Page 57 - Cambridge IGCSE Business Studies

4: Types of business organisation

You have already learned that public corporations are in the public sector of the
KEY TERM
economy. The main features of public corporations are:

Public corporation: a business
organisation that is owned and ■ They are owned and controlled by the state.
controlled by the state. ■ They are financed mainly through taxation.
■ In many countries they have social objectives rather than profit objectives. For
example, to provide a service to the public and meet the needs of the less well-off
in the population. In some countries the public sector organisations still have
social objectives, but they might also have a profit objective too.

■ The services of public corporations are often provided free or at a low price to the
population.

Public sector: see Chapter 2, Most countries throughout the world have public corporations or public sector
page 25. enterprises, for example Pakistan International Airlines (PIA), Brunei National
Petroleum Company and South African Post Offi ce.

EXPLORE!
Use library resources or the internet to research one public sector organisation in your
country.
■ What is the name of the organisation?
■ What goods or services does it offer to the people of your country?

■ How are the activities of the organisation financed?
■ Does it charge consumers for the goods or services it produces? Are all consumers
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charged the same price?
■ Do you think the organisation you have researched should be controlled by the
government? Justify your answer.

TEST YOURSELF
1 Identify three features of a sole trader.
2 What is meant by ‘unlimited liability’?
3 Identify and explain two advantages of a partnership.

4 State the main difference between an unincorporated business and an
incorporated business.

5 Identify and explain three differences between a private sector business
organisation and a public corporation.
6 State two disadvantages of a private limited company.
7 State two legal documents that must be completed when setting up a limited
company.
8 Outline the main difference between a private limited company and a public

limited company.
9 Identify three advantages to an entrepreneur of setting up a business through a
franchise agreement.
10 Explain the benefits to the businesses in a joint venture.