HOTs Private Public and Global Enterprises Class 11 Business Studies

HOTs for Class 11

Please refer to Private Public and Global Enterprises HOTs Class 11 Business Studies provided below with Private Public and Global Enterprises. All HOTs for Class 11 Business Studies with answers provided below have been designed as per the latest syllabus and examination petter issued by CBSE, NCERT, KVS. Students of Standard 11 Business Studies should learn the solved HOTS for Class 11 Business Studies provided below to gain better marks in examinations.

Private Public and Global Enterprises Class 11 Business Studies HOTs


Question. Mention the types of business enterprise which operates in more than one nation.
Answer :
Companies that operate business in more than one nation are called as Multinational Companies (MNCs). However, such companies have their headquarters in one country where all the primary business activities take place. For instance, Capgemini, Amazon, etc.,

Question. Provide 2 features of a public-private partnership.
Answer :
• The private sector’s role in the partnership is to make maximum use of its skills in managing tasks, innovation and operations to run the business effectively
• The public partners in a public-private partnership (PPP) are the government organisations, i.e., municipalities, government departments, ministries or state-owned enterprises. The private partners can be either local or international and include businesses or investors with financial or technical skills that are relevant to the project.

Question. What is Joint venture?
Answer :
A joint venture is a business arrangement in which two or more persons give their consent in pooling their resources for the purpose of completing a particular task. This task can either be a new project or any other business pursuit. In a joint venture (JV), each of the participant is accountable for profits, losses and costs related with it.

Very Short Answer Type Questions

Question. Name the type of business enterprise which operates in more than one country
Answer :
Multinational company may be defined of a company that has business operations in several countries by having its factories, branches or offices in those countries. But is has its headquarter in one country in which it is incorporated. Examples :- PHILIPS, Coca Cola etc.

Question.  It is a public sector enterprise in which Govt. holds at least 51% share. Name the company
How much paid up capital should be at least held by a government company?
Answer :
 According to the section 2(45) of the Companies Act 2013, a government company means any company in which not less than 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 and includes a company which is a subsidiary of a government company.

Question.  Mention any two objective of public sector enterprises
Answer :
1. To prevent the growth of monopoly and concentration of economic power in a few private hands.
2. To achieve rapid economic development through industrial growth in accordance with the development plans

Question. Which committee was formed to reconstruct the sick public units?
Answer :
 All public sector units were referred to the Board of Industrial and Financial Reconstruction to decide whether a sick unit was to be restructured or closed down. The Board has reconsidered revival and rehabilitation schemes for some cases and winding up for a number of units.

Short Answer Type Questions

Question. How does the govt. maintain regional balance in the country
Answer : 
• The government is responsible for developing all regions and states in a balanced way and removing regional disparties.
• Attention would be paid to those regions which were lagging behind and public sector industries were deliberately set up
• Four major steel plants were set up in the backward areas to accelerate economic development, provide employment to the workforce and develop ancilliary industries

Question. Explain differences between Departmental undertakings and Statutory Corporation
Answer :

HOTs Private Public and Global Enterprises Class 11 Business Studies

Question. Write three important steps of forming a joint venture
Answer : 
Three important steps of forming a joint venture are as follows:
1.Two parties, (individuals or companies), incorporate a company in India. Business of one party is transferred to the company and as consideration for such transfer, shares are issued by the company and subscribed by that party. The other party subscribes for the shares in cash.
2.The above two parties subscribe to the shares of the joint venture company in agreed proportion, in cash, and start a new business.
3.Promoter shareholder of an existing Indian company and a third party, who/which may be individual/company, one of them non-resident or both residents, collaborate to jointly carry on the business of that company and its shares are taken by the said third party through payment in cash.

Long Answer Type Questions

Question. It is a public enterprise established under Indian Companies Act and conducts business in competition with companies in private sector.
(a) Identify the type of public enterprise.
(b) What is the minimum investment Govt. has to make in such companies.
(c) In whose name shares of this type of company are purchased.
(d) Explain any two advantages and limitations of such companies.
Answer :
a) It is a Government Company. According to the section 2(45) of the Companies Act 2013, a government company means any company in which not less than 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 and includes a company which is a subsidiary of a government company
b) Minimum investment of 51% of paid up capital is to be made by central government, or by any state government or partly by Central government and partly by one or more State governments and includes a company which is a subsidiary of a government company
c) The shares of the company are purchased in the name of the President of India.
d) Advantages are as follows:
• It has a separate legal entity, apart from the Government;
• It enjoys autonomy in all management decisions and takes actions according to business prudence
Limitations are as follows:
• The Government is the only shareholder in some of the companies, the provisions of the Companies Act does not have much relevance
• It evades constitutional responsibility, which a company financed by the government should have

