Case Study - Week 2

Case Study - Week 2 - though it may initially benefit the...

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Case Study # 2 Deprivatization will lead to lower levels of investments set forth by managers of privatized firms for fear that their privatization will be deemed illegal and the investment will be lost which can cause an investment firm to lose investors for future endeavors. Foreign investors will be more apt to seek out investments in other countries, due to the possibility that any investment made could be later determined to be an illegal privatization thereby causing those investors to take a substantial loss. In my personal opinion I do not feel that deprivatization would be in the best interests of the Russian people. If the companies become government run it will begin to resemble the time period of the Soviet Union. If such a thing is to occur it could cause a negative impact on the world markets as a whole. It is my belief that in the case of Russia no one would truly gain by the deprivatization;
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Unformatted text preview: though it may initially benefit the government or some members of the government in the long run it will lead to slower response to market demand and will minimize the capital that can be gained by the company and the government through taxation. The politician is willing to support such a policy by placing the blame of the weak economy on the privatized firms, which allows the politician a greater stance in the polls thereby allowing them a greater chance at re-election. It can often be seen that politicians will jump on the band wagon or help to instigate one by passing the blame onto other groups thereby securing their position as the one against such a group, which will gain them favor with the public. Reference Brickley, J. A., Smith, C.W., & Zimmerman, J. L. (2009). Managerial Economics and Organizational Architecture Fifth Edition. New York: McGraw-Hill Irwin....
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