SS3 Commerce Lesson Note on Commercialization

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TOPIC: COMMERCIALIZATION

CONTENT:

• (a) Meaning of Commercialization and Privatization
• (b) Reason for commercialization of Public Enterprises and privatization
• (c) Advantages and disadvantages of commercialization.
• (d) Meaning of deregulation
• (e) Advantages and disadvantages of deregulation

SUB-TOPIC: 1   meaning of commercialization

Commercialization can be defined as a policy geared towards making state-owned enterprises to become more efficient and profit-oriented.

Meaning of Privatization

Privatization on the other hand can be defined as the transfer of management and control of property, business or industry from the government to the private sectors or individuals such as public companies and corporations. This is to allow for competition and efficiency.

Evaluation

• Define commercialization
• What is privatization?

SUB-TOPIC: 2 Reasons for commercialization and privatization of public enterprises

Below are the reasons:

1. Efficient management: Both help to develop a good and efficient management of enterprises.
2. Participation of private individuals: They assist people or individuals to participate in economic activities through ownership of enterprises.
3. Revenue generation: They assist the government to generate more revenue.
4. Removal of unproductive enterprise: They help to remove unproductive enterprises in the economy.
5. Autonomy of enterprises: It helps to provide autonomy for the enterprises.

EVALUATION

• Highlight five reasons for commercialization and privatization of enterprises

SUB-TOPIC: 3 Advantages and disadvantages of commercialization and privatization

Advantages are as follows:

1. Reduction in public expenditure: They help in reducing public expenditure on enterprises that are not viable.
2. Promote efficiency: They assist in promotion of efficiency in production.
3. Revenue generation: Both policies help to boost the revenue generation of the government.
4. Emergence of innovation: The existence of competition in the industries assists in the emergence of innovations.
5. Better choice by consumers: Both policies assist the consumers to have a wide range of choice where there are abundant products.

Disadvantages are as follows:

1. Poor standard of living: Commercialization and privatization lead to poor standard of living of the people due to a shift in interest from pure service delivery to profit maximization.
2. High cost of products: Both policies are aimed at profit maximization hence they are usually associated with high cost of products or goods.
3. Reduction in employment: Many workers are usually laid off when industries are commercialized and privatized.
4. Uneven distribution of income: Income is often unevenly distributed as few individuals are now in control of the industries.
5. Loss of consumers ‘welfare scheme: Here, the consumers’ welfare are neglected or not catered for.

SUB-TOPIC: 4 Differences between commercialization and privatization

Commercialization has to do with government’s re-enforcement of state-owned enterprises to make it more efficient and profit-oriented while privatization is the transfer of ownership and control of government-owned enterprises into the hands of private individuals.

Evaluation

1. Describe five for each the advantages and disadvantages of commercialization and privatization.
2. Differentiate between commercialization and privatization.

SUB-TOPIC 5: DEREGULATION

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