Skip to content

ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business

A government privatises a state-owned railway company by selling it to private investors. Which change is the most likely consequence for the company's objectives?

The company will most likely place greater emphasis on profit and shareholder returns. Private owners expect a financial return, so efficiency and profitability replace the broader social objectives often pursued under state ownership. Any social obligations would then come from regulation rather than ownership.

  1. AA greater emphasis on profit and shareholder returnsCorrect
  2. BA greater emphasis on meeting social objectives regardless of cost
  3. CNo change, because ownership does not influence objectives

Explanation

Private investors expect a return, so profit and efficiency become more prominent than the social objectives typical of state ownership. Ownership clearly influences objectives. Social aims may continue only if imposed through regulation or contract.

Did you get it right without looking?

One question tells you little. A timed set on Political and legal factors affecting business shows your real accuracy, how long you take and where you lose marks.

Practise Political and legal factors affecting businessFree diagnostic mock

More Political and legal factors affecting business questions