Commercial enterprises

Revise Commercial enterprises for Commerce 7100 (O Level) — revision notes, 114 practice questions and instant AI marking.

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Cambridge O Level Commerce 7100

Commercial Enterprises

The big idea: The way a business is owned decides who controls it, who takes the risk and where its money comes from. Choosing the right form of ownership, and the right location (a street address or a server and a warehouse), shapes how well the business can trade.

Summary — What This Chapter Covers

Private sector enterprises are owned by individuals and aim mainly at profit; public sector enterprises are owned by the government and aim to provide a service.
Private sector types: sole trader, cooperative, partnership, private limited company, public limited company. Each differs in owners, liability, finance and control.
Public corporations are state-owned businesses that provide essential services, protect jobs or run natural monopolies.
Multinational companies (MNCs) produce in more than one country. They bring jobs and investment but can harm local firms and send profits abroad.
A franchise lets a franchisee trade under the franchisor’s name in return for a fee and royalties.
Location: physical factors (labour, markets, transport, power, raw materials, competition, suppliers, communication, government) and ecommerce factors (wi-fi, warehousing, technology specialists, logistics).

1. Private and Public Sector Enterprises

Syllabus 2.1.1 · Papers 1 & 2

Who owns it and why it exists

	Private sector	Public sector
Owned by	Private individuals or shareholders	The government (central or local), on behalf of the people
Main aim	Profit	Providing a service, often at low cost or free
Finance from	Owners’ capital, shares, bank loans, retained profit	Taxes and government borrowing, plus charges to users
Examples	A corner shop, a bank, a car maker	State-owned railway, postal or electricity business, public hospitals

2. Types of Private and Public Sector Enterprise

Syllabus 2.1.2 · Papers 1 & 2

Features, and which fits which situation

Unlimited liability means the owners can lose their personal possessions to pay the business’s debts. Limited liability means they can lose only the money they invested.

Type	Owners and control	Liability	Finance	Profit
Sole trader	One owner, who makes every decision	Unlimited	Owner’s savings, bank loans; hard to raise large sums	All kept by the owner
Partnership	Two or more partners (often a maximum of 20), who share decisions; a deed of partnership sets out the rules	Unlimited (for ordinary partners)	Capital from every partner	Shared as agreed, often in the ratio of capital
Private limited company (Ltd)	Shareholders, often family or friends; directors run it	Limited	Selling shares privately; cannot sell to the public	Paid as dividends
Public limited company (plc)	Shareholders, who can be anyone; a board of directors runs it	Limited	Selling shares to the public on a stock exchange: very large sums	Paid as dividends
Cooperative	Members (workers, customers or producers) who each have one vote	Usually limited	Members’ contributions	Shared among members, often by how much they buy or supply
Public corporation	Owned by the government; run by a board appointed by a minister	The state stands behind it	Government funds and its own sales	Kept by the state or reinvested

Private sector enterprises
Advantages	Disadvantages
Sole trader: easy and cheap to set up; quick decisions; personal service; owner keeps all the profit

Reasons for public corporations

essential services
jobs

Memorise

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Also in the full note

One company, many countries
Borrowing a proven brand
Where to put the business
Ownership, MNCs and franchises in longer answers

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Commercial enterprises