Main features of the private sector
Main features of the private sector
involvement, but there are more features of the private sector:
(i) Profit motive
The primary focus of companies in the private sector is making a profit. By operating within the regulations and compliances of the respective country, companies in the private sector typically manage to realize more profits compared to firms in the public sector. Additionally, profits provide reward for the risk taken and the required return on capital.
(ii) Private ownership and control Private entrepreneurs are responsible for owning, controlling and managing the private sector. The management may be either by a single individual or by a group of people. When the ownership belongs to a single person, the private sector company is referred to as a sole proprietorship. Alternatively, a group of persons may jointly own a firm in the form of a cooperative society, partnership or a joint-stock company
(iii) No state participation
Private sector entities have less exposure to government interference. There is no participation by the state or central governments in the ownership and control of a private sector undertaking.
(iv) Independent management
The management of the private sector relies entirely on its owners. In the case of a sole proprietorship, the manager makes all of the decisions and acts on behalf of the company in legal matters. On the other hand, the management of a joint-stock company depends on a group of directors who are elected representatives of the shareholders.
(v) Work culture of employees
The private sector has a competitive work culture, characterized by performance-based career growth and better compensation. Private sector companies strive to create the best work environment for their employees to maintain a competitive advantage over other firms in the private sector.
