Chapter 1: Business Environments
The Private and Public Sector
Public sector
Public Sector government entity Business
Businesses owned by the government and provide world
Collective goods and services. They are funded Private sector
by taxes that government collects from
individuals who work or from the private sector
Only public company sells shares to public
• Parastatals- company or organisation which is owned by government of the
country and often has political power.
Collective goods: is infrastructure of the country; Government departments
(don’t run to earn profit by provide good and services to people) Eg hospitals,
schools and municipalities.
Aim of business is to create profit
Private Sector
Businesses established by private entrepreneurs. The aim is to satisfy customers
need and wants while generating a profit. Entrepreneurs use capital- own money
or borrowed capital. to fund their business. Competition between businesses to
offer customers the best value for their money in order to be successful. A
business creates a completive advantage and a loyal customer base by offering:
quality products and competitive pricing
Competitive advantage
Factors that allow a company to produce goods and services better or more
cheaply that its rivals
Private sector
The private sector is divided into 2 sectors
• Informal sector
• Formal sector Informal L Formal
Formal sector
Businesses administrated by the laws of the country. They pay taxes and
contribute to the GPD of the country (Gross Domestic Product). Located at fixed
locations eg malls
,Informal Sector
There’s no legal requirements of paying taxes therefore it’s not included in the
calculation of the GDP but indirectly contribute to the GDP. Not found at a
fixed location
Examples of businesses found in the informal sector:
• Production
• Hawking
• Services
How they indirectly contribute to the GDP?
Entrepreneurs buy raw materials from the formal. Businesses can grow big
enough to become part of the formal sector
Example- entrepreneurs become successful, move into the formal sector,
employing others and making enough profit, requiring to pay tax
Working in formal sector helps lessen poverty. Money earned in the informal
sector can be spent in the formal sector
Economic Sectors
The economy is divided into 5 sectors based on the types of activities that they
preform:
1. Primary sector
2. Secondary sector
3. Tertiary sector
4. Quaternary sector
5. Quinary sector
Primary sector Extraction or harvesting of raw
materials; farming, mining, fishing
Secondary sector Manufacturing of goods
Tertiary sector Selling of good and services
Quaternary sector Intellectual activities and knowledge-
based activities aimed at future
growth and development
Quinary sector Extension of the quaternary sector
but with decision making at the
highest levels of society; government
level, top management operations, CEO
, The concept of a “Business”
-A business adds value to society
Creates employment and helps society improve general standard of living. They
provide goods and services to make a profit to achieve economic, social and
environmental sustainability. Business operations is the activities in the private
and public sector are classified as activities in the primary, secondary, tertiary,
quaternary and quinary sector of the economy.
Profit share = dividens
Characteristics of a successful business 5
profit shared amongst partners
• Strong leadership to direct business to achieve goals
• Create competitive advantage
• Satisfy the needs and wants
• Use resources; 4 factors of production in a sustainable manner
• Corporate citizen is responsible, accountable and transparent which adds
value to all stakeholders employees customers shareholders
, , ·
nothing illegal
o Distribute profit to owners/shareholders
o Develops employees through skills training
o Uplifts the community
o Pays taxes to the government
NB !
• Stakeholder- any person or business that relays/depends on the success of
the business
Important objectives of a business
·
short term goals
Survival
Awareness of external threats and opportunities that impact these factors have.
Top management plans for the future. Businesses formulate a vision to indicate
long term dreams which translates the companies vision into a mission statement
which indicates what needs to be done to achieve the long-term dream
1. Vision- long term
2. Mission- short term
3. Goal – long term
4. Objective- short term
The Private and Public Sector
Public sector
Public Sector government entity Business
Businesses owned by the government and provide world
Collective goods and services. They are funded Private sector
by taxes that government collects from
individuals who work or from the private sector
Only public company sells shares to public
• Parastatals- company or organisation which is owned by government of the
country and often has political power.
Collective goods: is infrastructure of the country; Government departments
(don’t run to earn profit by provide good and services to people) Eg hospitals,
schools and municipalities.
Aim of business is to create profit
Private Sector
Businesses established by private entrepreneurs. The aim is to satisfy customers
need and wants while generating a profit. Entrepreneurs use capital- own money
or borrowed capital. to fund their business. Competition between businesses to
offer customers the best value for their money in order to be successful. A
business creates a completive advantage and a loyal customer base by offering:
quality products and competitive pricing
Competitive advantage
Factors that allow a company to produce goods and services better or more
cheaply that its rivals
Private sector
The private sector is divided into 2 sectors
• Informal sector
• Formal sector Informal L Formal
Formal sector
Businesses administrated by the laws of the country. They pay taxes and
contribute to the GPD of the country (Gross Domestic Product). Located at fixed
locations eg malls
,Informal Sector
There’s no legal requirements of paying taxes therefore it’s not included in the
calculation of the GDP but indirectly contribute to the GDP. Not found at a
fixed location
Examples of businesses found in the informal sector:
• Production
• Hawking
• Services
How they indirectly contribute to the GDP?
Entrepreneurs buy raw materials from the formal. Businesses can grow big
enough to become part of the formal sector
Example- entrepreneurs become successful, move into the formal sector,
employing others and making enough profit, requiring to pay tax
Working in formal sector helps lessen poverty. Money earned in the informal
sector can be spent in the formal sector
Economic Sectors
The economy is divided into 5 sectors based on the types of activities that they
preform:
1. Primary sector
2. Secondary sector
3. Tertiary sector
4. Quaternary sector
5. Quinary sector
Primary sector Extraction or harvesting of raw
materials; farming, mining, fishing
Secondary sector Manufacturing of goods
Tertiary sector Selling of good and services
Quaternary sector Intellectual activities and knowledge-
based activities aimed at future
growth and development
Quinary sector Extension of the quaternary sector
but with decision making at the
highest levels of society; government
level, top management operations, CEO
, The concept of a “Business”
-A business adds value to society
Creates employment and helps society improve general standard of living. They
provide goods and services to make a profit to achieve economic, social and
environmental sustainability. Business operations is the activities in the private
and public sector are classified as activities in the primary, secondary, tertiary,
quaternary and quinary sector of the economy.
Profit share = dividens
Characteristics of a successful business 5
profit shared amongst partners
• Strong leadership to direct business to achieve goals
• Create competitive advantage
• Satisfy the needs and wants
• Use resources; 4 factors of production in a sustainable manner
• Corporate citizen is responsible, accountable and transparent which adds
value to all stakeholders employees customers shareholders
, , ·
nothing illegal
o Distribute profit to owners/shareholders
o Develops employees through skills training
o Uplifts the community
o Pays taxes to the government
NB !
• Stakeholder- any person or business that relays/depends on the success of
the business
Important objectives of a business
·
short term goals
Survival
Awareness of external threats and opportunities that impact these factors have.
Top management plans for the future. Businesses formulate a vision to indicate
long term dreams which translates the companies vision into a mission statement
which indicates what needs to be done to achieve the long-term dream
1. Vision- long term
2. Mission- short term
3. Goal – long term
4. Objective- short term
