Business Studies – 1.2 Economic sectors | e-Consult

The private sector is driven by profit, aiming to maximize returns for its owners or shareholders. Its primary objective is to generate wealth through the production and sale of goods and services. Motivations include increasing market share, innovation, and efficiency. The private sector is typically characterized by competition, risk-taking, and a focus on customer satisfaction. Examples include companies like Tesco, BP, and Rolls-Royce.

The public sector, on the other hand, is funded by taxation and operates for the benefit of the public. Its objectives are broader than profit, encompassing social welfare, equality, and national well-being. Motivations include providing essential services like healthcare, education, and infrastructure, and addressing social inequalities. The public sector is often less competitive than the private sector and is subject to political influence and accountability to the public. Examples include the NHS, the police force, and local councils.

Key differences can be summarised as follows:

• Motivation: Profit (Private) vs. Public Benefit (Public)
• Funding: Private Investment (Private) vs. Taxation (Public)
• Objectives: Wealth Creation (Private) vs. Social Welfare (Public)
• Competition: High (Private) vs. Low (Public)
• Accountability: Owners/Shareholders (Private) vs. Public/Government (Public)