Introduction: public and private sectors by taking the


We are assigned to do research on public and private sectors by taking the
following points. In addition to that we have to compare and contrast each
components on public and private sectors.


1.     Insourcing

2.     Supplier Selection

3.     Cost Management

4.     Ethics

5.     Law

6.     Pricing

7.     Supplier Relations




Outsourcing is “an agreement in which one company
contracts-out a part of their existing internal activity to another company.

sector: A popular example of public-sector outsourcing is
education. The empirical evidence on public-sector outsourcing of education
services is quite positive: competition can lead to higher-quality education
and more efficient use of resources. This finding has been demonstrated in
diverse settings.

sector: The effects of private provision of schooling on
educational outcomes have been studied for Chile, for the creation of
autonomous grant-maintained schools in the UK, and for the effect of
private-school competition on public-sector schools in Milwaukee in the US.
Metropolitan areas with more choice among public schools have been found to
have more productive public schools, which reduces demand for private
schooling. A voucher system introduced in Sweden in 1992 paid the entire cost
of attending private or “independent” schools, thus introducing competition
into school choice. To minimize the possibility of adverse effects on
public-sector schools, student selection could not be based on ability or
socio-economic background, but only on such factors as proximity to the school
and position on a waiting list. Before the reform, just 1% of children attended
private schools; by 2012, 25.6% of students attended private or independent
secondary schools, and 12.6% attended private or independent primary schools. In
line with previous studies, analysis shows that the increase in the share of independent
schools led to an increase in educational achievement at the end of compulsory
schooling and raised the probability of students going to university. Several
robustness checks made possible by the richness of the data confirm that there
are no confounding effects of differential grade inflation and no omitted variables,
such as a correlation between characteristics of a certain municipality and the
probability of having a higher or lower share of independent schools. Increased
competition might lead to cost minimization, but it could also increase the
costs per student for schools losing students. However, the productivity
analysis showed no evidence of increased costs per student, indicating that the
positive effect of the reform on performance came from the increased
productivity induced by competition. Private sector maximizes its profit by
minimizing fixed costs while public sector can maximize its capacities
providing public services and benefits, to which citizens have the right, by
expanding availability of the services and benefits and their value. What is
more, both sectors use the model of outsourcing with a view to increasing value
added to the services aimed at final consumer. Support of particular functions
such as application processing development and contact making significantly increases
quality of the services. Corporations get benefits from higher customers’ satisfaction,
especially considering the fact that contact making improves their relationship
with final customers


Insourcing is
the commencement of performing a business function that could be contracted out
internally: either with the help of a third-party provider who performs the
task on-site, or by conducting said task independently. Very often it is
seen as opposite of outsourcing. Insourcing is a business decision that is often made to
maintain control of critical production or competencies. Insourcing is widely
used in production to reduce costs of taxes, labor
and transportation.

Insourcing is also defined as bringing a third party outsourcer
to work inside a company’s facility. For example, an IT outsourcing provider may be hired to service a
company’s IT department while working inside the company’s facilities.1 In addition to contracting an
entire team of workers from an outsourcing provider, outside experts are
sometimes hired as consultants (to improve certain processes etc.) and the
internal staff thereafter implements their recommendations.3 It may also refer to bringing
in foreign nationals to do jobs at lower wages. An example would be a coal mine
which lists a foreign language (i.e. Mandarin Chinese) as a job prerequisite
that citizens tend not to study. Since the labor pool does not have the listed
skill a foreign
worker permit can be obtained
allowing the importation of Chinese workers.

Public Sector: Insourcing
also includes a company assigning a project, be it services, R&D or
manufacturing, to a subsidiary or to another company that is within the same
country of the company’s location; this is also referred to as
“Outsourcing”. However, the term Outsourcing usually refers to a
project that was being performed in-house but now will be performed by another
company; either within or outside the company’s country. Whereas, Insourcing
can be any project that is required by the company to meet its needs; the
project is not necessarily being performed in-house. Insourcing also includes
the “reshoring” of projects when a company brings home projects that are
performed in another country and now will be performed in the company’s
country; either inside or outside the company.

