Problems of State Enterprise - QS Study
QS Study

Problems of State Enterprise

If the state gets the ownership on continual at any business directly or indirectly incest it that business is called as the state enterprise. The business controlled or operated by the government is known as a state enterprise.

In this globalization world, most of the country’s government with a view to establishing the socialized view in the economic structure and started nationalization of various medium and large industrial and commercial organizations by an ordinance. Few Country’s government followed denationalization policy and hand over most of the state enterprises to the private ownership. Problems of State Enterprise are given below:

Corruption and nepotism: State Enterprise is full of corruption and nepotism. Top management of state enterprises is often engaged in nepotism favoritism and rampant corruption they often help their own people to get job or work.

Political influence: These enterprises are under the control of ministries and the Political parties interments to the operation of the business. Politicians who hardly understood the problems of management of industry and state enterprises to make a decision on politically and rather than technical or economic grounds.

Improper Planning: The state enterprises have no proper planning. There is no real planning for the development of state enterprises to that they are failing in every sector.

Shortage proper training: The manpower of state enterprises is not efficient and effective. Because there is no proper training of employees, state enterprises are getting hindered in their operations.

Government interference: State enterprises are too much in government control. In some cases, government user these enterprises for their own interest as a result executives cannot work for the development of the organization.

The inefficiency of production and marketing: State enterprises are preparing strategies for producing and marketing products is not appropriate in the modern age. Production cost increases because the production ability is not used properly in these organizations, as a result, it cannot stand in the international competition.

Lack of research and innovative power: Necessary research activities cannot be done due to lack of sufficient amount of money and personal entrepreneurship. So it is not possible to produce new products as per the demand of the consumers. As a result, it cannot survive in highly competitive business areas.

Inefficiency to management: Government officials who are asked to manage these state organizations generally have no knowledge about management of the business.

Lack of accountability: The employees who are working in the state enterprises, do not have any accountability to the general public. They do not give any explanation to anyone for their work, there is no big punishment, or everyone can manage their boss properly. In spite of this, they use government money as they want which create a crisis in government fund.

At last, we can say that there are many problems in state enterprises and for these problems, state enterprises are becoming unable to achieve their goal. That’s why these enterprises are making continuous losses in every year which affecting government revenue badly. Removing these problems state enterprises are really needed some initiatives for public welfare.