Privatization in Business Environment

Privatization in Business Environment

Privatization in Business Environment

The transfer of ownership, property or business from the government to the private sector is termed privatization. The new set of economic reforms aimed at giving the greater role to the private sector in the nation-building process and a reduced role to the public sector. The term disinvestments used here means transfer in the public sector enterprises to the private sector.

It results in dilution of the stake of the Government in the public enterprise. If there is the dilution of Government ownership beyond 51 per cent, it would result in the transfer of ownership and management of the enterprise to the private sector.

Impact of Government policy changes on business and industry: The government policy of liberalization, privatization and globalization has made a definite impact on the working of enterprises in business and industry in terms of

(a) Increasing competition

(b) More demanding customers

(c) Rapidly changing technological environment

(d) Necessity for change

(e) Need for developing human resource

(f ) market orientation