The paper "Privatization Trend Issue" is a great example of marketing coursework. Privatization has been a major economic strategy since the 1980s. Governments from all over the world, both developed and developing countries, have been using this tactic to improve their countries financial rating. However, critics have argued that the method is not as straight forward as others deem it to be. Although privatization has been fruitful in many countries, the realization of its benefits and risks depends on the context in which it is applied. Privatization is defined as the concept whereby the government takes a state-owned enterprise passes its ownership or control to a private firm (Higgins, 1).
The enterprise could be a property, a public service or even a business. When this happens, the private firm assumes all the administrative responsibilities of that entity, however, the government could still regulate the usage of the same. In other corners, privatization refers to when a publicly-traded company has all its shares bought by one company or a small group of parties. When this happens, the bought company ceases to be traded on the stock exchange and the end name changes from ‘ limited’ to ‘ private limited’ .
Not all nations share the same mindset, some countries believe in the opposite of privatization, a practice known as nationalism (Goodman & Loveman, 1991). Nationalism happens when privately owned businesses are sold to the government to become public entities. In our case, however, we are dealing with the first scenario of government enterprises changing ownership. In countries like the UK, the government has sold most of its enterprises such as British Airways, coal and gas, electric company, water and many more (Riley, 2015).
It could be said that this move is one of the reasons why the UK has one of the strongest economies in the world. The private sector takes over these government monopolies and turns them into profitable endeavors. When a company gets privatized, the shareholders change from citizens to a few investors. Monopolies are broken up into businesses that are owned by several companies that can compete and increase customer experience. The privatization trend has its roots from the 1980s when Mrs Thatcher initialized it in the UK (Shleifer 4).
President Reagan of the US popularized the slogan “ Don’ t just stand there, undo something” (Goodman & Loveman, 1991). The two played a big role in making privatization an economic wave sweeping across the world when their nations found out that the size of their governments was getting too large and they had to minimize it to cut budget expenses. That decade of 1980s resulted in over $185 billion in the sale of state-owned enterprises. Coming to the end of the ’ 80s the trend has become so widespread that in 1990 alone, the total sale coming from privatization was $25 billion (Goodman & Loveman, 1991).
Out of this figure, the United Kingdom was the biggest winner with sales of $10 billion, this amount came from the sale of 12 regional electric companies. Germany didn’ t want to lag behind either, it made a special public trust agency with the name Treuhandanstalt. The duty of this agency was to sell off state-owned enterprises to private firms that meet its qualifications, By 1990, the agency had sold 3000 companies amassing $1.3 billion and had 5000 companies still remaining on offer to any private firm that fits the bill (Goodman & Loveman, 1991).
Russia and many European countries joined in on the privatization train too. Africa wasn’ t left behind either, Nigeria sold a significant portion of government holding to the private sector (doublegist. com 2015). However, not all countries carried out privatization using the same method.
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Goodman, John and Loveman. Gary, Does Privatization Serve the Public Interest? Havard Business Review, 1991. Web. 22nd November 2016. Retrieved from https://hbr.org/1991/11/does-privatization-serve-the-public-interest
Guriev, Sergei and Megginson. William, Privatization: What Have We Learned? 2006. Web. 22nd November 2016. Retrieved from https://siteresources.worldbank.org/INTDECABC2006/Resources/gurievmeggison.PDF
Higgins, Gordy. A Review of Privatization Definitions, Options, and Capabilities, 2000, Web. 22nd November 2016. Retrieved from http://leg.mt.gov/content/publications/committees/interim/1999_2000/business/defined.pdf
Pettinger, Tejvan. Advantages and problems of privatization. Economics Help, 2011. Web. 22nd November 2016. Retrieved from http://www.economicshelp.org/blog/501/economics/advantages-of-privatisation/
Sheshinski, Eytan and Calva, Luis. “Privatization and Its Benefits:Theory and Evidence” CESifo Economic Studies 49.3 (2003): 429-429. Web. 22nd November 2016. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.3522&rep=rep1&type=pdf
Shleifer, Andrei. Government Ownership and Privatization, 2013. Web. 22nd November 2016. Retrieved from http://scholar.harvard.edu/files/shleifer/files/ec10_2013_government_ownership_and_privatization.pdf
Varner, Benjamin. Privatization and Its Benefits:Theory and Evidence. Government Privatization History, Examples, and Issues, 2006. Web. 22nd November 2016. Retrieved from http://cgfa.ilga.gov/Upload/2006Gov_Privatization_Rprt.pdf
weownit.org. 5 reasons why privatization is bad for you. weownit.org, 2015. Web. 22nd November 2016. Retrieved from https://weownit.org.uk/privatisation