Introduction:We are assigned to do research on public and private sectors by taking thefollowing points. In addition to that we have to compare and contrast eachcomponents on public and private sectors.Outsourcing1. Insourcing2. Supplier Selection3.
Cost Management4. Ethics5. Law6. Pricing7. Supplier Relations Outsourcing Outsourcing is “an agreement in which one companycontracts-out a part of their existing internal activity to another company.
Publicsector: A popular example of public-sector outsourcing iseducation. The empirical evidence on public-sector outsourcing of educationservices is quite positive: competition can lead to higher-quality educationand more efficient use of resources. This finding has been demonstrated indiverse settings. Privatesector: The effects of private provision of schooling oneducational outcomes have been studied for Chile, for the creation ofautonomous grant-maintained schools in the UK, and for the effect ofprivate-school competition on public-sector schools in Milwaukee in the US.
Metropolitan areas with more choice among public schools have been found tohave more productive public schools, which reduces demand for privateschooling. A voucher system introduced in Sweden in 1992 paid the entire costof attending private or “independent” schools, thus introducing competitioninto school choice. To minimize the possibility of adverse effects onpublic-sector schools, student selection could not be based on ability or socio-economicbackground, but only on such factors as proximity to the school and position ona waiting list.
Before the reform, just 1% of children attended privateschools; by 2012, 25.6% of students attended private or independent secondaryschools, and 12.6% attended private or independent primary schools. In linewith previous studies, analysis shows that the increase in the share of independentschools led to an increase in educational achievement at the end of compulsoryschooling and raised the probability of students going to university.
Severalrobustness checks made possible by the richness of the data confirm that thereare no confounding effects of differential grade inflation and no omitted variables,such as a correlation between characteristics of a certain municipality and theprobability of having a higher or lower share of independent schools. Increasedcompetition might lead to cost minimization, but it could also increase thecosts per student for schools losing students. However, the productivityanalysis showed no evidence of increased costs per student, indicating that thepositive effect of the reform on performance came from the increasedproductivity induced by competition. Private sector maximizes its profit byminimizing fixed costs while public sector can maximize its capacitiesproviding public services and benefits, to which citizens have the right, byexpanding availability of the services and benefits and their value. What ismore, both sectors use the model of outsourcing with a view to increasing valueadded to the services aimed at final consumer. Support of particular functionssuch as application processing development and contact making significantly increasesquality of the services. InsourcingInsourcing isthe commencement of performing a business function that could be contracted outinternally. Insourcing is widely used in production to reduce costs of taxes, labor and transportation.
Insourcing is also defined as bringing a third party outsourcerto work inside a company’s facility. For example, an IT outsourcing provider may be hired to service acompany’s IT department while working inside the company’s facilities. Inaddition to contracting an entire team of workers from an outsourcing provider,outside experts are sometimes hired as consultants and the internal staffthereafter implements their recommendations. It may also refer to bringingin foreign nationals to do jobs at lower wages. Public Sector: Insourcingalso includes a company assigning a project, be it services, R ormanufacturing, to a subsidiary or to another company that is within the samecountry of the company’s location; this is also referred to as”Outsourcing”. However, the term Outsourcing usually refers to aproject that was being performed in-house but now will be performed by anothercompany; either within or outside the company’s country. Whereas, Insourcingcan be any project that is required by the company to meet its needs; theproject is not necessarily being performed in-house.
Insourcing also includesthe “reshoring” of projects when a company brings home projects that areperformed in another country and now will be performed in the company’scountry; either inside or outside the company.Private Sector: During 2012 the US manufacturing tide began turning. Twolead articles in The Atlantic, Dec. 2012, explain why.Rising third-world wages, recognition that many off-shoring costs were largeand hidden, rapid consumer product innovation and shrinking design/manufactureto market times, reduced manufacturing costs flowing from integrating skilledworkers into the product design teams (dramatically cutting assembly times andcomplexity), increasing overseas fuel and transportation costs, falling energycosts in the US, increasing US labor productivity, and union flexibility.
