Wednesday, 14 June 2017

Classification of Commercial Organizations on basis of Ownership

On the basis of ownership, the commercial organizations can be classified into 3 major categories -Private Sector Enterprises, Public Sector Enterprises and Joint Sector Enterprises
  
Private Sector Enterprises- These are the businesses which are owned, controlled and financed by a private businessman. There is no government participation in such form of business organizations.

Following are some of the features of Private Sector Enterprises-


1. Private Ownership and Control- A private sector undertaking is fully owned and managed by private entrepreneurs or businessmen. It may have just one owner or more than one owner. When there is only one owner, he is called as a sole proprietor and this form of business is called as Sole Proprietorship. If there is more than one owner then the organization may be  a Joint Hindu Family Business or a Partnership Business or a Joint Sock company or a Co-operative Society

2. Profit motive - The main purpose of   Private sector enterprises is to earn Profits.

3. No Government Participation - There is no government participation in such a form of business organization

4. Independent Management -  Private sector enterprises are  managed independently by the owners. 

5. Private Finance - The capital of private sector organization is arranged by the owners themselves.

Public Sector Enterprises - These are the businesses which are owned and controlled by the central or state government. 

Following are some of the features of public sector enterprises

1. State Ownership -  The public sector  enterprises are fully owned by the government. For example,  the Reserve Bank  of India is owned by the central government

2. Control of government -  The management of such organizations is in the hands of government

3. Service Motive - The major objective of such organizations is to provide services to the citizens of the country.

4. State Finance - The funds required to run these companies is provided by the government.  These funds are provided either through budget or by way of loans.

5. Public Accountability -  These undertakings are accountable to the public at large as tax payers' money is utilized by the government to invest in such companies. Hence the audit of such companies is carried out each year by the Comptroller and Auditor General of India (CAG)

Joint sector enterprises - Under this form of business organization the ownership  and management is shared jointly by government,  private entrepreneurs and public at large. For example, BHEL (Bharat Heavy Electricals Ltd)

The main features of joint sector enterprises are as follows-

1. Mixed Ownership - The joint sector companies or enterprises are owned jointly by government, private businessmen and people at large

2. Combined Management - The management of such companies is done jointly by representatives of the government, the private businessmen and the public

3. Joint Finance - The capital of such businesses is jointly financed by the government, the private entrepreneurs and people at large

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