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Company Privatization

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1. Why don't government-run organizations don't worry too much is merit raises, but prefer to hold down wages?

2. What is purchasing power parity, and why should managers or international companies be concerned about it?

3. What common problem does the use of GNI per capita and population density values present?

4. a. What is the capitalist, free enterprise ideal?
b. What is the actual situation in capitalist countries?

5. What are advantages of submitting contract disputes to arbitration instead of to litigation in courts?

about 500 words with references

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Company Privatization; Economic and Socioeconomic Forces; Political Forces:

1. Why don't government-run organizations don't worry too much is merit raises, but prefer to hold down wages?
Government run organization don't worry too much about merit raises because government run organizations have different objectives than private companies For instance, the objective of the government enterprise might be to provide public welfare. In such a case the organization is typically more interested in keeping costs low. Since wages form fixed costs for such organizations, these organizations prefer to keep down wages. In a private company, the firm is interested in motivating its employees so that the company remains competitive and profitable. Instead the government-run organization has varied objectives like promoting industrial development, provide utilities, prevent monopolies, and extraction of natural resources. The organizations are required to keep costs low.
2. What is purchasing power parity, and why should managers or international companies be concerned about it?
The purchasing power parity is a theory based on the law of one price. If there are no transaction costs, ...

Solution Summary

Company Privatization is discussed in great detail in this solution.

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Case Study: Privatization, New Staff Policies, Older Staff

This case concerns potential discrimination of older staff. The company set new policies after the government privatized it and those policies would seem to be unfair and unequal. New employees who are graduates or non graduates have the opportunity to train into positions faster and with faster grade increases and salary increases. Those working for the company before the change, are stuck in the older system of grade and salary increases. For older staff, movement to other departments, divisions, or locations does not change this. Their experience and knowledge is also used to train the new hires under the new system. This is a conflict between management and older staff. It can potentially lead to other conflicts as well.

Prepare a presentation discussing laws and policies, problems and conflict, the "Developee" program (a four year contract between the company and its new employees), arguments for changing the policy and how managers and employees may feel in this case. Is there a solution of alternatives?

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