Management of Business: Private and Public Sector

Private Sector Organizations

Recap:

• Covered Partnership, Sole Trader, Private Company, Franchise

Joint Venture

• Definition: A business jointly owned by two or more parties for an economic activity.
  • Not a merger; companies remain independent.
  • Formed for a specific purpose, usually short-term.
• Examples:
  • 2001: Price Smart and Restaurant of Jamaica
  • 2008: PSN and Kenson Production Service in Trinidad
  • Toyota and Subaru collaboration in 2005
  • Hulu: Joint venture of Disney, News Corp, NBC Universal to compete with Netflix.
• Reasons for Joint Ventures:
  • Fast expansion using another's resources.
  • Diversification and access to technology.
  • Sharing costs and risks.
• Advantages:
  • Shared assets reduce production costs.
  • Access to resources and specialization.
  • Easily dissolved after completion.
• Disadvantages:
  • Disagreements between parties.
  • Cultural and strategic differences.

Public Sector Organizations

Overview

• Mixed economies have private and public sectors.
• Private Sector: Controlled by individuals/groups for profit.
• Public Sector: Controlled by government/state for public benefit.

Public Corporations

• Owned and controlled by government.
• Aim to provide public services, not profits.
• Funded by government through taxes.
• Examples: Utilities, Transportation, Telecommunications.
• Features:
  • Funding mainly from grants.
  • Managed by government-appointed directors.
  • Aim to create employment, provide necessary services, keep prices low.

Nationalized Industries

• Previously private, now government-controlled.
• Reasons for nationalization:
  • Save essential services.
  • Prevent monopolies.
  • Retain profits within the country.

Advantages of Public Sector:

• Lower prices, employment opportunities, provide necessary services.

Disadvantages:

• Inefficiencies, political interference, monopolies.

Statutory Boards

• Controlled by state with partially government-appointed boards.
• Responsible for specific areas (e.g., tourism, water, agriculture).

Charities and NGOs

Charities

• Aim: Assist and help the less fortunate.
• Rely on donations, hosting events for funding.
• Examples: Red Cross, Food for the Poor.
• Must be registered and comply with local laws.

NGOs

• Non-profit, independent of government.
• Focus: Humanitarian aid, advocacy.

Privatization

• Opposite of nationalization; selling state-owned businesses to private sector.
• Methods:
  • Direct sale, deregulation, contracting services.
• Reasons for Privatization:
  • Generate income, improve efficiency, reduce government burden.
• Advantages:
  • Potential for improved service and efficiency.
• Disadvantages:
  • Can lead to monopolies, environmental concerns.

Conclusion

• Covered objectives of module 1: Economic sectors and legal structures.
• Next focus: Business objectives.