Theory question 104
Business Organisations(a) What are state-owned enterprises?
(b) State any three reasons for the establishment of state-owned enterprises.
(c) Highlight any four problems associated with state-owned enterprises.
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(a) State-owned enterprises are businesses owned, financed and controlled by government (federal, state or local) to provide goods and services, e.g. public corporations.
(b) Any three: to provide essential services that need huge capital; to prevent exploitation by private monopolies; to control strategic industries; to create employment; to promote balanced regional development; to generate revenue; to protect national interest from foreign domination.
(c) Any four: inefficiency; political interference; corruption and embezzlement; over-staffing; inadequate funding; frequent losses requiring subsidies; poor maintenance; bureaucracy; lack of accountability.
Reasons usually concern welfare and control rather than profit.