NCERT Solutions for Class 11 Business Studies Chapter 3

The NCERT Solutions for Class 11 Business Studies Chapter 3 have answers to all the textbook questions that are given at the end of this chapter. All the answers are explained in detail with relevant examples, wherever required so that students can understand them thoroughly. Using these resources along with the textbook itself will help students prepare better for the exams. Students should also refer to these solutions in order to get an idea of how to frame their answers. NCERT Solutions for Class 11 Business Studies Chapter 3 are also a great resource for last-minute preparations.

Class 11 NCERT Solutions Business Studies – Chapter 3 

Access NCERT Solutions for Class 11 Business Studies – Chapter 3 Private, Public and Global Enterprise

NCERT Solutions for Class 11 Business Studies Chapter 3 Private, Public and Global Enterprises

Chapter 3 of Class 11 Business Studies covers the different types of business enterprises on the basis of who owns them. The chapter talks about 3 different types of enterprises namely Private, Public and Global Enterprises. Private enterprises refer to the companies owned and operated by individuals. Public enterprises are wholly or partly owned by the government. Global enterprises are the ones that are owned by foreign entities. Students will get to learn the features and the importance of all these enterprises in an economy in this chapter.

Private Sector and Public Sector Enterprises

Private sector enterprises are businesses that are owned by individual people or groups and not by the government. The main type of organisations that fall under this category are partnerships, businesses, and companies. Public sector enterprises, on the other hand, are owned by the government. These include state or central government enterprises. The government participates in the economic activities of the country through public sector enterprises. These are primarily funded by the government and the main motive of these enterprises is the welfare of the people. The public enterprises are accountable to the people for whatever they do, and the control and management lie either entirely or partly with the government. 

Department Undertakings and Statutory Corporations

Department undertakings are recognised departments by the ministry and are fully controlled and financed by the state or central government. Indian Railways and the Telegram are examples of departmental undertakings and statutory corporations. There are no separate entities in these undertakings and the finance comes directly from the government. The merits of these undertakings include achieving the goals of the government, a source of national income, and allowing the government stricter control when it comes to defence production and other sensitive areas of production. However, these organisations lack flexibility and suffer red-tapism. 

Statutory corporations on the other hand are created by acts that specifically mention their functions. They are made by the Parliament and the State Assembly. They have their staff and are independently financed, like Unit Trust of India and LIC. This gives these enterprises internal autonomy and the ability to make quick decisions. However, there is little to no operational flexibility in these organisations, which leads to the development of monopolies. 

Government Companies 

The provisions of the Companies Act govern the formation of government companies, and an executive decision of the government is required. At the same time, it has management and operational autonomy. This category includes companies such as Hindustan Cables and State Trading Corp. They have the ability to control the market and put a stop to unethical business practices. However, such businesses frequently face government interference in their decision-making and bear constitutional responsibility that prevents them from making profit.  

Why Choose Extramarks?

Extramarks has compiled answers to all the textbook questions. Students can access Class 11 Business Studies Chapter 3 NCERT Solutions and can make the most of the study material. The Class 11 Business Studies Chapter 3 NCERT Solutions are precise and reliable as they are prepared by subject matter experts. They are also made keeping in mind the guidelines by the CBSE.

Solved Examples 

Question: Who owns public sector enterprises?

  1. Joint Hindu Families
  2. Government 
  3. Private parties
  4. MNCs 

Answer: 2. Government

Question: What is the percentage of the minimum paid-up capital held by the government in a public enterprise?

  1. 51%
  2. 49%
  3. 50%
  4. 100%

Answer: 1. 51%

Short Questions for NCERT Business Studies Solutions Class 11 Chapter 3

Q.1 Explain the concept of public sector and private sector.

Ans-

Private sector: It refers to that part of an economy which is owned and managed by individuals or companies with the sole motive of earning profits. The private sector consists of organizations like sole proprietorship, partnership, Joint Hindu family, cooperative and Joint Stock Company.

