PUBLIC CORPORATION : DEFINITION/ANALYSIS, FEATURES, MERITS AND DEMERITS

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Public corporation is an institute or government investment for large scale business and it is also called a statutory corporation or public enterprise.

Public enterprises are created for the sole aim of providing essential services to the public, it is always a large scale business I.e. it may not be affordable by the normal private enterprise because of the big


requirements, the likes of amount of laborer, size of the land, the structure of the building, board of directors and so, on all this makes it complex and it is mainly to provide services to the members of the public.

The only source or way to generate money in order to finance public corporations is through tax paid by the citizens, the institute is created by an act of parliament or in a military state, decree. The government then appoint board of directors to serve as people who controls public corporation.

FEATURES OF PUBLIC CORPORATION :

  • Government ownership : the ownership of the enterprise is government which moves into large scale business in the name of providing essential services to the people, the reason government owns this kind of businesses is that if a normal private holds it, he/she might become a monopoly. It is totally owned and financed by government
  • No profit involve : it is created to provide essential services and not to maximize profit, the concept is not that they won’take any money at all, but the money they are making is always at the cheaper price which makes it not look like a profit oriented enterprises
  • Tax payer and government bears the risk : the risk of the bussiness is totally beard by both the government and the tax payer, because if tax are not paid properly In a particular month, then the enterprise is moving into pit slowly.
  • It is a legal entity : this means nothing but, it is like an organization that one could drag to court of law if found guilty of something, it can sue and can be sue.
  • Management : public corporation is controlled and administers by the appointees of the government called the board of directors, this board is directly accountable to the government that set up the corporation.
ADVANTAGES OF PUBLIC CORPORATION 
  1. To ensure standardize enterprise in a state: the state will gain more respect internally and externally for this, a private enterprise will only provide you normal service and unlike the government that provide essential services and not really money oriented.
  2. Legal entity : it can sue and can be sued for any malaproprism, when things that are to be are not, so it an entity that is created by an act or decree.
  3. Reduces unemployment : public corporation provide employment opportunities for the teeming amount of unemployed in the society.
  4. It avoids consumer exploitation : public enterprise did not give rule for exploitation unlike what a private enterprise might so like being cruel, savage and monopolistic when attending to customers.
  5. It provides infrastructural facilities : as it is mend to be, it provide infrastructure to the state.
DISADVANTAGES OF PUBLIC CORPORATION :
  1. Subject to liquidation : the enterprise may liquidate due to the large involvement in large scale business.
  2. Danger of monopoly : government as the only one to control that large scale business will then turn monopoly over the citizens.
  3. It encourages wastage : the public enterprise as it is known is always generating money from the tax payer, so the government and its workers don’t care if there is a waste unlike the normal private enterprise that will use all its might to avoid wastage.
  4. No profit oriented : most of the public enterprises run loss due to the fact that it involved in that kind of large scale business without maximizing or making profit, for this the government is damn hell!
  5. It requires large amounts of starting money: the money that one uses to start a public corporation or enterprise is always huge because of the large scale and need for facilities.
See also  RELATIONSHIP BETWEEN THE THREE TIERS OF GOVERNMENT

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