Managing in a Mixed Economy - Essay Example

Managing In a Mixed Economy Table of Contents Introduction 3 Overview of the Network Rail 3 Seminar Topic Innovation and Service Transformation 5 Seminar Topic 2: Public Private Partnerships 8 Conclusion 12 References 14 Introduction In the recent day context, the existence and role of a mixed economy has been argued with much importance at various levels of the world economy. As per the commonly provided explanations, a mixed economy is the economic system wherein both the state level organisations and the private sector possess a substantial control over the economic activities of the nation. The emergence of a mixed economy has been related with the failure of the centrally planned economy. Management in mixed economy in the current context has attained significant importance across the world (Reisman, 2005). Concerning with the factors of a mixed economy, this paper intends to focus on the management of such issues in the light of Network Rail Infrastructure Ltd. Overview of the Network Rail Railtrack was involved in performing various tasks of scheduling, delivering, managing, selling and consulting for rail transportation and operated as a group of companies that was engaged in maintaining all the aspects of the track as well as stations of the old British rail network. However, it was sold to Network Rail and later renamed as Network Rail Infrastructure Ltd. Network Rail was then charged with the responsibility of managing the entire rail infrastructure in Great Britain excluding the London underground service. Network Rail therefore aims at providing a safe, reliable and efficient railway service within the UK. Correspondingly, the organisation is committed towards improving the rail network by offering faster, and frequent as well as reliable journey within the towns and cities of the UK. With its rigorous effort, it aims at integrating people for making the UK more competitive in terms of railroad transportation. It also aims at bringing significant benefits to the national economy. Moreover, its endeavour towards private sector growth and workforce can also be seen with its radical investment in the sector (Network Rail, 2013). It is worth mentioning in this context that the organisation is committed towards introducing new technologies in order to offer greater ease and facilities to its wide-range of customers. The organisation proclaims to follow the best organisational practices of safety management wherein its initiatives have been committed towards promoting righteous attitude and continuous development within the workforce. It further tends to ensure that all the passengers as well as individuals dealing with fright are fairly treated when they choose to use railway. Currently, the company operates as a private company performing commercial businesses. It is categorised as company limited by guarantee and is directly accountable to its members being regulated by the Office of Retail Regulation (ORR). Moreover, the company is determined to deliver a safe, reliable and the most efficient railway for Britain. It is worth mentioning that its members are drawn from rail industry and the public. Moreover, it is funded through excess of revenue apart from the monetary assistance rendered by the government grants. Notably, the Scottish Government is a public member of Network Rail (Network Rail, 2013). Seminar Topic 1: Innovation and Service Transformation The notion of co-production is widely being discussed in relation to the public services across the world and in the UK as well when evaluating the innovation and service transformation strategies taken by organisations such as Network Rail in a mixed economy system. It is worth mentioning that co-production processes in a mixed economy have often been argued to be primarily based upon the apparent characteristics of services in both public and private sectors wherein the production and consumption of services are commonly noted as inseparable. In order to attain the broad benefits of the co-production, it is essential that the users of the services offered by Network Rail are willing and provide their consent to take part in the co-production process. In other words, the effectiveness of the co-production basically lies on the closer collaboration between the customers and the service providers. Nonetheless, it can be argued that if the users of the services do not make full contribution to the service processes, Network Rail may not produce the most effective outcomes thereon. The interdependence of service provider and the service users therefore tend to provide ample scope for influencing the outcomes of Network Rail that have been prioritised in the co-production process or the organisation. One of the potential benefits that may avail with the process of coproduction in the public service primarily concerning with the rail transport system in the UK can be related with delivery of right services to the users at minimum cost and also in a time efficient manner. Thus, cost effectiveness along with enhanced customer services can be regarded as one of the major benefits that are often made available from the coproduction process in the public services offered by Network Rail (Network Rail, 2013; Bovaird, 2012). It can also be stated that coproduction shall facilitate service providers to focus and emphasize more on the problems and issues that are limiting the effectiveness of the services offered by Network Rail; while, on the other hand, the participation of customers shall result in contribution towards seeking the best remedies for the problem identified. The processes also contribute towards removing the distinction between clients and the recipients of the services as well as between the service providers and the customers of the organisation. In other words, the service users are also responsible to display the role of the service providers leading towards enhanced quality of services by Network Rail. Moreover, it can be argued that the current system in the public services tend to barricade innovation to a certain extent thus hampering the vision of Network Rail. Contextually, it is believed that coproduction shall offer ample scope for innovation based on the customer satisfaction and safety to Network Rail in such circumstances. Additionally, coproduction process in Network Rail