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Complete Strategic Practice Exercise #1. Your response should be at least 200 words. The 200 words does not include your name, course title, date, text that was copied for the book or restating the questions/assignment, etc.
Question
Read the Global Issue feature in this chapter on page 326. It lists six aspects of society that it proposes are better managed by not-for-profit organizations than by profit-making organizations. Do you agree with this list? Should some aspects be deleted from the list? Should other aspects be added?
Global Issue
Which is Best for Society: Business or Not-For-Profit?
Many nations throughout the world are attempting to privatize state-owned enterprises to balance their budgets. Privatization is (1) the selling of state owned enterprises to private individuals or corporations or (2) the hiring of a private business to provide services previously offered by a state agency. The British government, for example, sold British Airways, its state-owned airline to private investors. In the United States, many city governments now allow private companies to collect and dispose of trash – something that had previously been done by the city.
Problems can result, however, if privatization goes too far. For example, in converting from a communist-oriented, centrally managed economy to a more democratic, free-market economy, Eastern European countries are finding that profit-making business firms are unable to satisfy all of society’s needs. What used to be provided by the state free of charge (tax-supported) in Russia and other countries may now be provided only for the rich or not at all. The same problem is evident in the United States in the controversies over the provision of health care, retirement benefits, and private versus public education.
Some of the aspects of life that cannot easily be privatized and are often better managed by not-for-profit organizations are as follows:
* Religion
* Education
* Charities
* Clubs, interest groups, unions
* Health care
* Government
The privatization of state-owned business enterprises is likely to continue globally because most of these enterprises must expand internationally in order to survive in the increasing global environment. They cannot compete successfully if they are forced to follow inefficient, socially oriented policies and regulations (emphasizing employment over efficiency) rather than economically oriented, international practices (emphasizing efficiency over employment). The global trend toward privatization will probably continue until each country reaches the point where the efficiency of business is counterbalanced by the effectiveness of the not-for-profit sector of the economy. As political motives overcome economic ones, government will likely intervene in that decision.
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