Chapter private-public-and-global-enterprises: Private, Public and Global Enterprises Application Questions | business studies Class 11 CBSE

Chapter private-public-and-global-enterprises: Private, Public and Global Enterprises Application Questions | business studies Class 11 CBSE | ByteNotes.in

Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 1

Applied Concept

The Indian Railways is the world's largest rail network under government operation. With reference to departmental undertakings, explain why it is structured as one and whether this structure is the most appropriate form for it.

Indian Railways qualifies as a departmental undertaking because it is established as a department of the Ministry of Railways, funded directly from the government treasury through annual budget allocations, and staffed entirely by government servants under civil service rules.
The departmental form is appropriate for Railways because it involves national security considerations (troop movement, strategic connectivity), requires high public accountability given the millions of daily passengers, and demands consistent policy implementation across the entire country.
However, critics argue that Railways suffers from the classic disadvantages of departmental undertakings — excessive red tapism, political interference in pricing and route decisions, insensitivity to consumer needs, and inability to respond quickly to market opportunities — suggesting that greater operational autonomy would improve service quality.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 2

Applied Concept

A government wants to set up an organisation to manage the country's national airlines and give it the power to enter into international contracts, borrow funds independently, and compete commercially. Which form of public enterprise would be most suitable? Justify your answer.

A statutory corporation would be the most suitable form, as it is created by a Special Act of Parliament and possesses the legal capacity to sue, be sued, enter into contracts, and acquire property in its own name — essential for an airline dealing with international agreements and leases.
Statutory corporations are independently financed and not subject to central budget controls, allowing the airline to borrow from financial institutions and manage its revenues flexibly — necessary for competitive commercial operations in a capital-intensive industry.
Unlike a departmental undertaking, a statutory corporation can set its own employee service conditions, enabling the airline to recruit skilled pilots, engineers, and management professionals under commercially competitive terms without being bound by rigid civil service rules.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 3

Applied Concept

A state government wants to enter the steel manufacturing business in partnership with some private investors. It decides to hold 60% of the paid-up capital while private investors hold 40%. What form of organisation will this be? State any three features applicable to it.

This will be a Government Company under the Companies Act, 2013, since the state government holds more than 51% of the paid-up capital, satisfying the legal definition — it qualifies even though private investors hold the remaining 40%.
The company will have a separate legal entity, allowing it to sue and be sued in its own name, enter into contracts independently, and acquire property — distinct from the government's own legal identity.
The employees will be appointed under the company's own Memorandum and Articles of Association rather than government service rules; the company can also raise additional funds from the capital market beyond the government and private shareholder contributions, and an auditor will be appointed by the Central Government with the annual report presented to the legislature.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 4

Applied Concept

An Indian textile company wants to expand into the European market but lacks knowledge of European distribution channels and consumer preferences. A French company wants to source quality textiles at low cost. How can a joint venture help both parties? Which type of joint venture is more appropriate?

The joint venture would benefit the Indian company by giving it access to the French company's established European distribution network and consumer market knowledge, enabling it to sell its products in a new geography without the high cost of independently building a retail and logistics network abroad.
The French company benefits from India's low cost of production — cheap raw materials, technically skilled labour, and management professionals — allowing it to source high-quality textiles at a significantly lower price than what prevails in its home country, improving its own margins.
An Equity-based Joint Venture (EJV) is more appropriate here as both parties are looking for a longer-term, structured business relationship involving shared ownership, shared management, shared capital investment, and shared profits — rather than just a contractual agreement to cooperate on a single transaction.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 5

Applied Concept

The government of a state wants to build a 200-km highway but lacks the funds to complete it on its own. It decides to invite a private construction company to design and build the highway while the government retains ownership. Identify the model being used and explain its key features.

The model being used is Public Private Partnership (PPP) — specifically the design-build variant where a contract is awarded to the private party to design and build the public facility, while the facility is financed and owned by the public sector.
The key strength of this PPP structure is the transfer of design and construction risk to the private company, protecting the government from project delays and cost overruns; it also has the potential to accelerate project delivery since the private partner has commercial incentives to complete on time.
The PPP structure is particularly suited to capital projects where the government wishes to retain operational responsibility after construction, as it does with the highway; the government retains ownership and public accountability while leveraging private sector expertise and efficiency.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 6

Applied Concept

Coca-Cola and McDonald's are examples of companies that enter new countries through franchisee agreements where the franchisor provides the brand, recipe, and know-how, and the franchisee runs the local outlet. With reference to the chapter, identify what type of joint venture this represents and explain its characteristics.

This represents a Contractual Joint Venture (CJV), as the franchisor and franchisee do not create a new jointly-owned entity — instead, they only agree to work together contractually, with the franchisee running the business under the franchisor's system.
Key characteristics of this CJV include: both parties have a common business intention (running a profitable food/beverage outlet), each party brings specific inputs (the franchisor provides the brand and recipe; the franchisee provides capital, premises, and local operations), and both parties exercise some degree of control over the venture.
The relationship is not a one-off transaction but has a character of relatively longer duration — franchise agreements typically run for several years — satisfying the fourth key element of a CJV: a sustained rather than transactional relationship.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 7

Applied Concept

A public sector steel company has been incurring continuous losses for the past five years and has accumulated huge debts. The government is under financial pressure and cannot continue subsidising it. What options does the 1991 industrial policy provide for handling such a situation?

