The Impacts and Effects of Specified Laws and Regulations on a Given Firm


Each country has its own regulations, laws and regulatory bodies or agencies governing the manufacture, sale, marketing and distribution of products in the country. Laws and regulations are purposefully designed for human beings and other institutions as a guide to bring order and sanity back to society. For this reason, it is likely that their application will have an impact on business plans; their effects on a given company are also inevitable.

An attempt would be made to discuss the regulations and laws specified with particular reference to aviation and airlines, environmental regulations, stock market regulations, banking regulations, research (and development) cooperation regulations. ), regulations on stock options, labor regulations, intellectual property and industry-by-industry safety regulations and effects on company plans as necessary.

For example, the high density at airports (HDR) rule in the aviation industry has been seen as controversial. This rule requires that no more than 155 flights take off and land at O ​​& # 39; Hare Airport and three other major airports across the country between 6:45 a.m. and 9:15 p.m. This restriction was to maintain the number of operations flights to O & # 39; Hare during this time. and also to maintain the amount of noise generated by airplanes. When that failed, a law was proposed to abolish the rule.

On the tobacco industry, for example, the Food and Drug Administration (FDA), an agency of the United States government has published a tobacco rule in the federal registry to regulate the sale and distribution of cigarettes and smokeless tobacco smoke to children and adolescents based on the health consequences of smoking. The rule specifies that anyone under the age of 18 should not be sold cigarettes and smokeless tobacco. The rule further requires that manufacturers, distributors and retailers comply with certain conditions regarding the sale, distribution and promotion of tobacco products. Thus, vending machines and self-service displays were banned; Billboards within 1000 feet of schools and playgrounds were also prohibited. It could have harmed companies that engage in such activities.

In financial terms, however, the rule is expected to produce significant health benefits, ranging from $ 28 billion to $ 43 billion each year, assuming many teens would not start. to smoke because of the rule; with the FDA estimating that the rule will impose one-time costs of around $ 187 million.

For businesses of all sizes, access to capital is of great importance, especially when it comes to a start-up. The most important capital regulations are usually set by governments. These rules or regulations primarily affect the development of venture capital even if they are intended to guard against default. In the UK for example, the introduction of business angel networks by the government to coordinate the flow of investment capital into SMEs is proving successful – a positive effect. Also due to the lack of access to pension fund capital in the European Union, institutional investments are limited. In the case of the United States, most VCs prefer to make investments over $ 3 million, while most entrepreneurs are unable to raise more than $ 250,000 from their own source and of their relatives.

The impact of regulation on the plans of companies, especially those that rely on technology, limits the venture capital funding of these companies and affects what they can or intend to do. do and, ultimately, limit their ability to employ new hands, thus affecting the socio-economic fiber of society. For example, some government regulations even specify the type of investors eligible to fund venture capital due to the high risks for certain categories of investors.

In some countries, the source of funding for most businesses is through the stock markets. In the United Kingdom, for example, in addition to the London Stock Exchange, there is an Alternative Investments Market (AIM); purposely created to help SMEs. Very often the rules for registration, listing and IPO in terms of size, age, profit and management are too expensive and unnecessarily complicated for small and start-ups. ups. It is known that this hinders access to finance for most companies and invariably prevents some companies from pursuing their projects and invariably their growth needs. Ghana Sugar Estate is the epitome of companies that are denied the necessary funding due to controversial restrictions on listing on the Ghana Stock Exchange. The effects of this are seen in the plantations overrun by the new sugarcane company in the eastern region of Ghana, the loss of around £ 2,000 per day of income for the business and the loss of business. 39; jobs, and raw materials for most industries that depend on processing. sugar cane for their work. The impact on the business planning process is that funds will not be available to pay and maintain most of its qualified staff.

With technology-based businesses like those in need of constant innovation, source of finance is key to their planning and therefore any regulations or laws intended to provide adequate source or sources of finance are welcome.

The NYSE came under scrutiny for reform as there had been waves of irregularities in the stock exchange in terms of business practices. Until 2001, stocks traded in fractions of an eighth and sixteenth, or 12.5 cents and 6.25 cents, respectively, allowing a specialist buying a stock for sale to earn at least 12.5 cents. cents, which came down to a mere penny. This is the result of decimalization; a rule put in place to change trading from fractions to decimals. Decimalization reduces the spread. The largest specialty firm, LaBranche & Co., was hit by a halving of its market capitalization to $ 474 million last year. The effect of this settlement on LaBranche's projects could be felt in its budget as funds may not be available. It will also have effects on its investors.

