Several British institutions such as telecom firms, energy providers and railways have already gone through the process of privatisation, which, according to Marcouse et al. (2014:504), is the process of selling-off organizations owned by the government to the private sectors. The British government sold the Royal Mail to the private-sector owners in October, 2013 with its further floatation on the London Stock Exchange. Ashwin et al. (2008:59) defines floatation as the company’s transformation into a public limited company by offering its shares for general sale on the stock market. This issue appeared to be controversial since the feedback on this decision varied within the different stakeholders of Royal Mail. The purpose of this essay is …show more content…
This group of stakeholders was undersold as the consequence of the privatisation of the Royal Mail. On the first day of selling-off the shares the price of Royal Mail’s shares closed up by 38% which means that taxpayers have missed an extra £750 million. The private advisers’ recommendation was to avoid rising of the selling price before the beginning of sale. Eventually, the ones who benefited were investors not taxpayers (Parliament, 2014). The government had underpriced the process of privatisation of the Royal Mail and as a consequence taxpayers lost out on £ 1 billion. The desire of the government to push the privatisation led to the significant loss for the taxpayers. Underestimating the value of the shares of the Royal Mail and following a specific advice resulted in the disadvantages for the taxpayers (Farell, …show more content…
Another group of stakeholder, which was not mentioned in the sections above, the shareholders, experienced great advantages. As the share price of the Royal Mail increased in a high pace, selling of the shares would double the revenue of the shareholders. Saving the shares would provide them with dividends. However, some drawbacks cannot be left without consideration. The Royal Mail was relatively profitable when it was owned by the state, so the government could have done some borrowing from the investors, rather than privatise it with inflicting the loss on the taxpayers (Bloodworth, 2014). The other weakness is the tension within the company caused by the dissatisfaction of the CWU with this decision and the variety of the inconveniences inflicted on