Privatization of Public Utilities Essay

Privatization of Public Utilities Essay A National Government’s Decision to privatize It’s Public Utilities Introduction There has been a prevalent political agreement on improving-benefit effect of private governance in the last decades. More than $1 trillion revenues have been generated for the government on the sale of government-owned firms to private owners. Public executives nowadays evaluate privatization as a suitable tool to implement a rapid growth of promising product innovations, facilitate financial economy development and promote more efficient production technologies. However, substantial figures of firms across the world are still owned by government. (Aghion and Tirole, 1994; Ahmed and Ashutosh, 2008). Having mentioned the privatization benefits, why are there general impediments in the decision process from the government, prioritizing to privatize some firms over the others to private sectors? In answering this research question, certain firm’s political and financial-economy factors were investigated in the selection of companies for privatization. As supported by literature on private firm decision to go public, financial characteristics of firms that can probably influence the decision to privatize were recognized (Ansolabehere and James, 2007). Arguably, the sale of government owned firms can not only confide in financial-economy factors but also on political settlement and costs. However, Dixit and Londregan (1996) argued that privatization may be seen as a negative development by the public on the opinion of undemocratic shift of property owned by the government to private investors. This can result in the governing party losing its votes in such region. The position of political patronage in the decision to privatize was considered, such as; hiring decisions of government-owned firms can be influenced by politicians to favour supporters. Further to the evaluation of political and financial-economy effect on privatization, research was conducted on India Government. This country was used as a case study because it has a huge political competition among its political parties with multiparty democracy (Dinc and Gupta, 2011). This research contributes to the political and finance-economy literature by investigating privatization effects suggest that selection of companies for privatization are done randomly, but the result presented from Dinc and Gupta (2011) point out that privatization decision is probably endogenous to characteristics of the firm. The literature is structured as follows; Section one describes the political system in Indian along with its privatization. Section two, discusses the political and financial-economy factors that are possible to affect government decision to privatize its public utilities. While section three, presents the conclusion of this research. 1. Privatization and Indian Political System 1.1. Firms Owned by Government In Indian post-independence era, firms owned by government were justified by anxiety that projects that involve large investment and time-consuming gestation periods will not be awarded to private sectors. There was rapid nationalization of firms across all sectors between 1960 and 1991, which boost the formation of gross capital in firms owned by the Federal Government to 40% of the entire gross capital establishment in the market economy (Ministry of Finance, 1996). According to Ministry of Finance (2004), the wages of government companies’ workers are higher compare to private companies’ staff and overstaffed usually occur in government companies. For instance, federal government firms employed over 10% workers from various structured sector in 2003, and their wages were averagely double that of private sector (Panagariya, 2008). This huge difference in their wage recommends why government workers vigorously disagree with government decision to privatization. 1.2. Political System India has a legislative system where representatives are directly elected from 543 single member constituencies dispersed across 35 states, while the national government was formed by alliance of parties or political party that wins most of the constituencies. About 450 political parties participated in five elections to the federal government, held since the commencement of privatization program in 1991. These elections are 1991, 1996, 1998, 1999 and 2004. It is important to recognize the establishment of alliance among national political parties, before the commencement of election so as to inflate their probability of acquiring the majority (Dinc and Gupta, 2011). The Congress Party initiated the economic reforms that won the 1991 elections with the support of its allies and remain in as the ruling party until the 1996 election. After 1996 election, there were successive short-lived governments that later collapsed as a result of support deficiency from affiliated members (Dinc and Gupta, 2011). 1.3. Privatization Process In 1991, Indian created sweeping economic reforms which comprises of privatization and deregulations, as a reaction to balance payment crisis. 