Q:

What are the advantages and disadvantages of privatization?

A:

Quick Answer

Privatization is advantageous because it improves efficiency and profitability, prevents political interference and increases competition. According to The Guardian, privatization is disadvantageous because it can create private monopolies and a focus on profits rather than public interest in the delivery of essential services, such as healthcare.

Continue Reading
What are the advantages and disadvantages of privatization?
Credit: Simon Battensby Photographer's Choice Getty Images

Full Answer

Privatization prevents the bureaucracy that is associated with state-run industries. It also promotes specialization, leading to production of high-quality goods. Additionally, privatization eliminates corruption because managers of private companies are more accountable to shareholders, according to Wikipedia. Furthermore, private companies raise investment capital more easily than state-run companies because the government must consider several areas of the economy in its budgetary allocation. Wikipedia adds that privatization is advantageous because state-owned companies are run for political goals instead of economic objectives. It also reduces the rate of taxation and creates more jobs. BBC notes that privatization within the health sector allows consumers to get value for their money. According to The Guardian, the public is not guaranteed of the benefits of privatization because there is limited oversight or control over private companies. In addition, privatization can lead to the abandoning of social obligations, such as water supply to areas where these services are not profitable. Private firms may also provide inferior services because they are driven by their financial objectives, according to Wikipedia. The Guardian reveals that privatization can lead to the loss of assets to foreign companies, leading to unhealthy competition.

Learn more about Business Resources

Related Questions

  • Q:

    What should a business plan for a goat farm contain?

    A:

    Some of the most important things to include in a business plan for a goat farm include the vision, objectives, skills, budget, financing, marketing and competition. A business plan is quite important as it helps in planning and organizing of resources, as stated by Forbes.

    Full Answer >
    Filed Under:
  • Q:

    How can you create a business plan for a tanning salon?

    A:

    Create a business plan for a tanning salon by outlining the company's executive summary, determining its specific clientele such as young women or professional male models, and creating a detailed analysis of the competition. The plan also needs to include a clear business model, goals for growth over the next five years, and exact marketing and sales strategies.

    Full Answer >
    Filed Under:
  • Q:

    What is an effective bakery business plan?

    A:

    According to Inc., an effective bakery business plan includes a market study with data on the bakery’s targeted customer base, data on product sales in the market area, information about competitors, sales predictions and how the bakery plans to stand out from the competition. An effective bakery business plan should also include physical concepts with information, such as space and equipment required for the bakery.

    Full Answer >
    Filed Under:
  • Q:

    What are the four types of competition in business?

    A:

    The four types of competition in the field of business are pure competition, imperfect competition, oligopoly and monopoly. There is also a variation called monopolistic competition.

    Full Answer >
    Filed Under:

Explore