IB Business and Management 1.2 Private Sector and Public Sector.

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