Thelist is long and growing. Supplier Selection:Supplier selection is the process by which firmsidentify, evaluate, and contract with suppliers. The supplier selection processdeploys a tremendous amount of a firm’s financial resources. In return, firmsexpect significant benefits from contracting with suppliers offering highvalue.PublicSector: Sollish and Semanik (2006) mentioned that thesuppliers are essential for the organization to provide the needed resources inorder to achieve satisfactory results. Once the suppliers are chosen to be a partof well-managed supply chain, it will have a lasting effect on the competitivenessof the whole supply chain (Choi and Hartley, 1996).
Sollish and Semanik (2010)further pointed out that the supply risk management is a complicated business activityand it is a fundamental factor in supplier selection. In addition, anappropriate supplier selection must be conducted systematically by using themost objective criteria that the company is able to develop. According to Choiand Hartley (1996) selecting the supplier based on the potential for along-term relationship has a high rate which means it is very important for thefirm.
Furthermore, developing long-term and close supplier relationship are nowcritical for procurement decisions. Moreover, concerning the relationshipbetween the supplier and the buyer, the supplier’s main goal is to reach thedesired returns with maximized chance of being selected. While the buyer’s maingoal is to find a proper supplier selection process that can reach the rightinformation in the right details to be able to choose between the competingsuppliers (Seshadri, 2005). However, Handfield, et al. (2009) argued that thereis no certain ways for supplier selection and according to that, theorganizations can use a variety of many different methods. Moreover, the levelof the needed effort for the supplier selection depends on the importanceOf the required goods or service both listed andnon-listed companies have more latitude to use a customized sourcing processthat suits their industry and their organization.
They are not bound by therequirement to spend a given budget in a defined financial year and aretherefore free to schedule their buying process to suit business cycles.PrivateSector: Private companies wishing to be seen as ethical andhonest adopt what is accepted internationally as best practice. One area wherethey may not achieve this fully is in the providing details of evaluationcriteria and weightings to prospective bidders.
This is standard practice ingovernment and generally regarded as the fairest and most transparent way toaward contracts. Private companies are often reluctant to disclose theirweightings in advance. Selecting a list of bidders to be involved in the tenderprocess is not subject to any limitations so private companies can limit whothey send their documents to as they see fit. They are also not bound topublicly publish details to whom the contract was awarded or even to formallyadvise the unsuccessful bidders. Managing and completing their tendering process inless time than governments is really achievable when they are not bound bytight rules. Price negotiation between the sourcing company and short-listedbidders is normal practice which is limited by certain protocols in government. PrivateSector: the public sector is also averse to the use of costdata or the type of financial tools used in the private sector.
in truth, it is oftenmore difficult to quantify results in the public sector than in the privatesector.it is harder, for example, to quantify the benefits of long termoutcomes of school programs than it is to measure increased sales related to aprivate sector project. EthicsPublic Sector: Ethics in the publicsector is a broad topic that is usually considered a branch of politicalethics. In the public sector, ethics addresses the fundamental premise of apublic administrator’s duty as a “steward” to the public. In otherwords, it is the moral justification and consideration for decisions and actionsmade during the completion of daily duties when working to provide the generalservices of government and nonprofit organizations. Ethics is defined as, amongothers, the entirety of rules of proper moral conduct corresponding to theideology of a particular society or organization (Eduard). Public sector ethicsis a broad topic because values and morals vary between cultures. Despite thedifferences in ethical values, there is a growing common ground of what isconsidered good conduct and correct conduct with ethics.
1 Ethics are anaccountability standard by which the public will scrutinize the work beingconducted by the members of these organizations. The question of ethics emergesin the public sector on account of its subordinate character. Decisions are based upon ethical principles, which arethe perception of what the general public would view as correct. Ensuring theethical behavior in the public sector requires a permanent reflection on thedecisions taken and their impact from a moral point of view on citizens. Havingsuch a distinction ensures that public administrators are not acting on aninternal set of ethical principles without first questioning whether thoseprinciples would hold to public scrutiny. It also has placed an additional burdenupon public administrators regarding the conduct of their personal lives.