Private Sector: During 2012 the US manufacturing tide began turning. Two
lead articles  in The Atlantic, Dec. 2012,
explain why. Rising third-world wages, recognition that many off-shoring costs
were large and hidden, rapid consumer product innovation and shrinking
design/manufacture to market times, reduced manufacturing costs flowing from
integrating skilled workers into the product design teams (dramatically cutting
assembly times and complexity), increasing overseas fuel and transportation
costs, falling energy costs in the US, increasing US labor productivity, and
union flexibility. The list is long and growing.


Supplier Selection:

Supplier selection is the process by which firms
identify, evaluate, and contract with suppliers. The supplier selection process
deploys a tremendous amount of a firm’s financial resources. In return, firms
expect significant benefits from contracting with suppliers offering high

Sector: Sollish and Semanik (2006) mentioned that the
suppliers are essential for the organization to provide the needed resources in
order to achieve satisfactory results. Once the suppliers are chosen to be a
part of well-managed supply chain, it will have a lasting effect on the competitiveness
of the whole supply chain (Choi and Hartley, 1996). Sollish and Semanik (2010)
further pointed out that the supply risk management is a complicated business activity
and it is a fundamental factor in supplier selection. In addition, an
appropriate supplier selection must be conducted systematically by using the
most objective criteria that the company is able to develop. According to Choi
and Hartley (1996) selecting the supplier based on the potential for a
long-term relationship has a high rate which means it is very important for the
firm. Furthermore, developing long-term and close supplier relationship are now
critical for procurement decisions. Moreover, concerning the relationship
between the supplier and the buyer, the supplier’s main goal is to reach the
desired returns with maximized chance of being selected. While the buyer’s main
goal is to find a proper supplier selection process that can reach the right
information in the right details to be able to choose between the competing
suppliers (Seshadri, 2005). However, Handfield, et al. (2009) argued that there
is no certain ways for supplier selection and according to that, the
organizations can use a variety of many different methods. Moreover, the level
of the needed effort for the supplier selection depends on the importance

of the required goods or service Both listed and non-listed
companies have more latitude to use a customized sourcing process that suits
their industry and their organization. They are not bound by the requirement to
spend a given budget in a defined financial year and are therefore free to
schedule their buying process to suit business cycles.

Sector: Private companies wishing to be seen as ethical and
honest adopt what is accepted internationally as best practice. One area where
they may not achieve this fully is in the providing details of evaluation
criteria and weightings to prospective bidders. This is standard practice in
government and generally regarded as the fairest and most transparent way to
award contracts. Private companies are often reluctant to disclose their
weightings in advance. Selecting a list of bidders to be involved in the tender
process is not subject to any limitations so private companies can limit who
they send their documents to as they see fit. They are also not bound to
publicly publish details to whom the contract was awarded or even to formally
advise the unsuccessful bidders.


Managing and completing their tendering process in
less time than governments is really achievable when they are not bound by
tight rules. Price negotiation between the sourcing company and short-listed
bidders is normal practice which is limited by certain protocols in government.



the public sector is also averse to the use of cost
data or the type of financial tools used in the private truth, it is often
more difficult to quantify results in the public sector than in the private is harder, for example, to quantify the benefits of long term
outcomes of school programs than it is to measure increased sales related to a
private sector project.



Public Sector: Ethics in the public
sector is a broad topic that is usually considered a branch of political
ethics. In the public sector, ethics addresses the fundamental premise of a
public administrator’s duty as a “steward” to the public. In other
words, it is the moral justification and consideration for decisions and
actions made during the completion of daily duties when working to provide the
general services of government and nonprofit organizations. Ethics is defined
as, among others, the entirety of rules of proper moral conduct corresponding
to the ideology of a particular society or organization (Eduard). Public sector
ethics is a broad topic because values and morals vary between cultures.
Despite the differences in ethical values, there is a growing common ground of
what is considered good conduct and correct conduct with ethics.1 Ethics are
an accountability standard by which the public will scrutinize the work being
conducted by the members of these organizations. The question of ethics emerges
in the public sector on account of its subordinate character.


