Question

Public organizations, such as national, state, and local governments, authorities, school districts, and government agencies, and also firms and individuals in the private sector, are always in a post to make investment decisions. For these decision-making bodies, economic analysis is complicated by several factors that do not affect companies in the private sector. Write a discussion on, what are the factors (minimum of 3 factors / findings) that exist in public sectors that are not ordinarily found in privately financed and operated businesses, in which need to be considered in economic decision-making for the public sectors. Highlight all the challenges and differences of these decision-making factors between those public and private sectors.

Answer 1

Some factors that affect only public sector companies and not private sector are as follows -

• The public sector and goverment undrtakings are not fostered only by the profit motive but have to also think about the welfare of the citizens of the country.
• The public sector and goverment undertakings cannot follow the procedure of hire-and-fire for those employees who are underproductive as government jobs are secure, and this also prevents them from hiring new produtive talent.
• The government organisations have very complex decision making process, as it has to pass through different levels of the government administration, and this greatly reduces the efficiency of these organisations. Also, since there are a lot of people from different levels of the government who are involved in the decision making process and are not directly linked to the success or the profits of the organisation, there is a lot of bureaucracy, red-tapism and corruption involved.