Revision Notes

Business organisation

Aims of a business: profit maximising; sales maximising; satisficing (keeping all parties happy); survival.
Economy is divided into two sectors: private and public.
Private sector includes: sole trader; partnership; private limited company; public company. Public company is NOT owned by the government - that is a public CORPORATION.
Important concept: liability. Companies are limited liability companies, which means that though the liability of the company is unlimited, the risk to the shareholders is limited to the value of the shares they own. A sole trader has unlimited liability (as do many partnerships) and thus may lose everything. (Liability = risk).
Public sector organisations: local government; central government; nationalised industries.
Private sector tends to be profit driven.
Profit is a measure of success and is a motivator for further investment.
Public sector tends to be driven by the need to provide a service - perhaps at the lowest costs.
Public sector business may be privatised (transferred to the private sector). This increases competition and tends to lead to an increase in growth.
Such privatisation may have social effects in terms of unemployment. To cut costs people are made redundant. Often the nationalised industry is over manned in the first place.