The document discusses the importance and characteristics of the private sector, emphasizing its role in economic growth, innovation, job creation, and competitiveness. It outlines the advantages of private businesses, such as profit motive and limited state regulation, while also addressing their disadvantages, including issues related to worker protection and potential monopolies. The document highlights the significant shift of profits towards the private sector and its contribution to India's GDP growth, illustrating the dynamic nature of this economic component.

1. LIYANA M
Roll No 18
1st Semester MBA General
Institute of Management in Kerala,
Karyavattom Campus, University of Kerala
GROWTH AND DEVELOPMENT OF
PRIVATE SECTOR

2. INTRODUCTION 3
ADVANTAGES 4
CHARACTERISTICS 5
DISADVANTAGES 6
OBJECTIVES 7
RATE OF DEVELOPMENT 9
INVESTMENT GROWTH 10
ROLE OF DEVELOPMENT. 14
TABLE OF CONTENTS
Private sector

3. PRIVATE SECTOR
The private sector refers to that part of the economy that is owned, controlled, and operated by private
individuals or entities rather than the government. It includes businesses, corporations, and organisations
driven by profit motives and operating in a competitive market.
Not the Government : The private sector isn't owned or run by the government. It's like a big club of businesses owned
by regular people or groups of people
Making Money : The main goal is Making money. Whether it’s selling gadgets, food, or services, they’re in it to turn a
profit.
Working Smarter : Private businesses want to be the best. So, they find smart ways to do things, making everything
more efficient.
Not Putting All Eggs in One Basket : If one type of business struggles, it's okay because there are many different ones.
This helps the economy stay strong.

4. IMPORTANCE OF PRIVATE SECTOR
• Economic Growth: Private sector businesses are primary drivers of economic growth. They invest in new
technologies, create jobs, and contribute to the overall expansion of the economy.
• Innovation and Efficiency: The competitive nature of the private sector fosters innovation and efficiency.
Companies strive to develop better products, services, and processes to stay ahead of the market.
• Job Creation: Private sector businesses are major contributors to employment. They create jobs across
various industries, reducing unemployment and improving living standards.
• Tax Revenue: The profits generated by private sector businesses contribute to tax revenues, which are
essential for funding public services and infrastructure.
• Diversity of Products and Services: The private sector provides a wide range of products and services to
meet diverse consumer needs. This variety enhances consumer choices and promotes healthy competition.

5. IMPORTANCE OF PRIVATE SECTOR
• Entrepreneurship and Small Businesses: The private sector encourages entrepreneurship, enabling
individuals to start and grow businesses. Small and medium-sized enterprises (SMEs) often thrive in the
private sector, contributing significantly to economic development.
• Global Competitiveness: Private sector companies often engage in international trade, enhancing a
country's global competitiveness. This can lead to increased exports and a positive balance of trade.
• Adaptability to Market Changes: Private sector entities can adapt quickly to market changes and shifts in
consumer preferences. This adaptability is crucial for the survival and success of businesses in a dynamic
economic environment.
• Resource Allocation: In the private sector, resources are allocated based on market demand and
profitability. This efficient allocation helps in the optimal use of resources, minimising waste.

6. 1. Telecommunications:
1. AT&T Inc.
2. Verizon Communications Inc.
3. Comcast Corporation
4. Vodafone Group plc
5. Deutsche Telekom AG
2. Energy:
1. Exxon Mobil Corporation
2. Royal Dutch Shell plc
3. Chevron Corporation
4. BP plc
5. Total Energies SE
3. Healthcare:
1. Johnson & Johnson
2. Pfizer Inc.
3. Novartis International AG
4. Roche Holding AG
5. Merck & Co., Inc.
4. Aerospace and Defense:
1. Boeing Company
2. Lockheed Martin Corporation
3. Airbus SE
4. Raytheon Technologies Corporation
5. Northrop Grumman Corporation
5. Entertainment and Media:
1. The Walt Disney Company
2. Comcast NBCUniversal
3. Netflix Inc.
4. Sony Corporation
5. Via com CBS Inc.
6. Consumer Goods:
1. Procter & Gamble Company
2. Unilever
3. Nestlé S.A.
4. The Coca-Cola Company
5. PepsiCo, Inc.
6. Northrop Grumman Corporation
7. Entertainment and Media:
1. The Walt Disney Company
2. Comcast NBCUniversal
3. Netflix Inc.
4. Sony Corporation
5. Via com CBS Inc.
8. Consumer Goods:
1. Procter & Gamble Company
2. Unilever
3. Nestlé S.A.
4. The Coca-Cola Company
5. PepsiCo, Inc.
9. Finance:
1. JPMorgan Chase & Co.
2. Goldman Sachs Group, Inc.
3. Citigroup Inc.
4. Visa Inc.
10. Automobiles:
1. Toyota Motor Corporation
2. General Motors Company
3. Ford Motor Company
4. Honda Motor Co., Ltd.

