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Sample Essay on Denationalization

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Sample Essay on Denationalization

Denationalization

Governments, in most cases, get involved actively in the sale of their assets to various sectors and individuals. The sale of these assets or entities results in a transfer of ownership from the government to these private entities. The process of denationalization is also commonly referred to as privatization. Governments often resort to privatization owing to a number of reasons, among them the need to raise revenue for most national operations. In addition, the sale of government-owned entities is often related to increases in efficiency and effectiveness. The period of 19th century witnessed a number of countries’ governments selling their properties due to change of management from colonial powers (Caruth, Caruth, & Pane, 2009). Additionally, nationally owned entities are in most instances prone to an array of restrictions in their operations, as a result of bureaucracies and the demands of the ruling governments. The operation of these organizations is also limited within certain jurisdictions. On the other hand, privately owned entities often extend their operations across the borders, depending on the existing demands and the ability of the concern.

The denationalization of products and institutions can assume a number of forms. Initially, the government can invite the public to directly present their bids where the highest bidder often carries the day. Secondly, the government, through the National securities market, can invite the public to purchase the securities of the targeted entity. Public issue has been embraced by a number of governments in the event of selling assets. In line with these facets, the paper will strive to explicate product denationalization with respect to resulting income, job opportunities, and operating boundary, amongst other broader aspects (Weihrich & Cannice, 2013).

General Motors is a US multinational company that manufactures and supplies motors within the United States and to other countries. The organization has its headquarters in Detroit, Michigan, and apart from distributing vehicles to various countries, the organization provides a number of financial services. For a long period of time, the organization has been owned by the US government. Tax payers have been the sole financiers of the entity through the treasury (Caruth, Caruth, & Pane, 2009). A number of insufficiencies have characterized the operations of the company with huge debts that have in the past risked the procedures and objectives of the concern. Under the ownership of the government, the entity has suffered from mismanagement, besides a number of restrictions. The great depression that was witnessed in the country in the 19th century also greatly jeopardized key aspects of the company. Due to the constant financial crisis, the US government, in most instances, has intervened in the financial aspects of the entity, with the US treasury injecting certain volumes of funds. In the financial year 2008/2009, the Bush – Obama regime attempted to revive efficiency of GM motors through tax payers funds, that saw $39 billion from tax payers injected into the company’s operations, out of the overall $50. 1 billion injected to GM Corporation (Catano, 2009). As a result of the insufficiencies manifested and the burden it posed for the government, the treasury opted to privatize the entity. The sale of GM motors by the US treasury took the form of public issue where the purchase of the shares of the organization was effected in bits. Initially, GM operated in 37 countries before privatization; however, currently, the company has partnered with various organizations, besides acquiring other entities, leading into expansion of the company’s operations (Weihrich & Cannice, 2013).

 

 

Market Aspects
Marketing costs

The denationalization of GM motors on December 10, 2013 has witnessed the company’s benefit from reductions in marketing costs, amongst other key operating costs. Operating outside the control of the government, the organization is currently partially owned by Berkshire Hathaway Inc. and State Street Corp., who are among investors that have entered into an operating partnership with a number of marketing agencies. This partnership aspect has drastically reduced the marketing costs of the organization – an operation that was not possible with government ownership due to various restrictions. In China, GM motors has 10 joint ventures that successfully undertake marketing activities for the organization, resulting in general cost reductions.

Market opportunities

The privatization of the company resulted into efficiency owing to the eliminations of unnecessary bureaucracies brought by government indulgence. This attracted a number of trading partners from various countries. The initial intention of denationalization was the need for the executive to improve the quality of the various motors brands offered (Catano, 2009). Among the key  brands that GM offered included Alpheon, Chevrolet, Buick, GMC, Cadillac, Holden, HSV, Opel, Vauxhall, Wuling, Baojun, Jie Fang, and UzDaewoo, which are supplied across the 37 countries. Initially, the management opted to begin with the improvement of the brands – Chevrolet and Cadillac brands – globally, while also announcing plans to pull Chevy mostly out of Europe market. This plans greatly resulted into increased access to new market opportunities globally.

Realized Income

Despite the loss of $1.3 billion that the US treasury made from the sale of the entity, the total realized income by the government was $40. 90 billion. The sale of the corporation resulted in the organization expanding its share base, and as a result of this, the company has provided income in form of dividends to diverse groups of people across the globe (Shepherd, 1983). In a statement by Barrack Obama in 2010, he stated that there were “1 million automotive jobs, which helped to blunt the severity of the recession.”

Benefit for the Local market

The privatization of GM has increased the effectiveness of the US local motors industry through increasing competiveness in form of quality and prices. As a result of quality improvement, various American local motor companies have stepped up their product qualities in order to meet the increasing market competition.

Local technologies and production inputs

The denationalization of GM Company has greatly compromised the use of local technologies since the organization became free from federal regulations that restricted the use of the local technologies. Similarly, through denationalization, the local technologies and production inputs owned by GM have been liberalized. As a result of this, both the local technologies and inputs have been adopted in the international motors market.

Change in job and Wages

As a result of the increase in efficiency and the expansion in output levels resulting from denationalization, GM organization has increased the employee base. Initially, it is reported that the bailout by the treasury to GM in 2009 helped in retaining 2.63 million jobs. The expansion of the operation of GM has seen it provide a total of 1 million jobs to American locals. The management of the company has also employed the use of high wage rates in order to motivate personnel with a view towards increasing competiveness in the corporation (Shepherd, 1983).

Change in Environment

The denationalization of GM Corporation has resulted in a number of changes in the US automotive industry. Through liberalization policies, the industry has easily accessed global inputs besides outsourcing of personnel that has been made possible through elimination of unnecessary government restrictions.

Supply Chain

The denationalization of the supply chain operations is vital in attempts to improve efficiency in operations. In most instances, there are numerous channels in government owned supply operations that result in delays. On the other hand, privately owned supply chains will target to meet the demand of the concerns, hence the need for privatization of supply chains.

 

 

 

 

 

 

References

Caruth, D. L., Caruth, G. D., & Pane, S. S. (2009). Staffing the contemporary organization: A guide to planning, recruiting, and selecting for human resource professionals. Westport, Conn: Praeger Publishers.

Shepherd, P. L. (1983). Transnational corporations and the denationalization of the Latin American cigarette industry. Miami, FL: Latin American and Caribbean Center, Florida International University.

Weihrich, H., Koontz, H., &Cannice, M. (2013). Management: A global, innovative, and entrepreneurial perspective.

Catano, V. M. (2009). Recruitment and selection in Canada. Toronto: Nelson Education.

 

 

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