Disadvantages of public corporations

 

  • They are managed by political appointees who may not have the necessary managerial know how.

  • When they make losses, they are assisted by the government and this could lead to higher taxation of individuals

  • Lack of competition due to monopoly leads to inefficiency and insensitivity to customers feelings.

  • Political interference may hamper efficiency in the achievement of set goals and objectives.

  • Decision making is slow and difficult because the organizations are large.

  • They may lack close supervision because of their large sizes.

  • There is embezzlement of large sums of money leading to loss of public funds

  • The government is forced to provide goods and services to its citizens in all parts of the country where at times its uneconomical to provide them because the costs of providing them may surpass the returns

  • Public funds are wasted by keeping poorly managed public corporations.

  • Diseconomies of scale apply in these business units because they are usually very large scale organizations e.g. decision making may take long.

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