can be viewed as an effective step towards seeking customers in the mainstream for formulating effective service policies. Precisely stating, it can be argued that the coproduction concerning with rail transportation system in the UK can lead towards higher quality and more realistic as well as sustainable services by means of seeking expertise of users for designing the modes of services offered. It can also facilitate the management to ensure greater efficiency of services wherein its staff members shall have to experience greater work satisfaction derived from the highly satisfied employees. Additionally, maintenance costs shall also witness considerable reduction thereby providing ample opportunity for introducing more efficient services and facilities for the customers (Network Rail, 2013; Bovaird, 2007). Furthermore, it can be argued that current system concerning with most of the public services offered by Network Rail are narrow in a sense that these public service systems do not encourage innovation. It can be admitted that adoption or rejection of innovation is often accompanied with some sort of organisational as well as social changes. Essentially, innovation with reference to Network Rail can be closely related with the creation as well as implementation of new processes, and services in order to achieve greater efficiency and effectiveness in the services delivered to the customers. The organisation contextually has been quite inclined in order to prevent and eliminate any fatal consequences arising from technology failure which in turn increases the significance of Network Rail in the UK to constantly engage in innovating new ways for effective management and quality assured service delivery process to its customers. It is vital to consider that few innovations are transformational that may demand substantial departure from the past systems. Concerning with public service offered by Network Rail, the government role can be ascertained to be the most significant factor (Network Rail, 2013). It is in this context that government should bear greater responsibility and influence the public services offered by Network Rail through innovative policies. Usually, innovation is driven by multiple short-term, medium term and long-term factors. Concerning with the rail transport system and other public services of Network Rail, innovation can be associated with the need to respond effectively and efficiently to the new and the changing government as well as community expectations in a highly complex environment. It can firmly be argued in this regard that innovation concerning with Network Rail needs to be grounded on the holistic approach and customer-focussed approach towards service delivery. Simultaneously, coproduction process often provides ample scope for innovation in the area of public services (Network Rail, 2013; Osborne & Brown, 2012). Apparently, risk management can also be identified as a vital component in the course of innovation process with respect to Network Rail. It is required that the rail transport system executed by Network Rail should locate the potential consequences of the innovation process and its benefits. Unarguably, elimination of risk can ensure the best outcome from the implementation of innovative policy. Thus, an enhanced risk management process can be ascertained as the fundamental requirement in the innovation process for Network Rail in its rail transport system related concentrated areas (Network Rail, 2013; Hartley & et. al., 2008). Seminar Topic 2: Public Private Partnerships A well-integrated and sustainable public service system and transport system for both people and goods is considered to be the vital policy objectives for Network Rail and is perceived to be essential component for its future prosperity as well as the social welfare of the UK at large. Owing to its limitations in terms of resource obtainment and other legal constructs in the past, Network Rail was ascertained with a greater need for reforming the rail transportation system to seek the utmost benefit from the policy implemented. Hence, the need for Public-Private Partnership (PPP) was realised which would render efficiency in terms of resource availability and legal stature along with widening the scope for sustainable innovation. Numerous factors have adversely affected the ability of the state to provide necessary maintenance assistance for transportation infrastructure of Network Rail. Factors such as changing economic conditions and growing requirements for technologically advanced infrastructure had significantly urged a greater need for PPP for Network Rail. In general, the need for PPP in Network Rail can be firmly attributed with the dismal performance of public sector to meet its overall objective of social welfare in the context of rail transport system. It can be ascertained in this regard that PPP in Network Rail will facilitate in bridging the gap between the increasing transportation needs and the financial requirement of the organisation to effectively meet those requirements (Forrer & et. al., 2010). Another important factor emphasizing on PPP is that the private sector operations currently practiced by Network Rail exert significant discipline on functioning of the system which facilitates in maximising efficiency and availing the advantages arising from the available opportunities, but restricts development in terms of social-welfare due to increasing cost and profitability concerns. It is worth mentioning that PPP contributes towards the public sector to successfully access the skills and expertise of the private sector maintaining a balance of profit and social welfare guided by rigid norms. It is believed that investment, innovation, and skills that flow from private sectors will have continuous positive impact on delivering public infrastructure and services by Network Rail. The poor infrastructure often acts as constrain for the growth of an economy (Hodge & et. al., 2010). There lie many advantages for PPP in delivering effective services while it also owes few significant drawbacks for Network Rail. The pros and cons of PPP for Network Rail in the current situational circumstances are being critically represented below: Potential Benefits Value for Money: It can be stated that utilizing private sector skills and technology by Network Rail will contribute towards