Question

Distinguish Between.

Government Company and Multinational Corporation.

Answer 1

Points	Government Company	Multinational Corporation
1. Meaning	Government Company means a company where a minimum 51% of the paid-up capital is held by the Central or State Government jointly or individually.	Multinational Corporation is a company which is incorporated in one country and has business units in several countries
2. Capital	The capital is contributed by the Central Government or State Government or even by the general public.	The capital is contributed by the shareholders or financial institutions in several countries.
3. Management and control	Government Company is managed by the Board of Directors appointed by the government and shareholders.	A multinational corporation is managed by a parent company. It manages affairs of the subsidiary from the respective home country.
4. Establishment	Government companies are formed and registered under the provisions of Companies Act, 2013.	Multinational corporations have to seek permission from the government and host countries.
5. Borrowing	Government companies can borrow funds by the way of debt or issuing shares to the public.	Multinational corporations use resources of different countries.
6. Area of Operations	Government company operates within the local boundaries of a nation.	MNC operates in several countries, having headquarters in one country.
7. Motive	Government companies are service oriented and hence take an interest in the social welfare activities of the country.	MNCs are profit motivated rather than service oriented.
8. Accountability	Government Company has to take its annual reports in the Parliament Where its working is discussed and debated. Though it has autonomy in financial matters, it is indirectly accountable to the public.	MNC is accountable to the taxation authorities in host countries and has to follow procedures such as Income Tax law procedure, FEMA, EXIM Policy, etc. and as such will have to obey the laws of the host countries.
9. Currency	They have to deal with a single currency.	They have to deal with multiple currencies and exchange rates.
10. Resource availability	The government company uses resources of government and its employees are government employees and are permanent.	MNCs use resources of different countries and their employees are on a contract basis.
11. Trust and Public Confidence	Government companies enjoy more public confidence as they have government backing and support.	MNCs do not have government backing and support in host countries.
12. Example	Corporation, Indian Oil Corporation, BHEL, HMT, etc.	Hindustan Lever Ltd., Colgate Palmolive India Ltd; Coca Cola, IBM Computers, Sony, etc.