May 2021 Q1 a.

• Multiple objectives: they tend to have multiple objectives so that if they can all be clearly identified, it is impossible to say which the overriding objective is.
• Measuring outputs: outputs can seldom be measured in a way that is generally agreed to be meaningful. As a result, data collection can be problematic.
• Lack of profit measure: if an organistion is not expected to make profit or has no sales, indicators such as ROI and RI are meaningless.
• Nature of service provided: many not-for-profit organisations provide services for which it is difficult to define a cost unit. For example, what is the cost unit for a local fire service?
• Financial constraints: although every organisation operates under financial constraints, these are more pronounced in not-for-profit organisations. For instance, a commercial organisation’s borrowing power is effectively limited by managerial prudence and the willingness of lenders to lend. Still, a local authority’s ability to raise finance, whether by borrowing or via local taxes, is subject to strict control by the government.
• Political, legal and social considerations

(Any four point @ 1.5 mark each = 6 marks)

Effectiveness: is the relationship between an organisation’s outputs and its objectives. For example, it is checking whether outputs of a service or programme have the desired impact.

Efficiency: is the relationship between inputs and outputs. Maximising output for a given input or using the minimum input for a given output.

Economy: is attaining the appropriate quantity and quality of inputs at the lowest cost. Economy does not mean straightforward cost cutting because resources must be acquired which are of a suitable quality to provide the service to the desired standard.

Equity: seeks to ensure that public sector goods or services will be fair to meet societal needs.

(Three points @ 2 mark each = 6 marks)