IB Business and Management
1.2 Private Sector and Public Sector
Learning Outcomes
• Distinguish between organizations in the private and public sector
Human wants are unlimited but resources are limited
The Basic Economic Problem…..
The 3 Economic Questions….
• What to produce?• How to produce it?• For whom to produce?
Who makes these decisions?
It depends……
In reality, most economies are mixed economies
Ownership of Business in a mixed economy
Ownership Types
Private Sector Public Sector
Unincorporated
•Sole Trader
•Partnership
Incorporated
•Private Limited Company
•Public Limited Company
Public Corporations
•Local Authorities
•Central Government depts
Public Sector Organisations
• Organisations owned and controlled by the state or government
Objectives• • Provide an essential service
• Provide it cheaply or free of charge, therefore it is available to everybody• They are generally beneficial to society.
Private Sector Organisations
• Organisations owned and controlled by private individuals and organisations
• e.g. Top Shop, Virgin, British Telecom
Objectives- To survive in a competitive market- To maximise their profits- To make returns for their shareholders (dividends)
Questions….
• Why does the public sector exist so some extent in all countries?
Introducing…… Milton Friedman
• Watch the video….. The free lunch myth
• To what extent do you agree with his views?
Privatisation…..
• What is Privatisation?
• Watch the videos….
• Think about the following questions:• What examples are given of organisations that have been
privatised• What are the benefits of privatisation?• What are the drawbacks/problems of privatisation?• What conditions are necessary for privatisation to be a
success?• Is it possible to privatise all organisations? Why/Why not?
Plenary….. 3,2,1
• Give 3……. Differences between private and public sector organisations
• Give 2……. Arguments for privatisation
• Give 1 ……. Problem that could result from privatisation