Rational Planning Model – Part III – Strategic Option Generation (Part 05)

So far four other strategies for businesses have been discussed in the previous articles. This will be the fifth and the last of the third area of the Rational Planning Model. Another matrix will be discussed under this final part.

Need-Provision Matrix

This matrix is specifically designed for the public sector organizations, which are rather into social welfare than profit maximization. However in the allocation of resources towards the best interests of the society, public sector organizations too do have to develop strategies, to ensure the effectiveness and the efficiency of the process.

The matrix consists of the need for a product (high and low) and provision of resources by the private sector (high and low).

                                     Need

               Low                             High

No Provision	Selected Provision
Encourage Others	Extensive Provision

High

                Provision By Others

Low

No Provision

This is where the need for the product is low yet the private sector is providing for the product highly. Entertainment industry can be taken as a close example. The ‘need’ for entertainment is low (the ‘want’ for entertainment is high), but the private sector is generating wants out of entertainment industry.

Selected Provision

This is where the need for the product is high and the private sector provision is high too. In such cases the public sector will only intervene if necessary. Health industry shows these characteristics. Public sector will only intervene when there is some massive capital expenditure.

Encourage Others

This is a situation where the need for the product and the provision by the private sector are both low. Public Sector will motivate the private sector to provide for any low demand for the product.

Extensive Provision

This is where the need for the product is high and for some reason the private sector provision is low. Mostly very expensive provisions fall into this category or completely social welfare motive businesses are found in this category. Examples include maintaining law and order, national security and infrastructure facilities.