Lahore School of Aviation

The University of Lahore

Assignment Topic

Privatization

Program: BS Aviation Management Semester: 7th

Course: Managing Airlines
Instructor: Sir Sharjeel
Assign. No: 1st Date: 5-December-2021
Name: Romaisha Shabbir Reg. No: 70073239

Remarks:_________________________________________________________________________________

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Marks: / 10

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Instructor’s Signature
 Privatization
It is the process in which government functions, responsibilities and sometimes ownership as a whole or part of
it is shifted to private sector. The economic democracy is established to reduce government control in economic
activities.

Impediments of Privatization
Below discussed are the limitations or impediments of privatization:
● Price Problem:
The government want to do sales at the least profitable prices which are not acceptable by private sector
and they are not willing to buy.

● Improper Working:
The private sector doesn’t focus on cost reduction and do not want to improve the quality. There are also
many unfair practices that lead to corruption and generation of black money. The private sector is capable
of doing a lot good work on which it is not focusing.

● Interdependence on Government:
Government have much of interference in regulation and control of private sector. Private sector is very
much dependent on government for meeting its import requirements, outputs, sales etc. This has affected
the private sector to stand at its own.

● High-cost Economy:
Private sector has a problem of cost, its products are high in price and so is the cost. Poor management
and poor production leads to large cost and the profitability is insufficient.

● No Guarantee of Success:
There is no guarantee of success in private sector and a high risk of huge losses.

● Monopoly:
Natural monopoly occurs when the number of most efficient companies in the industry is one. Private
monopoly is created by privatization that tend to set higher prices to exploit consumers. In this way, public
monopoly is better.
● Ambulance development:
Private sector is only focused on areas where they can gain profit which makes it limited to few areas.

● Bad Industrial Relations:

An unfortunate aspect of private sector is recurring disputes. It hinders the smooth progress of industries.
Conclusions:
Privatization is not the solution for government sector problems. The countries whose markets function
badly are not meant to succeed by sifting them to private sector.