a data-ved="2ahUKEwiSo9jZ5ejtAhVGT30KHStlAWcQFjAAegQIAxAC" href="https://mycbseguide.com/blog/private-public-and-global-enterprises-class-11-notes-business-studies/" ping="/url?sa=t&source=web&rct=j&url=https://mycbseguide.com/blog/private-public-and-global-enterprises-class-11-notes-business-studies/&ved=2ahUKEwiSo9jZ5ejtAhVGT30KHStlAWcQFjAAegQIAxAC" rel="noopener" target="_blank">Private, Public and Global Enterprises class 11 Notes ...</a>

Primary Functions

1. Accepting Deposits: Accepting deposits is the main function of commercial banks. Banks offer different types of Bank accounts to suit the requirements and needs of different customers. Different types of Bank accounts areas follows:

A. Fixed Deposit Account: Money is deposited in the account for a fixed period is called as Fixed Deposit account. After expiry of specified period ,person can claim his money from the bank. Usually the rate of interest is maximum in this account. The longer the period of deposit, the higher will be the rate of interest on deposit.

B. Current Deposit Account: Current deposit Accounts are opened by businessman. The account holder can deposit and Withdraw money. Whenever desired. As the deposit is repayable on demand, it is also known as demand deposit. Withdrawals are always made by cheque. No interest is paid on current accounts. Rather charges are taken by bank for services rendered by it.

C. Saving Deposit Account: The aim of a saving account is to mobilize savings of the public. A person can open this account by depositing a small sum of money. He can withdraw money from his account and make additional deposits at will. Account holder also gets interest on his deposit. In this account though the rate of interest is lower than the rate of interest on fixed deposit account.

D.Recurring Deposit Account: The aim of recurring deposit is to encourage regular savings by the people. A depositor can deposit a fixed amount, say Rs. 100 every month for a fixed period. The amount together with interest is repaid on maturity. The interest rate on this account is higher than that on saving deposits.

E. Multiple Option Deposit Account: It is a type of saving Bank A/c in which deposit in excess of a particular limit get  automatically transferred into fixed Deposit. On the other hand, in case adequate fund is not available in our saving Bank Account so, as to honour a cheque that we have issued the required amount gets automatically transferred from fixed deposit to the saving bank account. Therefore, the account holder has twin benefits from this amount (i) he can earn more interest and (ii) It lowers the risk of dishonoring a cheque.

2. Lending Money with the help of money collected through various types of deposits, commercial banks lend finance to businessman, farmers, and others. The main ways of lending money are as follows:

A. Term Loans: These loans are provided by the banks to their customers for a fixed period to purchases Machinery. Truck. Scooter. House etc. The borrowers repay the loans in Monthly/Quarterly/Half Yearly/Annual installments.

B. Bank Overdraft: The customer who maintains a current account with the bank, takes permission from the bank to withdraw more money than deposited in his account. The extra amount withdrawn is called overdraft. This facility is available to trustworthy customers for a small period. This facility is usually given against the security of some assets or on the personal security of the customer. Interest is charged on the actual amount overdrawn by the customer.

C. Cash Credit: Under this arrangement, the bank advances cash loan up to a specified limit against current assets and other securities. The bank opens an account in the name of the borrower and allows him to withdraw the borrowed money from time to time subject to the sanctioned limit. Interest is charged on the amount actually withdraw.

D. Discounting of Bill of Exchange: Under this, a bank gives money to its customers on the security of a bill of exchange before the expiry of the bill in ease of customers needs it. For this service bank charges discount for the remaining period of the bill.

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.

They enjoy independence in their functioning and a high degree of operational flexibility. They are free from undesirable government regulation and control.

