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ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation

Which of the following is the most significant way in which the objectives of a typical private sector company differ from those of a public sector hospital?

A typical company prioritises maximising shareholder wealth, while a public sector hospital's primary aim is to deliver a service to the community within its funding. Companies are still accountable to shareholders and regulators, and both types of organisation use financial and non-financial performance measures.

  1. AThe company must prioritise maximising shareholder wealth, while the hospital's primary aim is to provide a service to the community within its fundingCorrect
  2. BThe company is accountable to no one, while the hospital must report to the government
  3. CThe company can use only financial measures, while the hospital can use only non-financial measures

Explanation

Private companies are normally driven by profit and shareholder wealth, whereas public sector bodies aim to deliver services within budget set by government funding. The second option is wrong because companies are accountable to shareholders and regulators. The third is wrong because both types of organisation use a mix of financial and non-financial measures.

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