50 companies out of 280 nonfinancial companies that are owned by the Federal Government were privatized between 1991 and 2006. The decision to privatized list of companies was takes at the Cabinet level where every government produce its own list. The Congress government commenced the privatization in 1991, and later continued in 1999 by the BJP administration after a brief interruption by the successive government (Dinc and Gupta, 2011). Comparatively, privatization is not famously practiced in India unlike United Kingdom (UK) where almost all government-owned firms are been privatized such as British Gas, Transport for London (TFL), British Airport Authority. Since Congress and BJP parties have engaged in privatization, neither any of them as an intellectual obligation to privatization, as both parties have campaigned against each other using anti-privatization rhetoric (Dinc and Gupta, 2011). For instance, the Congress government were attacked by the BJP conservatives on privatization plans (Reuters News, 1992; cited in Dinc and Gupta, 2011), and eventually collide with the labour unions to protest privatisation (Reuters News, 1993; cited in Dinc and Gupta, 2011). In 2004, the Congress Party also campaigned against the BJP’s reform agenda, based on the platform of limited privatization, the Congress party won the election (Dinc and Gupta, 2011). 2. The Role of Political and Financial-Economy Factors in Privatization Decision 2.1. Financial Factors: Firm Size and Profitably Adverse effect could exist in the quality of companies that decide to publicized, if the issuers have more information than the investors about the company’s value (Leland and Pyle, 1977). According to Chemmanur and Fulghieri (1999), they argued that there is probability for adverse selection cost to be greater for both smaller and younger companies. This is backed by the result of Pagano et al. (1998), who suggested that smaller companies are not likely to be privatised. In the context of privatization, the methods of sales in a cross-country sample of privatised companies were compared together by Megginson et al., (2004). From his analysis, he finds that compared to private capital markets, big companies have the possibility to be privatized over shares sales to the public. 2.2. Political Factors Theoretically, Persson and Guido (2002) suggested that is likely for the politicians to target public funds to important constituencies with swing voters to succeed in elections. Experimentally, Dahlberg and Johansson (2002) shows that allowance allocation in Sweden is intense in constituencies with more swing voters, and research shows that French companies that are politically associated create additional jobs in politically aggressive constituencies (Bertrand et al., 2007). Shleifer and Robert (1994) argued that interference in the operation of companies by politicians is a major cause of inefficiency in companies owned by the government. Conclusion Since most privatizing governments sell companies, owned by the government over time or not at all, we investigate if political and financial-economy factors as well as political objectives are likely to affect government decision to privatized its public utilities. Using Indian as an exemplification, government owned companies which comprises of companies that remain fully government owned and privatized companies were investigated. Although privatization advantages like efficiency developments are distributed across the community, the costs are probably to be distinctively intense among a small group. Therefore, the voter’s support could be declined for the governing party in constituencies where the company is located. Similarly, the public may have negative opinion on privatization as a diverging transfer to public utilities or assets to private investors. The adverse reaction on outcome of elections in that constituency will be increased if the ruling party encounter a close race with the other political parties. Finally, the research suggests that selection of companies for privatization is not by chance. Accepting political contest as a tool for privatization decision, the sale of companies owned by the government was found as a facilitator to significance development in efficiency as well as profitability of these companies. References Aghion, P., Tirole, J., 1994. The management of innovation. Quarterly Journal of Economics 109, 1185–1209. Ahmed, S. and Ashutosh, V., 2008, Battles half won: The political economy of India’s growth and economic policy since independence, World Bank Working paper No. 15. Ansolabehere, S., and James S. J., 2007, Party control of state government and the distribution of public expenditures, Scandinavian Journal of Economics 108, 547– 569. BÂ ¨os, D., 1991. Privatization: A Theoretical Treatment. Oxford University Press, Oxford. Chemmanur, T. and Fulghieri, P., 1999, A theory of the going public decision, Review of Financial Studies 12, 249–279. Department of Disinvestment, 2007. Evolution of Disinvestment Policy in India . Government of India. Available at: http://www.divest.nic.in/evolutionp.htm.> Dinc, S. and Gupta, N., 2011. The Decision to Privatize: Finance and Politics. The Journal of Finance, LXVI(1), pp 241-269. Dixit, A. and Londregan, J,. 