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Business Administration QUESTION #9575
Question 1
A government privatizes its national airline but retains a 'golden share' that gives it veto power over major strategic decisions. Which privatization theory most accurately describes this arrangement?
  • Full divestiture theory — the state has completely transferred ownership to private hands
  • Partial privatization theory — the state retains strategic control while transferring operational risk and efficiency incentives to private management✔️
  • Corporatization theory — the airline is restructured as a state-owned enterprise without private equity
  • Franchising theory — the state licenses private operators to run the airline under government-set conditions
Correct Answer Explanation
Partial privatization transfers equity to private investors while the state retains a strategic stake (golden share) to protect national interest. This is distinct from full divestiture (complete exit), corporatization (no private ownership) and franchising (no equity transfer). The golden share mechanism is the defining feature.