Enterprises, ownership and location
Choose between enterprise forms and locations by matching control, capital, liability, objectives and market access to a scenario.
Section 2.1.2 · Types of private and public enterprise
Exam scope and assessment notes
This original lesson maps Cambridge IGCSE Commerce 0715 for exams in 2028 and 2029. Examples, businesses, figures and practice questions are original StudyForA material, not Cambridge questions, mark schemes or endorsements. Practice supports the knowledge, application, data interpretation, analysis and evaluation skills in the syllabus; it is self-checked and does not produce an official Cambridge grade. Full timed papers, examination-centre entry advice and review by a qualified Commerce teacher remain outside this pathway.
Before you begin
- No prior Commerce study is assumed. Work from the facts in each scenario and show calculations before making a commercial judgement.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
A business format operated under a brand and system for fees is a:
What you will learn
- Distinguish private-sector enterprises from public-sector enterprises and compare sole traders, cooperatives, partnerships, limited companies and public corporations.
- Explain why multinationals and franchises exist and evaluate their effects or trade-offs.
- Compare physical and e-commerce location factors and justify a choice for a particular enterprise.
Ownership changes control and obligations
Private-sector enterprises are owned or controlled by private individuals or organisations; they may seek profit but can also pursue other objectives. Public-sector enterprises are owned or controlled by the state to provide services or meet public aims. A public corporation is a public-sector form; the reasons for one depend on the service and national context.
A sole trader has one owner and direct control but may have limited finance and personal liability. A partnership shares ownership and skills but needs agreement on decisions and profit. A cooperative is owned by members for shared benefit. A private limited company has separate legal identity and restricted share transfer; a public limited company can offer shares more widely, with additional regulation. In a limited company, owners' liability is generally limited to their investment, subject to law and guarantees. Choose by comparing the owners' aims, scale, control, finance, legal obligations and the circumstances in the question.
Expansion creates options and trade-offs
A multinational company operates in more than one country. It may bring investment, jobs, skills or consumer choice, while affecting local competitors, wages, tax receipts, the environment and the distribution of profits. Effects differ by country, industry and conduct.
A franchisee uses a franchisor's brand and business system in return for fees and compliance with agreed standards. It can reduce some start-up uncertainty and benefit from brand recognition, but fees, restrictions and reputation risk limit independence.
A physical location may depend on labour, customers, transport, power, raw materials, competitors, suppliers, communication and government influence. E-commerce still needs connectivity, technology specialists, warehousing and logistics; a website does not remove location costs. Outsourcing has grown as firms contract out activities such as production and logistics to access specialist capacity or focus on core work. A firm must still control quality, timing, information and supplier dependence.
Sources for this lesson
Pause and explain
A retailer sells online from a warehouse. Which location factor remains important?
Worked example
Two siblings want to open a repair business. They need shared decision-making, modest start-up capital and protection between personal and business finances. What should they compare?
Show the worked solution
- A partnership can share skills and control but needs clear agreements and may expose partners to personal liability.
- A private limited company can separate business identity and generally limit shareholder liability, but has administration and compliance costs.
- The best choice depends on finance, legal advice, responsibilities and future plans.
Answer They should compare a partnership with a private limited company. A partnership may be simpler and pool skills, but responsibility and liability need careful agreement. A private limited company can offer separate legal identity and limited liability, at the cost of more administration. They should check local law and costs before deciding.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A town wants a bus service that runs an unprofitable rural route. Explain one reason the state might support a public corporation or public-sector provider.
Give me a hint
Link the form to an objective that may differ from short-term profit.
Compare my reasoning
- Identify the service's public purpose, such as access to transport.
- Explain that a public-sector provider may maintain a route even when revenue alone is insufficient.
- Recognise that cost, accountability and alternative providers still need evaluation.
A public provider may be used to preserve access to an essential route that a profit-focused operator might not serve. The arrangement still needs cost control, accountability and evidence that it meets public needs.
Look for these in your work
- Public purpose connected to scenario
- Explains the ownership rationale
- Includes an evaluation condition
A small food firm can open a shop near customers or use an online warehouse outside the city. Compare the location factors for each.
Give me a hint
Use demand, rent, labour, power, communication, storage and delivery rather than assuming online is cost-free.
Compare my reasoning
- A shop benefits from customer access and visibility but may face rent, staff, utilities and local competition.
- An online warehouse may reduce shop costs but needs reliable internet, storage, fulfilment, technology staff and delivery.
- Compare total cost, customer service, demand and delivery reliability with local evidence.
The shop can offer visibility and immediate service but incurs premises and staffing costs. An online warehouse needs strong connectivity, stock management and logistics and may reduce some premises costs. The best option depends on customer demand and total operating cost.
Look for these in your work
- Both routes evaluated
- E-commerce costs acknowledged
- Decision evidence identified
A multinational opens a factory in a lower-income country. Evaluate two possible effects on the host country and give a conditional judgement.
Give me a hint
Balance jobs, investment or skills against effects on local firms, environment, wages or profit flows.
Compare my reasoning
- Possible gains include jobs, investment, exports, skills and supplier demand.
- Possible costs include pressure on local competitors, environmental damage, low wages or profits sent abroad.
- Judge by local employment quality, environmental standards, tax, supplier links and distribution of gains.
The factory may create jobs and investment, but benefits depend on wages, working conditions, local supplier links and environmental controls. If gains remain local and standards are enforced, the effect may be positive; otherwise costs can fall on residents and local firms.
Look for these in your work
- Balanced effects
- Contextual factors
- Conditional conclusion
Common mistakes
- Assuming every private enterprise has profit as its only objective
- Treating a cooperative as a public corporation
- Claiming a franchise guarantees success
- Assuming an online firm has no location costs
What can you explain now?
Why might a public corporation exist?
Compare with the explanation
To provide or manage a service for a public purpose where state ownership is judged appropriate.
Public ownership can be chosen to meet a public service or policy aim, but the reason depends on the context.
After trying it yourself, choose your next review. This is your self-assessment.
Your review choice appears on Today. Sign in to sync it across devices.
Make it stick
State one difference between public and private sector enterprises and one location factor for an e-commerce firm.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.