Many countries across the globe have acquired the policy of privatisation and global business, which has gained a lot of attention over the years. For the growth and improvement of any nation, all the three, that is, private, public, and global enterprises, should go hand in hand as just one sector cannot lead the country to success.
Let us now understand the meaning of these concepts in detail.
Private Sector Enterprises
The private sector includes businesses that are controlled, owned, and managed by an individual or group of individuals. Such companies are classified as small, medium, and large enterprises that are traded privately or sometimes publicly. The business in this sector is formed by establishing a new enterprise or privatising a public firm.
The main goal of a private company is to make profit and recruit more employees than the public sector. It focuses on providing quality services to the society and win its goodwill and trust to sustain in the market for a longer run and compete with the competitors. It has to abide by the rules and regulations of the government.
Types of Private Sector Enterprises
It is a diversified sector and contributes a considerable part to the country’s economy. The entities that provide to the private sector are:
- Sole proprietors
- Small and medium-sized enterprises
- Large and multinational companies
- Professional and trade associations
- Trade unions
Public Sector Enterprises
The public sector comprises a business owned and managed by the government, whether it is the state, central or local government. The public sector is engaged in ventures to provide goods to the government and services to the society.
A public sector organisation is formed when the government fully finances the firm or when the government has 51% or more of the firm’s share capital. The government funds these companies from the collection of revenues such as taxes, fees, duties, etc. The primary motive of these enterprises is established with the purpose of kindness.
Types of Public Sector Enterprises
Public sector organisations are established in three forms.
- Departmental undertaking – This is the earliest kind of public sector enterprise and is considered as one of the government’s departments. It does not have an individual existence other than the government and operates under one government department or ministry. For example, post and telegraph, broadcasting, railways, telephone service, etc.
- Public corporation/statutory corporation – It is a body found by the state or central legislature or by a special act of parliament. It is entirely government-funded, and the act of the legislature determines all the decisions, objects, limitations, powers, etc. For example, the State Bank of India, Life Insurance Corporation of India, Air India, Oil and Natural Gas Corporation, and Food Corporation of India.
- Government company –The central or state government holds 51% of the paid-up share capital in such a company. However, the government companies are controlled, governed, and registered under the Companies Act, 2013. For example, Hindustan Machine Tools, Steel Authority of India, and State Trading Corporation.
Global enterprises are firms that function across the globe, that is, in international trade. These enterprises are categorised based on their size, their products, technological advancements, marketing and strategy, and operational network around the world.
The central vision of a global enterprise company is to operate across many countries to earn international currencies. It has different books of accounts in several countries, which are merged at the end of the financial year according to their usage.
This article was about private, public, and global enterprises for commerce students. To know more, stay tuned to our website.