1.2

• Private Sector


  An organization that operate in the private sector are owned and controlled by private individuals and businesses rather than by the government
• Main aim of private sector


  To earn profit for its owners
• Aims of firms in private sector

  • Profit maximization
  • Profit satisfying
  • Social responsibility
  • Sale maximization
  • Growth
  • Survival
• Public Sector


  An organization that operates in the public sector is under the ownership and control of the government
• Reasons for public sector activity

  • Ensure that everyone has access to basic services
  • Avoid wasteful competitions the government is able to achieve huge economies of scale in the provision of certain services
  • To protect citizens and businesses through institutions
  • To create employment opportunities
  • To stabilize the economy
• Sole trader


  Owned by individuals who own and run personal business
• Advantages of sole trader

  • Few legal formalities
  • Profit taking
  • Being your own boss
  • Personalized service
  • Privacy
  • Quicker decision-making
• Disadvantages of sole trader


  • Unlimited liability
  • Limited source of finance
  • High risks
  • Workload stress
  • Limited economies of scale
  • Lack of continuity
• Partnership


  Individuals (2 to 20) that own/control an unincorporated business, and held personally legally accountable for the success or failure
• Advantages of partnership

  • Financial strength
  • Specialization and division of labour
  • Financial privacy
  • Cost-effective
• Disadvantages of partnership


  • Unlimited liability
  • A lack of continuity
  • Prolonged decision-making
  • Lack of harmony
• Privately held


  Businesses owned by their shareholders (individuals that invested money to provide shared capital for a company or corporation)
• Publicly held


  For-profit social enterprises that have revenue-generating businesses with social objectives at the core of their operations
• Arla's mission is to secure the highest value for our farmers' milk while creating opportunities for their growth
• Arla Foods is on a global mission to create delicious, quality products in an environmentally-friendly way and to grow their business in a sustainable manner
• Arla Foods


  Dairy cooperatives owned by more than 9,700 farmers in Denmark, Sweden, Luxembourg, Germany, Belgium, Netherlands and the UK, where profits go to the farmers who share the earnings equally on each litre of milk they deliver to Arla
• Types of social enterprises

  • For-profit public sector social enterprises
  • For-profit privately sector social enterprises
  • Non-profit social enterprises
• For-profit social enterprises


  Revenue generating cooperatives that are owned and run by their members (customers and employees) with the common goal of creating value for their members by operating in a socially responsible way
• Decision-making in cooperatives


  Each member has 1 vote
• Types of cooperatives


  • Consumer cooperatives
  • Worker cooperatives
  • Producer cooperatives
• Advantages of cooperatives

  • Incentive to work
  • Decision-making power
  • Social benefits
  • Public support
• Disadvantages of cooperatives


  • Disincentive effect
  • Limited source of finance
  • Slower decision-making
  • Limited promotional opportunities
• Examples of privately held companies


  • Aldi
  • Chanel
  • Ernst and young
  • Huawei
  • Ikea
  • Lego
  • Mars inc
  • Rolex
  • Pricewaterhousecoopers
  • Virgin group
• Examples of publicly held companies

  • Apple
  • Coca-cola
  • HSBC
  • Michelin
  • MTN group
  • Nike, inc
  • Philips
  • Samsung
  • Vodafone
  • Volkswagen group
• For-profit social enterprises

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


  Non-government organisations (NGOs)
• Public sector organisations


  • Central government departments
  • Local authority services
  • Executive agencies
  • Other public sector organisations
• Services provided by public sector

  • Infrastructure
  • Housing
  • Health care services
  • Education
  • National defence
  • Emergency services
• Profit based organizations are revenue generating businesses with profit objects at the core of their operations
• Profit based organizations aim to make a profit, reward the owners with profit from the business, and retain profit/plough it back into the business for capital growth
• Advantages of profit based organizations

  • Raising finance
  • Limited liability
  • Continuity
  • Economics of scale
  • Productivity
  • Tax benefits
• Disadvantages of profit based organizations

  • Communication problems
  • Added complexities
  • Compliance costs
  • Disclosure of information
  • Bureaucracy
  • Loss of control
• Non-profit social enterprises


  Businesses run in a commercial like manner but without profit being the main goal, instead utilizing surplus revenues to achieve their social goals rather than distributing surplus as dividends
• Non-governmental organisation (NGO)


  Private sector organizations that provide goods and services normally expected from the public sector, but which may be underprovided by government
• Types of NGOs


  • Operational NGOs
  • Advocacy NGOs
• Advocacy NGOs

  • Amnesty International
  • Greenpeace
  • Human Rights Campaign (HRC)
• Operational NGOs


  • Doctors Without Borders (Médecins Sans Frontières)
  • Save the Children
  • World Food Programme (WFP)