The purpose of the public sector and private sector
Private sector | Public sector | |
Types of organizations | For-profit businesses | Government |
Ownership | Individuals, shareholders | The public |
Types of workers | Employees and independent contractors | Civil servants |
General strategic goal | competitiveness | Mission effectiveness |
General financial goals | Profit; growth; market share | Cost reduction; efficiency |
values | Innovation; creativity; goodwill; recognition | Accountability to the public; integrity; fairness |
Desired outcome stakeholders | Customer satisfaction Stockholders; owners; market | Customer satisfaction Taxpayers; inspectors; legislators |
Budget priorities defined by | Customer demand | Leadership; legislators; planners |
Justification for secrecy | Protection of intellectual capital; proprietary knowledge | National security |
Key success factors | Growth rate; earnings; market share; uniqueness; advanced technology | Best management practices; sameness; economies of scale; standardized technology |
The main stakeholders of an organization and their objectives
The impact of fiscal policies and monetary policies on businesses
Fiscal Policies | Monetary policies | |
Responsible | Set by the Government | Set by Central Banks |
Tool | Tax and government spending | Interest rates and money supply |
Effect | Budget deficit | Cost of borrowing/mortgages |
Distribution | It depends on which taxes you raise | Higher interest rates hit homeowners but benefit savers |
Exchange rate | No effect on the exchange rate | Higher interest rates cause appreciation |
Side effect | Impacts government budget and national debt | Impacts on the exchange rate and housing/property market |
Politics | Strongly political | Largely independent |
Liquidity trap | Fiscal policy advised in very deep recessions | Cutting in interest rates may not work in a liquidity trap |
How resources allocate in a Capitalist, Mixed, and Socialist economy
Capitalists | Socialist | Mixed |
Private ownership and control | Government ownership and control | Combination of Capitalistic and socialistic economy |
The Predominance of the Private sector | The Predominance of the Public sector | Co-existence of private and public sector |
The Decisive role of market | The Decisive role of planning | The Decisive role of the market and supportive part of planning |
Profit-induced Businesses | Production Guided by social benefit | Profit-induced private business |
Economic decisions to be taken by Price-mechanism or Market-mechanism | Financial decisions to be taken by the Planning Committee on behalf of the Government | Economic decisions (price decisions) to be taken both by the government as well as market |
Motive-Consumer is Sovereign/King. | Welfare Promotion is the Primary motive. | Protects individual freedom |
The impact of supply and demand on the market
The market moves to a new equilibrium due to changes in supply or demand that change equilibrium prices and quantity.
- Increasing market demand = Increasing product prices and rising production quantities.
- Decreasing market demand = Decreasing product prices and decreasing production quantities.
Changes in demand occur due to price fluctuations in goods or services and move along the demand curve. Changes in angles are changes needed, and to some extent, are required for all prices. Changes in the market can be changed by changes in population, preferred income, expectations, and costs of alternative products.
- Increased product supply = Decreased product prices and increased quantity.
- Decreased product supply = Increased product prices and reduced quantity.
Changes in supply volume can be caused by price fluctuations in goods or services and move along the supply curve. The shift in supply represents a change in a curve and refers to a change in all prices when more or less collection is made.
Michael Porter’s 5 Forces
Competitive Rivalry | The Threat of New Entry | Buyer Power | Supplier Power | Threat of Substitution |
– Switching costs – Barriers to exist – Brand loyalty – Quality differences – Number of competitors – Diversity of competitors – Industry growth | -Cumulative experience -Access to distribution channels -Brand loyalty -Switching costs -Barriers to entry -Capital requirements -Barriers to entry -Government policies | – Price sensitivity – Number of customers – Differences between competitors – Buyer’s ability to substitute – Size of each customer order – Switching costs – Buyer’s information ability | – Focal company’s ability to substitute – Number and size of suppliers – Uniqueness of each supplier’s product | – Relative price performance of substitute – Buyer propensity to substitute – Number of substitute products available – Switching costs – Perceived level of product differentiation |
The effect of the market decision on business policies
Product | Price | Place | Promotion |
– Brand – Services – Variety – Features – Warranties – Quality – Packaging – Sizes – Design | – Allowance – Discounts – Credit Terms – List Price – Payment – Period | – Locations – Channels – Transport – Coverage – Inventory – Assortments | – Direct Marketing – Public Relations – Sales Promotion – Advertising |
The impact of different cultures on the businesses
All organizations develop and maintain their own culture and have a strong influence on their members. Organizational culture is created according to what is allowed and appropriate, and what is not permitted and inappropriate. That means it refers to a system of values, assumptions, and beliefs shared with everyone in the organization. It deals with not only details related to work performance, but also overall behavioural styles and dress codes within the organization.
The value of the international market to UK business over the last 70 years
Britain’s economy accounts for most of its imports and exports in the gross domestic product (GDP) over the past 160 years, except for two major historical events, the Great Depression and World War II.
Figure 3: Importance of trade for the UK over the last 200 years
The global factors on UK business
The impact of EU policies on UK business
References
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