Classification Of Business Enterprises In A Mixed Economy

IGCSE

CREATIVE & PROFESSIONAL

Business Studies

Notes

Classification Of Business Enterprises In A Mixed Economy

Classification Of Business Enterprises In A Mixed Economy

Classification of Business Enterprises

in a Mixed Economy


Mixed Economy

The economic system of a country that has both private and public sectors is known as the Mixed Economy. 

Private Sector

Private sector business is basically controlled by private individuals who mostly work to earn the profit. They are free to take decisions on their own regarding what to produce, how to produce, how much to produce and what price should be charged, etc. they may take all these decisions without any government interference. Private businesses just follow the rules and regulations set by governments. 

Public Sector

There are some sectors which are in the control of the government almost all over the world. Government officials or ministries run these organizations on their own or by professionals but most of the decisions are taken by the governments. Some departments are directly run by ministries like different schools and colleges by the ministry of education, hospitals and nursing homes by the ministry of health, etc. The heads of these departments make it possible to run the operations under the guidance of the governments. The organizations and departments run different businesses under government supervision but their aim is public-serving instead of more profit.

Recent Changes in Mixed Economy

Capital is an important factor behind the recent changes in the mixed economy. Capital is basically money invested in the business at the start by a person who owns the business. 

In recent years, there is a trend observed that governments are inclined towards privatization. There are various businesses like water supply, electric supply, public transport, etc. that are encouraged to be adopted by the private sector. 

Now there is a question that why governments are doing this? The main reason for this trend is the capital investment of private investors. It is considered that private investors can invest more capital than the government as his main aim is to earn more profit while the focus of the government is to provide more facilities. 

The issue of unemployment is also important to discuss as the private sector cuts the various jobs to increase more output and profit while government departments focus more on the employment and welfare of the people rather than profit. 

As far as managerial issues are concerned, it is obvious that the management of the private sector is always considered better than the public sector all over the world as the investor wants to utilize his resources at the maximum level.

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