Public Sector: It consists various organizations owned and managed by the government. These organizations 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.

Q.2 State the various types of organisations in the private sector.

Ans-

It refers to that part of an economy which is owned and managed by individuals or companies with the sole motive of earning profits. The various types of private organizations in India are:

  • Sole Proprietorship
  • Partnership
  • Joint Hindu Family
  • Cooperative Society
  • Company

Q.3 What are the different kinds of organisations that come under the public sector?

Ans-

These consists various organizations owned and managed by the government. These organizations may either be partly or wholly owned by the central or state government. The different kinds of organizations that come under the public sector are:

  • Departmental Undertakings
  • Statutory Corporations
  • Government Companies

Q.4 List the names of some enterprises under the public sector and classify them.

Ans-

Some enterprises under the public sector are

  • Departmental undertakings: Indian Railways, Post and Telegraph department, Public Works Department.
  • Statutory Corporations: Life Insurance Corporation of India, Reserve Bank of India, Food Corporation of India.
  • Government Companies: National Insurance Companies, Steel Authority of India, State Bank of India.

Q.5 Why is the government company form of organisation preferred to other types in the public sector?

Ans-

A government company is established under the Indian Companies Act, 1956, and is registered and governed by the provisions of the Indian Companies Act.

The following are the reasons that government – company form of organisation is preferred over the other forms in the public sector.

  • Easy Formation: It can be formed simply by following the procedure laid down by the Companies Act.
  • Separate legal entity: It is separate from the government.
  • Enjoys autonomy: Has autonomy in management decisions and takes actions according to business prudence.
  • Curbs unhealthy business practices: These companies, by providing goods and services at reasonable prices, are able to control the market.

Q.6 How does the government maintain a regional balance in the country?

Ans-

The following are the ways in which the government of India has maintained a regional balance in the country.

  • Four major steel plants were set up in the backward areas to accelerate economic development.
  • Providing employment to the workforce and development of ancillary industries.
  • Development of backward regions so as to ensure a regional balance in the country.

Location of new enterprises in the backward areas and prevention of mushrooming growth of private sector units in already advanced areas.

Q.7 State the meaning of public private partnership.

Ans-

Public Private Partnership is a relationship among public sector and private sector for allocation and completion of development projects.

The public partners in PPP are government entities, i.e., ministers, government departments, municipalities or state-owned enterprise.

The private partners in PPP can be local or foreign (international and include business or investors with technical or financial expertise relevant to the project.

Long Questions for NCERT Business Studies Solutions Class 11 Chapter 3

Q.1 Describe the Industrial Policy 1991, towards the public sector.

Ans-

The Government of India introduced four major reforms in the public sector in the Industrial Policy 1991:

  • Restructure and revive potentially viable PSUs.
  • Close down PSUs which cannot be revived.
  • Bring down government equity in all non-strategic PSUs to 26% or lower, as necessary.
  • Fully protect interest of workers.

The steps taken by the government to achieve the above reforms are:

  • Reduction in number of industries reserved for public sector from 17 to 8 (subsequently to 3): By 2001, the number of industries reserved for the public sector was brought down to 3 namely, atomic energy, rail transport and arms.
  • Disinvestment of shares of select public sector enterprises: Disinvestment refers to the sale of shares of public sector units by the government to the private sector and the public. The objective was to reduce debt and interest burden, discourage government control & monopoly, release large amount of public funds blocked in the PSUs for social projects etc.
  • Referring the sick units to BIFR: All the loss making PSUs were handed over to Board of Industrial and Financial Reconstruction (BIFR). The BIFR decided to wind up the very sick units and revive some other capable units. The workers retrenched were helped through retraining, redeployment or compensation.
  • Memorandum of understanding: Under MoU system between the concerned ministries and PSUs, the PSUs were given greater autonomy but held accountable for achievement of the defined targets. This was initiated to reduce the unnecessary interference of ministries.

Q.2 What was the role of the public sector before 1991?