7. CHARACTERISTICS
1.Profit motive: Businesses in the private sector are motivated to make a profit. That means
they aim to earn more money than they spend. It's like a game where the goal is to come out
with more money.
2. Private ownership and control: In the private sector, businesses are owned by private
individuals or groups of people, not the government. These owners have the power to make
decisions about how the business operates and what it focuses on.
3. Limited state regulation: Compared to the public sector, private businesses face less
government interference. There are rules to follow, but they have more freedom in how they run
their day-to-day operations.
4. Independent Management: Private businesses have their management teams. These are the
people who make the big decisions, like what to sell, how to market it, and who to hire. The
government does not appoint them.
5. Private Finance: Businesses in the private sector get their money from private sources. This
could be from investors, loans from banks, or Private businesses that faceless government
interference than the public sector by selling shares. They're not funded directly by the
government.
6. Work Culture of Employees:The way people work in the private sector often influences
private companies' needs by the company's goals and values. The culture could be fast-paced,
creative, or focused on customer satisfaction, depending on what the business prioritises

8. ADVANTAGES
Separate Legal Entity
An entity means something which has a real existence; a thing with distinct existence. A
company is a legal entity and a juristic person established under the Act. A juristic person is a
person who is not a natural person or human being. Therefore a company form of
organization has wide legal capacity and can own property and also incur debts. The
members (Shareholders/Directors) of a company have no liability to the creditors of a
company for such debts.
Uninterrupted existence
A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is
legally dissolved. A company, being a separate legal person, is unaffected by the death or
other departure of any member but continues to be in existence irrespective of the changes in
membership. Perpetual succession is one of the most important characteristics of a company.
Limited Liability
Limited Liability means the status of being legally responsible only to a limited amount for
debts of a company. The liability of the members of a company is limited only to the extent
of the face value of shares taken up by them. Therefore, where a company is limited by
shares, the liability of the members on a winding-up is limited to the amount unpaid on their
shares.

9. Free & Easy transferability of shares
Shares of a company limited by shares are transferable by a shareholder t any other person. The transfer is easy as
compared to the transfer of interest in business run as a proprietary concern or a partnership. Filing and signing a
share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
Owning Property
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder
can make any claim upon the property of the company so long as the company is a going concern. The shareholders
are not the owners of the company’s property. The company itself is the true owner.
Capacity to sue and be sued
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a
legal action in his/her own name against another in that person’s name, a company being an independent legal entity
can sue and also be sued in its own name.
Dual Relationship
In the company form of organization it is possible for a company to make a valid and effective contract with any of
tis members. It is also possible for a person to be in control of a company and at the same time be in its employment.
Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.
Borrowing Capacity
A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and
can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial
assistance to a company rather than partnership firms or proprietary concerns.

