Comparative Analysis of Government and Private Businesses

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There is a range of ways that government businesses continue to attract customers, despite the competition from the private sector. For instance, they use bailouts, following the 2008-2010 financial crisis, the US government has categorically shown the will of bailing out industries and companies that seem to face financial hardships. It has historically saved the non-financial enterprises such as Lockheed, Penn Central Railroad, and Chrysler. Consequently, these bailouts enable businesses to continue running (Shleifer 133). However, it is crucial to note that such bailouts come in form of loan guarantees. Most of the industries that the government protects in this way include car and airline manufacturers, insurers and banks. The government also attracts customers by offering subsidies and tariffs. In the case of tariffs, the government often charges the foreign products a little higher tax compared to those produced internally. When the government offers an industry a subsidy, there is preferential treatment to such customers, encouraging them to do business with the government. Nonetheless, it is important to note that from the taxpayer’s perspective, the government taxes the general public and rewards certain customers in form of subsidies and tariffs (Shleifer 138). Another way that the government businesses attract customers is through encouraging a stable environment for business.

The private businesses, on the other hand, have different ways of attracting clients. For instance, they put more focus on service, while building the relationships with their clients. Private businesses attempt to be good at listening to their customers and be their trusted resource (Shleifer 139). They also put more focus on the specific customers rather than industries as the government does. Whereas the government focuses on attracting various industries, the private institutions develop detailed client profiles, so that their marketing strategies communicate directly with every customer. The use of social media has been another element that differentiates the way that private businesses attract customers compared to the state-run businesses. Reports indicate that private institutions are more active in using social media platforms to obtain insight through social listening (Shleifer 143). Through this, private businesses learn how to attract clients by providing services that reflect their cultures and behavior. However, unlike the government businesses that have a huge financial advantage, private businesses are incapable of giving bailouts, tariffs, and subsidies to their clients.


Despite the differences in the manner that the government and private businesses attract customers, there are similarities in their strategies to get more clients. For instance, they all tend to apply technology in providing services. The use of technology in the service businesses has proven to ease transaction processes while also reducing costs (Hacker 59). It fastens the customer services which eventually improves their satisfaction and loyalty to the business. However, technical breakdowns may often lead to their dissatisfaction with a business. Furthermore, the introduction of technology in business may at times scare away the clients if it involves complex operating procedures and knowledge that the customers might not have. Moreover, in some instances, the introduction of technology in businesses may raise the transaction costs in the banking sector, scaring away clients (Hacker 63). Another similarity is that they all strive to understand their customers and provide the best services. Despite the financial strength of government businesses, private businesses also often provide their clients with financial benefits such as reducing their interest rates and prices to get more clients (Hacker 71).

What State Businesses May Learn From Private Institutions to Attain a Competitive Advantage?

The government may learn various ways from how the private businesses attract clients. For example, the government enterprises may have to realize that they should put more emphasis on the providing services that are client friendly. In most government businesses, the employees tend not to show the service-oriented attitude as is the case in private corporations. It is often probably due to the lack of close supervision of the employees (Klein, 23). Another aspect that the state institutions may learn is the need to reduce political interference. Usually, the government faces challenges in making decisions that have political outcomes such as instituting pay cuts and layoffs. Due to the negative publicity that these factors may create, decision making becomes difficult. Hence, in attaining a competitive edge and ensuring sustainability, these public corporations may learn to keep politics out of business. However, it is due to such political activism that the customers may often get protection against exploitation such as high prices (Klein 27). Therefore, the elimination of politics from these entities may create situations that scare customers. The other factor that the state-run institutions may learn from their private counterparts is the use of social sites in marketing their businesses. Most public institutions do not practice intensive marketing and promotion activities, especially in social media. Nonetheless, this may be an avenue of attracting more client attention while elaborating the business aspects, the service qualities, and benefits they are likely to come across when they do business with the public corporation (Klein 28).

Works Cited

Hacker, Jacob S. The Divided Welfare State: The Battle Over Public and Private Social Benefits in the United States. Cambridge University Press, 2002.

Klein, Jennifer. For All These Rights: Business, Labor, and the Shaping of America's Public-Private Welfare State. Princeton University Press, 2010.

Shleifer, Andrei. "State Versus Private Ownership." Journal of Economic Perspectives

,vol.12.4, 1998, pp. 133-150.

January 19, 2024

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