Government interacts with business to pursue mutually beneficial goals, though their objectives sometimes conflict. Companies operating globally may face dilemmas when doing business in countries with illegitimate governments. Government establishes public policy through tools that combine incentives and penalties to influence citizen behavior and achieve policy goals. Economic public policies include fiscal, monetary, taxation, industrial, and trade policies. Social policies provide citizens with services like health care and education. Regulation establishes conduct rules and aims to modify free market forces, protect consumers and the environment, and ensure workplace safety. Regulatory activity fluctuates depending on politics and deregulation has occurred in some industries. International regulation is sometimes necessary to oversee global products and reconcile conflicting national regulations.
Government interacts with business to pursue mutually beneficial goals, though their objectives sometimes conflict. Companies operating globally may face dilemmas when doing business in countries with illegitimate governments. Government establishes public policy through tools that combine incentives and penalties to influence citizen behavior and achieve policy goals. Economic public policies include fiscal, monetary, taxation, industrial, and trade policies. Social policies provide citizens with services like health care and education. Regulation establishes conduct rules and aims to modify free market forces, protect consumers and the environment, and ensure workplace safety. Regulatory activity fluctuates depending on politics and deregulation has occurred in some industries. International regulation is sometimes necessary to oversee global products and reconcile conflicting national regulations.
Government interacts with business to pursue mutually beneficial goals, though their objectives sometimes conflict. Companies operating globally may face dilemmas when doing business in countries with illegitimate governments. Government establishes public policy through tools that combine incentives and penalties to influence citizen behavior and achieve policy goals. Economic public policies include fiscal, monetary, taxation, industrial, and trade policies. Social policies provide citizens with services like health care and education. Regulation establishes conduct rules and aims to modify free market forces, protect consumers and the environment, and ensure workplace safety. Regulatory activity fluctuates depending on politics and deregulation has occurred in some industries. International regulation is sometimes necessary to oversee global products and reconcile conflicting national regulations.
beneficial goals Influenced by nations values and customs, therefore differs by county
Governments goals and businesss objectives are in conflict
Companies operating globally may find governments whose legitimacy or right to be in power is questioned May be faced with dilemma of continuing to do business when could be supporting the illegitimate power May choose to become politically active or refuse to conduct business until legitimate government is in place Governments Public Policy Role Public policy A plan of action undertaken by government officials to achieve some broad purpose affecting a substantial segment of a nations citizens
Public policy inputs shape a governments policy decisions and strategies to address problems Public policy goals can be broad and high-minded or narrow and self-serving Governments use public policy tools involving combinations of incentives and penalties to prompt citizens to act in ways that achieve policy goals Public policy effects are the outcomes arising from government regulation Types of Economic Public Policies Fiscal policy Refers to patterns of government taxing and spending that are intended to stimulate or support the economy
Monetary policy Refers to policies that affect the supply, demand, and value of a nations currency Types of Economic Public Policies Taxation policy Raising or lowering taxes on business or individuals
Industrial policy Directing economic resources toward the development of specific industries
Trade policy Encouraging or discouraging trade with other countries Types of Social Public Policies Advanced industrial nations have developed elaborate systems of social services for their citizens
Developing economies have improved key areas of social assistance (health care, education)
Social assistance policies that effect specific stakeholder groups are discussed in subsequent chapters Government Regulation of Business Regulation The action of government to establish rules of conduct for citizens and organizations. It is a primary way of accomplishing public policy.
Reasons for regulation Market failure Negative externalalities Natural monopolies Ethical arguments Types of Regulation: Economic Economic regulations Aim to modify the normal operation of the free market and the forces of supply and demand
Includes regulations that Control prices or wages Allocate public resources Establish service territories Set the number of participants Ration resources Types of Regulation: Social Social regulations Aimed at such important social goals as protecting consumers and the environment and providing workers with safe and healthy working conditions
Includes regulations which apply to all businesses Pollution laws Safety and health laws Job discrimination laws
And others that only apply to certain businesses Consumer protection laws for businesses producing and selling consumer goods Types of Regulation and Regulatory Agencies Continuous Regulatory Reform Levels of regulatory activity tend to be cyclical and dependent on politics Deregulation refers to the scaling down of regulatory authority Reregulation is the return to increased regulatory activity
Areas where deregulation has occurred in recent years Commercial airlines Interstate trucking companies Railroads Financial institutions Regulation in a Global Context As patterns of international commerce grow more complicated, governments recognize the need to establish rules that protect the interests of their own citizens
International regulation in general occurs when there is a growth of exiting, yet often conflicting, national regulations of a product, or the product itself is global in nature, thus requiring international oversight and control
Sometimes national leaders resist the notion of international regulation; yet at other times, international regulation is welcomed or at least accepted as necessary