Question

In the public sector, a chief executive needs to convey a sense of priorities to the departments and subunits and the central budget authorities, so energies are not wasted on issues not likely to gain legislative support. Discuss each of the following issues that may affect the CEO’s priorities. • Strategic Concerns • Surplus or Deficit • Tactical Concerns

Answer 1

All the mentioned concerns such as Strategic concern, surplus or deficit and tactical concern are important to the CEO of a public sector firm. Among which strategic concern is the most important concern which will affect a CEO’s priorities. Strategic concern is the most important concern because a public sector firm works on the basis of the strategic decisions of the government.

Surplus or deficit is the second priority concern among the given concerns. It is because a surplus may generate excess stock or unsold stock or inventory (stock). There will be a maintenance cost to holding inventory. In some industries, inventories may lead to fall in price. Both may lead the firm to experience loss. A rational CEO tries to maximise the companies’ profit. Thus he tries to produce up to the level consumers demand. A deficit may reduce the profit. Thus avoid a surplus or deficit is the second priority of a CEO.

In the case of an ordinary public sector unit, tactical concerns come to the third priority of the CEO because it deals with intra industry response to its competitors. But if the firm deals with matters with strategic importance such as defence or atomic energy, then tactical concern comes to the second priority.