Theory question 107
Government and BusinessCommerce 2 (essay)
(a) State five reasons for governments' participation in business.
(b) Explain five problems encountered by government businesses.
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(a) Any five: to provide essential services (water, electricity) at low prices; to control strategic industries (defence, oil); to prevent exploitation by private monopolies; projects too large for private investors; to create employment; to promote even development of all areas; to generate revenue; to reduce foreign domination.
(b) Any five, explained: political interference in management; inefficiency and bureaucracy; corruption and embezzlement; inadequate funding; poor management/appointment of unqualified staff; overstaffing; lack of competition and profit motive; frequent changes of management; large size makes control difficult.
Problems in (b) explain why many public enterprises perform poorly.