Private and Public Sector Organisations Only Differ in Terms of their Ownership - Essay Example

Private and Public Sector Organisations Only Differ in Terms of their Ownership Within an economy, the private and public organisations are industries that help in production of goods and services. As a fact, the private and public sector may operate in the same range of products and services. However, there is a slight difference, which is mainly in the ownership. On one hand, the public sector is controlled by government bodies in most instances. On the other hand, the private sector is controlled by individuals who are mostly private operators in businesses. One of the most explicit way of differentiating private sector organisations and public sector organisations is by looking at the people who are in charge. To begin with, organisations, which are in the public sector domain, the employees, stakeholders and supervisors, work directly under government control (Sen 11). As such, all the employees, supervisors and managers are answerable to the government. In such cases, the government provides directives on service and product provision. As a fact, the organisation is not owned by a corporation or a private investor, but it is owned by the government that is initiated at the region. In most cases, the public organisations are headed by people that are chosen by the government that is in place. As a result, the government has high stakes in making a choice of the people to take control of the public organisation (Diamond and Seth 12). Apparently, public organisations are led by different people, depending on the government that is in place. When a different government, is elected, the leaders and managers of the organisation are likely to be replaced by new leaders and managers. On the other hand, the control of private sector organisations solely lies in the hands of private investors and individuals. In this case, the private individuals have the authority and power to make a decision on the leaders of the organisation. The leaders and managers of private sector organisations are directly answerable to the private investors (Henry 12). As such, the private investors have the right to replace the leaders and managers depending on their performance. In some instance, the leaders and managers of the private sector organisations are answerable to board of directors, who make decisions that are directly affecting the organisation. As such, the board of directors is the supreme controller of the organisation. Therefore, the leaders and managers of a private sector organisation are not answerable to the government. Apparently, the government has minute control in the private sector organisation. The government only has control on the regulations and laws that govern private sector organisations. However, the government does not have direct influence on the leaders of the organisation (Adekola and Bruno 16). Consequentially, the leaders and managers of the organisation are not replaced by directives of the government. In private sector organisations, private investors have ownership rights. Private owners have the discrepancy of investing their money in the private sector organisations to accrue profits. In some instances, a private sector organisation can be owned by a single entity, which can be a single person. The single investor also makes decisions on the types of services and products that can be sold to the market. In other instances, a number of private investors pool their resources together to initiate a private organisation (Carroll 6). On the other hand, the public sector organisations are run by the government finances. The government provides finances that are used in provision of obligatory goods to the public. As such, the ownership of the public organisation is between the government and the public. The government has to ensure the public domain gets sufficient supply of some of the fundamental services and products they need. Apart from the stated differences, both private and public sector organisations serve the public’s interest (Capon 11). They have to provide the products and services as demanded by the public. Therefore, their main interest is to serve the needs of consumers in the public domain. As a fact, the public and private sector organisation have the same market niche. Therefore, they are likely to compete in the market for a better proportion of the market share. Secondly, both private and public sector organisations have hierarchies of leadership. The employees are answerable to immediate supervisors, who are in turn answerable to their respective managers. The managers have to report to the overall directors, who have authority and control in the organisation (Hess and Michael 16). Therefore, they follow the same process of decision-making and flow of information. Consequentially, the private sector organisations may have different names for different hierarchies, since they would want to be differentiated from the public sector organisation (Gatti 13). Thirdly, both private and public sector organisations are prone to failures. This is where the organisations are subjected to excessive bureaucracy. This factor affects the efficiency and effectiveness of the organisation. As such, the organisations have to make various directives in ensuring they are successful in the market. Fourthly, both private and public sector organisations are regulated by laws and regulations that are initiated by the government. As such, both private and public sector organisations have to be observant to the rules and regulations. Various PESTEL Forces that Influence the Firm's Growth A firm’s growth is dependent on both internal and external environment. While an organisation has control over the internal factors, some of the external factors are hardly controlled. Therefore, the organisation should look for particular ways of ensuring the external factors do not affect the organisation adversely (Pannell and Steven 21). Some of these factors include the political environment, economy, social factors, technology, environmental factors and legal factors. Firstly, the political factors have a direct effect on the performance of an organisation (Lan 21). For example, McDonalds is a private sector organisation that is affected by political environment. This is through the regulations that govern the fast food industry. The government has to make regulations in enhancing hygiene and health. Apparently, the government is concerned with the businesses since they may affect a larger part of the population if they are not monitored through directives (Williams 15). As a result, the businesses have to focus on the regulations, which at times affect the efficiency and effectiveness of the organisation. However, the private organisation has maintained a healthy relationship with the government, which is a reason for immense success. Secondly, economic factors have direct effect on the performance of organisations, especially the private organisations that need colossal investments from the private investors (Jeffs 6). Private organisations like McDonalds can be affected owing to an increase in the tax rate. Similarly, the exchange rate between countries using different currencies can affect the performance of an organisation (Peng 8). When the economic climate is favourable, the business is likely to make an immense improvement. However, when the exchange rate and tax rate are unfavourable, the business is likely to make a downward trend. In addition to this, the unemployment rate will affect the economy. This may later affect the businesses. Thirdly, social factors have an effect on the performance of McDonalds as a private sector organisation. For example, the changing lifestyles of the people will likely affect the performance of McDonalds. In these days, there is awareness in that people are advised to consume healthy foods, rather than relying on fast foods (Hill 10). This may have a direct effect on McDonalds, as most of the niche market will rely on competitive products. Fourthly, with emergence of new technology, private organisations have to enhance their production by purchasing the new technologies (Keohane 13). Apparently, most of the competitors are using new technologies, which improve on effectiveness and efficiency in production. However, when the organisation does not invest in new technologies, it is likely to record dismal performance. Fifthly, organisations performance will be dependent on the environmental factors (Durand 14). For example, in the wake of pollution, many organisations are required to pay colossal amounts of cash owing to excess pollution in the environment. This affects the profitability of the firms as they incur increased costs. Lastly, the legal factors will affect the organisation’s performance. The company has to adhere to the legal requirements to continue serving consumers. However, owing to the many legal requirements, the company finds it hard to record steady progress. Works cited Adekola, Abel, and Bruno S. Sergi. Global Business Management: A Cross-Cultural Perspective. Aldershot, England: Ashgate, 2007. Print. Capon, Claire. Understanding Strategic Management. New York: Pearson Education Ltd, 2008. Print. Carroll, Kathleen A. Property Rights and Managerial Decisions in For-Profit, Non-profit, and Public Organisations: Comparative Theory and Policy. Basingstoke, Hampshire [England: Palgrave Macmillan, 2004. Print. Diamond, Michael A, and Seth Allcorn. 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