Difference Between Public and Private Sectors

Public vs Private Sectors

You often hear news analysts talk about the public and private sectors. Although most people generally have an idea what these two terms entail, there are intricate differences between the two, which are also useful to learn about.

Firstly, here’s what the public sector is all about. It is basically composed of organizations which are owned and operated by the government. In the United States, the public sector includes government agencies like federal and state offices. When a private individual talks about the public sector, they are usually referring to a public authority, or public body. Any federal institution which is associated with health care, police services, prison services, local and central government management, and all their departments, are also part of the public sector.

Secondly, there’s the private sector. As the name implies, this is usually made up of organizations which are ‘private’, and this means that they are not owned by, nor part of, the government. All small businesses, corporations, profit and non-profit organizations, partnerships, charitable organizations and middle to large entrepreneurships, are considered to be part of the private sector. The specific examples are retail stores, credit unions, local businesses and non-government operated banks.

Now, what’s the difference between the public and the private sector in terms of the way that they operate? Those who are in the public sector typically supply services to the public, and they are not competing with any other institution for profit. Private sectors, on the other hand, do have a goal of overtaking their competitors, and maximising their profit.

Most public sectors are managed under a larger chain of command and control, while private sectors mostly operate in a corporate setting. When it comes to policy decisions, the activities in the public sector have a goal of sticking to what is indicated by law, while the private sector is managed under the rules of shareholders and corporate owners.

Finally, the beneficiary of the services offered by the public sector, is the general public, while for the private sector, it is mostly the consuming public who uses the goods and services that they offer in return for profit.

Summary:

1. The public sector is made up of agencies and institutions owned and operated by the government, while the private sector is made up of small businesses, corporations, as well as profit and non-profit organizations.

2. The public sector is not profit-driven, while this is the case with the private sector.

3. The end beneficiary of the services offered by the public sector is the general public, while it is the general consuming public who take advantage of the goods and services offered for profit by the private sector businesses.