Friday, March 09, 2007

Exam Practice - Model Answer P.12





Name: Julian Walter
Exam Practice: Doing your business in public
Date: 09/03/07

1. Q.Explain what is meant by privatisation. (2)
A. Privatisation is the sale of public sector organizations to the private sector. An example of this would be the sale the National electricity company Electro Peru to Chilean private investors.
(ALWAYS GIVE EXAMPLES)

2.Q. In what sector of industry would you put railtrack?(2)

A. Railtrack belongs to the private sector, as in the text it says 'some experts arguing it should have remained under state control, which in other words means it used to belong to the public sector and was run by the government. (JUSTIFY YOUR ANSWERS, BACK UP WHAT YOU SAY, SHOW THE EXAMINER WHAT YOU UNDERSTAND)

3.Q. What are Public-Private Partnerships?
A. PPP's are partnerships between the government and one or more companies from the the private sector. They are set up inorder to add funding to expensive, generally national, projects. An example of this would be the construction of the Trans-American Interoceanica from Brazil to Peru, which is being built by the Peruvian government and Brazilian private roadbuilders. (ALWAYS GO THE EXTRA MILE IN ANSWERING YOUR QUESTIONS)

4.Q. Explain how a rail operator might attempt to add value to its products.
A. A rail operator might add value by looking to provide a more comfortable service, with better seats. They could offer free drinks or magazines for the customers to read. They might also want to provide high class food in the buffet car. It is important that the customer perceives that they are receiving value for money and that the people working within the company are providing value added services.

5.Q. What might the advantages and potential drawbacks of selling Royal Mail to the private sector?
A. If the Royal Mail is privatised then there will obviously be both advantages and disadvantages. I will begin the potential advantages first. Firstly there will be an incentive to make the company more efficient as the company will then be profit orientated. Investors will have to make it more efficient, so hopefully customers will receive their post more quickly. From a customers point of view, with the arrival of competition, prices should hopefully be brought down in price.
Drawbacks could include the removal of essential yet loss making services that were previoulsy arranged by the Rail Mail. As has happened in privatisation, the price of the service may actually increase. Shareholders interests will now become more important than before because they, the private investors, will be looking to get a return on their investment.
In conclusion there are many advantages and disadvantages but in my opinion if the Royal Mail is to progress with the current trend in global business then it would probably be a good idea to privatise as they will become more compeitive and might be in danger of being overtaken by more efficient companies such as DHL.

TRY AND GIVE A BALANCED ANSWER, ALWAYS COUNT THE NUMBER OF POINTS IN THE QUESTION.
A GOOD RULE OF THUMB IS THAT YOU SHOULD MENTION AT LEAST ONE PIECE OF INFORMATION PER TWO POINTS.
THIS SHOULD HELP YOU IN THE FUTURE

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