The Issue of Privatization of Public Sector - Coursework Example

Privatization of Public Sector

With the increasing levels of globalization, economies across the world have become interconnected; many countries have become more liberalized, while the flow of information across the borders has improved tremendously. Initially, many governments used to hold key institutions and functions. However, the demand for high quality services has increased tremendously as people are now able to access information more easily. Furthermore, the increased flow of goods from one country to the other has threatened the existence of government-run companies, some of which are characterized by inefficiencies and poor management. This paper will therefore discuss privatization and its impact on the public manager.

Many issues affect public managers as they try to administer government and public affairs through an efficient and scientific manner. For instance, unlike in private sector whereby the effects of country’s politics is very minimal and has a little effect on the operations of the business, public organizations are directly affected by the political environment in the country. As a result, managers should ensure that they satisfy the interests of the political leaders. Furthermore, they should listen to their views and ensure that they align the operations of the organizations towards the interests of the government at large. Therefore, public managers are not able to make independent decisions. When making critical decisions that might affect the future of the business, they must seek approval from the political class. This is to prevent any backlash that might affect the implementation of these changes, an aspect that can affect the overall performance of the organization. However, many governments are privatizing their operations in order to enhance the level of efficiency and also deal with environments that require specific strategies. For instance, the US government had to privatize some of its operations in Iraq in order to prevent mass casualty of its soldiers. In an example, due to the risks associated in transporting supplies and guarding major institutions such as embassies, the government had to privatize these operations. However, a manager who was working for a public organization had to oversee the processes. However, he has to adjust and ensure that measures are put in place in order to minimize risks and improve the level of efficiency (Cameron & Chetail, 2013). Therefore, privatization of public institutions plays a significant in providing the managers with the freedom to make critical decisions without external influence. Instead, the managers focus on delivering high-quality products and services, aspect that improves the overall performance of the business.

Privatization has been in existence for decades. However, the main difference with today is that it is encroaching on all sectors of public administration. Furthermore, the governments are expecting the public organization to compete with private companies or else surrender the management of operations to other effective private businesses. For decades, the country has supported the idea that public companies are ideal in provision of quality services to the members of the public. Public subordinates were mandated with providing the country with essential services such as water, sewage treatment, and maintenance of roads and bridges. The government feared that leaving such critical services to private entities might lead to manipulation. In addition, the fact that private companies are profit oriented might make them to charge more in order to collect more revenues. However, over the years, this theory has been proven wrong with private companies offering efficient and low-priced services to the members of the public (Farazmand, 2001). Therefore, many governments across the world are opting to privatize the operations of different institutions in an attempt to improve service delivery. However, move is having a major impact on the managers who have to adjust in order to serve the interests of customers.

Proponents of privatization argue that governments cannot continue to operate some of the service sectors. Service delivery has become a critical aspect towards the satisfaction of the tastes and preferences of the customers. However, public organization does not focus on the interests of the consumers. Instead, they concentrate on satisfying the interests of the political class. For decades, these companies have been associated with immense corruption deal involving the political leaders. Issues related with hiring of close associates or even family members of the political leaders have characterized many public firms over the years. Currently, the market has become dynamic with new challenges arising each day. Many multinational companies are expanding their operations to different markets across the world. Furthermore, the efficient flow of information which has been facilitated by the entry of the internet and social media has continued to pile pressure on many governments to privatize various operations in order for the customers to enjoy better services. Initially, many governments were not willing to privatize many firms because of the revenue they used to get. However, changes in the consumer behaviour have made it hard for the companies to keep up with the current trends in the market. Furthermore, competition is leading to innovation. Furthermore, it is enabling the consumers to enjoy better prices and high quality products and services (Calabrese, 2008). On the other hand, some of the businesses are opting to expand the operations to different markets across the world. This is playing a significant role in expanding the source of government revenues. Analysts argue that the government is able to raise more money when it allows competition. This is unlike when it controls and owns major organizations, an aspect that leads to inefficiency resulting from complacency.

Public managers focus on bureaucracy and the mechanics involved in running the government. Therefore, they give more attention on budgeting, statistics, ethical evaluation, planning program evaluation, and other critical techniques that attempts to run matrix of governance. However, privatization changes this aspect by shifting the attention of the managers towards customer relationship management. Currently, multinational companies have expanded their operations to different markets across the world. As a result, they have enough funds to stage a strong competition against other competitors in the market. As a result, they use money collected as a barrier of entry for other interested investors in the market. Therefore, privatization changes the interests of the managers from addressing issues related to governance of the country and the needs of the members of the public to increasing the profit margin of the business and expanding its operations in order to reduce the risks and uncertainties associated with focusing on a single market. Therefore, unlike in public administration whereby the manager relies on research conducted by other government institutions, running a private organization requires the establishment of an internal research centre (Roland, 2008). As a result, managers should establish an effective communication system that aims at passing critical information regarding the changes in the tastes and preferences of the target market to the top managers. This is to enable them to make well informed decisions in order not to lose the customers who are loyal to organization’s products and services.

