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Privatisation of goods and services - ALDI

University: Imperial College Business School

  • Unit No: 6
  • Level: Undergraduate/College
  • Pages: 5 / Words 1300
  • Paper Type: Assignment
  • Course Code: ASW1001
  • Downloads: 909
Organization Selected : ALDI

1.Privatisation of public goods and services by the government of a country

Privatisation is the transfer of goods and services from public to private hands. Government is the public body that deal with a number of functions. This is done to produce the collection of significant improvements in other sectors like boosting the efficacy and quality of remaining government activities, reducing taxes and shrinking size of government (Drucker, 2017). The activities that ranges from selling of state enterprises to the public services in hand of private contractors. These steps are taken by the government so that better development of a nation can be done. It is not possible to organise and manage all activities in a standard way.

Therefore, goods and services are distributed to private contractors with agreement of few documents and policies. Different sectors like health, educations, road constructions these are the best examples of privatisation. This is done because government activities are not sufficient to full fill the needs of public. The main aim behind it to prevent the services and goods from vanishing. The contractors are paid by public in terms of goods and services and the fixed amount of money is also transferred to the government body. The activities like air port management, management of army medical centres and employment services are also included in privatisation. Privatisation of public goods are leading to the dangerous and bad activities towards the public services(Crouch, 2015.). Goods and services are exploited by private contractors.

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1.1 Various economic benefits of a large scale productions or operations in a brand company

ALDI is one of the most growing brand across the world. They have to maintain all the internal and external factors that can manage the economic benefits of production. They earn profits at a large scale because they have all facilities from manufacturing to distribution process. They do not need to depend upon other to serve their goods and service to the people. If you are searching for health related sample paper then click on Treatment & Measures of Anxiety Disorder.

  • Up Date Machinery- ALDI has its own machinery set up because they have to produce large number of goods at a time. This reduce in the cost of manufacturing. They have their own arrangement of repairing so there is no need of outer team members. All these all process provide them economic benefits (Baumers Dickens and Hague,2016).
  • Economy of labour- In large production company specialised labours are employed who give their best output with the best quality of services.There are availability of every type of labour related to each service so they do not need to call other labours to maintain their services.
  • Bulk buying and selling- Raw materials are fetched at a large scale and manufactured goods are also sold at the same level so there is clear chance of benefits(Rikowski, 2017.). They have different varieties of products so more customers are attracted by them.
  • Overhead charges- It is the charges of distribution and administration of per unit production of goods. In large production the per unit charges applied to the goodsare less. This also result in lower cost of larger output of goods.Transportation charges given for large services are less than it is given foe small services.
  • Economic benefits in rent- Large production industry require large area to run their business. The cost per unit area is less when it is calculated at al large scale. So the rent that is paid by them cost less.
  • Advertisement -The promotional value for large scale production cost less according to per unit charges of goods and services. Due to large production the services of other sectors also benefited so they also offer discounts on large number on advertisements.
  • Utilization of By products- Large number of by products and wastes are produced during the production of goods. These wastes and by products are not dumped, they make economical use of these products to make some other products.
  • Cheap and easy loans- The loan interests are also easily available for large production industry due to their fixed assets and properties(Gilbert, 2015.). The rate of interests imposed over them is low than the small sector industries.
  • Research- Experiments and research related to the products ideas and design are done at a large scale by different managerial department that cause the less cost of services to develop new products and machines.

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1.2 Define fixed cost and variable cost with three examples

Fixed cost are those cost that do not change with the quantity variation of output charges. It may vary in other respects but it does not change with business activities (Liuand and Tyagi, 2017). This include indirect cost and manufacturing overhead cost. Example is taken with the help of rent and utility bills. During a time if the production of the company is slow, that do not affect fixed cost. They have to pay the same bills and rent. If the production is zero, fixed cost will not be zero. The other examples include insurance premium and loan payments. During decision making fixed cost is considered but it does not have too much value as much as variable cost. If you want assistance with your HND Assignment Help, then quickly opt assignment services from professional writers.

Variable cost

These are the cost which are directly proportional to the activities of producing volume. For production of goods, many other factors are required like raw materials, labours, sale means of communication. The raw materials cost, labour cost, sales commission cost and many other variables are the examples of variable cost because the cost of these components go on changing (Mahmoud, 2015).

These variable cost are the main components that effect the production volume of ALDI. If the labour charges are increased it would have direct effect over the production volume of goods. So the variable cost components play a great role during decision making of business.

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1.3 Behaviour costs influencing decision making

Behaviour cost are the changing trend in current business. These are the cost that are applied in the live situation. It plays an important part in decision making. These examples can be seen during negotiations of business like cocktail receptions, tour or travels, banquet or conferences and many more. Good and polite behaviours during business are very helpful in increasing the productivity cost of business.

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  • Baumers, M., Dickens, P. and Hague, R., 2016. The cost of additive manufacturing: machine productivity, economies of scale and technology-push. Technological forecasting and social change, 102, pp.193-201.
  • Crouch, C., 2015. 9. The Paradoxes of Privatisation and Public Service Outsourcing. The Political Quarterly. 86(S1). pp.156-171.
  • Drucker, P.F., 2017. The Theory of the Business (Harvard Business Review
  • Gilbert, N., 2015. Social welfare trends in western societies: privatisation and the challenge to social work.
  • Liu, Y. and Tyagi, R.K., 2017. Outsourcing to convert fixed costs into variable costs: A competitive analysis. International Journal of Research in Marketing .34(1). pp.252-264.
  • Mahmoud, O., 2015. Book Review: Misbehaving: The Making of Behavioral Economics.
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