EOpriv: Creating a viable market

[Dan Bell <dbell@kent.edu>]

Again, I look forward to feedback, comments, suggestions.

5.4     Creating a viable market

        Enterprises facing privatization sometimes find themselves without
sufficient demand for their product or service to support their operations
at full capacity. Prior to moving forward with the privatization process, a
prefeasibility study should be conducted which includes a realistic
forecast in order to measure the size of the problem. The study should also
look at alternative services and markets which can fill the gap.

        Where a reduction in demand is due to the inability of former consumers 
to
continue their consumption at the market price, this demand can be shored
up through either the distribution of vouchers to the consumers or
subsidies to the enterprise. Vouchers allow the enterprise to charge market
prices and a subsidy would allow the enterprise to lower its price to
attract more consumption. A third way to maintain the market is for the
government to guarantee a minimum level of procurement for a transitional
period.

        If the enterprise is expected to lose customers to new competition, one
possible method of building customer loyalty is to provide equity in the
new enterprise to the consumer group itself through a Consumer Stock
Ownership Plan (CSOP).

        For the long term, the company's products or services are going to have 
to
compete in the market. This will require that they be made attractive to
the consumer. Where management has not had to make products marketable
before, some investment in marketing skills training is warranted.

--
Dan Bell
International Program Coordinator
Ohio Employee Ownership Center
Kent State University
Kent, OH 44242
(330) 672-0333 << New direct number!
(330) 672-4063 fax
dbell@kent.edu
http://www.kent.edu/oeoc/
http://cog.kent.edu