Features

Statutory corporations have certain distinct features, which are discussed as below:

(i) Statutory corporations are set up under an Act of Parliament and are governed by the provisions of the Act. The Act defines the objects, powers and privileges of a statutory corporation;

(ii) This type of organisation is wholly owned by the state. The government has the ultimate financial responsibility and has the power to appropriate its profits. At the same time, the state also has to bear the losses, if any;

(iii) A statutory corporation is a body corporate and can sue and be sued, enter into contract and acquire property in its own name;

(iv) This type of enterprise is usually independently financed. It obtains funds by borrowings from the government or from the public through revenues, derived from sale of goods and services. It has the authority to use its revenues;

(v) A statutory corporation is not subject to the same accounting and audit procedures applicable to government departments. It is also not concerned with the central budget of the Government;

(vi) The employees of these enterprises are not government or civil servants and are not governed by government rules and regulations. The conditions of service of the employees are governed by the provisions of the Act itself. At times, some officers are taken from government departments, on deputation, to head these organisations.

The importance of aids to trade Transport

In the modern times there is a vast distance between centers of production and the centers of consumption. This difficulty is removed by an important aid to trade known as Transport.

Transport creates place utility.

There are several types of transport such as Air, Water and Land transport. The geographical distance between producers and consumers is removed with the help of transport.

<a href="https://lh3.googleusercontent.com/_iFIztPmvqg8/TXJV5FjgnDI/AAAAAAAAEOw/RKmpA0ZQjco/Types-of-Transport.png" imageanchor="1" rel="lightbox-What-Are-Aids-To-Trade" title="Types of transport"></a>

The three main modes of transport:

1. Land:
   1. Road
   2. Railyway
2. Water:
   1. River
   2. Sea
   3. Canals
3. Air:
   1. Airway

The formation of a company is a lengthy process. For convenience the whole process of company formation may be divided into the following four stages:

Stage # 1. Promotion Stage:

Promotion is the first stage in the formation of a company. The term ‘Promotion’ refers to the aggregate of activities designed to bring into being an enterprise to operate a business. It presupposes the technical processing of a commercial proposition with reference to its potential profitability. The meaning of promotion and the steps to be taken in promoting a business are discussed in brief here.

Stage # 2. Incorporation or Registration Stage:

Incorporation or registration is the second stage in the formation of a company. It is the registration that brings a company into existence. A company is properly constituted only when it is duly registered under the Act and a Certificate of Incorporation has been obtained from the Registrar of Companies.

Stage # 3. Capital Subscription Stage:

A private company or a public company not having share capital can commence business immediately on its incorporation. As such ‘capital subscription stage’ and ‘commencement of business stage’ are relevant only in the case of a public company having a share capital. Such a company has to pass through these additional two stages before it can commence business.

Stage # 4. Commencement of Business Stage:

After getting the certificate of incorporation, a private company can start its business. A public company can start its business only after getting a’ certificate of commencement of business’.

In the world of commerce, the term is usually synonymous with 'company', or 'business'. A business entity such as a corporation, limited liability company, public limited company, sole proprietorship, or partnership that has products or services for sale is a firm.

Continuous increase in the profits of any enterprise is possible only by performing useful services to the society. Infact, objectives are needed in every area that influences the survival and prosperity of busi¬ness. Since a business has to balance a number of needs and goals, it requires multiple objectives.
The five multiple objectives of business are as follows:

1. Market standing : Market standing refers to the position of an enterprise in relation to its competitors. A business enterprise must aim at stronger market standing in terms of offering competitive products to its customers and serving them to their satisfaction.
2. Innovation : Innovation is the introduction of new ideas or methods in the way something is done or made. There are two kinds of innovation in every business, i.e.,
   (i) innovation in product or service.
   (ii) innovation in the various skills and activities needed to supply them.
3. Productivity : Productivity is calculated by comparing the value of outputs with the value of inputs. It is used as a measure of efficiency.
4. Physical and financial resources : Any business requires physical resources like plants, machines, offices, etc., and financial resources i.e. funds to be able to produce and supply goods and services to its
   customers.
5. Earning profits : One of the main objectives of business is to earn profits on the capital employed.
   Profitability refers to profit in relation to capital investment. Every business must earn a reasonable profit which is crucial for its survival and growth

PRIVATE SECTOR ENTERPRISES

The private sector consists of business owned by individuals or a group of individuals. The varios forms of organisation are- sole proprietorship, partnership, joint hindu family, cooperative and company.

