10 Major Difference between Public Sector & Private Sector

10 Major Difference between Public Sector & Private Sector
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Following are the comparison between private and public sector. 10 important difference between private and public sector are given below.

Let us study the major difference between Public Sector Vs Private Sector in the form of a summery:

Serial No.	Private Sector	Public Sector
01	On the managerial level:  The managers of private organizations see conflict as a negative sign, because it indicates that some members of the organization do not believe that the results of the strategic action are positive.	On the Managerial level:  The managers in the public sector conflict in a strategic decision has a positive component, since it shows that different stakeholders are participating in the process, thereby ensuring that the final decision will represent their interests, or at least take them into account.
02	The manager of a private organization prefer to adopt the theory of rational choice, in order to maximise the company’s shareholders’ wishes (Mort, Weerawardena & Carnegie, 2003).	The ultimate goal of a public manager is to maximise the collective value.
03	On the Employees Level:  On the other hand, private sector employees place higher a value on the economic rewards they receive (de Graaf & van der Wal, 2008).	On the Employees Level:  public sector employees place higher a value on carrying out tasks that are of use to society compared with their counterparts in the private sector
04	Accounting: In the private sector, financial managers and accountants are bound by the Generally Accepted Accounting Principles, or GAAP, methodology for accounting. This is a set of practices, such as the double-entry accounting method, used to ensure financial accuracy and uniformity.	Accounting:  In the public sector, these methods may also be used, but it is not that unusual to deviate from them, as well. This is seen in areas such as budgeting where public sector financial managers are not necessarily bound by accrual accounting methods.
05	Profit: In the private sector, financial managers are generally motivated by profit and pushed to maintain a bottom line or a minimum level of profitability.	Profit: On the other end of the spectrum are the financial managers in the public sector who do not necessarily have a bottom line to maintain. Instead, they may be task-oriented or driven by some other motivating force endemic to the specific type of work the organization is focused on daily.
06	Context: The profit-driven financial manager in the private sector will generally have the leeway to get done what needs to be done in order to maintain the bottom line.	Context: With public sector financial managers, various constraints may prevent the manager from acting with a great deal of autonomy.
07	Decisions:  In private sector financial management, decisions are generally made from the top and are filtered down through the hierarchy of the business as the financial manager hands off the orders or directions to those below him on the company food chain.	Decisions: In public sector management, it is not so simple. Public sector financial managers often have to work with political constituencies and navigate between competing interest groups. Important financial decisions are often rendered by creating coalitions and support.
08	Effects of Competition: Private-sector employees face higher vulnerability to market forces, including wage levels according to fluctuating market conditions. They must remain competitive in terms of skills and job performance so they won't be replaced.	Effects of Competition: Government employees must meet performance standards, too; but, as noted, it's harder to get rid of them.
09	Job Security: Private sector jobs are generally less stable and often based on contract.	Job Security: Government employees enjoy more job security in two respects. First, government jobs are generally more stable than private-sector jobs unless a government employer cuts jobs due to serious economic problems. Second, government jobs are often permanent appointments;
10	Benefits: Their is no such plan about health insurance, dental insurance and vacations for the employes in private sector. Also the salary offered to employes in private sectors are also less as compared to public sector employes.	Benefits: Government employees enjoy excellent benefits, including health insurance, dental insurance, vacation time, sick leave and other income security benefits. Benefits make a position valuable even if the salary offered is lower than a private-sector salary. Government employees more often get retirement benefits from their employer,

Indifference Curve explaining the concept of consumer’s equilibrium

Indifference Curve explaining the concept of consumer’s equilibrium
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

How Indifference Curve is used in explaining the concept of consumer’s equilibrium?
Let us discuss them:

Equilibrium of the consumer:
In order to explain the consumer’s equilibrium with the help of indifference curves, we make the following assumptions.
 
Assumptions of the Indifference Curve:

• The consumer purchases two commodities x and y for which he has various combinations. His scale of preferences for the various combinations of these two goods does not change in the analysis.
• The consumer has a fixed amount of money.
• The prices of two goods x and y in the market are given and constant.
• The goods are substitute of each other and divisible.
• The consumer acts rationally.

Equilibrium of the consumer:
The consumer will be in equilibrium position where the price line or income line is tangent to the indifference curve.

Equilibrium of the consumer with the help of a Diagram:

In this diagram there are three indifference curves, IC1, IC2,IC3.
AB is the price line or income line. Now P is the point where the indifference curve IC2 is tangent to price line. This is consumer’s equilibrium point. Here he purchases OE of y commodity and OH of x commodity and getting maximum satisfaction.
No other point will yield maximum satisfaction. E.g. if consumer purchases at point T. at this point the consumer has to substitute PR amount of y commodity. To get RT amount of x commodity. But during this purchasing process he cannot go beyond AB line. so when he scarifies PR amount of ‘y’ he will get only “RS” of x commodity, so he will be a loser. Similarly indifference curve IC3 is beyond the reach of the consumer. So the consumer will be in equilibrium only at the point where IC2 is tangent to price line.

Introduction of Indifference Curve Approach

Introduction of Indifference Curve Approach
Reviewed by Hammad Naziron Apr 01 2013
Rating: 4

Indifference Curve:
 
Introduction of Indifference Curve:
The indifference curves approach was first introduced by Pareto and Later on it was developed by hicks and Allen. These economists are of the view that utility relates to the state of mind, so it is immeasurable cardinally. They based their theory on scale of preferences and the ordinal measurement of utility. According to these economists, a consumer simply ranks or orders his preferences.

Definition of Indifference Curve:
“An indifference curve is a locus of points or particular budgets or combinations of goods, each of which yields the same level of total utility, or to which the consumer is indifferent”.

Complexity of the Global Environment:

Complexity of the Global Environment:
Global strategic planning is more complex than such purely domestic planning.

There are at least five factors that contribute to this increase in complexity:

1. Global face multiple political, economic, legal, social and cultural environments as well as various rates of changes within each of them.
2. Interactions between the national and foreign environments are complex because of national sovereignty issues and widely differing economic and social conditions.
3. Geographic separation, cultural and national differences and variations in business practices all tend to make communication and control efforts between headquarters and the overseas affiliates difficult. This will also results in the Complexity of the Global Environment:
4. Global face extreme competition because of differences in industry structures.
5. Global are restricted i their selection of competitive strategies by various regional blocs and economic integrations.