Question. Write the main features of multinational companies
Answer :

  • Features:
  • Huge capital resources:
  • They possess huge financial resources and the ability to raise funds from different sources.
  • They are able to tap funds from various sources.
  • They may issue equity shares, debentures or bonds to the public.
  • They are also in a position to borrow from financial institutions and international banks.
  • They enjoy credibility in the capital market
  • Foreign collaboration:
  • They enter into agreements with Indian companies pertaining to the sale of technology, production of goods, use of brand names for the final products, etc.
  • They may collaborate with companies in the public and private sector.
  • There are usually various restrictive clauses in the agreement relating to transfer of technology, pricing, dividend payments, tight control by foreign technicians, etc.
  • foreign collaborations have given rise to the growth of monopolies and concentration of power in few hands
  • Advanced technology:
  • These enterprises possess technological superiorities in their methods of production.
  • They are able to conform to international standards and quality specifications.
  • This leads to industrial progress of the country in which such corporations operate since they are able to optimally exploit local resources and raw materials 
  • Product innovation:
  • These enterprises are characterised by having highly sophisticated research and development departments engaged in the task of developing new products and superior designs of existing products.
  • Qualitative research requires huge investment which only global enterprises can afford
  • Marketing strategies:
  • They use aggressive marketing strategies in order to increase their sales in a short period.
  • They posses a more reliable and up-to-date market information system.
  • They already have carved out a place for themselves in the global market, and their brands are well-known, selling their products is not a problem.
  • Expansion of market territory:
  • Their operations and activities extend beyond the physical boundaries of their own countries.
  • Their international image also builds up and their market territory expands enabling them to become international brands.
  • They operate through a network of subsidiaries, branches and affiliates in host countries. Due to their giant size they occupy a dominant position in the market.
  • Centralised control:
  • They have their headquaters in their home country and exercise control over all branches and subsidiaries.
  • This control is limited to the broad policy framework of the parent company.
  • There is no interference in day to day operations

Question. What was the role of public sector before 1991?
Answer :

  • Indian economy consists of both privately owned and government owned business enterprises
  • The private sector consists of business owned by individuals or a group of individuals
  • The public sector consists of various organisations owned and managed by the government.
  • These organisations may either be partly or wholly owned by the central or state government.
  • They may also be a part of the ministry or come into existence by a Special Act of the Parliament
  • In the Industrial Policy Resolution 1948, the Government of India had specified the approach towards development of the industrial sector.
  • The Industrial Policy Resolution, 1956 had also laid down certain objectives for the public sector to follow so as to accelerate the rate of growth and industrialization
  • The 1991 industrial policy was radically different from all the earlier policies where the government was deliberating disinvestment of public sector and allowing greater freedom to the private sector.
  • At the same time, foreign direct investment was invited from business houses outside India.
  • Thus, public sector units, private sector enterprises and global enterprises coexisting in the Indian economy.

Question. What are the benefits available for two businesses agree to join together for a common purpose and mutual benefit?
Answer : Joint Ventures
• When two businesses agree to join together for a common purpose and mutual benefit, it gives rise to a joint venture.
• Joint venture is the pooling of resources and expertise by two or more businesses, to achieve a particular goal.
• The risks and rewards of the business are also shared. The reasons behind the joint venture often include business expansion, development of new products or moving into new markets, particularly in another country
• Examples of Joint Ventures are AVI Oil India Pvt. Ltd., Green Gas Ltd etc
• A joint venture must be based on a memorandum of understanding signed by both the parties, highlighting the basis of a joint venture agreement.
• Negotiations and terms must take into account the cultural and legal background of the parties.
• The joint venture agreement must also state that all necessary governmental approvals and licences will be obtained within a specified period

HOTs Private Public and Global Enterprises Class 11 Business Studies

• Teaming up adds to existing resources and capacity enabling the joint venture company to grow and expand more quickly and efficiently
• When a business enters into a joint venture with a partner from another country, it opens up a vast growing market
• They have Access to Advance technology. Advanced techniques of production leading to superior quality products saves a lot of time, energy and investment as they do not have to develop their own technology.

• Joint ventures allow business to come up with something new and creative for the same market.
Especially foreign partners can come up with innovative products because of new ideas and technology
• International corporations invest in India, they benefit immensely due to the lower cost of production. They are able to get quality products for their global requirements
• One of the parties benefits from the other’s goodwill which has already been established in the market.