Topic B

B1 - Firms

Key points 1 - Public Copportaions & Government Departments:

  1. Public ownership = ownership of a government body w/ the right to…
    • possess
    • control
    • use
    • dispose of properties
  2. There are 2 forms of public ownership
    • Government departments
      • Branches of a gov. org. that is completely owned, managed, financed by the gov
      • E.g.: Fire Service Department, Water Supplies Department
    • Public coporations
      • Firms that are incorporated by statue
      • Owned by gov but independenly financed (excluding initial financial capital investment)
      • Gov appoints board of directors to manage it
      • E.g.: HK Int. Airport managed by the Airport Authority & Ocean Park managed by the Ocean Park Coperation

Key points 2 - Public Copportaions > Government Department:

  1. Public coporation operations are more flexible
  2. Has higher incentive to lowr production cost
  3. Can efficiently use resources to avoid wastage
  4. Employer can have better control over employees
  5. Public corporations responses better to consumers demand (i.e. be more innovative)

Key points 3 - Public Copportaions > Private companies:

  1. Public Coporation can have lower interest rates on loans borrowed since it’s financially backed up by gov.
  2. Has better overall planning in transportation services
  3. Gov. can recevies dividends from these corporations

Key points 4 & 5 - 2 types of private ownership:

  1. Owners with unlimited liability
    • 1 person in charge = sole proprietorship
  2. Owners with limited liability
    • 2-20 ppl in charge = partnership

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