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ACCA Strategic Professional · Strategic Business Leader · Public sector governance

A government creates a state-owned water company that must break even, provide universal access at regulated prices and also contribute to national environmental goals. Which statement best describes how its objectives differ from those of a typical listed private company?

The water company pursues a blend of financial and non-financial objectives, including break-even, universal access and environmental contribution, with social and political aims taking precedence over profit maximisation. A listed private company would mainly prioritise shareholder wealth.

  1. AIt pursues a mix of financial and non-financial objectives, with social and political aims taking priority over maximising profitCorrect
  2. BIt has no need to consider financial sustainability
  3. CIt has only one objective: maximising shareholder wealth
  4. DIts objectives are determined entirely by customers through market competition

Explanation

State-owned enterprises often balance financial constraints (such as break-even) with social, political and environmental goals, which can take priority over profit maximisation. Option B is wrong since it must break even; C and D describe private-sector, market-driven objectives.

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