Public Enterprise Forms in Management

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Regarding the management of the public enterprise forms, no question arises in the case of socialist economy. The problem arises especially in the field of mixed economy. Any specific pattern of organization is controversial here. Prescription of any form of the organization thus is difficult and risky because of the fact that the viability of public enterprises in the mixed-which, in turn, depends upon the socio-economic condition of the country.

Management of Public Enterprise Forms:

There are mentioned the management of public enterprise forms through the world. The most prominent public enterprise forms are:-

  1. Department
  2. Public Corporation
  3. Joint Stock Company
  4. The Operating Contract

1. Department:

The departmental management of public enterprise form is the traditional form of government intervention in the economy. An ordinary government department can at least keep going with the help of familiar unimaginative slow moving routines. It may operate the public in general and it hints in particular but never the less it can keep going and does not collapse. But an enterprise cannot keep going in this way. It becomes a permanent liability to the state but the essential purpose of many enterprises are not to be a liability but to be an asset. The basic tow requirements for efficiency are:-

  • First, a competent and responsible management free to run an enterprise within the limits drawn by the constitution, legislation and government policy decision;
  • Secondly, and this is really the consequence of the first that the enterprise should possess personnel and financial systems which are sufficiently similar to those prevailing in the best organized private enterprise no to place it at any great disadvantages.

The traditional departmental management of public enterprise form got some severe limitation. Some of its characteristics are limited to management flexibility and efficiency. The limitations are:-

  1. Permanent stuff is subject to rules and regulations applicable to civil servants thereby preventing both promotion on merits and prompt disciplinary action where necessary.
  2. Hardy procedure for arranging fund for expenditure and other matter in every single area.
  3. Cash receipts have to be put into government account and cannot be taken out without special sanction.
  4. The system of accounting purchase.
  5. The department methods of purchase of raw materials and sale production and so on.

2. Public Corporation:

Sure, it is difficult to find out any universal definition of the public corporation. In its general sense, a public corporation is body corporate owned by the state commercial in nature and created by an act of parliament or an instrument having the force of an act charged with such functions given such power and subject to such controls as the said act or instrument many prescribe? It is merely a means to an end. According to Rangoon Seminara, public corporation is:-

  1. Wholly owned by the state
  2. A legal entity
  3. Self-supporting and
  4. Subject to special non-departmental controls over budgets expenditures contracts, purchases, and personals.
  5. Not subject to the budget procedures, accounting and audit laws applicable to non-corporate agencies.
  6. Recruitment policy is quite different from that of the civil servants.

The acts of parliament which create public corporation vary from county to county. In many countries, public corporations are often called ‘statutory authorities’ and in African countries, they are called ‘Parastatles’.

3. Joint Stock Company:

The Joint Stock Companies is a management of public enterprise form; generally established under a county’s regular company’s Act which provides for the creation and operation of companies. The state companies are more convenient for a ‘mixed’ enterprise in which the state owns major shares and private investors own the rest. The Joint Stock companies or the Stat companies are not regarded as government corporations even though they are completely state-owned. But they are similar to government corporations, except.

  1. Majority and minority shares are owned by the government and public respectively.
  2. Companies are more autonomous than the public corporations.
  3. The government expects to eventually transfer its ownership to the private sector.
  4. Financially independent.
  5. More independent from direct political control by the government or independent regulatory commission.
  6. Free from governmental recruitment policy.

There are some practical advantages to create company form of management than to create a public corporation. A company can be easily registered under the county’s company law but for the creation of any public corporation must require an enactment of the parliamentary law. Therefore to set up any public corporation, parliament must be passed a law about this. But regarding the state-owned companies, parliamentary control in clearly defined. Parliament controls the company through annual reports and auditing accounts, through qualified and independent persons and the responsibilities of the minister are clearly defined in his capacity as a shareholder.

4. The Operating Contract:

This management of public enterprise form is a system where the government runs the public enterprise through a contract with a private company or contractors. In this system, the company manages the public enterprise and the government pays them a fixed fees for their services on the basis of the contracts signed between them. The contractor runs and manages the enterprise on behalf of the government. The operating contractor for running the enterprise maintains his own recruitment policy, employs his own personal and enjoys greater freedom in operating the enterprise.

There is a greater degree of flexibility found in the form of management of public enterprise by an operating contract. It provides greater flexibility in procurement, planning recruitment and staffing than in even with other forms of management.

This form of contract of public enterprise is only used in a technical and limited sense. This type of contract is a short-term, limited and a routine in nature.

These are the management of public enterprise forms (Department, Public Corporation, Joint Stock Company and the Operating Contract); which is described here with shortly for better understanding the management of public enterprise forms. And improving the Strategic Management.

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