Every country has its own regulations, laws and restrictive bodies or agencies governing the manufacturing, sales, marketing and distribution of products inside the country. Laws and regulations are deliberately made for man and other institutions as a guide to bring order and saneness into the society. Because of this, it is likely that their application will impact upon the plans of firms; their effects on a given firm are also inevitable.
An attempt would be made to discuss nominal regulations and laws with particular reference to aviation and airline, environmental regulations, securities market regulations, banking regulations, research (and development) co-operation regulations, stock options regulations, labour regulations, intellectual property social security regulations industry by industry and effects on the plans of firms where necessary.
For example, the Airport High Density Rule (HDR) in the aviation industry was considered as moot. This rule requires that no more than 155 flights take off and land at O'Hare Airport and at three other major airports in the country between 6.45am and 9.15p.m.That restriction was expected to keep number of airline operations at O'Hare during that timeframe and also to keep the amount of noise generated by aircraft. When this unsuccessful, a law was planned to get eliminate the rule.
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On the tobacco industry, e.g., the Food and Drug Administration (FDA), an agency of the US government promulgated a rule on tobacco in the federal register to regulate the sale and distribution of butts and smoke-free tobacco to children and adolescents supported the health consequences of tobacco use. The rule specifies that anyone jr. than 18years aged should not be sold butt and smoke-free tobacco. The rule further requires manufacturers, distributors, and retailers to follow with certain conditions regarding the sale, distribution and promotion of tobacco products. Thus, hawking machines and self-service displays were banned; billboards inside 1,000feet of schools and playgrounds were also prohibited. This might have adversely affected firms who engage in such businesses.
In commercial enterprise terms, however, the rule is expected to produce significant health-related benefits, ranging between $28 billion to $43 billion each year supported the premise that many adolescents would not start smoking because of the rule; with the FDA estimating that the rule will impose one-time costs of around $187 million.
With firms of all sizes, access to capital is of great grandness especially when it comes to start-ups.Laws and regulations may affect the amount of investment available either from foreign or local investors or commercial enterprise institutions. The most important regulations on capital are commonly set by governments. These rules or regulations primarily affect the development of risk capital even though they are meant to guard against defaults. In the UK e.g., the introduction of the business angel networks by the government to co-ordinate the flow of SME investment capital is proving successful-a positive effect. Also ascribable lack of access to pension off off fund capital in the European Union there is a limited institutional investment. In the case of the United States, most capital venture firms prefer to make investments large than $3 million, spell most entrepreneurs are unable to obtain more than $250 000 from own source and close relations.
The impact of regulations on plans of firms especially those who are technology-based limits the risk capital funding for these firms and affect what they can or intend to do and eventually limiting their capabilities to employ new hands thereby poignant the socio-economic fibre of the society. For example, some government regulations even specifies the type of investors suitable to fund risk capital because of the high risks sure enough classes of investors.
In some countries, most firms' source of funding is through the securities markets. In the UK e.g. apart from the London Stock Exchange, there is Alternative Investment market( AIM); deliberately established to assist SMEs. Quite often, the rules on the registration, listing and IPO in terms of size, age ,profit and direction set up are too costly and unnecessarily complex for small and start-ups. This is notable to hamper access to finance for most firms and invariably making it impossible sure enough firms to pursue their plans and invariably their growth needs. Ghana Sugar Estate is an epitome of firms which are denied requisite funding as a result of moot restrictions on listing to the Ghana Stock Exchange. The effects of this is seen in the overgrown plantations of the freshly formed sugarcane company in the Eastern Region of Ghana, loss of about £2,000 a day in revenue to the company and loss of jobs, and raw materials for most industries which depend on processed sugarcane for their work. The impact on the firms provision process is that medium of exchange imagination will not be available to pay and maintain most of its qualified personnel.
With technology-based firms like which need constant innovations, source of funding is key to their provision so any regulations or laws meant to provide adequate source(s) of finance is welcomed.
The NYSE has come under intense examination to reform as there had been spates of irregularities in the exchange in terms of trading practices. Up till 2001, stocks listed in fractions of eighths and sixteenths i.e. 12.5 cents and 6.25cents severally enabling a specialist buying a stock to sell to make at to the last-place degree 12.5cents.That has narrowed to a mere penny. This is as a result of decimalisation; a rule set up to change trading from fractions to decimals.Decimalisation reduces spread. The largest specialist firm LaBranche & Co., has been affected with a reduction of its market capitalisation being halved to $474million in the past year. The effect of this regulation on LaBranche's plans could be felt in its budget as medium of exchange imagination might not be available. It will also have effect on its investors.
