State Ownership Forms of Business Overview What is

State Ownership Forms of Business

Overview What is meant by state ownership? ¡ How are state companies formed? ¡ How are they controlled? ¡ Why does the state get involved in business? ¡ List two advantages and two disadvantages of state ownership ¡ List five examples of state-owned companies ¡

What is a state company? ¡ ¡ ¡ It is a business owned, financed and controlled by the Government (state) Many state companies were set up by passing an Act of the Oireachtas Each state company is responsible to a government minister The minister appoints a board of directors to run the company The profit is either reinvested in the company or given to the state (current income)

Reasons for State Involvement in Business To provide essential services ¡ To develop the country’s natural resources ¡ To rescue businesses in danger of closing down ¡ To promote Irish businesses at home and abroad ¡ To provide training for the unemployed, e. g. FÁS ¡

Advantages of State Ownership l l Essential services will be available in all parts of the country The country’s natural resources will always be owned by the people The government may receive regular dividends They provide a lot of employment

Disadvantages of State Ownership Some state businesses suffer large losses which are borne by the tax payer ¡ No profit motive which can lead to inefficiency ¡ Some are in a monopoly situation, which can lead to inefficiency ¡ High prices ¡

Examples of State Ownership

Privatisation ¡ Is the sale of semi- state company by the government.

Summary What is meant by state ownership? ¡ How are state companies formed? ¡ How are they controlled? ¡ Why does the state get involved in business? ¡ List two advantages and two disadvantages of state ownership ¡ List five examples of state-owned companies ¡