Public sector ethics is an attempt to create a more open atmosphere withingovernmental operations. The public sector is the part of an economy in whichgoods and services are produced and/or (re)distributed by government agencies.Examples are state educational systems and unemployment insurance. Civilservants working for government entities are public sector employees, whereasthose employed by private employers not affiliated with government are privatesector employees. PrivateSector: Sometimes the private sector works in coordinationwith the public sector. By partnering with the private sector througharrangements which leverage governmental assets and resources, opportunitiesare provided for the privates sector to participate in the development,financing, ownership and operation of a public facility or service. Forexample, a public/private partnership could be an arrangement whereby acontractor or third party develops and operates a system which is beneficial toa government agency and others and charges the cost of the service to users. LawPrivateSector: Private law is that part of a civil law legal systemwhich is part of the jus commune that involves relationships betweenindividuals, such as the law of contracts or torts1 (as it is called in thecommon law), and the law of obligations (as it is called in civil legalsystems).
It is to be distinguished from public law, which deals withrelationships between both natural and artificial persons (i.e., organizations)and the state, including regulatory statutes, penal law and other law thataffects the public order.
In general terms, private law involves interactionsbetween private citizens, whereas public law involves interrelations betweenthe state and the general population Pricing:PublicSector: The pricing in private and publicenterprise differs primarily on the supply side. In the long run, privateenterprises must cover total costs and provide an adequate return necessary toattract venture capital. In contrast, extra-commercial considerations mayinfluence pricing in public enterprises.
They may incur losses in the public interest underexplicit directives from the government.A number of theories of pricing in publicenterprises have been put forward. Most important of these are: (1) marginalcost of production theory; (2) no profit, no loss theory; (3) average cost ofproduction theory; (4) theory of making profits.
All these theories suffer froma number of weaknesses and none of them taken individually is a satisfactoryguide for determining the prices of the products of public enterprises.Private Sector: On carbon pricing, private sectorshows the way Especially in carbon-intensive sectors, such as oiland gas and electric utilities, firms are anticipating what they view as theinevitable policy action: a federal carbon tax or cap-and-trade system.Companies like Nexen and TransAlta are using “carbon shadow pricing” in theirstrategic planning and project finance to help guide decision-making oncapital-intensive projects such as power plants or upgrading refiningfacilities.Federal action to design a simple andcost-effective policy that sends clear price signals to all Canadian firms andhouseholds is long overdue. The further the private sector gets ahead of thegovernment on this issue, the less credible the political argument thatCanadians don’t really support a sensible climate change policy.Before proceeding, an important myth needs to beslain.
Too often we hear the claim that climate change policies need not imposea cost on economic growth. This is not so. Any sensible economic modelling thathas been done on this issue shows that even the most efficient policies withteeth would slow down the growth rate of our gross domestic product (althoughgrowth would continue). SupplierrelationsPublic Sector: The public sector is faced with agrowing and diverse range of independent providers of public services.Traditional procurement frequently assumes an arm’s length approach, wherebyservices are purchased and managed through atightly specified service contract. But many public services arethere to address messy problems – services that are intimatelyinvolved in people’s lives, such as mental health, problem families, housingand long term unemployment.
This complexity requires a more agile andflexible approach to service delivery, based on the development of longterm partnerships, or Supplier Relationship Management (SRM).Toyota is famedfor its tightly knit group of suppliers and its long-term, collaborativeapproach to supplier relations, or keiretsu. Itoperates a system of shared values and work philosophy across a tightly knitsupplier network, an approach that has been adopted by many other organizations,with varying degrees of success. What are the key characteristics of thisapproach and what modifications need to be made for it to succeed in the publicsector. Private Sector: The adversarialand partnership view, Kraljic (1983) and Bensaou (2000) stressed that no singleapproach to relationship management is inherently superior, successful supplychain management requires the efficient management of a portfolio ofrelationships. Bensaou (2000) even goes further with his analysis saying thatevery company, when deciding which Mandiyambira 309 relationship style toadopt, should consider three factors: the product exchanged and its technology,the competitive conditions in the upstream market, and the capabilities of thesuppliers available.