Ans-

The Role of public sector before 1991 were

  • Development of infrastructure: Infrastructure is considered as the backbone of economic growth. The private sector hesitates to invest in infrastructure due to huge capital and delayed profit. Hence, the public sector enterprises undertake the task of developing the infrastructure of our country.
  • Regional balance: The private sector hesitates to set business in backward or remote areas due to lack of infrastructure. The government is responsible for locating the public sector enterprises in backward areas so that people in that area get the opportunity to work and also to bring about balanced regional development of the country.
  • Import substitutes: The public sector has been set up for the production of capital goods, which are generally imported. These enterprises make the economy more reliant and help in saving huge amount of foreign exchange.
  • Check over concentration of economic power: Very few enterprises in the private sector invest in heavy industries, due to which the power gets concentrated with a few. The public sector can invest in heavy industries, thus income gets shared by a large number of employees and workers. This prevents concentration of wealth in the private sector.
  • Defence Requirement: Defence being a sensitive industry, the government has to depend upon the public sector for the supply of products and services for defence.
  • Social Utilities: The private sector hesitates to invest in public utilities like water supply, electricity, gas etc. since profit making is slow and these services are subject to government controls. Hence, the public sector takes care of the provision of utilities to the society.

Q.3 Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.

Ans-

No, the public sector cannot compete with the private sector in terms of profit and efficiency. The following are the reasons:

  • Profit motive: In case of a public sector, apart from the profit motive, it is the welfare motive that generally drives the public sector. The main objective of a private sector is profit motive and hence they work towards this motive only. This motive is achieved by choosing the best combination of factors of production. PSE’s make their goods and services available to the consumers at a nominal cost so that majority of the society can benefit out of it.
  • Efficiency: An organisation is said to be efficient when it uses optimum amount of inputs at low cost to produce a given amount of output. Private sectors have structures to ensure quick decision making, they set their goals in such a way that the efficiency targets are met easily. In a public sector enterprises the decision making process is very slow and rigid. This is because a lot of procedures have to be followed by the employees. Moreover public sector enterprises are very slow in adopting new and efficient technologies due to its costly affair as well and hence they lag behind.

Q.4 Why are global enterprises considered superior to other business organisations?

Ans-

A Global enterprise or a multinational company is that company which is incorporated in one country but has its goods produced, assembled and sold in many countries.

They are characterised by huge size, advanced technology, innovative products, advanced marketing strategies and huge markets for their products and services.

The following features make MNCs superior to other business organizations:

  • Huge capital resources: MNCs have the ability to raise funds from different resources. They may do so by way of issuing shares, debentures, borrowings from banks and financial institutions. Due to their financial strength they enjoy credibility in the market.
  • Foreign Collaborations: Global enterprises usually enter into agreements with Indian companies pertaining to the sale of technology, production of goods, use of brand names for the final product etc. MNCs may collaborate I the public and private sector. Big industrial houses wanting to diversify and expand have gained by collaborating with MNCs in terms of patents, resources foreign exchange etc.
  • Advanced technology: Due to their large financial resources, MNCs posses advanced technology. This helps them to confirm to international standards and quality specifications.
  • 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.
  • Marketing Strategies: Global companies use aggressive marketing strategies in order to increase their sales in a short period. They have more reliable and up-to- date market information. Selling their product is not a problem as they already have their well known brands. Their advertising and sales promotion techniques are normally very effective.
  • 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. Due to their giant size they occupy a dominant position in the market.
  • Centralised control: They have their headquarters in their home country and exercise control over all branches and subsidiaries. However this control is limited to the broad policy framework of the parent company.

Q.5 What are the benefits of entering into joint ventures and public private partnership?

Ans-

The benefits of entering into joint venture are:
Increased resources and capacity: Joint venture leads to pooling of financial and human resources which helps in facing market challenges and taking advantages of new opportunities.

