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Advantages and disadvantages of public sector , private sect

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Nidhi Kumari

on 16 October 2013

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Transcript of Advantages and disadvantages of public sector , private sect

Advantages and disadvantages of public sector , private sector , and joint stock companies
Private sector :------
Private sector serves personnel interest and is a non-government sector. Private enterprise are run by businessmen, capital is collected from the private partners. Private sector does not take risky ventures or those having low profit margin.

Public companies : -------
Business firm in the public (non-private) sector of an economy, controlled and operated by civil servants or government personnel (and not by private individuals). A company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over the counter market

JOINT STOCK COMPANY :-----
A joint stock company is an association of individuals called shareholders who join together for profit and agree to  supply  capital  divided   into   shares   that   are transferable for carrying on a specific business. Death, insolvency, disablement  does not affect the joint stock company.

Advantages of PRIVATE COMPANIES
Limitations of JOINT STOCK COMPANIES
Difficult to form
Excessive government control
Delay in policy decisions
Concentration of economic power and wealth in few hands
Lack of ability for centralized management

EXAMPLE OF THE PUBLIC COMPANIES : -----
ONGC (OIL AND NATURAL GAS CORPORATION)
NATIONAL BANKS LIKE (SBI (STATE BANK OF INDIA), PNB(PUNJAB NATIONAL BANK), CANARA BANK )
MILITARY CAMP & POLICE FORCE
TELECOMMUNICATION COMPANY LIKE (BSNL , GOVERNMENT LANDLINES )
GOVERNMENT AIRWAYS LIKE “AIRINDIA” & GOVERNMENT AIRWAYS AUTHORITIES OF INDIA
Limitation of PUBLIC COMPANIES
There are lot of legal formalities
strict controls and regulations
The original owners may lose control.
huge in size and may face management problems 
Very slow in decision making
Workers (unlike in private concern) shrink work.
Incompetent person may occupy very high level.

Advantages of PUBLIC COMPANIES
There is limited liability for the shareholders.
raise large capital 
freely transferable
It Can use its power / size to dominate(I m the best ) a market
 Capital ,raw material ,fuel ,power and transport are easily made available to them.
Public enterprise encourage industrial growth of under-developed regions in the country.
Main objectives to do welfare of the society.
 

Limitation of PRIVATE COMPANIES
Profits have to be shared out amongst a potentially larger number of people
Detailed Legal procedures must be followed to set up the business – consuming time and money
Financial information can be inspected by any member of the public once filed with the Registrar, including competitors Public disclosure of company information (annual report & accounts + annual return)
Directors’ legal duties (set out by Companies Act)
Greater admin costs
There is exploitation motive, the worker and the consumermay not receive fair deal
IT COMPANIES LIKE ( INFOSIS,WIPRO , INFOTECH ,IBM )
TELECOMMUNICATION COMPANY LIKE ( VODAFONE,IDEA,AIRCEL, AIRTEL)
PRIVATE BANKS LIKE (HDFC , IDBI , HSBC, ICICI )
PRIVATE AIRWAYS LIKE ( INDIGO , GO AIRWAYS , KING FISHER)
AUTOMOBILE COMPANIES ( BMW, AUDI , FORD)
EXAMPLES OF PRIVATE SECTORS :----

More capital can be raised as no limit on number of shareholders
privacy of information ….Control of company can not be lost to outsiders – shares only sold if all shareholders agree
Wastage of materials and labour is minimum.
Easier to raise finance
Stable form of structure
Decision making is very prompt
The magnitude of profit incurred is high
There is no interference in the internal affairs by the politician and government.

EXAMPLES OF JOINT STOCK COMPANIES :-----

BIRLA GROUP OF INDUSTRIES
RELIANCE INDUSTRIES LIMITED
HERO HONDA
MARUTI SUZUKI
TATA IRON AND STEEL COMPANY
Advantages of Joint Stock Company
Large financial resources
Limited Liability:--the liability of its members is limited to the extent of the value of shares held by them.
Professional management
Large-scale production
Contribution to society:--offers employment to a large number of people.
Research and Development
Research and Development
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