Features of State Enterprise

Features of State Enterprise

Features of State Enterprise

The state enterprise refers to those businesses which are partly or wholly owned and controls by the government. The revenue of this business spends for the public welfare. Nowadays, we can see state-owned enterprises are found more or less in every country. In many ways, it has been criticized. But this business deserves to be on talk as different kinds of business organizations. There are some features which make it different from other business organizations and those features are stated below:

Formation: A state enterprise can be established directly by government entrepreneurship or both by the government and non-government steps. Even it can be formed by the permission of the president or by a special law of the court.

Ownership: Generally, state owner of these kinds of businesses means that state is the owner of this business. But sometimes some capital of the business is collected from the public and in this position it’s become joint ownership business.

Capital: Basically, agreement serves the necessary capital of the business. If necessary agreement can sell some of the shares to collect capital, in this position the amount of collected capital has to be less than half of the total capital.

Purpose: Making profit is not the main purpose of this kind of business organization. The main purpose of this organization is the public welfare and doing something which benefits the public most.

Legal Entity: State enterprise has a different legal entity that means business and owners are different from each other. Because it is formed under a special section of the law, that’s why it achieves an anti-social and individual entity. This business by own name can make a deed with the third party, can suit against someone and the third party also can suit against this business.

Distribution of profit: Making profits is not only the main purpose of state enterprise but also earning the profit. The profits earned by these businesses are kept in state treasure, and the money spends only for the welfare of the public.

Risk taking: Government has to hear the whole risk of state enterprise. But in case of joint ownership state enterprise, the risk is limited by the price of the share.

Autonomy: This kind of business is operated and controlled by the own policy of the law. That’s why its organization is operated by individual power.

Administration and management: State enterprise generally operated by the board of directors, selected by the government and government employees are in charge of management.

Limited liability: The liability of these businesses is limited if the share is sold to the public, the liability of shareholders are limited by the price of the shares they bought.

Bureaucratic management: The management of these organizations is faulted by bureaucratic management. The mentality of the manager is not up to the mark. The managers think they are the governmental head so that they can do anything. That’s why they want to do something for them and not for the public and organization. They don’t think about the development of the organization.

Winding up: The stability and winding up of gate enterprise is completely depending on the wish of government. If the government thinks some organizations are not needed, the government can wind up that organization. The government can form state enterprise and can wind up easily.

After above discussion, we can see that though state enterprise is a government organization, it has some features like other business organization. And as different kinds of business organizations, its features have taken it to the higher level where people like it very much. Because of its features, it is on the top of popularity today.