Advantages: 

1. Easy Formation: It is easy to set up a departmental undertaking. The departmental undertaking is created by an administrative decision of the Government, involving no legal formalities for its formation.

2. Direct and Control of Parliament or State Legislature: The departmental undertaking is directly responsible to the Parliament or the State legislature through its overall head i.e. the minister concerned.

3. Secrecy Maintained: Strategic industries like defence and atomic power cannot be better managed other than government departments. Department undertakings can maintain secrecy in their working.

Disadvantages: 

1. Red – Tape and Bureaucracy: There is too much of procedures which results in delay. Commercial organisation cannot afford delay in taking decisions

2. Incidence of Additional Taxation: Losses incurred by a departmental enterprise are met out of the treasury. This very often necessitates additional taxation the burden of which falls on the common man.