Private sector and public sector

Distinguish between organizations in the private and public sectors.

Private sectors- business sector not controlled by the government, mostly aims to make a profit through the actions of a business.
Public sectors- business sector which is fully controlled by the government, mostly does not aim for a profit but rather for the benefit of society.

  • Although public and private sector are different, a government owned company may turn private for more efficiency.


Starting a business

Explain the reasons for setting up a business

Growth - make money :D
Earnings - earn more than employed jobs
Transfer & inheritance - business passed from past generations
Challenge - a challenging task
Autonomy - freedom of choice for the business
Security - secure job given the business runs well
Hobbies - personal interest

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Explain the process a business will have to go through to start up


Analyse the problems that business start-ups may face.

Business idea - a product or a service?
Finance - do I have enough capital, do I need a loan from bank?
Human resources- hiring? training?
Entrepreneur skills - do i have the skills? or do I have to hire someone?
Fixed assets - location? shop? do I have enough capital for them?
Suppliers - who? where?
Customers - target audience?
Marketing - advertisement? placement?
Legalities - legal issues for operating business? do I need a permit?
Competition - competition maybe huge? is it possible to still start up?


Profit-based organizations

Distinguish between different types of business organization and identify their main features.

Analyse the extent to which ownership and control differ in organizations.

Evaluate the most appropriate form of ownership for a firm.

Analyse the impact of the division between ownership and control on internal and external stakeholders.

Sole traders

- run and owned by one individual

- profits and loss are attached to the owner (unlimited liability: owners risk losing personal possessions in order to pay if the business fails)

- easiest and fastest way to establish a small business

- owner have complete control over the business


- owned by 2 or more people

- usually benefit from partners that have different skills

- easier to raise funds

- owners are liable to the profit and losses from the business (unlimited liability)

eg: ernst & young (accounting firm)
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Private Limited Companies

- cannot raise share capital from the public
- relative to public limited companies, the owners have greater control over the business (less shareholders)
- shares cannot be traded on open stock exchange
- limited liability: owner never uses his assets to cover the business' loss

eg. marks and spencer?
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Public Limited Companies

- shares are able to be traded on open stock exchange
- owners' control is limited due to the number of shareholders
- usually the owner of the company keeps over 50% of the shares

eg. Microsoft
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Non-profit and non-governmental organizations (NGOs), including charities and pressure groups

- volunteer organizations or charities or pressure groups
- some NGOs now form partnership with government to gain funds

eg. Greenpeace
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Compare and contrast the objectives of NGOs and non-profit organizations and other organizations.

- NGO is not profit oriented but the other types of organizations are
- NGOs provide support for the welfare of society
- pressure groups established to address a special interest

Analyse the impact of the actions of NGOs and other non-profit organizations.

- charities help the society
- pressure groups try to influence government legislation