Difference between State Enterprise and Private Enterprise
State enterprise and private enterprise both are involved with industrial and business activities. But except ownership, there are many differences in objective and activities. Difference between state enterprise and private enterprise are given below:
State Enterprise
- Ownership: State or government is the owner of the state enterprise.
- Formation: It formed by the order of president or Act passed in the parliament.
- Objective: The main purpose of state enterprise is public welfare.
- Size: These businesses are long in size.
- Capital: Government provides the capital of this business.
- Legal entity: Legal entity of state enterprise is stronger.
- Consumption: The profit of State enterprise is kept into the treasury of the state.
- Flexibility: It is not flexible in nature. It is hard to match with changing situation.
- Monopoly business: State enterprise removes the effect of monopoly business.
- Financial Structure: State enterprise helps in forming socialism.
- Risk and liability: Loss, liability, and risk of state enterprise have to bear the government means public.
Private Enterprise
- Ownership: Person or persons are the owners of the private enterprise.
- Formation: Except sole proprietorship, all enterprises are formed by the Act widely used for getting the permission of business.
- Objective: Only earning the profit is the main objective of the private enterprise.
- Size: These businesses can be small, large, or media types.
- Capital: Entrepreneurs arrange the capital business.
- Legal entity: Company and cooperative society have a legal entity. Sole proprietorship and partnership firm have no separate entity.
- Consumption: Owners of the organization consume all the profits of this business.
- Flexibility: It is flexible. Owners can take necessary decisions quickly.
- Monopoly business: Private enterprise helps in increasing the effect of monopoly business.
- Financial Structure: Private enterprise helps in forming self capital and capitalism.
- Risk and liability: Owner is the bearer of the risk and liability of the business.
After above discussion, we can say that state enterprise and private enterprise both are different from each other formally, morally, operatively, and objectively. But both are important for the development of the country and public. Both of the companies are working for the development of economy and country.
