1.2

• Public sector


  Businesses created by governments to provide public services and protection to citizens
• Public sector organizations


  • BBC
  • USPS
  • NHS
  • NASA
• Surplus


  The positive difference between revenue and costs for public sector organizations (not profit)
• Public sector


  • Socially oriented, funded by tax revenue, not as efficient as private sector
• Private sector


  Businesses owned by individuals or groups that earn profits to compensate owners
• Private sector


  • Efficient, competitive, focused on profits, less socially oriented
• Cuba has the highest public sector at 77% of the workforce, Japan has one of the lowest at 7.7%
• Liability


  The extent to which you risk losing personal possessions if the business fails - can be limited or unlimited
• Legal identity


  Whether a business exists separately from the owner(s) in the eyes of the law
• Corpus


  Whether a business has a separate legal body (incorporated) or not (unincorporated)
• Transparency


  The extent to which a business must publicly disclose financial information
• Accountability


  How answerable a business is to others, increases with more people involved
• Setup cost


  The amount of money needed to start up a business, lowest for sole traders, highest for public limited companies
• Sole traders have the lowest setup costs and least accountability, public limited companies have the highest setup costs and most accountability
• Sole trader


  Person who runs a business alone, no extra legal identity created, owner equals business
• Sole traders


  • Unlimited liability, high risk of failure, limited finance, short-term orientation, no continuity, feel closer to customers, cannot compete with corporations
• Partnership


  Two or more people (2-20) who run a business together, share risks and profits
• Partnerships


  • Unlimited liability, longer decision making, more finance available than sole traders, better continuity than sole traders, partnership agreement is key document
• Company


  Business entity with unlimited number of shareholders/owners, has its own legal identity
• Companies


  • Limited liability, incorporated, board of directors and CEO, greater access to capital, high degree of continuity
• Privately held company


  Relatively small number of shareholders, shares not easy to buy or sell, more control retained by owners
• Publicly held company


  Shares traded publicly on stock exchange, no direct control over share price, greatest access to capital but more government scrutiny
• The three most important documents for a company are memorandum of association, articles of association, and certificate of incorporation
• China has the three largest IPOs of all time: Alibaba, Agricultural Bank of China, and Industrial and Commercial Bank of China
• The oldest company in the world was established in 578
• Virgin Group went public then Richard Branson bought back the shares to regain control and changed it to a privately held company
• Lego has been family-owned since 1932 and has not gone public to retain control
• In 2004, when Google went public, one share was worth $85
• For-profit social enterprises


  Private sector companies, public sector companies, cooperatives
• Non-profit social enterprises


  Non-governmental organizations (NGOs)
• Porsche is a priority shareholder of Volkswagen and Volkswagen owns more than 10 car brands
• In 2004 when Google went public, one share was worth 85 US dollars
• You can check how much a Google share is worth now
• The last part of this class is about social enterprises
• Social enterprise

  An organization that has social well-being as its main goals instead of making profits
• Social enterprises use profit as a tool to achieve social aims
• For-profit social enterprises


  • Private sector companies
  • Public sector companies
  • Cooperatives
• Private sector for-profit social enterprises

  • Privately held companies
  • Publicly held companies
  • Aim to achieve socially important aims using profits as a tool
• Private sector for-profit social enterprises

  • Geek Teachers
  • Manga Show
• Public sector for-profit social enterprises are run and funded by the government to provide public services