1996, The determinants of success of special interests in redistributive politics, Journal of Politics 58, 1132–1155. Gupta, Nandini, 2005, Partial privatization and firm performance, Journal of Finance 60, 987–1015. Leland, H. and David P., 1977, Informational asymmetries, financial structure, and financial intermediation, Journal of Finance 32, 371–387. Ministry of Finance, Government of India, 1996, Economic Survey of India (Government of India, New Delhi, India). Ministry of Finance, Government of India, 2004, Economic Survey of India (Government of India, New Delhi, India). Pagano, M., Fabio, P. and Luigi, Z., 1998, Why do companies go public? An empirical analysis, Journal of Finance 53, 27–64. Panagariya, A., 2008, India: An Emerging Giant (Oxford University Press, New York). Persson, T. and Guido T., 2002, Political Economics: Explaining Economic Policy (MIT Press, Cambridge). Persson, T. and Guido, T., 2002, Political Economics: Explaining Economic Policy (MIT Press, Cambridge). Shapiro, K. and Willig, R., 1990. Economic rationales for the scope of privatization. In: Suleiman, E.N.,Waterbury, J. (Eds.), The Political Economy of Public Sector Reform and Privatization. Westview Press, Boulder, CO. Shleifer, A. and Robert, V., 1994, Politicians and firms, Quarterly Journal of Economics. 109, 995–1025. A National Government’s Decision to Privatize its Public UtilitiesPage 1

IKEA’s Global Strategy Essay

Swedish company IKEA was the world’s largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian design. The company operated in 55 countries with a workforce of 76,000 (the company referred to its workforce as its ‘co-workers’). IKEA offered nearly 12,000 items to the home furnishings market worldwide. It sold a wide range of products including furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries across Europe, North America, Southeast Asia, Middle East and Australia. IKEA enjoyed high brand equity. | | In 2003, Manhattan US-based Interbrand, a marketing research and consultancy firm, valued the ‘IKEA’ brand at $6.92 billion and ranked IKEA 43rd on its list of the top 100 most valuable global brands, ahead of Nestle, Harley-Davidson, and Apple.3 | Analysts attributed IKEA’s success to its skill in combining good product design and superior quality with an affordable price. IKEA’s low-pricing strategy was aimed at young people. For several decades, IKEA had looked for international markets, which were culturally as close as possible to the Scandinavian market. The basic assumption behind IKEA’s global strategy was ‘one-design-suits-all.’ Anders Dahlvig, the CEO of IKEA, had once said, â€Å"Whether we are in China, Russia, Manhattan, or London, people buy the same things. We don’t adapt to local markets.†| IKEA had, in fact, been quite successful with its ‘one-design-suits-all’ global expansion strategy in many markets. However, industry experts were doubtful as to whether this strategy would translate well into new, culturally diverse and riskier markets. They felt that a higher degree of localization was essential for companies like IKEA to be successful in diverse markets. The Asian markets, together with the Middle East and Australia, accounted for only 4% of IKEA’s total revenues in 2004. The company was keen to increase this share in the future. Upon entry into the far eastern markets, IKEA faced a number of challenges in terms of varied cultural, demographic and market specific needs.| | IKEA opened its first store in China in 1998.  Although the company’s global strategy had worked well in the past in most of the markets it had entered, it quickly learnt that success in the Chinese market required a different strategy in the areas of Marketing and HR. | IKEA also had to alter two of the most important aspects of its time-tested and proven global strategy when it came to China; while elsewhere in the world, IKEA had always located its stores in less expensive areas and sold its furniture on the do-it-yourself (DIY) principle, these elements had to be changed in China. IKEA claimed that it had decentralized most of its functions incl uding HR and stores management in China, but despite this, there was criticism that IKEA was far too bureaucratic with many of its operations being globally controlled and systematized. Commenting on this, Ian Duffy, IKEA’s China retail manager commented, â€Å"We need time to learn and change in the (Chinese) market to become a success.†| IKEA should have many innovations to adapt to the China market. â€Å"At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.†(Our vision and business idea, http://www.ikea.com/ms/en_US/about_ikea/the_ikea_way/our_business_idea/index.html) It seems not achieved in China market yet. Firstly, IKEA should have greater cooperation with local suppliers to get more competitive advantage of cost leadership. Secondly, according to the specialty of China market, IKEA should have some more adjustment to satisfy so many China picky customers. Thirdly, IKEA should intensify propaganda work to let more customers understand and accommodate the IKEA model. As an outcomer, there is a long way to be the winner in this huge and potential market.After a long time to research the China market, IKEA already understand the China market more than before. With accelerating the speed of expand, the success of IKEA in China market is only the problem of time.

