ECONS 101

BUSINESS ORGANISATION CONTD

Hey Guyz, Happy New Week hope the weekend was wonderful for you and your loved ones. I had a Blast myself. I Pray that this new week brings all kinds of happiness and joy your way in Jesus name- Amen. We are continuing from where we stopped last time, so let's get started.....

Differences Between Private and Public Enterprise:

Private Enterprises	Public Enterprises
6. Owners bear losses suffered by private enterprises.	Tax payers bear losses suffered by public enterprises.
7. They require small amount of capital to set up.	They require huge amount of capital to set up.
8. They are established by ordinary registration or by incorporation.	They are established by acts of parliament.

Reasons for the Establishment of Many Private Enterprises in West Africa:

1. Existence of Official Corruption in Public Enterprises- The existence of official corruption in public enterprises discourages government from further investment in public enterprises, thereby giving way for the proliferation of private enterprises in many west African countries.

2. Availability of Credit facilities- The availability of credit facilities to private individuals enable them to set up private enterprises.

3. Favourable Legal Environment- The enabling laws which govern the setting up of private enterprises are quite favourable. This makes it easy and interesting for many entrepreneurs to go into private business.

4. High Level of Efficiency- The Private Enterprises are known to be more efficient in management than the public enterprises and these account for their large number in the economy.

5. Type of Economic System- The Type of Economic System adopted by the government determines the nature of economic activities that will take place in that country. For Example- Nigeria has a free economy in which private individuals are allowed to participate in economic activities.

Problems of Private Enterprises in West Africa:

Many Private Enterprises are faced with the following problems, and they include:

1. Poor Patronage- Private Enterprises suffer from patronage partly because of low quality products and the high taste which consumers have for imported foreign goods.

2. Poor Power Supply- Many Private Enterprises don't have regular power supply to their companies hence they have to generate their own power through generating sets, which increase cost of production.

3. Inefficient Management- Private Enterprises generally do suffer from poor management because their owners who run the business may and may not have a good knowledge of the kind of production they are engaged in.

4. Insufficient Raw Materials- Many Private Enterprises suffer from inadequate supply of raw materials necessary for maximum production.

5. Lack of Specialization- Lack of Specialization by owners of Private Enterprises leads to business failure as most of them are illiterates, who may not have any idea of what they are doing.

Factors which Limit the Size of Indigenous Firms in West Africa:

The Factors which limit the size of indigenous firms in West Africa are the following:

1.  High Level of Illiteracy- The Existence of High Level of Illiteracy among investors in many West Africa Countries Militates against the establishment of Large Business Units.

2. Political Instability- Many West African Countries are politically unstable either due to military intervention or ethnic wars, which discourages investment.

3. Lack of Co-operative Spirit Among Entrepreneurs- It is usually difficult for entrepreneurs to combine their resources for expansion due to mistrust.

4. Inadequate Government Support- There is usually inadequate government support. For Example- Extension Services, Technology, Good Roads, Communications etc.

5. Market Limitation- There is the problem of Market Limitation due to low income, which leads to low demand, and external competition as a result of the people preferring foreign goods to locally manufactured ones.

Factors that Determine the Type of Business Units:

1. Availability of Capital.

2. The Ownership of the Business Outfit- whether Private or Public Ownership.

3. The Nature of the Business the Proposed Business Unit is to Carry Out.

4. The Objective of the Proposed Business- whether to maximizes profit or to render social services.

5. The payback period.

6.  The Return on Investment.

Factors that Determine the Size of a Firm:

1. The Market- The size of the market for a firm's product influences its size. If the market is small in terms of effective demand, the operation of the firm is bound to be small.

2.Government Policy- When Government is ready to assist firms, it helps to determine the size of operation.

3. Stages of Development- Some Firms are small because they have just been established. Given time, they may grow and expand.

4. Entrepreneurial Ability- Ability to undertake risk and to manage large scale business is an important factor that determines the size of a firm. The size of such firm depends on the knowledge and experience needed for planning the operation.

5. Technical Nature of Product/Service- Firms producing Perishable agricultural goods tend to produce to satisfy only local markets. They therefore tend to be small scale producers.

NOTE: PARTS OF THIS POST WERE CULLED FROM TONAD ESSENTIAL ECONOMICS FOR SENIOR SECONDARY SCHOOLS BY C.E ANDE.  WE AT EDU-MADE-EASY RESPECT THIS CRAFT TOO MUCH TO DENY ITS ORIGIN. THANK YOU

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