Under the 1991 industrial policy, the sick public sector unit would be referred to the Board for Industrial and Financial Reconstruction (BIFR) to determine whether it is potentially viable and should be restructured, or whether it should be closed down.
If the BIFR determines that the steel company can be revived with restructuring, it may recommend rehabilitation schemes involving fresh capital infusion, management overhauling, or strategic disinvestment — bringing in private sector expertise through partial equity sale.
If revival is not feasible, the unit would be closed down; the National Renewal Fund (NRF) would provide a safety net for affected workers — funding retraining, redeployment, and compensation under Voluntary Retirement or Separation Schemes — though the chapter notes NRF resources have often been insufficient for this purpose.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 8

Applied Concept

Samsung, a South Korean MNC, has set up manufacturing plants in India, employs thousands of Indian workers, and sells smartphones that compete with Indian brands. With reference to the features of global enterprises, explain its presence in India.

Samsung's entry and success in India is explained by its huge capital resources — its ability to raise funds from global financial institutions and equity markets enables it to invest in large manufacturing facilities in India without financial constraint.
Its advanced technology and product innovation capabilities allow it to manufacture smartphones that meet international quality standards and regularly introduce superior designs, giving it a competitive edge over domestic Indian brands with smaller R&D budgets.
Samsung's powerful marketing strategies — including aggressive advertising, deep distribution networks through subsidiaries and retail chains, and its already globally established brand — allow it to rapidly penetrate the Indian market and occupy a dominant position, demonstrating the feature of expansion of market territory.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 9

Applied Concept

The government of India set up steel plants in Bhilai, Rourkela, Durgapur, and Bokaro — all in relatively underdeveloped regions — during the early Five Year Plans. Which objective of the public sector does this best illustrate? Explain how this policy served the stated objective.

This best illustrates the public sector objective of ensuring regional balance — the government's responsibility to develop all regions in a balanced manner and remove regional disparities that were entrenched since the pre-Independence era when industrial progress was concentrated in a few port cities.
By deliberately locating major steel plants in underdeveloped areas, the government accelerated economic development in those regions, generated employment for the local workforce, and stimulated the growth of ancillary industries around the steel plants — creating a multiplier effect on regional economies.
The policy also served to prevent the mushrooming growth of private sector units in already advanced areas, ensuring that the benefits of industrialisation were distributed more equitably — consistent with the planned development objective of inclusive growth across states and regions.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 10

Applied Concept

A new Indian pharmaceutical startup has excellent scientific talent and innovative drug formulas but lacks the capital and global distribution network to scale up. A German pharma MNC wants to expand in Asia but lacks local knowledge and regulatory expertise. Explain how a joint venture between them would serve both parties.

The joint venture would provide the Indian startup with the German MNC's capital, advanced manufacturing technology, and global distribution network — enabling it to scale up rapidly and bring its innovative drugs to international markets far sooner than it could independently.
The German MNC benefits from the Indian company's local regulatory expertise (navigating India's drug approval processes), scientific talent, and lower cost of production — giving it a cost-competitive manufacturing base for its Asian expansion without having to build one from scratch.
The venture would also give the German MNC access to the vast and rapidly growing Indian and Asian pharmaceutical market, with the Indian partner's established distribution channels and market knowledge reducing the cost and risk of market entry significantly.

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Chapter private-public-and-global-enterprises: Private, Public and Global Enterprises | Application Questions

The Indian Railways is the world's largest rail network under government operation. With reference to departmental undertakings, explain why it is structured as one and whether this structure is the most appropriate form for it.

A government wants to set up an organisation to manage the country's national airlines and give it the power to enter into international contracts, borrow funds independently, and compete commercially. Which form of public enterprise would be most suitable? Justify your answer.

A state government wants to enter the steel manufacturing business in partnership with some private investors. It decides to hold 60% of the paid-up capital while private investors hold 40%. What form of organisation will this be? State any three features applicable to it.

The government of a state wants to build a 200-km highway but lacks the funds to complete it on its own. It decides to invite a private construction company to design and build the highway while the government retains ownership. Identify the model being used and explain its key features.

A public sector steel company has been incurring continuous losses for the past five years and has accumulated huge debts. The government is under financial pressure and cannot continue subsidising it. What options does the 1991 industrial policy provide for handling such a situation?

Samsung, a South Korean MNC, has set up manufacturing plants in India, employs thousands of Indian workers, and sells smartphones that compete with Indian brands. With reference to the features of global enterprises, explain its presence in India.

The government of India set up steel plants in Bhilai, Rourkela, Durgapur, and Bokaro — all in relatively underdeveloped regions — during the early Five Year Plans. Which objective of the public sector does this best illustrate? Explain how this policy served the stated objective.

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