Notwithstanding this, the impact of this decimalisation rule is felt on NYSE which in the long term can tear the Exchange apart thereby poignant the very people the rule seeks to eliminate that is the brokers and specialists on the floor. The effect on NYSE's plan is to start perform its 1.4b shares daily electronically. It is believed that if NYSE does not match its rivals like NASDAQ on automatic trading, investors can take their trades elsewhere and that means a lost of huge annual fees in revenue to NYSE and possibly lost of jobs.
Until recently when it was announced on the TV a planned credit regulation to improve transparency, the credit or loans market has been shrouded with secrecy that most firms were paying overmuch interest which affects their operations. Even though to the large firms the unavailpower of the transparent credit regulation seem to benefit them i.e. their profit, altogether it costs the SMEs to the extent that the US government has introduced new types of regulations that requires Sir Joseph Banks to report their lending to SMEs which are hierarchal and promulgated by the government as a guide for 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 Sir Joseph Banks to create new departments specialising in the origination and sale of small business advice and other secure loans. At the moment some 60% of SMEs now depend on some form of bank credit.
In Ghana, the government has put in place certain regulations which are believed to be in favor of o of small firms like First Allied Loans and Savings Bank. This company posted a profit before tax of about $2m, a mess of money for a new bank. The impact on the plans of this firm is the enlisting of the best human imaginations in the industry culminating in a position to vie favorably with old and big Sir Joseph Banks in the Ghanaian banking industry.
However ,after deregulating in Britain, competition between Sir Joseph Banks and securities markets and among Sir Joseph Banks rose with loan increases to SMEs.Nationwide Building Society was one of such Sir Joseph Banks to benefit from deregulating. It can now vie favorably with other main street Sir Joseph Banks. Nationwide is creating more employment as a result of the deregulating law. The impact on the firm is that profit has hyperbolic and its members are satisfied and thus growth is imminent.
In a world nowadays with improved, challenging and competitive vast technology innovation and know-how, new businesses rise in this sphere as a result of its dynamism. It is also another sphere that has a strong interest in research and development in co-operation. These technology-based firms or enterprises, however, are incapable to engage themselves for in-house research activities. To this end, therefore, there are besides many regulations most popularly the just law. Known also as the Sherman Act, this is meant to prevent monopoly. Microsoft was accused of exploitation its position in the software package market to maintain its monopoly in operative systems. It was also accused also accused of exploitation its operative system monopoly power to dominate the browser market and that Microsoft bundled its browser into its operative system to try to force Netscape out of the browser market. By just standards, a judge gave an extraordinary ruling describing Microsoft's dominance of the PC operative system market as "applications roadblock to entry" and by that Microsoft held its prices well above the competitive level. The effects of this law on the plans of Microsoft is that consumers will now have more choice so Microsoft will have to come out with more innovations to attract more customers and maintain its position in the industry now that there seem to become a competitive market place where all kinds of innovation can thrive. Regulators now appear more powerful and Microsoft will have to reconsider other related laws when provision. The impact on Microsoft's plans in the end will in my opinion be positive delivery about more improvements in the PC operative market.
Another area with regulations of concern is intellectual property laws or intellectual property rights (IPR).The reader's digest word power lexicon defines intellectual property law or rights (IPR) as ''an intangible property that is the result of creativity, e.g. patents or copyrights." Just as research findings are commercially listed by the owners or universities, patents and copyrights are also listed. Although, the filing of patents is generally notable to be inefficient, slow and costly with the system commonly in favor of o of large firms, its epilepsia minor epilepsy could have established chaos in industry. For example a French court subordinate against cyberspace search powerhouse Google Inc.in an IPR case for linking a trade marked search terms and ordered Google to stop. The impact on Google is yet to become significant but it is self-evident that it now sent a content to them to review their plans on their IPO which will in effect affect their business plans leading indirectly to a fall in profit as a result of the effect of the restriction on the search services they provide.
It is wide accepted amongst academics and executives in the business world that, the main assets of most firms is their personnel in other word their human imaginations. There are a number of employee-related regulations and laws in terms of labour, on enlisting and hiring of workers; social security with regard to retirements, pension off offs and health benefits; and the freshly introduced stock options to compensate employee.
