HideShow resource information
View mindmap
  • privatisation
    • when governments sell public sector businesses to new owners in the private sector.
    • arguments for:
      • the new owners operate the business with profit as a main aim
        • this encourages them to run the business efficiently
      • competition may now be encouraged if the business is sold off to several different private owners.
        • this helps to increase efficiency and to keep prices low
      • governments are often short of money.
        • new owners may have additional capital to invest in improving the service offered by the business
      • important business decisions will now be made fore reasons of business efficiency - not by government popularity.
        • for instance, the government might subsidise a loss-making coal mine to protect miners' jobs.
          • a private mine owner would close the mine to use resources more efficiently and profitably elsewhere.
      • the sale of the business to private owners raises money for the government
    • arguments against:
      • as the new owners are interested mainly in profits, some services making losses may be closed down.
        • these might be very important for some people or areas, for example, closing a rural bus route or not delivering letters to isolated districts
      • workers' jobs could be lost as the new owners attempt to increase efficiency in order to raise profits.
      • the business might be sold off to one owner who would still be able to run it as a monopoly.
        • this could lead to higher prices for the customers
      • only a few-people - the new owners - will benefit from owning the business, whereas before privatisation the whole country could benefit from any profits made as it was owned by the government


No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Business environment resources »