The Case for 
Unfair Competition

Burr Millsap
Captive operations like in-plants support their parent organizations’ missions, bringing better flexibility and control. For this reason, insists one university administrator, the competition should be unfair.

Auxiliary enterprises are those organizational units whose mission it is to serve the students, faculty, and staff. The products and services offered by auxiliary enterprises could be said to be personal in nature. Book stores, dining halls, copy shops, athletics…these are excellent examples of auxiliary enterprises.

If mission-funding is inappropriate for service departments, it is really inappropriate for auxiliary enterprises. The tendency for overuse and abuse would be much greater for these types of operations. The chargeback or sales model is the only one that will allow this type of unit to operate effectively.

While auxiliary enterprises exist mainly to serve students, faculty, and staff, their products and services may also be used by other departments. So, in many instances, auxiliary enterprises act as service departments.

Why Do We Have Them?

The burning question is, “Why do we have service departments and auxiliary enterprises (SDAEs)?” If we can find these services commercially, in the community, why do we go to the trouble of setting them up within the institution?

There are at least seven reasons why SDAEs are necessary.

1. Captivity. Within an institution, the feature of captivity is attractive and essential. Departments need to have certain services available on a captive basis to streamline the shopping-buying-getting process. It is a feature of efficiency.

2. Availability. SDAEs typically offer superior availability of their products or services. When and where they do a better job of this than the market, they represent a real advantage to the support and operation of the institution.

3. Quality Control. Generally, the institution has a better handle on the quality it receives when it can control the supplier of a product or services. This may not be true in every case, but even the thought that the control is possible is sometimes justification enough.

Related story: Something About IPMA...

Related Content
Comments