Strategic Management between the Private and Public Sector - Essay Example

Similarities and Differences in strategic management between the private and public sector Similarities and Differences in strategicmanagement between the private and public sector Introduction In modern business management, efficient strategy is imperative in ensuring success and achievement of an organization objective. Various strategic management techniques exist within the private and public sectors. It is indispensable that efficiency of strategic management with the sectors greatly contributes to observed similarities and differences. Strategic managers within the private sector face fundamental tasks of maximizing profit while conforming to local policies. However, public sector managers have the central role of ensuring greater social benefits to the society. It is imperative to relate the inherent differences and similarities between private and public sectors based on their primary objectives as aforementioned. The paper explores similarities and differences in strategic management between the private and public sector. Strategic Management similarities between Public and Private Sectors Common management techniques There are significant strategic administrative similarities between the public sector and private sector. It is imperative that both the sectors greatly relies on common business administration techniques including planning, budgeting, organization, delegation, and control in conducting daily activities. The aforementioned administration techniques are imperious for all business entities and consequently, both private and public sectors have to apply them in strategic management. For instance, budgeting for business involvement in specific functions remains as a vital activity in both public and private management activities. Both the sectors require budgeting techniques to ensure minimal use of resources and exploitation of business finances. Furthermore, both the public and private sectors require use of planning techniques in remaining relevant to market trends and developments. Planning is an imperious activity for all business entities and managers who aim at success and achievement of organizations goals. In addition, planning is of central importance for strategic managers who aim at overcoming competition in the market. Apparently, both the private and public sectors require comprehensive planning techniques in strategic management to enable them achieve their objectives (Desmarais & Abord de Chatillon, 2010). Corporate social responsibility Corporate social responsibility relates to business organizations’ involvement in non-profit activities within the society. Majority of organizations engages in corporate social responsibility to enable them create a good public image within the community that they operate. It is the responsibility of a business entity to attract interest from the public through social activities including the provision of better employment conditions, promotion of education, and managing crises within the society(Flynn, 2012, p. 202). Apparently, both the public and private sectors understand the vitality of social responsibility within the community. Both of the sectors, therefore ensures the provision of due support to the community in issues relating to environmental conservation, education support programs, and certain awareness programs. Profit making In a normal business setting, realization of profit returns is indispensable for success. Business entities require a constant supply of finances and other revenues to foster sustainability and enable it to remain competitive in the market. Both the strategic managers in private and public sectors understand that the success of their organization greatly relies on the amount of profit that they make. Consequently, the managers initiate strategies that would ensure maximization of good profit margins. Technological advancements Strategic managers in both the private and public sectors understand the significance of modern technology in development of business and realization of investment success. Successful business organizations pride undoubtedly uses of advanced technology including computers and campaign strategies. Consequently, both the strategic managers in private and public sectors understand the dynamism in business management and the central importance of advanced technology in performing business operations. In all most all sectors of the economy, technology forms the most imperative tool in advertisement and production of quality goods and services. Both private and public strategic managers invest in modern technology for efficient management and realization of business objectives (Milner and Joyce, 2005, p. 2340. Strategic Management differences Between Public and Private Sectors Procurement differences Strategic managers in both the private and public sectors initiates strategies that assist their procurement departments to acquire good and services that can adequately find use in the company. However, the two business entities greatly differ on the purpose of obtaining commodities and services for their organizations. The most obvious distinction between the two sectors remains that private sector for instance procures specific goods and services mainly for profit centric objectives. On the contrary, majority of public entities procures goods and services exclusively for social benefit and not largely for profit motives (Desmarais & Abord de Chatillon, 2010). The procurement differences between private and public sectors largely rely on the inherent objectives of the organizations and rationale for the establishment of the businesses. Strategic managers in the private sector have the central aim of maximizing profit based on the organizations laid objectives. They strive to initiate strategies that would ensure maximum realization of profit. However, private sectors also engage partially in ensuring social benefits for their organizations. On the contrary, strategic managers in public sector procure goods and services mainly to support government operations and provide public members with alternative services (Bevan and Hood, 2006, p. 530). Employee level differences There exists a significant