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Free «Government Regulation» Essay Sample

Introduction

The economy of a nation is without a doubt driven by consumer based society coupled with a citizenry that is driven by capital. It is on the basis of this that the government has taken the initiative of regulating the business operations in the economic sector to ensure that the consumers are not exploited by profit driven organizations. This goes a long way to keep the economic safety net of the nation in check by guaranteeing the stability and growth in the macroeconomic and microeconomic sector. The existing systems of regulation are devoted to ensure that the business scandals of citizen exploitation remain on the minimal. This is set to restore the public confidence of the nation in the capital market ensuring an ongoing vitality in the market place. Through the regulatory systems, enforcements that have been stepped up and improved auditing processes, the regulations are set to make the market economy secure for all the participants.   

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Explanation of why the government regulation is not needed

The main concern of whether the government intervention is necessary in the free enterprise market is still a major issue.  Despite the fact that public safety is the main aim for the regulations by the government, it has been said by other financial analysts to be a necessary evil that will not benefit the operation of the financial market but rather affect the growth rates in the financial market. The main reason why government regulations are not needed is the clear fact that self regulation initiatives will lead to greater policing of corporate behavior and professionals in the national financial market. This offers the businesses excellent proximity since the self-regulatory organizations will be closer to the activities that are taking place in the market. Detailed and current information about the industry will be easily availed making the regulation operations much easier and effective compared to government regulation initiatives. The identification of potential problems in the financial market will only be through self-regulatory initiatives. Government regulators cannot act with greater flexibility, since they are not subject to the similarly procedural financial issues and hurdles that are in the economic sector. This means that the extremely complex issues that are faced by organizations and citizens will have to be delegated to bodies that self-regulate (Stokes, 2008).

Government regulations always generate relatively lower levels of compliance to the set rules making it very hard for the rules to be well implemented by the individual firms. This makes self regulation initiatives to be more sensitive to the practices and the constraints that are being faced in the national economy.

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Government involvement in a market economy

Attaining global competitiveness is among the main reasons for government involvement in the market economy. The collective interest of an industry is usually defined by the competition experienced with other foreign markets. Through the involvement of the government in the market economic operations, the local markets will not be burdened with unregulated socially optimal decisions. Despite the fact that the market economy is susceptible to the whims of the legislatures, it can be able to offer the market economy the needed sufficient resources since the bodies that self regulate are faced with the challenge of insufficient funding (Kaufman, 1997).

The growth of mammoth corporations in the market economy, the government decided to pass the regulation act that was well designed to break monopolistic organizations. Government regulations operations have been placed into categories which are; social and economic regulation. Through economic regulations activities price control measures are put inplace to ensure that the final consumers from gouging prices. This has stimulated the growth being experienced in the market economy protecting all the products I from price cuttings by the valued foreign markets. Through social regulations, the public is usually protected through the generation of workplace safety rules and food and drug administration which ensures that the all the consumers purchase safe products. It is paramount to state that the more restrictive a government is towards its economy, the lower the rates in national growth. The government should hence aim at moderating the regulation while still protecting the consumers for relatively stagnant economies to attain growth and compete internationally.

Self-Expansion over merger

 
 
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Giving another company the power to control all the assets and liabilities of the organization has been stated not to be option.  As the corporation decides to expand its operations, it will retain its identity and presence in the target market. There are however numerous challenges that will be encountered by the organization since it will have to incur a lot of financial expenses to ensure that the company gains the expected growth rates. The values held by the company will have to be explored though capital budgeting decisions that will release all the untapped resources. Some of the problems that might be experienced would be the lack of better diversification opportunities for the investments to be expanded into new territories. The capabilities of the business to attain financial growth independently will prove a challenge without the organization accepting a merger since the finances held by the company will not increase. 

To ensure that the company attains profitability through the organizational expansion initiative, stakeholders and managers will have to device a proper plan that will ensure the growth of the organization. A significant outlay of cash to build will have to be devised so that an improvement of the assets can occur. The structures, intangible investments and company equipments will have to be re-organized for the expansions to be attained. Capital projects should be commenced with the acquisition of new assets; expanding the personnel levels for productivity to increase which will raise the number of returns the company will experience (McEachern, 2011).

Other several expansion operations can be undertaken through multi-stage expansion projects that will generate a lot of income for the organization. This will also offer the company the grand opportunity of creating significant value in their local and global business operations. To elaborate the growth process, the data represented below will clearly show how the capital base of the organization will be expanded through diverse expansion operations:

Table 1: Company expansion projects and financial growth attained

Company sectors to be expanded

Cost of expansion projects

Approximated funds to be generates

Final growth to be attained

Main company assets

$5,000,000

$16,000,000

$11,000,000

Personnel levels

$690,000

$ 2,000,000

$1,310,000

Investments

$85,000,000

$150,000,000

$65,000,000

Totals

$90,690,000

$168,000,000

$77,310,000

 

   

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