The costs and benefits of such regulations are large considering the fact that employee-related issues are somewhat at the fabric of the organisation.In many countries the regulations ranging from fee-charging enlisting services, working hours to social benefits limit the exemption of business executives and entrepreneurs to operate commonly in terms of hiring and retaining qualified workers. Some regulations on labour also restrict the enlisting and dismissal of personnel, defrayal of extra time and 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 48-hour working week including extra time is considered by littler firms to be taken in an inflexible way thereby constrictive their power to make best use of their labour imaginations. These really affect the firms because they are unable to recruit the best of personnel they might be looking which could indirectly affect its operation(plans) as most Sir Joseph Banks choose to deal with firms with most well- qualified personnel. However, to those on the other end of the spectrum, the limitation on the maximum hour regulation is of great benefit and has had positive impact on the plans of the firm. London United Busways Ltd. e.g. has recently recorded its last-place chance event rates as a result of the ceiling of EU maximum driving hours a day (and week besides) thereby preventing tired but money-seeking drivers from driving. The company can now depend on the services of recruiting agencies to cover for the extra hours. The long-term benefit to LUB is that it can employ few workers, give them extra time to cover the requisite hours and save some costs on pension off offs and sick pay to workers. The impact on the plans of LUB is that customers' confidence in the company will increase and enhances its corporate social responsibility stance.
It must be emphatic here that, the introduction of stock options, which are a new and valuable approach to compensate employees, are prohibitive, too regulated or heavily taxed in a number of OECD countries.However, as a result of securities rules governing it, the issue of stock incentives and business rules for their taxation makes it popular with most US small or start-up firms. It is wide used by firms like Yahoo and Google in the early stages to recruit and or keep employees in the company. Even though research into this area is ongoing, it is claimed that they have helped in the high growth of the IT software package sphere at the Silicon Valley with particular reference to Google which has managed to keep its best human imaginations over the years, the impact on the firm is even on the brand image and attributes that it has inborn for itself giving it a competitive advantage over the likes in the IT sphere and also generating employment for a mess of new ambitious graduates.
Certainly health insurance market is another area which is of great concern to most governments as a result of sandals and fraud.Recent studies into health insurance regulations have terminated that state regulation of insurance issue, renewal and rating in the main either reduces health coverage or, on net, has no impact on coverage. Some of these regulations, however, presume that regulations may change the risk distribution of the insured population, raising coverage among high-risk groups and individuals but lowering coverage among low-risk groups and individuals, with no significant impact on overall coverage. The studies also assumed that insurance markets are competitive, and therefore, that higher price is an inevitable effect of regulation. Smaller insurers with increasing returns to scale may respond otherwise to regulation than large insurers with comparatively constant returns to scale.
The effects and impacts of laws and regulations on the plans of businesses cannot be overemphatic as the above indicate. Recent insurance scandal in Britain's oldest insurance company, Equitable, nearly caused its demise.Equitable's crisis is alleged to have started as a result of loopholes in regulation governing British insurance industry when it emerged that it did not have comfortable medium of exchange imagination to honour secure annuity policies to a large group of policyholders. The immediate impact on the Equitable insurance was that a court subordinate that it closes all new businesses meaning a fall in services leading to huge debts and also lost of trust and market position to the insurance community and public as a whole which will inevitably force the mutual company to change its business plans and operations.
Throwing more light on this article, a brief look of recent stories and reports might be appropriate.
An Oxfam report in Metro of February 9, 2004 edition, reports that some companies particularly Tesco, Taco Bell and Wal-mart were accused of exploiting workers especially women in the name of lower production costs with unpaid extra time, low payoff and unhealthy conditions as a result of lack of regulations.
In the UK, the recent spate of commercial enterprise scandals leading to loss of pension off offs for retired workers has prompted the government to put forward a bill in fantan to avoid future loss of pension off off medium of exchange imagination to retired workers.
Another story filed by Georgina Littlejohn in Metro of February, 23, 2004, alleges that UK's crumbling infrastructure is holding back British businesses. It is claimed that new Government measures announced in July 2004 to help boost transport efficiency in the road and rail spheres have unsuccessful to be an effective solution sequent in loss of "man-hours" with 37% expression that lost time has a significant impact on their businesses. This costs the UK firms at to the last-place degree 15 billion pounds each year with each firm losing an average of 27,000 pounds.
This is a pointer to the fact that regulations could also be costly to businesses and firms and can negatively or otherwise affect their business plans in the end.
Nevertheless, it is important to say here that the empirical results given here, rest on few observations of laws and regulations and it is recommended that further studies must be conducted to confirm these findings and opinions.
As the interests of business do not always coincide with the broader interests of society, governments might still have to interpose with laws and regulations to accomplish goals otherwise profits.
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