The Business Units In Commerce (Government Owned And Private-Owned Businesses)

The Business Units In Commerce (Government Owned And Private-Owned Businesses)

GOVERNMENT-OWNED BUSINESS UNITS – These are run by government bodies for the benefit of the public me as a whole. Essential, non-profit-making services are run state; so also are some profitable businesses where the profits earned are used by the state for the benefit of the nation. Their employees and management therefore work for the government whose officials lay down the basic aims and objectives these businesses must attain.


The sole-owner businesses Each one is owned by a single individual. They are the most common form of business and are small-scale. Typical examples are the numerous agricultural smallholdings, small retailing out lets, garages and firms of painters, builders or window cleaners Although they are small they may well employ staff, however some are literally one man businesses, owned and run entirely by one man.

Advantages of sole-owner firms

1. They are set up easily without the need for a large amount of finance or to comply with the fairly complex regulations which affect many of the larger types of firms.

2. Their owners do not share their firms’ profits with other people this can encourage them to work hard to make as much money for themselves as possible.

3. They do not have to consult others and so can make decisions quickly. It can be very satisfying controlling a firm singlehandedly.

4. The sole-owner is in the best position to make direct, personal contact with the customers and so meet individual customer requirements.

5. If any staff are employed the owner is likely to work closely with them. This tends to lead to a better relationship between management and employees than exists in many larger firms because they understand one another problems.

Disadvantages of sole-owner firms

1. As they have little or no help in the running of their firms, owners often have to work long hours, rarely have time off and face serious problems when they are ill.

2. Finance for the modernization and expansion such firms will be hard to obtain. There is only one owner to provide private funds and banks are very cautious when considering lending to small firms as their future can be uncertain.

3. Being small-scale they will be unable to enjoy the use of a wide power. For example an owner may be an excellent salesman but very bad at undertaking the necessary bookkeeping. This lack of specialization can cause these small firms to be less efficient than their larger counterparts.

4. Because of their relatively weak financial position they are more likely to go out of business. The owners have unlimited liability for the firms debts and so they could be obliged to sell their private possessions to pay creditors.

5. If the owner dies the firm may cease operating. Unlike companies these businesses do not exist continuously.

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