  • Access to new markets and distribution networks: A joint venture between the partners from different countries helps in exploring new markets for their products and services. They can make use of the existing distribution channels.
  • Access to technology: A joint venture brings advanced techniques of production, thus leading to superior quality products. Technology adds to efficiency and effectiveness, thereby leading to reduction in costs.
  • Innovation: Joint ventures also introduce innovative products to lure the customers. They can afford investment in research and development activities to develop innovative products.
  • Low cost of production: Joint venture operates on a large scale. This brings economies of scale, which reduces the cost of production.
  • Established brand name: When two businesses enter into a joint venture, one of the parties benefits from the other’s goodwill which has already been established in the market.

Benefits of Public Private Partnership (PPP):

Under the PPP model, public sector plays an important role and ensures that the social obligations are fulfilled and sector reforms and public investments are successfully met.

The government contribution to PPP is in the form of capital for investment and transfer of assets that support the partnership in addition to the social responsibility, environmental awareness and local knowledge.

The private sector role in the partnership is to make use of its expertise in operations, managing tasks and innovation to run the business efficiently.

Please register to view this section

FAQs (Frequently Asked Questions)

The role of the public sector before 1991 was to develop the country’s heavy industries and infrastructure because there were no heavy industries or infrastructure before 1991. The public sector was crucial in setting up steel plants in the rural backward regions to remove the rural-urban divide. In addition, the public sector ensured that the country’s economic wealth was not monopolised. It was also important for India to become self-reliant by reducing imports and increasing the production of all essential goods domestically.  

The private sector is companies, organisations or institutions owned and run by an individual or a group of individuals. The sole purpose of the private sector enterprises is to earn profits. The public sector is those organisations or institutions that are partly or completely owned and run by the government. Through its participation in the public sector, the government accelerates the economic growth of the country. The purpose of the public sector is the welfare of the people. 

Global organisations are considered superior to other organisations due to several factors. Firstly, global enterprises have a wide market, which means they have greater geographic and resource accessibility. Secondly, global organisations have several options and sources for raising funds due to their international presence. Thirdly, because of the sufficient availability of funds, global enterprises have a superior and efficient research and development network that helps them create high-quality products.

Extramarks provides comprehensive NCERT Solutions for Class 11 Business Studies Chapter 3 that are easily accessible to students. Each answer is explained in an easy to understand manner, which helps students prepare for exams in a better way.

There are different types of organisations that fall under the public sector. The first of them is departmental undertaking, where the enterprises are established as ministry departments and are seen as the extension of the ministry. Examples of such organisations are railway and telegraph. 

The statutory organisations are formed by a special Act in the Parliament and are a financially independent body and have autonomy in managing their own affairs. Government companies also fall under the category of public sectors and have ownership of the government. These companies are established solely for business purposes. 

The different types of organisations in the private sector include various sole proprietorships, partnership, and other types of companies and societies. Sole proprietorship refers to a type of organisation where the management and decision-making authority is under the proprietor. This single individual faces all the risks and enjoys all the profits made. Such a type of company is usually an individual-owned business. A partnership is where two or more people have associated with each other to run the business together, and the risks and profits are shared between them. This is a very commonly seen method of managing a business. The other type of organisations in this category includes joint Hindu families, Joint Stock companies, and cooperative societies. 

The government maintains a regional balance in the country by building steel plants in rural areas. It helps in the development of the rural economy by generating employment and providing financial stability to the rural populations. Similarly, several other industries are set up by the government in the rural areas to increase the contribution of rural resources and population to the country’s economic development. The direct impact of setting up industries is that it increases the connectivity of rural areas by building infrastructure in the form of roads, railways, bridges, etc. 

A public-private partnership is the long-term involvement of the private sector in government-based projects. In this type of partnership, both the public and private sectors share risks, costs, finances, tasks, obligations, and technology with each other. The PPPs takes advantage of the technical skills and the finances of the private sector.

In this, the public sector partners can be ministries, government bodies and the private sector partners can be businesses, investors with technical expertise. Examples of PPPs are power generation, railways, infrastructure, water, hospital etc.