the delivery of projects and/or services in more effective manner which shall result in superior outcome for the same investment otherwise made by the state itself. PPP will also contribute towards faster and timely delivery of projects programmed (Cuthbert & Cuthbert, 2010). Improved Service Delivery: The operations of both sectors inconsistent with required expertise significantly contribute towards the enhancement of design, construction, management and maintenance in the organisational processes of Network Rail. Additionally, payments facilitated through PPP are likely to be closely linked with the performance where every individual are required to perform efficiently within the organisational context of Network Rail (Cuthbert & Cuthbert, 2010). Increased Investment: Additionally, PPP will facilitate Network Rail to implement more projects on frequent basis at a large scale with the benefits to the financial assistance derived from the private sector. The investment flow from the private sector shall also contribute towards additional budget for state to undertake various projects (Cuthbert & Cuthbert, 2010). Risk Transfer: PPP shall also provide opportunities for Network Rail to innovative solutions to develop its organisation sphere concerning the private sector with the availability of required resources and mitigation of cost associated risks. Additionally, it will also lead towards risk transfer to private sectors that may act as a shield for state concerning with certain specific projects which may again reduce unforeseen liabilities for the state (Cuthbert & Cuthbert, 2010). Potential Drawbacks Higher Consumer Price: PPP may have a significant influence on Network Rail with respect to its profit earning motive which in turn might reduce employee motivation to bring in innovation at every level of the organisation in pursuit to preserve customer satisfaction. Contextually, the market driven price for the services may contribute towards higher price for the services availed by the customers which would have been lower when delivered by the state alone (Colverson & Parera, 2012). Loss of Management Control: The inculcation of PPP in Network Rail may contribute towards reduction in the state influence over the management control which may significantly influence the ability of the state to decide upon the projects required (Colverson & Parera, 2012). Less Accountability and Transparency: PPP is often argued to contribute largely towards reducing transparency owing to the difficulties in accessing the information of private sector for Network Rail. At the same time, evaluation of project often becomes difficult and problematic as various data are spread over multiple sources but are seldom available for state scrutiny (Colverson & Parera, 2012). Higher Cost: It can also be affirmed that borrowing rates from private sector are usually higher for the state than from other sources. From a critical perspective, this particular concern may neutralize any savings that the Network Rail can save in the any subsequent phase (Colverson & Parera, 2012). Conclusion The case study of Network Rail apparently postulates the potential drawbacks of privatisation of public services. Concerning the various issues and implications related with public and private sector’s role in promoting public services such as in the rail transport system executed by Network Rail, a recently developed concept of co-production is emerging as an alternative solution to tackle these issues for the organisation. It can be stated in this regard that the engagement of users in rail transport system as Network Rail shall significantly promote innovation and effectiveness in the services offered. Co-production can further facilitate in seeking concrete solution for the various problems encountered by pubic through constant involvement of stakeholders in the delivery process of services. Furthermore, the notion of PPP has also been gaining radical popularity in promoting public service which owes numerous benefits and has few drawbacks as well with respect to the operations currently practiced by Network Rail. Correspondingly, it is believed that PPP will contribute in seeking larger financial assistance to Network Rail for implementing new and innovative projects. It is also expected that managerial skills derived from private sector shall facilitate effective management in the aftermath of such an initiative. Nonetheless, there has been certain fear regarding the private participation in promoting services in rail transport system for Network Rail. It has been estimated that such participation shall contribute towards increasing cost of the public services followed by higher cost of borrowing rates for the state in association with Network Rail. Despite the pros and cons associated with PPP, it has observed that benefits of PPP are more substantial and fruitful than its adverse implications on Network Rail. References Bovaird, T., 2007. Beyond Engagement and Participation: User and Community Coproduction of Public Services. Public Administration Review pp.846-860. Bovaird, T., 2012. We’re all in this together: User and community co-production of public outcomes. University of Birmingham, pp. 1-14. Cuthbert, M. & Cuthbert, J., 2010. The Royal Infirmary of Edinburgh: a case study on the workings of the Private Finance Initiative. Public Money & Management, Vol. 30, Iss. 6. Colverson, S. & Parera, O., 2012. Harnessing the Power of Public-Private Partnerships: The Role of Hybrid Financing Strategies in Sustainable Development. International Institute for Sustainable Development, pp. 1-56. Forrer, J. & et. al., 2010. Public–Private Partnerships and the Public Accountability Question. Public Administration Review, Vol. 70, Iss. 3, pp. 475–484. Hodge, G. A. & et. al., 2010. International Handbook on Public-Private Partnership. Edward Elgar Publishing. Hartley, J. & et. al., 2008. Managing to Improve Public Services. Cambridge University Press. Network Rail, 2013. Our Legal and Financial Structure. About Us. [Online] Available at: http://www.networkrail.co.uk/aspx/713.aspx [Accessed May 11, 2013]. Osborne, S. P. & Brown, K., 2012. Managing Change and Innovation in Public Service Organizations. Routledge. Reisman, D. A., 2005. Exchange and Authority: The Mixed Economy. American Review of Political Economy, Vol. 3, No. 2, pp. 1-16. Read More