Decisions are based upon ethical principles, which are
the perception of what the general public would view as correct. Ensuring the
ethical behavior in the public sector requires a permanent reflection on the
decisions taken and their impact from a moral point of view on citizens. Having
such a distinction ensures that public administrators are not acting on an
internal set of ethical principles without first questioning whether those
principles would hold to public scrutiny. It also has placed an additional
burden upon public administrators regarding the conduct of their personal
lives. Public sector ethics is an attempt to create a more open atmosphere
within governmental operations.



The public sector is the part of an economy in which
goods and services are produced and/or (re)distributed by government agencies.
Examples are state educational systems and unemployment insurance. Civil
servants working for government entities are public sector employees, whereas
those employed by private employers not affiliated with government are private
sector employees.


Sector: Sometimes the private sector works in coordination
with the public sector. By partnering with the private sector through
arrangements which leverage governmental assets and resources, opportunities
are provided for the privates sector to participate in the development,
financing, ownership and operation of a public facility or service. For
example, a public/private partnership could be an arrangement whereby a
contractor or third party develops and operates a system which is beneficial to
a government agency and others and charges the cost of the service to users.



Sector: Private law is that part of a civil law legal system
which is part of the jus commune that involves relationships between
individuals, such as the law of contracts or torts1 (as it is called in the
common law), and the law of obligations (as it is called in civil legal
systems). It is to be distinguished from public law, which deals with
relationships between both natural and artificial persons (i.e., organizations)
and the state, including regulatory statutes, penal law and other law that
affects the public order. In general terms, private law involves interactions
between private citizens, whereas public law involves interrelations between
the state and the general population



Sector: The pricing in private and public
enterprise differs primarily on the supply side. In the long run, private
enterprises must cover total costs and provide an adequate return necessary to
attract venture capital. In contrast, extra-commercial considerations may
influence pricing in public enterprises. They may incur losses in the public interest under
explicit directives from the government.

A number of theories of pricing in public
enterprises have been put forward. Most important of these are: (1) marginal
cost of production theory; (2) no profit, no loss theory; (3) average cost of
production theory; (4) theory of making profits. All these theories suffer from
a number of weaknesses and none of them taken individually is a satisfactory
guide for determining the prices of the products of public enterprises.

Private Sector: On carbon pricing, private sector
shows the way Especially in carbon-intensive sectors, such as oil
and gas and electric utilities, firms are anticipating what they view as the
inevitable policy action: a federal carbon tax or cap-and-trade system.
Companies like Nexen and TransAlta are using “carbon shadow pricing” in their
strategic planning and project finance to help guide decision-making on
capital-intensive projects such as power plants or upgrading refining
Federal action to design a simple and cost-effective policy
that sends clear price signals to all Canadian firms and households is long
overdue. The further the private sector gets ahead of the government on this
issue, the less credible the political argument that Canadians don’t really
support a sensible climate change policy.
Before proceeding, an important myth needs to be slain. Too
often we hear the claim that climate change policies need not impose a cost on
economic growth. This is not so. Any sensible economic modelling that has been
done on this issue shows that even the most efficient policies with teeth would
slow down the growth rate of our gross domestic product (although growth would


Supplier relations

Public Sector: The public sector is faced with a
growing and diverse range of independent providers of public services.
Traditional procurement frequently assumes an arm’s length approach, whereby
services are purchased and managed through a
tightly specified service contract. But many public services are
there to address messy problems – services
that are intimately involved in people’s lives, such as mental health, problem
families, housing and long term unemployment. This complexity requires a
more agile and flexible approach to service delivery, based on
the development of long term partnerships, or Supplier Relationship
Management (SRM).Toyota is famed for its tightly knit group of suppliers and
its long-term, collaborative approach to supplier relations, or keiretsu.   It operates a system
of shared values and work philosophy across a tightly knit supplier network, an
approach that has been adopted by many other organizations, with varying
degrees of success. What are the key characteristics of this approach and what
modifications need to be made for it to succeed in the public sector.


