Private, Public & Global Enterprises: Types, Features & Differences

Businesses in the world drive the economy by contributing to job creation, fostering innovation, and generating wealth, thus shaping the financial landscape. To understand the economic implications, we need to comprehend the different types of enterprises that are crucial right from the local corner shops to multinational giants. In this blog, we will try to explore the distinct characteristics of each type of enterprise, their advantages and challenges, and their impact on our lives. Private, Public, and Global enterprises will be discussed in the article.

Describe Private Sector Enterprises

In the private sector, businesses are controlled, owned, and managed by an individual or group of individuals. These companies are classified as small, medium, and large enterprises depending on the market size and the number of employees.

 Private companies have the objective of making profits and recruiting more employees than the public sector. Besides providing quality services to society, private enterprises build goodwill and trust to sustain themselves in the market for the long run and compete with the competitors. However, it must adhere to the rules and regulations of the government.

Private companies are traded privately or publicly and this is determined by the business trading procedures which means a private company cannot choose its mode of trading. There are guidelines outlined for private enterprises to trade publicly. A company with good financial health is allowed to go for public trading in the share markets.

Types of Private Sector Enterprises

Private sector enterprises are of different types, the categories are as the following with examples −

• Sole proprietorship (local photography studios or a freelance designing agency)
• Partnerships (law firms or accounting firms)
• Small and medium-sized enterprises (SMEs) {Local restaurants or regional manufacturing companies}
• Large and multinational companies (Technology companies or global retail chains)
• Professional and trade associations (Confederation of Indian Industry {CII}, Indian Banks’ Association (IBA)
• Trade unions (Centre of Indian Trade Unions {CITU}, United Auto Workers {UAW}

What are Public Sector Enterprises?

The Public sector enterprises are owned and managed by local, state, or central governments. Usually, governments hold complete ownership of public enterprises. If the government holds more than 50% of a firm, then it will be considered public. Public enterprises provide wages or goods to the government for services to society.

Public enterprises are usually funded by governments in the way of taxes, revenues, and fees from the citizens. This is a reason why public companies aim at providing social welfare, and public service rather than generating profits. Governments often privatise a public sector firm by selling off their stake to make it more efficient and profitable.

Types of Public Sector Enterprises with examples

• Public or statutory corporation − It is created by central or state legislation and all funding is provided by the government. Its goals, powers, and operations are planned by the appropriate act. (State Bank of India, Life Insurance Corporation of India, Oil and Natural Gas Corporation, and Food Corporation of India)
• Departmental Undertaking − It is the oldest form of government organization, essentially a department or ministry entirely funded by the government. It has no separate existence from the government itself. (Broadcasting, post and telegraph, railways, telephone services, etc
• Government company − The government owns 51% or more shares in these enterprises. These firms are run following the Companies Act, of 2013. (Steel Authority of India, Hindustan Machine Tools, and State Trading Corporation)

Features of the Public Sector Enterprises are as follows:

Public or Statutory corporation:

• These are set up under an Act of Parliament and are governed by the provisions of the Act.
• This type of organisation is wholly owned by the state.
• These act as a corporate body and can sue or be sued, enter into a contract and own property in its own name.
• This type of organisation is usually independently financed.
• These are not subject to the same accounting and audit controls applicable to other govt. departments.

Departmental Undertaking:

• The funding of these undertakings comes directly from the government.
• They are subject to accounting and audit controls applicable to other governments activities.
• The recruitment and conditions of employment are the same as any other employee directly under the government.
• It is subject to direct control of the concerned ministry.
• Accountability of such enterprise is to the concerned ministry.

Government Company:

• It is an organisation created by the Indian Companies Act 2013.
• It has a legal identity.
• The management of the company is regulated by the provisions of the Companies Act, like any other Public Limited Co.
• The employees of the organisation are appointed according to their own rules and regulations.
• These companies are exempted from the accounting and audit rule procedures. An appointed auditor by the central or state govt. presents the Annual Report directly in the parliament or state legislature.

What are Global Enterprises?

Global Enterprises have their presence worldwide and their operations differ from any other type of enterprise and they are larger than multinational companies (MNCs). Depending on the type of global operations, these are the largest firms possible and they earn internationally and are ahead of all other firms when funding and revenue generation are concerned.

These enterprises are divided into various categories depending on their size, products, marketing and strategy, technological advancements, and operational networks around the globe. The objective of these global enterprises is to operate across multiple countries, earning in various international currencies. It maintains separate accounting records for each country, which are consolidated at the end of the financial year based on their specific usage.

 (Apple, Microsoft, Google, etc. are some examples of global enterprises)

What are the features of global enterprises?

• They have ample financial resources
• These enterprises often enter into agreements with Indian companies for the sale of technology, production of goods, etc.
• These companies have technological superiorities in their method of production
• They have highly sophisticated research and development departments
• Their operations and activities extend beyond the physical boundaries of their own country.
• They have their headquarters in their home country and exercise control over all branches and subsidiaries.

A comparative analysis of private, public, and global enterprises

Firms and stakeholders need to know whether their firms are public, private, or global. This offers them the idea of how it should be managed and categorised in general. That is why learning about various types of enterprises is considered valuable in economics.

An idea of the type of firm gives you an understanding of how to manage and categorise in general. Each type of enterprise faces its unique challenge but their collective impact is undisputable. The right mix of different kinds of enterprises shall create a balanced ecosystem nurturing economic growth, social responsibility, and global connectivity.

FAQs

Q1. What are the features of global enterprises?

Ans. Features of Global Enterprises include:

• Huge capital resources
• Foreign collaboration
• Advanced technology
• Product innovation
• Marketing strategies
• Expansion of market territory
• Centralised control

Q2. Why do companies go global?

 Ans. Expanding internationally gives access to new markets, diversification of revenue streams, and the potential for significant growth. Going global reduces reliance on a single market and spreads business risks.

Q3. What makes an enterprise unique?

Ans. Only the business itself is not what makes a company unique; it's the people, their approach, and the intangible elements. The work to be done is introspection to explore what the company's specific vision or mission is, and how that differs from other brands in the marketplace.

Q4. What are the major uses of enterprise models?

Ans. Enterprise modelling is used to capture the purpose of a system, by describing the behaviour of the organisation in which that system will operate. This behaviour is the organisational objective or goals and associated tasks and resources.