Difference between Public and Private Enterprises

Difference between Public and Private Enterprises

Some of the differences are;

1. Private enterprises are owned by private individuals while public enterprises are owned by the government which can be federal, state or local government.

2. While private individuals or organizations provide the capital used in the formation and management of private enterprises, government provides the capital for public enterprises.

3. The main motive for setting up private enterprises is to make profit while profit making is not the main motive for setting up public enterprises but to render essential services to members of the public.

4. While public enterprises are established mainly in the areas of essential services, the private enterprises are established in any area where profits are assured.

5. The tax payers bear losses suffered by public enterprises while the owners of private enterprises bear losses suffered by private enterprises.

6. Public enterprises are controlled by the government through the directors appointed by it while private enterprises are controlled by their owners or in some cases by directors appointed by the owners of the enterprises.

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7. While many public enterprises like public corporations enjoy monopoly, no private enterprise enjoys monopoly.

8. Public enterprises like public corporations are established by acts of parliament while private enterprises are established by ordinary registration or by incorporation.

9. A huge amount of capital is involved in the establishment of many public enterprises more than private enterprises.

10. Private enterprises tend to be more efficient than public enterprises hence the privatization of some public enterprises.

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