Essay on The Impact of Teen Pregnancy on the American People

The Impact of Teen Pregnancy on the American People Although the rate of teenage pregnancy in the United States has been on an overall decline, it remains the highest in the entire world. Teenage pregnancy is obviously still a problem in todays American society with roughly 97 per 1000 women aged 15-19, which rounds up to be roughly one million teenagers, becoming pregnant each year. Interestingly enough, 78% of these pregnancies are unintended. The births of these children are not only a problem for the parents and the families of the babies, but it is a huge problem and burden upon American Taxpayers. Taxpayers pay roughly 16.5 billion dollars every year to welfare and Medicaid programs to aid these young parents who are†¦show more content†¦As stated before, teenage pregnancy poses a sizeable financial burden to society. Between public assistance, child health care, foster care, and involvement with the criminal justice system, teenage mothers cost society an estimated $7 billion annually. Obviously, the minority issue is a problem with one in every four black teenage girls becoming pregnant by the time they are 18 years of age. Nearly a third of these ladies will have a second child by the time they turn 20 years of age. African-Americans and Hispanics have switched roles within the past few years, in which case Hispanics now have the highest teenage birth rate in America. Teenage mothers often decide to keep their children simply because their mothers, who were probably also teenage mothers, decided to keep them. These teenage mothers are often missing the guidance, love, and discipline that most children grow up with. Teenage mothers often have a sense of responsibility since they were often left at home to fend for themselves while their mother was at work, in which case, single mothers often have more than one job to try to support their family financially. The key to preventing teenage pregnancy lies within the education. It is very important to start teaching children at a very young age the cons and pros of sex, especially since the age that people are initiating intercourse is astonishing low. 7.2% of students nationwide report having sex before the age of 13, 42.5% by gradeShow MoreRelatedAbstinence-Only Education Is Harmful to American Teens Essay1410 Words   |  6 Pagesform of education has been a hot and debatable topic among many Americans. The original reason for sex education classes was to reduce problems such as sexually transmitted illnesses and prostitution. In recent years, abstinence has become the focus of sex education curriculum. Abstinence means refraining from sex completely. Although, it is the only one-hundred percent way to prevent sexually transmitted diseases and unwanted pregnancies, abstinence-only instruction should not be the only form ofRead MoreThe Argument Of Teen Pregnancy813 Words   |  4 P agesFor some time now, teen pregnancies have become an intense and emotional debate in America. The argument of teen pregnancy has been disputed in households across America, discussed on social media sites like Facebook, debated by many of our most powerful political leaders, and analyzed by researchers. Furthermore, pregnant teens are being judged regularly by political groups/movements, the ultra-religious groups, and ordinary Americans. The highly publicized debate has even compelled networks suchRead MoreTeen Pregnancy Rates By Jacqueline Sedgwick s Article, American Adolescents And Emergency Contraceptive Pill Access843 Words   |  4 PagesOne major problem in America’s society today is teen pregnancy rates. In fact, â€Å"teen sexual activity, pregnancy, and childbearing are associated with substantial social, economic, and health costs† (Sedgwick). However, this problem is not one without a solution. The rise of teen pregnancy rates can be prevented and reve rsed by providing better access to birth control for teens, eliminating the negative connotation that accompanies abstinence, and implementing more efficient sex education in publicRead MoreThe Causes Of Adolescent Pregnancy Essay1352 Words   |  6 Pagessome of the causes of adolescent pregnancy and some of the programs put into place to help decrease the number of pregnant teenagers and teens with STD’s. â€Å"Teenager is defined as between 13 and 19 years old.† (Merriam Webster, 2016) â€Å"Pregnancy is defined as the condition of a woman or female animal that is going to have a baby or babies.† (Merriam Webster, 2016) Teen pregnancy in the United States is still an epidemic. The number of babies delivered by teen pregnancies in 2014 was 249,078. That isRead MoreTeen Pregnancy Essay1667 Words   |  7 PagesTeenage pregnancy has long been acknowledged as an important health, social and economic problem in the United States, one that creates hardships for women and families and threatens the health and well-being of women and their infants. Unintended pregnancies span across age, race and religion, with a specific negative impact among the teenage population. According to the Center for Disease Control (CDC, 2016) In 2015, a total of 229,715 babies were born to women aged 15–19 years, for a birth rateRead MoreUnintended Pregnancy : An American Epidemic Essay1280 Words   |  6 PagesUnintended Pregnancy: An American Epidemic This year in America, over one million teens will become pregnant. More than 80% of these