Tag Archives: private sector

The Business Enterprise and Today’s Society (Reposted)

Dr. John Psarouthakis, Executive Editor, www.BusinessThinker.com

Founder and former CEO, JPIndustries, Inc., a Fortune 500 industrial group

 

We have been in the midst of a fundamental and historic shift of how the economies around the world develop. With the collapse of the centralized and state control model of the economy what we have now, however, imperfect it maybe, is the model of the “Free Market.”

This shift is occurring in parallel with two other sociopolitical expressions:

  1. Smaller government, though the last few years this seems not to have been happening.
  2. The need, indeed the demand by our society to provide assistance, protection, and distribution of economic benefits in a “fair” way

What we are witnessing is a major shift on “how we can fulfill our expectations of a humanistic society” while we keep the state’s interventions and control power at minimum.

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The Business Enterprise and Today’s Society

drjohn11aDr. John Psarouthakis, Executive editor, The Business Thinker magazine, and Founder and managing director, JP Management Center, llc.

 A lecture at the Institute for Advanced Studies in the Humanities, University of Edinburgh, Scotland.

We have been in the midst of a fundamental and historic shift of how the economies around the world develop.  With the collapse of communism, the centralized and state control model of the economy has also collapsed. Other socialist State models, i.e., Sweden, UK before Margaret Thatcher, have also collapsed.  What we have now, however, imperfect it maybe, is the model of the “Free Market.”

This shift is occurring in parallel with two other sociopolitical expressions:

  1. Smaller government, though the last couple years this seems to have moderated quite a bit
  2. The need, indeed the demand by our society to provide assistance, protection, and distribution of economic benefits  a “fair” way

What we are witnessing is a major shift on “how we can fulfill our expectations of a humanistic society” while we keep the state’s interventions and control power at minimum.

Before I deal with this question (shift) let me digress in to a bit of history .  .  .  .  After all, how can a Greek like myself discuss such matters without referring to HISTORY .

These great shifts of power are not without precedent.  What is new is the rapidity of change that we are witnessing.  When such major shifts of power occurred in the past, they had a great impact in the ways the society functioned.  Examples:

  • The emergence of secular values over religious values and authority during the 16th, 17th and 18th centuries.  Power centers changed.  Princes of church gave way to princes of land, who,  in turn, gave way to the chiefs of industrial, commercial and financial wealth.
  • Societal institutions and the most firmly established organizations were forced to conform or disappear with the passage of time.These shifts took place not without sacrifice of then well established ways of life.  Now, let’s get back to the question I posed earlier.  Let me repeat it.

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PRIVATE EQUITY: A Contributing Factor to the Crisis or a Way to Resolve It?

Dr. Tamir Agmon is the  Associate Dean for Research and Development at the School of Management and Economics, Academic College Tel Aviv Yaffo in Israel. He is also  a Professor of Financial Economics at the School of Business, Economics  and Law at Gothenburg University in Sweden.

The economic ocean is comprised of a large number of small drops of water: a micro approach to the crisis

   The efforts of the Treasury and the Federal Reserve Board to deal with the current financial and economic crisis are focused on the “large picture”. Hundreds of billions of dollars are given to major financial institutions and to major manufacturers. This is clearly necessary and important. Yet, thousands of firms find themselves in financial and economic distress as a result of the crisis and as a result of their business policy in the boom period preceding the crisis. Firms that based their business policy on the assumption that American and other consumers will continue to buy more every year and financed this policy by borrowing ever increasing sums of money find themselves today in financial distress. Many of these firms have good business foundations.  They have the capabilities to design, produce and sell good products and useful services. They do have problems today in selling a particular product or a service to a particular industry, and they do have problems servicing the accumulated debt from the boom period. If they fail and disappear the cost to their employees, their suppliers, and to society as a whole is high. These small and medium size firms, often unknown to the public and below the radar of the media contribute substantially to the general welfare. It is impossible to address the needs and the potential of these firms at the macro, federal level. Fortunately, there is a private sector solution motivated by interests of investors, managers, employees and other stakeholders of the corporation. The solution is turnaround private equity investment by specialized companies and funds. Turnaround private equity is motivated by profit like any other investment activities. It is based on reframing the activities (assets) of a distressed firm, rearranging the liabilities to fit the new direction of the firm and manage the process of the turnaround. If successful, the private equity investors make an exit and leave the firm to continue and grow with other owners.

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