1. IB Business and Management
1.2 Private Sector and Public Sector

2. Learning Outcomes
Distinguish between organizations in the private and public sector

3. The Basic Economic Problem…..
Human wants are unlimited but resources are limited

4. The 3 Economic Questions….
What to produce?
How to produce it?
For whom to produce?
Who makes these decisions?

5. It depends……
In reality, most economies are mixed economies

6. 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

7. 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.

8. 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)

9. Questions….
Why does the public sector exist so some extent in all countries?

10. Introducing…… Milton Friedman
Watch the video….. The free lunch myth
To what extent do you agree with his views?

11. 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?

12. 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