Running Privatization Privatization-An analysis Privatization is a process by which a public sector organization run by the government is taken over by a private entrepreneur or a group, or the ownership of an organization or a business or an agency is transferred from public sector to private sector (Chowdary, 2006). The present essay is intended to analyze the benefits and the processes involved in privatization.
There are three methods of privatization
1. Share issue privatization: In this process shares of the organization is sold at stock market
2. Asset sale privatization: Here the entire firm is sold by auctioning
3. Voucher privatization: Share of the ownership is sold to all citizens of the country at a very low prize.
Of these three the first one namely, share issue privatization is the most commonly used method of privatization.
There are many benefits for privatization. The major benfit is the importance it gives to customer. When the monopoly is with the government, the customer is given least importance and the service provided is not satisfactory. But privatization increases the quality of services to the customer and thus resulted in greater customer satisfaction, although the price for the services has increased. Another advantage of privatization is the change in attitude of the government employees. They started to behave in a cordial manner to the customer and began to treat the customer as a respectful entity. Complaints regarding the service have tremendously reduced in all the sectors, which have undergone privatization in India (Dwivedi, 2007).
Another important advantage of the privatization is the increase in competition or a free market competition. This would ensure higher quality of products, timely delivery of the products, reduce costs over a period of time, no red tape delaying, less corruption, more choices for the customer to choose from etc. When the entire monopoly of a business is with the government it is not possible to measure or compare its efficiency. The government is not bothered about the profit it makes and also the losses. But a private owner would be keenly interested in profits and would make necessary changes in the organization to maximize the profits thus resulting in better performance and specialization.
British telecom is one of the most important sectors, which was privatized towards the last of last century, more precisely in 1982. Privatization resulted in a change in the organizational structure, which gives more focus on specific market needs and the different sectors of the market. Now it is almost 20 years and privatization has resulted in tremendous improvement of the enterprise. The managers who resisted privatization later became the advocates of privatization mainly because of the greater benefits they enjoyed in a private sector. The share value increased more than six times. The number of skilled labors was reduced, without any existing staff, thus increasing the profit of the company. Political intervention in each and every aspect was considerably reduced. The company now leads in the supply of converged network services (The historical development of BT, 2009).
Thus it could be seen that privatization has resulted in greater benefits to customers as well as those who are within the organization. It has resulted in the improvement of quality and quantity of products and services. British Telecom is a good example of the benefit or the merit of privatization.
Chowdhury, F. L. (2006). Corrupt Bureaucracy and Privatisation of Tax Enforcement, Pathak Samabesh, Dhaka.
Dwivedi, K. (2007) Privatization and its benefits [online] Available at: http://www.merinews.com/catFull.jsparticleID=124950 Accessed on 10th June 2009.
The historical development of BT (2009) [online] Available at: http://www.btplc.com/Thegroup/BTsHistory/History.htm Accessed on 10th June 2009.