The form of privatization dictates the impact the process has on the managers. Complete privatization entails the outright sale of government organization to the private sector. Besides selling the assets, the government also transfers all responsibilities of ownership to the private sector. There are different ways in which the government run companies and assets have been privatized. These include through selling of shares to private investors. This has been the most common method that the governments have been using to privatize the operations of public companies. The reason is that private investors are mainly focused towards making profit. As a result, they are able to put up the necessary checks and balances to ensure that they improve the level of efficiency in the business. This aims at reducing the costs of operations within the organization. Once the government decides to privatize the organization, the manager is forced to change his focus towards the achieving of strict goals within very specific deadlines. As a result, he must restrategize by developing a close working relationship. The reason is that employees have become a critical component towards the success of any business. The reason is that this is the group that interacts directly with the customers. Therefore, the managers must develop a strong working relationship with the rest of the subordinates. Majority of them are able to achieve this aspect by implementing an open office policy. This policy enables the employees to raise their grievances and report them directly to the top managers. This offers the managers with an ideal opportunity to deal with these issues, an aspect that boosts the morale of the employees.

Privatization of operations has a major impact on public managers. This strategy entails turning the managerial and operational responsibilities of a public firm to private sector firm. In many cases, this type of privatization is common to organization that deals with sport and concert events. These are areas that require high levels of efficiency. Therefore, previous managers are forced to shift their attention towards streamlining the sector in order to turn it around. This is through focusing on reducing the cost of operations. This can be done by reducing the number of employees and instead shifting focus towards the modern technologies. This is unlike in public organization which focuses on reducing the level of unemployment through employing as many employees as possible. Although in this case the manager can be answerable to the government officials, they have more freedom to make critical decisions regarding the future of the organization (Calabrese, 2008). For instance, they can opt to change the previous strategies in order to maximize the organizational returns.

Contracting out is another form of privatization that has a major impact on the public manager. In some cases, the government is forced to contract private firms to produce designated products. The reason is that a government firm is unable to meet the increasing demand for specific products. For instance, even with the existence of a public firm mandated with collecting waste, the government can opt to contract a private firm in order to reach more people. This aspect can have a major impact on the public managers who are put under intense pressure to match the working ethics and speed of a private firm. However, majority of the private companies might have diversified their sources of income. Furthermore, the subordinates working in these companies might have worked in other parts of the country or the world (Roland, 2008). Therefore, they might have enough experience that enables them to achieve the set goals with ease. Therefore, privatization might force the public managers to pile more pressure on the employees in order to achieve better results. However, implementing this strategy kills the morale of the employees, an aspect that can lead to a high turnover rate within the organization.

Government can privatize operations within a firm through franchising. This entails awarding exclusive production rights to perform within a certain geographical location to a private firm by a government sector. The private firm can collect fees on behalf of the government. This strategy is mainly used in collecting electricity, gas, and water fees. A manager who was working for the government has to adjust in order to improve the performance of a company. For instance, he should be ready to face stiff competition from other companies which are willing to spend a fortune in order to improve their operations and meet the needs of the customers. Such managers should be willing to learn new strategies of ensuring that the company remains relevant (Calabrese, 2008). This can be achieved by marketing the company in order to increase brand value. The strategy is important in increasing brand value. Furthermore, it would be critical to ensure that the company penetrates new markets and attracts the loyalty of the customers towards its products and services.

Privatization increases the number of incentives to public managers. Proponents of privatization argue that government firms have to incentives of holding down the production costs. However, private producers that contract the governments to provide products and services have more at stake. This acts as critical incentives that encourage the managers to put more effort in order to achieve more success. This is through effective management of the scarce resources (Calabrese, 2008). This is to ensure that all sectors within the organization receive the correct share of resources. Furthermore, the managers are able to put up the necessary checks and balances to prevent the embezzlement of the organizational funds.

