HBM - Understanding Business

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Public Sector

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Owned and controlled by the government, e.g., NHS, Public Schools, Police. Aims to provide essential public services and is funded by taxpayers.

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Private Sector

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All businesses aim to make a profit. Owned and controlled by private individuals, e.g., Sole Traders, Partnerships, Private Limited Companies.

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Third Sector

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All businesses aim to help a specific cause, e.g., charities and social enterprises.

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Private sector businesses are financed by whom?

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Private individuals

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Types of private sector organizations

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- Private Limited Companies (LTD) - Public Limited Companies (PLC) - Multinationals - Franchise

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Features of a Private Limited Company (LTD)

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- Owned by shareholders - Minimum of 1 shareholder - Shares sold privately - Board of Directors elected by shareholders - Profits shared among shareholders

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Advantages of a Private Limited Company (LTD)

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- Shareholders have limited liability - Large sums of capital invested through selling shares - Shares cannot be freely traded, reducing takeover risk

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Disadvantages of a Private Limited Company (LTD)

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- Decision making takes longer with many owners - Business affairs are not private - Complicated setup due to regulations

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Features of a Public Limited Company (PLC)

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- Owned by shareholders - Board of Directors elected by shareholders - Shares sold publicly through the stock market - Aim to dominate the market and increase market share

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Advantages of a Public Limited Company (PLC)

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- Shareholders have limited liability - Large capital raised through public sale of shares - Easier to borrow finance due to size and reputation - Can dominate the market