A public company, on the basis of profit and loss, cannot compete with a private company.
The reasons are:
1. More human resources than needed –
There are more human resources in a public company than needed. Their human resource department cannot employ human power effectively. The result of this is that some workers are always at standby, by which the production cost per unit of goods and services is unnecessarily more.
2. Industrial Agitation –
Every now and then, in defence of various policies, several strikes and lockouts are done in public companies.
3. Defective Project Planning –
Project planning is found to be defective in these companies because their rules and objectives are not clarified. Generally, these projects depend upon government action and hence cannot be completed on time.
4. Defective Financial Planning –
The most common flaw in public companies is their capitalization. Poor financial planning cannot give suitable returns. Therefore, profits are also less here.
5. Many Overheads –
Public company spends a lot on school, houses, canteen, etc. for their workers due to their social motive that increases their overheads.
6. No full use of Production Capacity –
Generally, the use of production capacity is not up to the mark in public sector company. Therefore, the production cost increases.
7. Defective Production Planning –
No scientific planning is done for the production units, because of which production is sometimes done more than required or sometimes it doesn’t meet the requirement. Sometimes, things do no reach on time.
8. Lack of Appropriate system of Employees Training –
In these companies, at the time of selecting the employees, their applications are read thoroughly, but their skills are not evaluated. Therefore, such non – skilled employees do not work efficiently.
9. Defective Promotion Policy –
There is no scientific promotion policy are used here. The promotion is done on the basis of government policies only.
10. Objectives –
Like private companies, their motive is not just to earn profits. Their objectives include social growth, to fulfil government policies and to fulfil the requirements of society, etc.