In order for private companies to remain competitive in the market, it must keep on innovating with the aim of retaining the current target market while attracting new customers at the same time. Government-owned organizations are under no pressure to improve the operations. The reason is that they are protected either through tariffs or other measures that reduce the level of competition. Furthermore, they mainly get their resources from the government budget rather than the profits generated from the sale of products or services. However, after privatization of the firms, the public managers must shift their focus towards using scarce resources to maximize the profits and improve the products and services that are offered to the customers. These managers should outlined an effective strategy starting from hiring of the employees in order to ensure that subordinates that are hired meet the necessary parameters and they can be able to spearhead the growth and development of the business (Roland, 2008). Currently, the level of competition for raw talents has increased tremendously. Multinational companies such as Apple Inc have even come up with a new strategy of collaborating with institutions of higher learning in order to identify the upcoming talents. They support such students, train them, and later incorporate them as part of its workforce. This explains the reason why the company has been recording immense growth over the years irrespective of the increasing level of competition in the local and international market.

Privatization plays a significant role in enabling the previous government-owned organizations to expand their operations to new markets across the world. Currently, there are new and emerging markets across the world. However, state corporations are limited within the boundaries. Furthermore, they are inefficient, an aspect that makes it hard for them to meet the interests of customers located in different parts of the world. Moreover, they are constantly affected by the political environment in the country. However, privatizations give corporations the power to expand to new markets. However, this comes with a major challenge to the manager because each market is unique (Calabrese, 2008). As a result, it requires different strategies in order to penetrate, position the products or services strategically in the market, and attract the loyalty of the customers towards the products and services. Therefore, the public managers must change their focus towards the global market. They must set up the necessary mechanisms that will enable them to understanding the varying interests of various markets. The reason is that each market has a unique culture that must be taken into consideration while designing a marketing campaign. Moreover, in some markers, customers prefer to be associated with companies that have a local outlook. In such cases, managers of privatized organization must learn to handle such challenges by employing the local subordinates who understand the interests of the customers (Fox, 2002). This is critical in ensuring that the company is able to identify any major factor that affect the consumption behaviour of the target market. Such a move enables the managers to introduce the necessary changes to avoid any fallout that might force the customers to shift towards the competitors’ products and services.

Public corporations are unable to compete more effectively due to the time taken to make a decision. Public managers have to consult other government agencies, officials, and in some cases, they have to absorb public opinion. However, privatization reduces time taken to make critical decisions regarding the future of the company. As a result, the organization is able to adjust its operations more easily in order to meet the new changes in the market. Furthermore, such organizations are able to adjust their structure in order to improve the level of efficiency. Therefore, public managers are forced to deal with global issues that might affect the operations of the business. For instance, with the integration of the economies, the level of political risk that faces the company has increased tremendously. The reason is that an economic challenge in one country has an impact on the other (Roland, 2008). Therefore, unlike previously when the firm had government protection, the managers must learn how to deal and navigate through these issues in order to improve the competitive advantage of the organization.

The management of a public-owned business is considered to be easier due to the fact that government has an auditing system that ensures that money is well spent within the organization. However, these critical roles and responsibilities are transferred to the managers once the organization is privatized. For instance, the manager has to oversee the operations within the organization. In addition, they have to set the guiding principles that aim at improving the employees’ output within an organization. Therefore, they have to take control an delegate authority and responsibility in order to focus mainly on the major internal and external issues that affect the performance of the business in the market. The reason is that after privatization, the goals and objectives of the organization changes tremendously. The private company focuses on the expansion of the operations in order to meet the interests of more customers. However, new trends such as the issue of diversification hamper the operations of the public managers while trying to manage private firms. While managing a public firm, the employees mainly emanates from within the boundaries. However, after privatization of the company, the managers must ensure that the workforce is a reflection of the whole population. With the current movement of people across the borders, it has become important to keep on conducting market research with the aim of understanding the needs of the market. Initially, companies used to conduct market research on their own. However, after expanding the operations beyond borders, it has become very hard to reach all corners of the market (Farazmand, 2001). However, the internet and social media have become an important source of information. Many private companies are using the social media platforms to collect feedbacks and advertise their products and services. Furthermore, organizations are being forced to employ subordinates emanating from different cultural, religious, and social backgrounds. This is important in enabling the companies to deal with varying challenges that keep on arising in the market. However, public managers must learn how to keep these employees motivated. In addition, they should be conversant with ways of ensuring that the employees work as a single unit towards the success of the business. The reason is that such a group can suffer from constant conflicts because each employee looks at a challenge in a different dimension, an aspect that can divide the group.

Privatization allows the state officials to focus on more pressing issues that affect the country rather than spending much of the time managing personnel and maintaining equipments within the public-owned organization. This lowers the pressure on the public managers who turns the attention towards streamlining the operations of the corporation in order to achieve absolute efficiency. The reason is that government officials constantly interfere with critical decision such as hiring and firing of the employees within the organization. However, after privatization, the managers are able to set up an effective incentive system that aims at motivating the employees. In addition, they are able to get the required authority to promote employees based on their merit rather than following external recommendations by political with special interests (Parker, 2002). This is important in ensuring that the best performing employees are awarded effectively by following a set parameter to measure individual and team performance.