difference between employees in the private sector and those in the public. The inherent difference observed have a fundamental basis of greatly relying on objectives of the companies in both private and public sectors. For instance, public strategic managers normally aim at completing tasks to satisfy society needs and build a good reputation of public compliance. The public managers and employees establish strategies that enhance positive relations with members of the public. Normally, public employees receive their rewards due to improved compliance by the society on the goods and services that they offer. On the contrary, strategic managers in the private sector aim at building their reputation and good image to the company owners. They strive to establish strategies that would ensure the attainment of organization owners’ central objective of maximizing profit. It is imperative to understand that employees in the private sectors receive rewards about the maximum profit that they can obtain from the society. Sources of Knowledge In private sector, strategic managers have considerable flexibility in acquiring innovation-related information from various sources including trade associations, public researchers, and consultants. However, managers in the public sector despite the large resources at their disposal they may be constrained from applying private information sources in running businesses. Normally, public sectors source of knowledge remains oriented to similar institutions within the economy. It is imperative to understand that private sector strategic managers have more flexibility in making decisions regarding the type of innovation applicable in their organizations despite limited resources. On the contrary, public sector managers receive many resources but they cannot not make independent decisions in acquiring innovations without consent of other sectors of the government. Otherwise, the public sector managers would risk public criticism especially from politicians(Hughes, 2012, p. 245). Political aspects Politics plays a fundamental role in the management of business and consequent success. It is imperative to comprehend that political influence directly affect business strategies. Within the public sector, political factors remain of greater importance than in the private sector. Strategic managers in the public sector always remain affected by policy decisions made by politicians more than managers from private institutions. While management decisions in the public sector remain under the inherent influence of politicians within the economy, managers in the private sector rely on independent decisions by owners of the organizations. Consequently, private sectors find it easy to conduct efficient strategic management objectives if they conform to local policies. In addition, recruitment of strategic managers and employees in the private sector remains least procedural and indirectly linked with politics (Liddle, 2010, p. 610). On the contrary, politicians dictate recruitment process and decision-making in the public sector. It imperative that the political influence on public sectors greatly contributes to low economic performance of management strategies employed in such organizations when compared to private companies. Management issues Typically, managers in the private sector face considerable autonomy in making decisions and conducting daily operations. Other managers in the private sector remain constrained by corporate governance issues, financial stringency, and shareholders interest. It is imperious that successful managers within the private sector receive their rewards substantially from promotions and other material benefits (Pederson, 2008, p 338). On the contrary, public sector managers remain under the influence of political scrutiny. However, management practices in the public sector have initiated various strategies to emulate the private economy. It is indispensable to comprehend that a successful manager within the public domain gets comparatively meager material benefits in relation to those in private organizations. Conclusion In conclusion, various similarities exist between strategic management practices in the private and public sector. The similarities that relate to common techniques of business management including planning and record keeping are imperative for success of both sectors. In addition, private and public sectors have great similarities on how they remain affected by various policies within the economy. It is imperious that both the sectors have a central role to play in social responsibility within the society. Despite the similarities, a great divide exists between private and public sector management objectives and strategies. While the public sector managers remain solely committed to social benefits rewards, private sectors strives to achieve economic success through maximization of profits. The aforementioned objectives of the sectors greatly contribute to their inherent differences in procurement, employee management, and innovation strategies. It is essential that the political influence within an economy greatly affect managerial functions in the public sector than private organizations. Bibliography Desmarais, C, & Abord de Chatillon, E 2010, Are There Still Differences Between the Roles of Private and Public Sector Managers?, Public Management Review, vol. 12, no. 1, pp. 127-149. Available from: 10.1080/14719030902817931. [16 November 2014]. Flynn, N., 2012. Public Sector Management. SAGE, New York. Hughes, O.E., 2012. Public Management and Administration. Palgrave Macmillan, London.  Pederson, D and Hartley, J (2008) The changing context of public leadership and management International Journal of Public Sector Management Vol. 21, No. 4, pp. 327-339 Bevan, G and Hood, C., 2006. ‘What’s measured is what matters: Targets and gaming in the English Public Health Care System’ Public Administration Vol. 84, No. 3, 517-538 Milner, E and Joyce, P., 2005. Lessons in Leadership: Meeting the challenges of Public Services Management. Abingdon: Rutledge. Liddle, J., 2010. Twenty-first-century public leadership within complex governance systems: some reflection Policy & Politics, Volume 38, Number 4, pp. 657-663(7) Read More