Private Sector: The adversarial
and partnership view, Kraljic (1983) and Bensaou (2000) stressed that no single
approach to relationship management is inherently superior, successful supply
chain management requires the efficient management of a portfolio of
relationships. Bensaou (2000) even goes further with his analysis saying that
every company, when deciding which Mandiyambira 309 relationship style to
adopt, should consider three factors: the product exchanged and its technology,
the competitive conditions in the upstream market, and the capabilities of the
suppliers available. In this regard Webster?s (1992) notes that each company
needs to assess each of their suppliers and decide if a supply alliance would
be appropriate or not. Smart and Harrison (2003) cites that the best purchasing
strategy depends on the circumstances, such that a competitive strategy of
playing suppliers against one another in one situation will achieve the lowest
price, whereas another situation calls for a collaborative strategy that
emphasizes partnership relations to guarantee the same outcome. According to
Dwyer et al. (1987) the buyer-seller relationship portfolio is situated on the
axis between two extremes, namely, discrete transaction and vertical
integration, such that the strength of a relation-ship depends on environmental
effects and competitive market. Dwyer et al. (1987) further notes that supply
alliances, today seem to be the best way to do business, they are not suitable
for every company and its market place. An article by Zineldin and Philipson
(2007) provides a research of marketing practices in the contemporary
environment which was done in 1997 by Brodie et al. (1997) in the University of
Auckland in New Zealand. The results did not support the concept of a total
“paradigm shift” that is the movement away from adversarial approach to
collaborations with suppliers. Instead, the findings in several companies
confirmed that the transaction marketing is still relevant and currently used
with some types of relationship marketing. Brodie et al. (1997) quoted in
Zineldin and Philipson (2007), concluded that the importance of transactional
marketing should be recognized and estimated, their study’s results contradict
the trend of academics and practitioners of the so-called relationship
marketing “paradigm shift”.






Public: Incompetent
and overstaffed. Lots of public servants on good pay, counting down the days to
an early and very prosperous retirement on a gold plated pension. 

Private: Incompetent
and understaffed. Most of the work done offshore by other even less motivated
and trained staff on 3rd World wages. UK staff stretched and undervalued.
Executives and directors paid 6 and 7 figure salaries. Lots of offshore tax
avoidance on the huge profits by massive outsourcing corporations.



Public: By having employees of your own company or
anyone from the outside temporarily working for you in your building, you will
be able to better manage and probe them under your watchful eye. At this rate,
the quality of projects and services can be more appropriate as the company
intends it to be.


Private: The reality of
business is that not every movement of every client is predictable and
sometimes you have to put out fires. In the event that something goes wrong,
and you need to call an emergency meeting with your team, it’s a lot easier if
you are all in the same building. Rather than waiting on the schedule of a
remote employee, you can walk to the desk of each key player, and bring them
into the conference room.


Supplier selection:

Public: Public sector is highly regulated and sometime
can be seen as inflexible


Private: Private sector are more flexible and open to
innovations; they are profit and people driven.



Public: social
achievement outcomes and cost effectiveness

Private: The worth of all benefits and rights arriving
from ownership


Supplier relations:
Public: The public sector is faced
with a growing and diverse range of independent providers of public services.

Private: Every
business in the private sector – is dependent on materials and services
supplied by other businesses. As no business is self-sufficient, it can be
concluded that sound relationships in the supply chain are vital


The aim was to compare and contrast

1.      Outsourcing

2.     Insourcing

3.     Supplier Selection

4.     Cost Management

5.     Ethics

6.     Law

7.     Pricing

8.     Supplier Relations

On both the private and public sectors. By concluding,
we have compared and contrasted the data and submitted.