This notwithstanding, the impact of this decimal rule is being felt on NYSE which in the long run can tear the stock market apart, affecting the people the rule seeks to eliminate, namely brokers and specialists in the field. . The effect on NYSE's plan is to start executing its 1.4 billion shares electronically on a daily basis. It is believed that if the NYSE does not match its rivals like the NASDAQ when it comes to auto trading, investors can trade elsewhere, which means a huge loss of annual income for the NYSE and possibly jobs.

Until recently, when a proposed credit settlement to improve transparency was announced on television, the credit or loan market was shrouded in secrecy that most companies were paying too much interest. , which affects their operations. Even though for large companies the unavailability of transparent credit regulation seems to benefit them, i.e. their profit, overall it costs SMEs as the US government has introduced new types of regulations that require banks to report their loans to SMEs. which are classified and published by the government as a guide to potential lenders. In addition, in the United States, reforms to reduce paperwork, speed up loan approval, and reduce costs have led a number of commercial banks to create new departments specializing in origination. and the sale of small business advice and other secured loans. Around 60% of SMEs now depend on some form of bank credit.

In Ghana, the government has put in place some regulations that would benefit small businesses like First Allied Loans and Savings Bank. This company made a pre-tax profit of around $ 2 million, a lot of money for a new bank. The impact on the plans of this company is the recruitment of the best human resources in the industry, resulting in a favorable competitive position with the old and big banks in the Ghanaian banking sector.

However, after deregulation in Britain, competition between banks and the stock markets and between banks increased with the increase in lending to SMEs. The Nationalwide Building Society was one of those banks to benefit from deregulation. It can now compete favorably with other high street banks. Nationwide is creating more jobs through deregulation law. The impact on the company is that the profits have increased and its members are happy and therefore growth is imminent.

In a world of today with improved technological innovation and know-how, stimulating and competitive, new companies are emerging in this sector thanks to its dynamism. It is also another sector which has a strong interest in cooperative research and development. These tech-based companies or firms, however, are unable to engage in internal research activities. To this end, therefore, there are also many regulations, including the antitrust law. Also known as the Sherman Act, it aims to prevent monopoly. Microsoft has been accused of using its position in the software market to maintain its monopoly on operating systems. It has also been accused of using the monopoly power of its operating system to dominate the browser market and that Microsoft has integrated its browser into its operating system to try to force Netscape to leave the browser market. According to antitrust standards, a judge issued an extraordinary ruling describing Microsoft's dominance in the PC operating system market as a "barrier to application entry" and, as a result, Microsoft has maintained its prices significantly above the competitive level. The effects of this law on Microsoft's plans are that consumers will now have more choice and therefore Microsoft will have to come up with more innovations to attract more customers and maintain its position in the industry now as it seems. become a competitive market. where all kinds of innovations can flourish. Regulators now appear more powerful and Microsoft will have to reconsider other related laws when planning. The impact on Microsoft's long-term plans will, in my opinion, be positive, leading to more improvements in the PC operating market.

Another area with worrisome regulations is intellectual property laws or intellectual property rights (IPRs). The Reader's Word Power Dictionary defines intellectual property law or rights (IPRs) as “ intangible property that is the result of creativity, for example. patents or copyrights. "Just as research results are marketed by owners or universities, patents and copyrights are also traded. Although patent filing is generally known to be inefficient, slow and expensive, the system being generally in favor of large corporations, its absence could have caused chaos in the industry. For example, a French court convicted internet search engine Google Inc. in an IPR case for associating search terms trademark and ordered Google to stop. The impact on Google is not yet significant but it is evident that he immediately sent them a message asking them to review their plans regarding their IPO which will actually affect their business plans and indirectly lead to lower profits due to the effect of the restriction on the research services that i ls provide.

It is widely accepted among academics and business executives that the main asset of most companies is their people, i.e. their human resources. There are a number of employee regulations and laws that relate to working, recruiting and hiring workers; social security with regard to pensions, pensions and health benefits; and the newly introduced stock options to compensate employees.

