Unit: 3 Private, Public and Global Enterprises
### MCQs
1. **What is the main characteristic of a Departmental Undertaking?**
- A) It operates independently of the government.
- B) It is part of a government ministry and not an independent entity.
- C) It is created by an Act of Parliament.
- D) It is governed by the Companies Act.
**Answer:** B) It is part of a government ministry and not an independent entity.
2. **Which of the following is a feature of Statutory Corporations?**
- A) They are directly controlled by a ministry.
- B) They are created under an Act of Parliament.
- C) They are governed by the rules of government departments.
- D) They are dependent on the government budget for funding.
**Answer:** B) They are created under an Act of Parliament.
3. **What percentage of paid-up capital must the government hold for a company to be classified as a Government Company?**
- A) 50%
- B) 51%
- C) 75%
- D) 100%
**Answer:** B) 51%
4. **Which of the following is NOT a limitation of Departmental Undertakings?**
- A) Lack of flexibility.
- B) High degree of public accountability.
- C) Delays in decision-making.
- D) Insensitivity to consumer needs.
**Answer:** B) High degree of public accountability.
5. **What is a key advantage of a Government Company?**
- A) It does not have to file taxes.
- B) It can operate entirely free of government influence.
- C) It enjoys autonomy in management decisions.
- D) It does not have to report to any governmental body.
**Answer:** C) It enjoys autonomy in management decisions.
6. **Which of the following statements is true about Statutory Corporations?**
- A) They are treated as part of the government.
- B) They do not have the power to enter into contracts.
- C) They operate independently with financial flexibility.
- D) They are staffed exclusively by government employees.
**Answer:** C) They operate independently with financial flexibility.
7. **Which form of public enterprise is considered to be the oldest and most traditional?**
- A) Government Company
- B) Statutory Corporation
- C) Departmental Undertaking
- D) Private Sector Company
**Answer:** C) Departmental Undertaking
8. **What is one of the main disadvantages of Statutory Corporations?**
- A) They are subject to the same audit controls as private companies.
- B) They have complete operational freedom.
- C) Government interference in major decisions.
- D) They cannot sue or be sued.
**Answer:** C) Government interference in major decisions.
9. **Which of the following is a merit of Departmental Undertakings?**
- A) High operational flexibility.
- B) Direct accountability to Parliament.
- C) Ability to make independent business decisions.
- D) Freedom from government rules and regulations.
**Answer:** B) Direct accountability to Parliament.
10. **What type of funding does a Government Company primarily rely on?**
- A) Direct government budget allocation.
- B) Public donations.
- C) Government shareholdings and capital market raising.
- D) Private equity investments only.
**Answer:** C) Government shareholdings and capital market raising.
Certainly! Here are some multiple-choice questions (MCQs) based on the provided content, along with their answers.
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### **Section 3.3.3 Government Company**
**1. Under which Act is a government company established and governed?**
- a) The Industrial Disputes Act, 1947
- b) The Companies Act, 2013
- c) The Banking Regulation Act, 1949
- d) The Public Sector Enterprises Act, 1991
- **Answer:** b) The Companies Act, 2013
**2. According to the Companies Act, a government company is one in which the government holds at least what percentage of the paid-up capital?**
- a) 75%
- b) 51%
- c) 60%
- d) 49%
- **Answer:** b) 51%
**3. Which document defines the objectives and rules of a government company?**
- a) Memorandum and Articles of Association
- b) Company Charter
- c) Financial Statements
- d) Employee Handbook
- **Answer:** a) Memorandum and Articles of Association
**4. Which of the following is NOT a feature of government companies?**
- a) They can sue and be sued in a court of law
- b) They follow the Companies Act like other companies
- c) Their accounting is completely private and independent
- d) They acquire property in their own name
- **Answer:** c) Their accounting is completely private and independent
---
### **Merits of Government Companies**
**5. Which of the following is an advantage of establishing a government company?**
- a) Requires an act of Parliament
- b) Operates solely under government control
- c) Has a separate legal entity from the government
- d) Cannot compete in the market with private companies
- **Answer:** c) Has a separate legal entity from the government
**6. Which of the following best describes the market role of government companies?**
- a) They offer products at high prices to control demand
- b) They provide goods and services at reasonable prices to control the market
- c) They primarily serve the government without public interaction
- d) They do not compete with private companies
- **Answer:** b) They provide goods and services at reasonable prices to control the market
---