pregnancies will be unintended (North Carolina PRAMS 2009). Unintended pregnancy is commonly defined as â€Å"a pregnancy that is reported to have been either unwanted (that is, the pregnancy occurred when no children, or no more children, were desired) or mistimed (that is, the pregnancy occurred earlier than desired)† (CDC 2015). Though some teen pregnancies are intentionalRead MoreTeen Pregnancy Essay1121 Words   |  5 Pages5/6 11/20/2017 Teen Pregnancy The fearless of all parents who have teenagers is pregnancy. Nowadays, teen pregnancy is a serious problem. Teenage have a lack of skills to handle a pregnancy. So that impact strongly on the future of a young woman. Teen pregnancy is associated with negative consequences for adolescents for three reasons: lack of education, medical complication, uncertainty about the future, and financial difficulties. First, the main causes of teenage pregnancy are the lack of educationRead MoreReality Shows : Helping Or Hurting Teenage Girls?1370 Words   |  6 Pages  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  While teenage pregnancy has been on the rise in America since the 1950’s, researchers have been trying to look for an ideal solution that will help solve the problem by declining teenage birth rates. Perhaps there is a potential solution after all. What could this solution possibly be? Well, it might be as simple as the reality shows â€Å"16 and Pregnant† and â€Å"Teen Mom† on the MTV network. Ever since airing in 2009, the shows â€Å"16 and Pregnant† and â€Å"Teen Mom† have made a positive impact on teenage girlsRead MoreTeen Pregnancy Should Be Pregnant Before The Age Of Twenty1504 Words   |  7 Pagesthe highest teen birth rate in the world, every year the United States experiences 610,000 teen pregnancies (Bleakly 2006). The figures show that t hree in ten adolescent girls will become pregnant before the age of twenty. People ages 15-24 represent 25 eighteen 70 percent of United States females, and 62 percent of males have had sex. About 3.2 million adolescent females are infected with the most common STI’s, such as chlamydia and gonorrhea (Bleakly 2006). The likelihood of teens having sex increasesRead MoreEssay on Teenage Pregnancy and Prevention1320 Words   |  6 Pagescare and support teenage births. Although teen pregnancy has declined in the past, the United States is still number one out of all industrialized countries of teen pregnancies. Therefore, implementing an in depth sex education class covering parenting in schools will allow teens to fully understand he consequences of having protected or unprotected sex. All children deserve love and care from their parents. The United States has a higher rate of teen pregnancy than other countries because one is not

Rhetorical Analysis Of O Connor s `` A Good Man Is Hard...

A Good Man is Hard to Find and the Use of Foreshadowing The religious theme of achieving salvation is brought full circle in Flannery O’Connor’s, â€Å"A Good Man is Hard to Find†, by the use of foreshadowing, with elements such as the town of Toomsboro, Georgia, passing a graveyard and the main character dressing as if she were attending a funeral. Although these elements may not be recognized the first time that the story is read, if one goes back over the story, there is a foreboding feeling as these things appear. These incidents reveal hints that tell of an ominous ending to come on the dirt road. The importance of the grandmother may not be evident as one reads the short story and she may be dismissed as just an annoyance, but as one reads further, it becomes evident that she is the main character. O’Connor effectively uses foreshadowing during the story to help keep the reader captivated while each element helps to build suspense. As the family is driving along, the grandmother awakens from a nap and recalls â€Å"an old plantation that she had visited in this neighborhood once when she was a young lady† (189). This recollection happens while the family is driving through the town of Toomsboro, GA. The grandmother is extremely manipulative and selfish and coaxes the family into visiting the old plantation by lying to them with the possibility of finding hidden treasure. The name of the town is only a slight indication of the terrible tragedy that is yet to come. It is noShow MoreRelatedRhetorical Analysis Of O Connor s A Good Man Is Hard And Find 1245 Words   |  5 PagesAdria Corral English 1302 MWF 8:00 A.M. Religion and Morality In â€Å"A Good Man is Hard to Find†, Flannery O’Connor uses grotesque and flawed characters to reflect her own faith on the Roman Catholic Church. Set in the rural South during the 1950s, O’Connor takes readers on a journey from a satiric family comedy to a brutal cold blooded murder. An analysis of O’Connor’s use of religious symbolism and foreshadowing through characters and setting will be conducted in order to better understand her viewsRead MoreThe Five Dysfunctions of a Team a Leadership Fable46009 Words   |  185 Pages01_960756_ffirs_16.qxd 1/13/06 8:57 AM Page iii The Five Dysfunctions of aTeam A L E A D E R S H I P FA B L E Patrick Lencioni 01_960756_ffirs_16.qxd 1/13/06 8:57 AM Page ii 01_960756_ffirs_16.qxd 1/13/06 8:57 AM Page i Also by Patrick Lencioni Leadership Fables The Five Temptations of a CEO The Four Obsessions of an Extraordinary Executive Death by Meeting Silos, Politics, and Turf Wars Field Guide Overcoming the Five Dysfunctions of a Team