Influence of Private and Government Organizations

On this occasion we will discuss the Influence of Private and Government Organizations, happy reading. Hopefully readers will be given ease in understanding …

Table of contents :

  • Definition of Public Organization
  • Definition of Private Organization
  • Differences in nature and characteristics
    • Organization goals
    • Sources of financing
    • Accountability Pattern
    • Organizational structure
    • Budget and Stakeholder Characteristics
  • What is the Equation between the Private Sector and the Public Sector
    • Share this:

Definition of Public Organization

Public organization that we often see in the form of a government organization which is often known as the government bureaucracy, or also the only organization in the world that has the authority to “rob” people’s property, “kill” the people, or also “imprison” the people.

It is the largest organization which accommodates all levels of society within the scope of the State and also has institutional authority in the fields of politics, government administration, and law.

So that it has an obligation to protect its citizens, and serve their needs, on the contrary, it is also entitled to collect taxes for funding, and impose penalties as sanctions for enforcing regulations.

This will aim to be able to serve the needs of the community for the welfare as mandated by the constitution as a foothold in its operations. Service-oriented organization to society that is not profit / profit / profit.

Definition of Private Organization

The term private comes from the Latin “set apart” which means separate. The goals of public organizations will be aimed at things that are ‘separate’ from society in general.

Private organizations or profit organizations are organizations that will also be engaged in the service of goods and services whose ownership will be distinguished from their ability to pay for these goods and services.

In accordance with market laws by one person or more who are profit or profit oriented. then so, it is clear that this organization has a specific objective is to be able to seek profit or profit as much as possible.

 

Also Read:   Understanding Managerial Economics

 

Profit organizations include, among others, small to large scale companies, both local, national and international. The characteristics of which, among others, are owned by one person or more, are profit-oriented.

Differences in nature and characteristics

a. Organization goals

In terms of objectives, this public sector organization will be different from the private sector. This difference is very prominent lies in the goal that will earn a profit.

In the private sector there is an objective to maximize profits, while in the public sector it is where the provision of public services, as well as the provision of public services.

But even though the main purpose of the public sector is the delivery of public services, it does not mean that public sector organizations do not have goals that are financial in nature.

Public sector organizations also have financial objectives, but they are very different both philosophically, conceptually and operationally from the goal of private sector profitability.

b. Sources of financing

The difference between the public sector and the private sector can also be seen from the source of organizational funding or in financial management terms it is called the capital structure and also the source of financing.

These sources of public sector financing differ markedly from the private sector in terms of form, type and level of risk.

In the public sector, sources of funding come from taxes and levies, charging for services, state-owned company profits, government loans in the form of foreign debt and also government bonds, and other income.

Which is legal and will not conflict with the laws and regulations that will be stipulated. Then, for the private sector, sources of financing are separated into two, namely internal and external.

Internal sources of financing consisting of a portion of the profit which will be reinvested into the company and owner’s capital.

External sources of financing, such as bank loans, bond issuance, and issuance of new shares to obtain funds from the public.

 

Also Read:   Complete Accounting Fields

 

c. Accountability Pattern

Management in the private sector will be responsible to the owner of the company as well as creditors for the funds that will be given.

In the public sector, management is responsible to the public because there are sources of funds that are often used by public sector organizations in the context of providing public services that also come from the community (public funds).

The accountability pattern in the public sector is vertical as well as horizontal. The vertical accountability is the accountability for managing funds to the higher authority,

for example, the accountability for fund management to the central government. Horizontal accountability is an accountability to the wider community.

d. Organizational structure

Institutionally, these public sector organizations are also very different from the private sector. The organizational structure in the public sector is also bureaucratic, rigid, and hierarchical.

Meanwhile, while the organizational structure in the private sector is more flexible, one of the main factors which differentiates the public sector from the private sector is where there is very high political influence on the influence of public sector organizations.

Typology of leaders, which includes the choice and orientation of political policies, will greatly influence the choice of bureaucratic structure in the public sector.

The public sector serves several functions that are more complex than the private sector. Organizational complexity also greatly affects the organizational structure.

e. Budget and Stakeholder Characteristics

When viewed from the characteristics of the budget, in the public sector this budget plan will be publicly published to the public openly for criticism and discussion.

This budget is not a state secret. Meanwhile, the budget in the private sector will also be closed to the public because the budget is a company secret.

From the stakeholder side, stakeholders in the public sector will be divided into 2, namely internal and external, internal stakeholders include state institutions, from political groups (political parties), public managers (governors of BUMN, BUMD), and government employees.

 

Also Read:   Making Individual SIUP

 

These external stakeholders in the public sector such as public service users, taxpaying communities, companies and also socio-economic organizations which use public services as input for organizational activities,

Banks as creditors of government, international agencies (IMF, ADB, UN, and so on), foreign investors, and also future generations. In the private sector, internal stakeholders consist of management, employees and shareholders.

Then while external stakeholders consist of banks, labor unions, government, suppliers, distributors, customers, the community, trade unions or the capital market.

What is the Equation between the Private Sector and the Public Sector

1) Both sectors, namely the public sector and the private sector, are an integral part of the economic system in a country and also both use the same resources to achieve organizational goals.

2) Both face the same problem, namely the problem of scarcity of resources, so that both the public and private sectors will be required to use organizational resources economically, effectively or efficiently.

3) The management control process, including financial management, is basically the same in the two sectors. Both of these sectors will need reliable or relevant information to be able to carry out management functions, namely: planning, organizing, or controlling.

4) In some cases, the two sectors can produce the same product, for example: both the government and the private sector will both be engaged in mass transportation, education, health, energy supply, or others.

5). Both of these sectors will be bound by laws and regulations and other legal provisions that have been required.

 

Leave a Comment