Private & Public Sectors

Private Sector Businesses

• goal is profit-maximization

• owned and controlled by private individuals and businesses

• Examples:

  • Law firms

  • Estate agents

  • Newspapers or magazines

  • Financial Services

Public Sector Businesses

• provides essential goods and services that is inefficiently being provided by the private sector

• owned and controlled by the government

• Examples:

  • Healthcare

  • Public Education

  • Museums

  • Armed forces

Profit-Based Organizations

Sole Trader

• business is owned and controlled by one person

• the simplest form of businesses

• owned by a single owner who takes all profits and liabilities

Companies/Corporations

• businesses owned by shareholders, those who have invested money to provide capital for a company

• there is a legal difference between the owners’ and the business’ identity

• Limited Liability - shareholders only lose the value of their investment, not their personal belongings

• more bureaucracy

• two types: Private & Public

Private Limited Company:

• shareholders are usually family, friends, and business partners

• shares are not traded on a public stock exchange

• unless elected to the Board of Directors; the shareholders aren’t involved in running the business

Public Limited Company:

• shared are traded on a public stock exchange

• required to publish financial accounts and reports to the public

For-Profit Social Enterprises

Social Enterprises: Revenue generating businesses with social objectives at the core of their objectives

• Main Goals:

  • to achieve social objectives

  • earn revenue in excess of costs

Cooperatives

• jointly owned and run by members who share profits and benefits

Microfinance Providers

• small loan providers to poor businesses who have no access to conventional banking services

Public-Private Partnerships [PPP]

• government jointly works with the private sector companies

Non-Profit Social Enterprises

• organizations operating for public welfare, not profit

• exempt from many taxes

Non-Governmental Organizations [NGOs]

• exists in the private sector

• participates in humanitarian, educational projects, etc

  • WWF, UNESCO, Red Cross

Charities

• non-profit organization that is exempted from taxes

• charitable objectives

  • reducing poverty

  • environmental degradation