Managerial Economics

1932 Words Jan 21st, 2012 8 Pages
MBA 5600 Managerial Economics
Assignment #1

1. What impact will the prospect of deprivatization have on investment by managers of privatized firms?
The impact will be:
- Loosing corporate focus;
- Missing planned CEO turnover;
- Affecting planned managerial objects and strategic efficiency
Obviously, normal managers invest in long-term projects, products and services, deprivatization may come up with a different strategy that not aligned with corporate goals and its profit will probably go to different parties.
Managers believe, in a privatized firm, in greater gains and therefore have different incentives to implement long-term and in many case different strategies than in a deprivatization firm. In a competitive market,
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The basic mechanisms and tools, which are used or can be used for the property alienation from the today's private proprietors. Three basic directions of transferring the private property to the state are pointed out in the report: 1) Deprivatization - partial restoration or the state control strengthening above the already privatized firms; 2) Reprivatization - repeated privatization of the enterprises where the previous proprietors have not executed the necessary investment programs (in fact it is the proprietor change); 3) Nationalization.

Mechanisms for property alienation for the benefit of the state
Deprivatization
Reprivatization
Renationalization
State -owned share reassessment(intangibles)
Shares purchasing in a free market
Debt structuring by the shares mortgage
Shares in exchange for state investment
Debt converting(to the state-owned share)

It means strengthening not the “protective state”, but “productive state” (Buchanan,1975). Besides it can be covered with the patriotic slogans (strong Russia, Great state etc.) or with communist ones (struggle with poverty, social inequality etc.) “Democratic deprivatization” In case of the “democratic deprivatization” there will be another way of the development which means regrouping of the property rights to reach maximum efficiency of the market economy.

Who is interested in the restoration of the power-property system or, on the contrary, in the development

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