state-owned enterprise
Accounting
Business
Examples of state-owned enterprise in the following topics:
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Publicly Held Corporations
- Government-owned companies are either partially or fully owned by a government and have both a distinct legal form and commercial presence.
- There is no standard definition of a publicly-owned corporation or state-owned enterprise (SOE), although the two terms can be used interchangeably.
- State-owned enterprises can be fully or partially owned by the government.
- However, the line beyond which a corporation must be considered "state-owned" is unclear, as governments can also own regular stock and have no special influence over business.
- The Saudi government also owns and operates Saudi Arabian Airlines, as well as many other companies.
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Government Corporations
- A government-owned corporation, also known as a state-owned company, state enterprise, publicly owned corporation, or commercial government agency, is a legal entity created by a government to undertake commercial activities on behalf of the government.
- In other instances, government-owned corporations are similar to private enterprises except that the government is the majority stockholder.
- In the United States, there is a specific subset of government-owned corporations known as government-sponsored enterprises (GSEs).
- The first GSE in the United States was the Farm Credit System in 1916, which made loans available for agricultural expansion and development.
- Differentiate between a government-owned corporation, a government-sponsored enterprise, and organizations chartered by the government that provide public services
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The Global Economy
- Belatedly, economists realized that much of the capital had gone into unproductive enterprises.
- In addition, the United States pressed the IMF to require countries to adopt structural reforms.
- In response, the IMF began requiring governments to stop directing lending to politically favored projects that were unlikely to survive on their own.
- It required countries to reform bankruptcy laws so that they can quickly close failed enterprises rather than allowing them to be a continuing drain on their economies.
- It encouraged privatization of state-owned enterprises.
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Free Enterprise
- A free-enterprise system is based on private ownership as the means of production.
- Bremmer states, "In this system, governments use various kinds of state-owned companies to manage the exploitation of resources that they consider the state's crown jewels and to create and maintain large numbers of jobs.
- They use select privately owned companies to dominate certain economic sectors.
- Capitalism is generally considered to be an economic system that is based on private ownership of the means of production and the creation of goods or services for profit by privately-owned business enterprises.
- Explain how free enterprise leads to the economic system of capitalism
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Assets
- Assets are resources as a result of past events and from which future economic benefits are expected to flow to the enterprise.
- Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset.
- Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset).
- The balance sheet of a firm records the monetary value of the assets owned by the firm .
- "An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise. "
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Expanding into Foreign Countries
- A multinational corporation is a company incorporates itself in one country and operates in one or more foreign countries.For example, British Petroleum, General Electric, Toshiba, and Wal-Mart are multinational corporations with extensive business activities that span across the globe.Sometimes financial analysts use the term, multinational enterprise because a government could form a joint venture with a corporation, and the definition of an enterprise implies a broader meaning.
- A multinational enterprise's goal is to earn profits.Therefore, they enter the international markets and foreign countries in the pursuit of profits.Every international enterprise has a choice.It could export to another country or relocate production outside their home country.For instance, many U.S. corporations relocated manufacturing outside the United States, althoughthe U.S. suffers from a high unemployment rate since the beginning of the Great Recession.
- Reason 2: A company gains access to technology from another country.For example, India has talented computer programmers and engineers, who work for relatively lower wages than their counterparts in the United States and Europe.Consequently, a company could relocate to India to tap into their skilled workforce.
- Multinational enterprises are more complicated than businesses that remain in their home country.First, the businesses transfer resources, such as machines, equipment, and labor between different countries.Next, they ship products and services to other countries.Consequently, companies need excellent management in logistics, and specialists who monitors a country's different laws and regulations.Second, international enterprises are exposed to exchange rate risks and credit risks.Thus, a company's profit can quickly change due to fluctuations in currency exchange rates, or a company cannot get credit to finance operations in a specific country.Finally, enterprises have other exposures, such as country risk.For example, when Hugo Chavez became president of Venezuela, his government began nationalizing companies.Any international enterprise in Venezuela can experience the seizure of its assetswithout compensation.
- A country risk is the risk of investing in a particular country as political conditions rapidly change.For example, the Republic of Kazakhstan was a former state of the Soviet Union that became an independent country in 1991.Country's president, Nursultan Nazarbayev, opened its economy to free markets in early 1990s.Consequently, Kazakhstan made great strides towards a market economy and attracted billions in international investment because the country containsvast petroleum and mineral wealth.After the 2008 Financial Crisis, the Kazakh government is gradually reviving the Soviet rules, practices, and regulations.Unfortunately, the Soviet legal system is very bureaucratic, slow, and arbitrary, and suffers from corruption and political favoritism.Moreover, the Kazakh government nationalized several foreign-owned companies, and international investment began plummeting in 2012.
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Socialism
- Socialism is an economic system in which the means of production are socially owned and used to meet human needs, not to create profits.
- Socialism is an economic system in which the means of production are socially owned and used to meet human needs instead of to create profits.
- It could refer to cooperative enterprises, common ownership, direct public ownership, or autonomous state enterprises.
- By contrast, in market socialism, the means of production may be publicly or cooperatively owned, but they operate in a market economy.
- Europe has far more socialist democracies than the United States.
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Economic Systems
- In theory, a communist economy is one in which the government owns all or most enterprises.
- Other businesses are owned privately.
- The means of production are owned primarily by private enterprises and decisions regarding production and investment determined by private owners in capital markets.
- Capitalist systems range from laissez-faire, with minimal government regulation and state enterprise, to regulated and social market systems, with the stated aim of ensuring social justice and a more equitable distribution of wealth or ameliorating market failures.
- Formerly titled socialist states, led by communists (whether that be in title or in fact) are represented in orange, currently titled socialist states are represented in red.
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The Disadvantages of Mixed Economies
- In contemporary terms, "social democracy" usually refers to a social corporatist arrangement and a welfare state in developed capitalist economies.
- Others contrast social democracy with democratic socialism by defining the former as an attempt to strengthen the welfare state and the latter as an alternative socialist economic system to capitalism.
- The democratic socialist critique of social democracy states that capitalism could never be sufficiently "humanized" and any attempt to suppress the economic contradictions of capitalism would only cause them to emerge elsewhere.
- While a common goal of both systems is to achieve greater social and economic equality, market socialism does so by changes in enterprise ownership and management, whereas social democracy attempts to do so by government-imposed taxes and subsidies on privately owned enterprises.
- The Democratic party in the United States is seen by some critics of contemporary social democracy (and mixed economies) as a watered-down, pro-capitalist movement.
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The Mission Statement
- A mission statement defines the fundamental purpose of an organization or enterprise.
- To be truly effective, an organizational mission statement must be assimilated into the organization's culture (as the theory states).
- Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging employees to craft their own personal vision that is compatible with the organization's overall vision.