GOP is an oil producer based in country X. It is a public corporation. GOP plans to build a 200km pipeline across the country using retained profits to pay for it. The pipeline will need planning permission from the Government. Environmental pressure groups are concerned. A spokesperson for GOP said: ‘GOP’s objectives are different to businesses in the private sector. This pipeline will create 2000 skilled construction jobs and reduce the need for other businesses to import oil.’
02 Identify and explain two ways in which the objectives of GOP might be different if it was in the private
sector. [6]
Possible KN Points:
• May look to maximise profit
• May look to increase market share
• May look to increase revenue
• Protecting jobs may be more important in the public sector
02 Identify and explain two ways in which the objectives of GOP might be different if it was in the private sector. [6]
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Xuhair Chishty
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Re: 02 Identify and explain two ways in which the objectives of GOP might be different if it was in the private sector.
Maximising profit (private sector objective):
APP:
If GOP was in the private sector, it may focus on whether building the 200km pipeline will increase profits rather than creating 2000 jobs.
AN:
A private sector business aims to reward shareholders, so GOP might cancel or delay the project if it does not generate enough profit, even if it reduces oil imports.
Protecting jobs less important (private sector objective):
APP:
As a public corporation, GOP plans to create 2000 skilled construction jobs, but a private sector GOP may not see job creation as a main objective.
AN:
A private firm would be more likely to reduce jobs to lower costs and increase efficiency, which could increase profit but reduce employment in country X.
APP:
If GOP was in the private sector, it may focus on whether building the 200km pipeline will increase profits rather than creating 2000 jobs.
AN:
A private sector business aims to reward shareholders, so GOP might cancel or delay the project if it does not generate enough profit, even if it reduces oil imports.
Protecting jobs less important (private sector objective):
APP:
As a public corporation, GOP plans to create 2000 skilled construction jobs, but a private sector GOP may not see job creation as a main objective.
AN:
A private firm would be more likely to reduce jobs to lower costs and increase efficiency, which could increase profit but reduce employment in country X.
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Muzamil Ahmed
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Re: 02 Identify and explain two ways in which the objectives of GOP might be different if it was in the private sector.
KN : Increase market share.
APP : If GOP was a private oil company they might focus on expanding the shares of oil market rather than building a pipeline across the country
AN : This means that their focus would be towards selling more oil and not creating jobs or reducing imports which is a part of public sector.
KN : Increase revenue
APP : GOP might focus on generating higher sales through oil or price adjustments rather than spending retained profits on infrastructure.
AN : Private companies focus on making money while public projects like the pipeline also aim to help society and create jobs.
APP : If GOP was a private oil company they might focus on expanding the shares of oil market rather than building a pipeline across the country
AN : This means that their focus would be towards selling more oil and not creating jobs or reducing imports which is a part of public sector.
KN : Increase revenue
APP : GOP might focus on generating higher sales through oil or price adjustments rather than spending retained profits on infrastructure.
AN : Private companies focus on making money while public projects like the pipeline also aim to help society and create jobs.