PUBLIC SECTOR ENTERPRISES

Meaning: The public sector consists of various organizations owned and managed by central or State or by both governments. The govt. participates in economic activity of the country through these enterprises.

A company abides by the new regulations regarding payment of taxes in India. It is performing its social responsibility towards the government

Social responsibility of business towards government’s regulatory bodies or agencies is quite sensitive from the license point of view. If permission is not granted or revoked abruptly, it can result in huge losses to an organization. Therefore, compliance in this regard is necessary.
Furthermore, a business must also function within the demarcation of rules and policies as formulated from time to time by the government of state or nation. It should respect laws and abide by all established regulations while performing within the jurisdiction of state.
Some examples of activities a business can do in this regard:

• Paying fair taxes on time,
•  Following labor, environmental and other laws, etc.
• Seeking permissions wherever necessary,
• Licensing an organization,

Which of the following is not a characteristics of Business?

(a) Dealing in goods-in-trade.
(b) A father teaching his son.
(c) Involves risk and uncertainty of income.
(d) Aims at earning profits

Answer:

b) A father teaching his son

Explanation:

Business refers to the part of the occupation where the main objective becomes earning profit. It also refers to the supply of goods that satisfy customer needs. It involves the purchase of goods or sales.

The characteristics of Business are :

* It only aims at earning profit.

* It involves dealing goods in trade.

* It may involve risk and uncertainty in income.

* Production of goods.

So option b) A father teaching son is not a characteristic of business.

Services : Services are all those economic activities that are intangible and imply an interaction to be realised between service provider and consumer.

The Peculiar feature of construction industry is that it is always initiated by clients, opposite to most of the other industries. The other industries first produces the goods to meet the supply of the customers. But in a construction the request or the specifications are raised by the clients.

Q :

Different situations in different business are being elaborated below:-
(i) Raghunath Gorkha had a match stick factory in Nepal which got distructed by the recent earthquake.

Answer:

Causes of business risk identified in the above cases are as follows:--

1. Natural causes: Human beings have little or no control over natural calamities like flood, earthquake, lightning, heavy rains, famine, etc. A person can only  talk about them and can not say when they will definitely occur. These natural calamities result in heavy loss of life, property and income in business.

2. Human causes: Human causes include such unexpected events as dishonesty, carelessness or negligence of employer/employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.
 

When a company specialises in a particular operation such as preparation of financial statements  and performs this task for various industries in the market. It is referred to as horizontal outsourcing. 

While, when a company performs more than one task for other one or two industries in the market. It is referred to as vertical outsourcing. 

Indian Depository Receipt- IDR is a financial instrument. It is issued  by domestic depository to the Indian citizens against the shares of foreign company. IDR is denominated in Indian rupees. It helps issuing company, i.e. foreign companies to raise capital from Indian securities market.

Global Depository Receipt- GDR is issued by a country's bank against the shares of a foreign company which is not traded in their domestic stock exchange. GDR is issued in more than one country. It is a negotiable instrument.

American Depository Receipt- ADR is a negotiable instrument. It is issued by American Bank against the shares of foreign company that are traded in U.S. Stock market. ADR is denominated in US Dollars. 

Economic Activities Activities which are under taken by people with the object of earning money are known as economic activities. e.g., production of goods in 8 factory, distribution of goods by a wholesaler or retailer

Emerging modes of business refers to recent changes that have taken place & will take place in a manner or mode of conducting a business. E-business, outsourcing, internationalisation & globalisation are the three dynamic trends that are shaping business in today’s world.