Business Structures - Public and Private Sectors Flashcards
1
Q
What are the two sectors of businesses?
A
The private sector
- business owned and run by private individuals
- sole trader or limited company
The public sector
- owned and operated by government that usually provide essentials
2
Q
Why would a business want to be in the public sector?
A
- hard to charge a direct payment for
- customer might not chose to buy them, don’t realise the benefit they provide
- customers might not be able to afford them
- argument not is that they are essential services that should not be provided for a profit
3
Q
What is privatisation?
A
- business or industries under government control are known as nationalised industries
- a lot of British industries used to be run this way
- businesses were privatised in the 80’s
- involved issuing shares and making shareholders the owners
- previously protected industries were opened to competition
- Some services were contracted out to private businesses run on behalf of the government
- education and health remained government controlled
- regulatory bodies monitor previously nationalised businesses, ofqual
4
Q
Why would a business privatise?
A
- improved efficiency, ran more as a business
- no political agenda
- increased competition
- country gains revenue from selling the business
- shareholders own business and expectations need to be met
5
Q
Why wouldn’t they privatise?
A
- run for price so prices might rise
- private business isn’t as accountable as public business
- man only offer profitable services and remove unprofitable ones
6
Q
What is nationalisation?
A
Where a private sector business can be taken over by the government moving into the public sector
7
Q
Why nationalise?
A
- government can ensure essential services are provided and available to all.
- motives of the business / industry do not necessarily have to be profit led
- protects struggling industries