Public managers focus on short term goals and objectives. When managing a public firm, managers are forced to focus on achieving the set goals before the next election. The reason is that each government has its agenda and they might differ with those of the previous administrations. In some cases, the government may not be willing to invest in improving the infrastructure that will help the firm in the long term because it might not be concerned with the projects that will run after the election. However, after elections, the public managers are forced to readjust and expand their focus to the long-term strategies that will streamline the future of the business. Currently, the technology sector is changing tremendously. Therefore, in order for the organization to remain competitive, the business should invest heavily on the modern technology (Kemp, 2007). Therefore, the privatization of government-owned business plays a critical role in enabling the firms to compete effectively with the rest of the business in the market. Furthermore, the customers are able to enjoy low-priced products and services because of the improved production levels emanating from heavy investment in modern machines.

Public managers are put under a lot of pressure from shareholders after the privatization of a previously government-owned corporation. The interests of the shareholders are to make profits. Unlike the government which is rarely interested in the day-to-day running of the organizations, the shareholders keep on evaluating the work of a manager in order to ensure that it is in accordance with their interests. They are not willing to tolerate any manager that is complacent. Therefore, the manager is always aware that results matters most if they are to retain their positions within an organization. Therefore, they must set up strategies that will ensure that the organization records growth. This is shifting the attention of every stakeholder towards customer satisfaction. The reason is that customer relationship management has become an important concept towards the success of any business in the market. This has been necessitated by the increased bargaining power of the clients (Megginson, 2005). This is because the customers have a variety of options to select from. As a result, the public managers working in a privatized firm must ensure that they understand the varying interests of the customers and produce products and services that are customized according to the specific needs of the customers.

Privatization attracts foreign investment. Every company in the market is trying to expand its operations in order to improve its competitive position in the market. However, the expansion program requires heavy funding. Initially, public managers were used to government funding. Therefore, they did not have to put more effort to secure funding. However, after the privatization of the company, the managers should develop a comprehensive plan to convince the investors that the company will have better returns in the future (Hermann & Flecker, 2012). The reason is that investors are not willing to put their money in a company that is likely to make losses. Therefore, public managers should prepare effectively to develop the necessary mechanisms that will improve the performance of the business in a competitive market in order to attract the interests of the potential investors.

Privatization exposes the corporation to various risks and uncertainties. In a competitive market, the decisions made are uncertain because a change in the current trends in the market can necessitate a change in the operations within the organization. Therefore, public managers must shift from the previous rigid state to being flexible. They should develop effective means of gathering critical information. For instance, they should develop a close relationship with the customers. The reason is that these are people who interact directly with the customers. As a result, they are able to identify any changes in the tastes and preferences of the customers. Furthermore, the customers can raise important ideas that can spearhead the growth of the business. Furthermore, unlike in public firm where innovation was not a critical aspect, the managers must embark on vigorous training of the employees in order to equip them with the necessary skills that will enable them to interact effectively with the target market. The reason is that subordinates are representatives of the organization. Therefore, their position and behaviour in the market portrays the position of the company. Any hitches might affect the reputation of the company in the market. On the other hand, unlike in public corporations, the value of the brand is significant to the private companies. Therefore, managers should adjust themselves and start outlining strategies of improving the reputation of the company in the market. For instance, they can introduce corporate social responsibility. This is a concept that has changed in meaning over the years. Initially, the companies used the concept to deal with social problems that are affecting the society. However, in the past three decades, private companies are engaging in corporate social responsibility with the aim of improving the reputation of their brands in the market. The reason is that customers want to be associated with products and services from companies that are concerned about the social issues affecting the society at large (Calabrese, 2008). Furthermore, CSR offers the business with an ideal platform to conduct a market research regarding the consumption behaviour of the customers. Therefore, public managers should be ready to an extra mile in understanding the changing needs of the customers.

In conclusion, the level of competition in the market is forcing the government to privatize state-owned firms. This is to expand its revenue base and improve service delivery. However, the move has a major impact on the public managers who are also forced to change their focus and management strategies in order to remain relevant in a competitive market. Therefore, managers in a privatized firm must focus on the interests of all stakeholders. Furthermore, they must be ready to spearhead the growth and development of the business. This is critical in satisfying the interests of the shareholders. Moreover, they must invest heavily in improving the level of efficiency and quality of the products and services being offered to the target market.