Business and Public Administration | Public Administration N6
Business and Public Administration
QUESTION
Differentiate between the business administration and public administration
Business administration and public administration are two separate fields with different objectives and contexts as explained below
1, Aim of their decisions
In private administration, decisions are primarily aimed at maximizing profit. Businesses focus on strategies that enhance revenue and minimize costs to increase financial gains. Decision-making is centred around profitability metrics and shareholder returns.
On the other hand, In public administration, decisions are aimed at improving the welfare of the community rather than maximizing profit. While financial considerations are important, the primary goal is to provide essential services and enhance the quality of life for citizens.
2, Budget Orientation:
Budgets in private administration typically indicate an ever-growing profit as a key objective. Financial plans are structured to reflect this aim, with a focus on increasing revenue streams and expanding market share.
In contrast, budgets in public administration must demonstrate balanced spending. Resource allocation is guided by the need to efficiently utilize tax funds and address societal needs effectively, rather than focusing solely on profit growth.
3, Compliance with Stipulations of the Law:
Private administration complies with stipulations of the law, primarily revolving around commercial laws and regulations governing trade, commerce, and corporate governance.
Similarly, public administration adheres to stipulations of the law, but the regulations are typically related to governance, public policy, and the administration of public services.
4, Capital Utilization:
Private administration relies on its own capital or investments from shareholders to finance operations and expansion. Decision-making is often driven by the financial resources available within the organization.
In contrast, public administration relies on tax funds collected from citizens and businesses to finance its activities. This funding source differs from private administration, which uses its own capital or shareholder investments.
5, Decision-Making Authority:
Decision-making in private administration is dedicated by the market. Market dynamics, consumer demand, and competitive forces heavily influence decision-making processes within businesses.
In public administration, decisions are dedicated by political authority. Government policies and the interests of the broader community, as determined through democratic processes, shape decision-making.