The costs and benefits of such regulations are huge considering that employee issues are somewhat at the heart of the organization, in many countries regulations ranging from paid recruiting services to working hours benefits limit the freedom of business leaders. and entrepreneurs to operate generally in terms of hiring and retaining skilled workers. Some labor regulations also limit the hiring and firing of staff, the payment of overtime, and the use of part-time and temporary workers. Coyne (1998) writes that the European Union Directive on the Organization of Working Time which establishes a maximum working week of 48 hours, including overtime, is viewed by small businesses as being interpreted as meaningfully. In an inflexible manner, which restricts their ability to make the best use of their work. Resources. These actually affect businesses as they are unable to recruit the best staff they might be looking for, which could indirectly affect how they operate (plans) as most banks choose to deal with businesses that have the most qualified staff. However, for those on the other end of the spectrum, limiting maximum hourly throttling is of great benefit and has had a positive impact on business plans. London United Busways Ltd., for example, recently had its lowest accident rates due to the cap on maximum driving hours per day (and per week as well) in the EU , thus preventing tired but looking for money drivers from driving. The company can now count on the services of recruitment agencies to cover overtime. The long-term advantage of the LUB is that it can employ few workers, give them overtime to cover the hours needed, and save some costs on workers' pensions and sick pay. The impact on LUB & # 39; s plans is that customer confidence in the company will increase and strengthen its position of corporate social responsibility.

It should be emphasized here that the introduction of stock options, an interesting new approach to remunerating employees, is prohibitive, overly regulated or heavily taxed in a number of OECD countries, but due to the rules on the securities that govern it, the publication of stock market incentives and tax rules for their taxation makes it popular with most small businesses or American start-ups. It is widely used by companies like Yahoo and Google in the early stages to recruit and / or keep employees in the business. Even though research in this area is ongoing, it is claimed to have contributed to the strong growth of the IT and software industry in Silicon Valley, with particular reference to Google which has managed to retain its best human resources at the over the years the impact on the firm is even on the brand image and attributes that it has acquired by giving it a competitive edge over the likes IT sector and also creating jobs for many ambitious new graduates.

Certainly, the health insurance market is another area of ​​great concern to most governments due to sandals and fraud. Recent studies on health insurance regulation have concluded that regulation by The state of the art, renewal and pricing of insurance in general reduces health insurance coverage or, on the net, has no impact on coverage. However, some of these regulations assume that regulations can change the risk distribution of the insured population, increasing coverage among high-risk groups and individuals, but reducing coverage among low-risk groups and individuals, without impact. significant on overall coverage. The studies also assume that insurance markets are competitive and therefore a higher price is an inevitable effect of regulation. Small insurers with increasing returns to scale may react to regulation differently than large insurers with relatively constant returns to scale.

The effects and impacts of laws and regulations on business plans cannot be overstated as the above indicates. The recent insurance scandal in Britain's oldest insurance company, Equitable, nearly caused its demise.The Equitable crisis is said to have started as a result of regulatory loopholes governing the UK industry insurance when it became apparent that she did not have sufficient funds to honor the guaranteed annuity policies. a large group of policyholders. The immediate impact on Equitable Insurance was that a court ruled that it is shutting down all new businesses, which means a drop in services resulting in huge debt and also a loss of confidence and market position for the insurance community and the public at large, which will inevitably strain the mutual. company to change its business plans and operations.

To inform this article, a brief overview of recent stories and reports might be appropriate.

An Oxfam report in Metro from the February 9, 2004 edition, reports that some companies, in particular Tesco, Taco Bell and Wal-mart, have been accused of exploiting workers, especially workers. women, in the name of falling production costs with unpaid overtime, low wages and unsanitary conditions as a result of the lack of regulation.

In the UK, the recent wave of financial scandals leading to the loss of pensions of retired workers prompted the government to introduce a bill in parliament to prevent future losses of pension funds for retirees.

Another story filed by Georgina Littlejohn in Metro on February 23, 2004 alleges that the UK's crumbling infrastructure is holding back UK businesses. It is alleged that new government measures announced in July 2004 to help improve transport efficiency in the road and rail sectors have not been an effective solution, resulting in a loss of working hours , 37% saying that lost time has a significant impact on their businesses. It costs UK businesses at least £ 15 billion a year, with each company losing an average of £ 27,000.

This indicates that regulations can also be costly for businesses and businesses and can negatively or otherwise affect their long-term business plans.

Nevertheless, it is important to say here that the empirical results presented here are based on some observations of laws and regulations and it is suggested that further studies should be carried out to confirm these results and opinions.

As corporate interests do not always coincide with the broader interests of society, governments may still have to intervene with laws and regulations to achieve goals other than profits.

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