In this regard Webster?s (1992) notes that each companyneeds to assess each of their suppliers and decide if a supply alliance wouldbe appropriate or not. Smart and Harrison (2003) cites that the best purchasingstrategy depends on the circumstances, such that a competitive strategy ofplaying suppliers against one another in one situation will achieve the lowestprice, whereas another situation calls for a collaborative strategy thatemphasizes partnership relations to guarantee the same outcome. According toDwyer et al. (1987) the buyer-seller relationship portfolio is situated on theaxis between two extremes, namely, discrete transaction and verticalintegration, such that the strength of a relation-ship depends on environmentaleffects and competitive market. Dwyer et al.
(1987) further notes that supplyalliances, today seem to be the best way to do business, they are not suitablefor every company and its market place. An article by Zineldin and Philipson(2007) provides a research of marketing practices in the contemporaryenvironment which was done in 1997 by Brodie et al. (1997) in the University ofAuckland in New Zealand.
The results did not support the concept of a total”paradigm shift” that is the movement away from adversarial approach tocollaborations with suppliers. Instead, the findings in several companiesconfirmed that the transaction marketing is still relevant and currently usedwith some types of relationship marketing. Brodie et al. (1997) quoted inZineldin and Philipson (2007), concluded that the importance of transactionalmarketing should be recognized and estimated, their study’s results contradictthe trend of academics and practitioners of the so-called relationshipmarketing “paradigm shift”. ContrastingOutsourcing:Public:Incompetent and overstaffed.
Lots of public servants on good pay, counting downthe days to an early and very prosperous retirement on a gold platedpension. Private:Incompetent and understaffed. Most of the work done offshore by other even lessmotivated and trained staff on 3rd World wages. UK staff stretched andundervalued. Executives and directors paid 6 and 7 figure salaries.
Lots ofoffshore tax avoidance on the huge profits by massive outsourcing corporations. Insourcing:Public: By having employees of your own company oranyone from the outside temporarily working for you in your building, you willbe able to better manage and probe them under your watchful eye. At this rate,the quality of projects and services can be more appropriate as the companyintends it to be. Private: The reality ofbusiness is that not every movement of every client is predictable andsometimes you have to put out fires. In the event that something goes wrong,and you need to call an emergency meeting with your team, it’s a lot easier ifyou are all in the same building.
Rather than waiting on the schedule of aremote employee, you can walk to the desk of each key player, and bring theminto the conference room. Supplier selection:Public: Public sector is highly regulated and sometimecan be seen as inflexible Private: Private sector are more flexible and open toinnovations; they are profit and people driven. Ethics:Public: socialachievement outcomes and cost effectivenessPrivate: The worth of all benefits and rights arrivingfrom ownership Supplier relations:Public: The public sector is facedwith a growing and diverse range of independent providers of public services.Private: Everybusiness in the private sector – is dependent on materials and servicessupplied by other businesses. As no business is self-sufficient, it can beconcluded that sound relationships in the supply chain are vitalConclusion: The aim was to compare and contrast1.
Outsourcing2. Insourcing3. Supplier Selection4. Cost Management5.
Ethics6. Law7. Pricing8. Supplier RelationsOn both the private and public sectors.
By concluding,we have compared and contrasted the data and submitted. REFERENCE:https://www.purchasing-procurement-center.com/tender-process.htmlhttp://www.civil-taiwan.org/chart-int1law.htmhttps://en.wikipedia.org/wiki/Public_sector_ethicshttps://en.wikipedia.org/wiki/Insourcinghttps://studentshare.net/finance-accounting/593728-compare-and-contrast-the-key-features-of-public-and-private-sector-organisations-and-explain-how-these-might-impact-on-the-role-of-the-accountant-working-within-either-sector