In Great Britain, the national government and to some extent the European Union has been playing and continues to play a big role in influencing business activities. From time to time, the government amends the regulations and frameworks which cause business firms to alter their way of operation. Trade is therefore impacted by government strategy. Key areas of government policy that affect a business are Economic policy, a key area where the government gives to the state in the economy. Between 1945 and 1979 the government more and more interfered in the economy by creating state-run industries which usually took the form of public corporations (Times Correspondents, p. 3).
However, from 1979 onwards there was an era of privatization in which industries were sold off to private shareholders to create a more competitive business environment. This can be done through taxation and spending, laws, directives, and regulations, encouraging the activities through subsidies, financial support and also providing advice related to business matters. There are policies that the government in Britain can enforce that influence business such as employment policy which is used to stimulate employment. It is encouraging business efficiency through this policy so that to make businesses in Britain competitive in international markets and the process of creating jobs. People are now being trained and funded by the government to sponsor employment opportunities.
In the regional policy, this is when the European Union comes in where funds are being made available to support regions that have low levels of employment and social deprivation such as the Highlands and Islands of Scotland and other nations. Through the inflation policy, the Britain government seeks to make sure that there are no sudden general rises in prices that could impact negatively on medium and small-scale businesses. This is when the monetary policy committee of the Bank of England comes into play where interest rates are set. This is done when there is the danger of people borrowing and spending too much which normally hikes the prices of commodities in the market. Hence raising interest rates makes it hard for a business to borrow money for business development which also impacts consumers and when this happens, spending goes down and in the end, prices are forced down.
The government is also applying education and training policy which is viewed in Britain as having a valuable contribution to bringing back business to life. Through this, the government is forcing changes in the business environment by creating vocational subjects in the school curriculum. In the taxation policy, businesses contribute to the community in general through the taxes they pay, and in return for these taxes, the government helps businesses prosper by laying the infrastructure. The received in form of taxes is spend on projects that provide an enabling environment such as airports and roads for easier movement of goods and services and also in aiding neighboring nations stabilize business-wise to have a common market for the goods and services produced (Coleene, p. 16).
In the international policy, the government is promoting trade and encouraging sales of British goods and services abroad or can even discourage goods and services coming in from other nations if they don’t meet the required standards. It is also establishing the rules of business although many laws in the country have been in existence for a long time while others are still new. These laws aim to set out how people should behave towards one another especially on how the business should be conducted among the people. The government is also using subsidies as a way of encouraging more business entities so that enough money through taxes is made available to satisfy the needs and wants of its people. It gives money to stressed industries to help them recover after incurring certain losses. Through subsidies, the government can also allow tax cuts that will encourage the growth of businesses in Britain.
In the economy of the market policy, the nation is the main factor manipulating the conditions of small and medium-scale firms’ growth with further influence on the exterior environment in which trade activities can expand than through direct support interventions. The problem here is that these firms remain small and their contribution to economic development is rather inadequate. In such a situation the government creates framework conditions for private sector development to become entrenched and supporting. The government is also bringing legislation and regulations in line with the European Union standards in preparation for European Union consent, encouraging the banking system to adjust and recognize the small and medium enterprise sector. This makes the sector a probable market for a variety of financial products and facilitating the development of venture capital funds for that minority of small and medium enterprises that seek exterior impartiality. The government is also encouraging small and medium enterprises to work in a joint venture with the private sector to establish an efficient support infrastructure.
The government also established the Chambers of commerce in the 18th century to help businesses adapt to the huge technological and social changes that were occurring in Britain. To reinforce the belief that developing local business communities in Britain holds the key to future prosperity, the government through the British Chambers of Commerce recently unveiled a new initiative known as the Ultimate Business Network. The aim of this was to create a nationwide online networking system so that enterprises in other parts such as Aberdeen can work from the chamber member in Norfolk. This makes the access to the tender system by all members of the local chamber of commerce free to provide an enabling environment for business development.
In the U.S, too much political power is concentrated in the hands of business interests as organized business interests expend vast resources on political activities and this implies that business development in the U.S is under influence of the government. The USA has experienced economic uncertainties in the past time and this poses challenges to credit markets which then impact Wall Street, Main Street, and small businesses countrywide. The government has established an SBA body which is for the U.S small business administration. It has begun loan programs that aim at helping reduce the credit crunch by extending credit to small-scale businesses across the nation.
The SBA’s loan programs permit lenders to give starting funds to small businesses with less threat and are due to the SBA-backed guaranty. SBA programs are a significant source of capital for small-scale firms in this economy and SBA is now prepared to contain an increasing demand. SBA also provides administrative psychotherapy and support through a nationwide network of one thousand five hundred partners. In addition, it maintains an influential network presence with present trade data and free online courses providing a diversity of business topics. The SBA also provides the option of filing disaster and business loan applications electronically at home.
As a disaster victim, a person in the USA may now apply for disaster loan assistance at his or her convenience through the Electronic Loan Application. The method makes the application process easy and quickens the delivery of assistance to a person (Robert, p. 25).
The method also allows anyone with damages to their home or business emanating from a confirmed disaster to apply for disaster loan assistance. Homeowners and Renters are also entitled to such funds if there are damages to their homes, personal property, and vehicles. Businesses can also apply for damages to their real estate or business contents and economic losses. A person can apply via mail.
The U.S government has entered into partnerships and agreements with other nations to provide an enabling environment and market for its business activities. It also applies the Taylor-type interest rates which allow for both time and state dependence. During the expansions period, the Federal Reserve normally follows a rule that can be categorized as inflation which targets a high degree of interest smoothing. This enables them to detect when inflation is about to occur and take necessary steps to avert the situation.
The government has also applied various policies such as economic policy, market policy, regional and international policies, tax policy, and inflation policy for both economic and non-economic rationales. Economic rationales are meant to reduce the unemployment level, protect new industries, increasing industrialization, and enhance the good economic relationship with other countries with a view of attaining a common market for the business activities and also preventing external influences that jeopardize business prosperity. The non-economic rationales aim at maintaining essential industries, maintaining spheres of influence, and preserving their culture and identity. It has used various trade control instruments such as tariffs, dumping policy, countervailing duties, subsidies, quotas, voluntary export restraints, standards, and trade sanctions.
In the international policy, the U.S government is promoting trade and encouraging sales of America’s goods and services abroad or can even discourage goods and services coming in from other nations if they don’t meet the required standards. These laws aim to set out how people should behave towards one another especially on how the business should be conducted among the people. The government is also employing the use of interventions such as the use of subsidies as a way of trying to encouraging more business entities and sustainability (Robert, 26). The Governments have established Chambers of commerce to help businesses adapt to the huge technological, competitive, dynamic, and social changes. All these interventions aim to create a nationwide online networking system so that enterprises in other parts such as Aberdeen can work from the chamber member in Norfolk. This makes the access to the tender system by all members of the local chamber of commerce free to provide an enabling environment for business development (Witko, Christopher & Newmark, p. 3).
- Bringing the Business Studies to Life. Times Correspondents Limited and MBA Publishing Limited, 1995-2008.
- Coleene Anger. Financial Development, Industry Streamlining and Nationwide Progress: The Responsibility of Government, 1967.
- Robert H. Smith. The Growth of Trade-Government Plan by diversified Business Company. U.S.A: University of Maryland, College Park, 2000.
- Witko, Christopher & Newmark, Adam. Business Mobilization and Public Policy in the U.S.A, McGraw Hill Publishers, 2008