### **Limitations of Government Companies**
**7. One limitation of government companies is that they:**
- a) Always operate at a profit
- b) Are free from the oversight of the Companies Act
- c) Are often controlled by the government, which may reduce autonomy
- d) Require private sector approval for all decisions
- **Answer:** c) Are often controlled by the government, which may reduce autonomy
**8. Why are some government companies not answerable directly to the Parliament?**
- a) They are privately owned
- b) They evade constitutional responsibility
- c) They do not follow the Companies Act
- d) They are entirely autonomous with no government influence
- **Answer:** b) They evade constitutional responsibility
---
### **Changing Role of the Public Sector**
**9. What was the primary reason for the government’s emphasis on public sector enterprises post-independence?**
- a) To build private monopolies
- b) To ensure infrastructure development in key areas
- c) To restrict industrialization
- d) To focus solely on the export sector
- **Answer:** b) To ensure infrastructure development in key areas
**10. The new economic policies introduced in the 1990s emphasized:**
- a) Full government control of industries
- b) Monopoly of public sector in all industries
- c) Liberalization, privatization, and globalization
- d) Restriction on private investment
- **Answer:** c) Liberalization, privatization, and globalization
---
### **Public Sector Objectives and Reforms**
**11. Which public sector reform involves reducing the government’s equity in non-strategic PSUs to 26% or lower?**
- a) Privatization
- b) Industrial Deregulation
- c) Disinvestment
- d) Subsidization
- **Answer:** c) Disinvestment
**12. In which year was the number of industries reserved exclusively for the public sector reduced to three?**
- a) 1980
- b) 1991
- c) 2001
- d) 2010
- **Answer:** c) 2001
**13. What was the purpose of the National Renewal Fund established by the government?**
- a) To support the privatisation of public sector units
- b) To provide compensation to retrenched workers in PSUs
- c) To fund new private-sector ventures
- d) To control the prices of goods produced by PSUs
- **Answer:** b) To provide compensation to retrenched workers in PSUs
---
**14. What is a primary characteristic of Multinational Corporations (MNCs)?**
- A) Limited capital resources
- B) Operations limited to one country
- C) Huge size and a network of operations in multiple countries
- D) Minimal marketing strategies
- **Answer:** C) Huge size and a network of operations in multiple countries
**15. What is a unique feature of global enterprises that sets them apart from other private companies?**
- A) Minimal international presence
- B) Centralised control from headquarters in the home country
- C) Small product range
- D) Limited technology resources
- **Answer:** B) Centralised control from headquarters in the home country
**16. Which factor is a benefit of joint ventures?**
- A) Decreased resources and capacity
- B) Low cost of production in the home country
- C) Increased access to technology and new markets
- D) Ownership limited to one entity
- **Answer:** C) Increased access to technology and new markets
**17. In which type of joint venture is a new, jointly owned entity typically **not** created?**
- A) Contractual Joint Venture (CJV)
- B) Equity-Based Joint Venture (EJV)
- C) Public Private Partnership (PPP)
- D) Global Enterprise Agreement (GEA)
- **Answer:** A) Contractual Joint Venture (CJV)
**17. What is a common reason for entering into a joint venture?**
- A) Avoiding financial risks
- B) Expanding market reach and sharing expertise
- C) Ensuring complete ownership of operations
- D) Restricting to one product market
- **Answer:** B) Expanding market reach and sharing expertise
**18. Which feature is typically associated with a Public-Private Partnership (PPP)?**
- A) Private ownership of public assets
- B) Public financing and private operational expertise
- C) Minimal public involvement in the project
- D) Complete government ownership and control
- **Answer:** B) Public financing and private operational expertise
**19. Which industry is **not** commonly associated with Public-Private Partnerships (PPPs)?**
- A) Power generation
- B) Water and sanitation
- C) Hospitality services
- D) Road infrastructure
- **Answer:** C) Hospitality services
**20. What is a significant weakness of the PPP model?**
- A) High environmental standards
- B) Inability to attract private finance easily
- C) Minimal government oversight
- D) Unlimited project expansion
- **Answer:** B) Inability to attract private finance easily
**21. In a joint venture, which aspect is **not** typically shared?**
- A) Management responsibilities
- B) Risks and rewards
- C) Daily operational decisions
- D) Ownership of the joint venture entity (in equity-based joint ventures)
- **Answer:** C) Daily operational decisions
**22. What distinguishes global enterprises in terms of product development?**
- A) Lack of investment in R&D
- B) Product innovation with advanced research departments
- C) Minimal focus on international quality standards
- D) Limited product designs
- **Answer:** B) Product innovation with advanced research departments
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