10. • Harder to motive and control worker
In the sector motivation and control of workers can be challenging due to the profit driven nature of
businesses. Some companies may focus primarily on financial incentives, leading to issues with
employee morale and job satisfaction. Additionally, there may be less job security, which can affect
employee motivation.
• Poor protection of members
Private sector organizations may not have the same level of worker protection mechanisms as seen
in the public sector. This could result in issues related to employee rights, workplace safety, and job
security.
• Lack of public confidence
Public perception of private sector entities can sometimes be influenced by concerns related to profit
motives, perceived lack of transparency, and fears of exploitation. This can lead to a lack of trust and
confidence in private businesses among the general public.
• Monopoly power
In some industries, a few large private corporations may dominate the market, leading to
monopoly or oligopoly situations. This can limit competition, hinder innovation, and result in
higher prices for consumers.
DISADVANTAGES

11. • Smaller resources
Smaller businesses in the private sector may have limited financial and human resources compared to large corporations. This can
hinder their ability to invest in research and development, expand operations, or weather economic downturns.
• Concentration of black money
In some cases, private businesses may engage in illegal or unethical practices, including the generation and use of unaccounted
funds, commonly known as black money. This can contribute to corruption and undermine the integrity of the economic system
• Industrial sickness
Private sector industries may face challenges such as over-expansion, mismanagement, or changing market conditions, leading to a
state of industrial sickness. This can result in financial instability, layoffs, and negative consequences for the broader economy.
• Industrial disputes
The pursuit of profit and sometimes conflicting interests between employers and workers can lead to industrial disputes in the
private sector. Strikes, lockouts, and other forms of labor unrest can disrupt productivity and harm the overall economic
environment.
• Emergence of monopoly power and economic concentration
Unchecked private sector growth can sometimes lead to the emergence of monopoly power and economic concentration. This
concentration of market control can stifle competition, limit consumer choice, and result in unfair business practices.
• Job Insecurity
Private companies may be more prone to downsizing or layoffs during economic downturns as they strive to maintain
profitability. This can lead to job insecurity for employees.
• Corruption and Fraud
The profit motive may incentivize unethical behavior, including corruption and fraud. Companies may engage in practices that
prioritize short-term financial gains at the expense of ethical considerations.

12. • Survival
• Growth
• Profit satisficing
• Profit maximization
• Increasing market share
• Maximizing short term sales
• Maximizing shareholder value
• Corporate social responsibility(CSR)
OBJECTIVES OF PRIVATE SECTOR

13.  Fosters entrepreneurship and innovation : Private sector companies are an integral aspect of fostering innovation and
entrepreneurship and ensuring the future progress of an economy.
 Ensures environmental efficiency : This sector is essential for ensuring environmental efficiency because private companies are
inclined to greener technologies.
 Global Competitiveness : Private sector organisations often engage in international trade, promoting a country's global
competitiveness. Export-oriented businesses contribute to economic strength and create opportunities for growth
 Ensures diversification in a business : The sector is extremely rich in opportunities because it allows new companies to deliver new
products and services to the public.
 economic and community development : Private companies launch new equipment, commodities, machinery and technology to
ensure economic development.
 Provides high-quality goods and services : Industries in the private sector are competitive, constantly focusing on innovation to
develop new products and services.
 Entrepreneurship and Small Business Development : Private sector development fosters entrepreneurship, allowing individuals to
start and grow their businesses. Small and medium-sized enterprises (SMEs) contribute significantly to job creation and economic
dynamism
ROLES OF PRIVATE SECTOR DEVELOPMENT

14. The shares of the private sector in the net profit in the non-agricultural economy rose to 63.86% from 39.17%. The share of
the public sector subsequently declined to 36.14% from 60.83%. This increase in the private sector's share is largely due to
the higher foreign direct investment over the last decade. Looking at the development and progress, the government
departments look back somewhere. The rate of development in them is very slow. Since the growth rate in private offices is
very fast, a person can develop himself and the company through his work. Gross fixed capital formation, private sector (%
of GDP) in India was reported at 24.71 % in 2021, according to the World Bank collection of development indicators,
compiled from officially recognised sources. India - Gross fixed capital formation; private sector (% of GDP) - actual values,
historical data, forecasts and projections were sour in the private sector (% of GDP) in India was reported at 24.71 % in
2021, according to the World Bank collection of development from the World Bank on October of 2023.
RATE OF DEVELOPMENT IN THE PRIVATE SECTOR

15. THANK YOU!
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