External Influences in Business
Governments set up many interventions that guide businesses. Businesses will normally change the way they operate when the government changes these rules and policies. Government economic and market policy may have an influence on the productivity of businesses. Business owners must adhere to regulations established by the governments on a local, state and federal level. Let’s discuss the potential interventions reasons in markets and evaluate the effects.
TV, press and public advertisements for smoking are banned by the government within the UK. High tax rates are placed on the purchase of cigarettes to discourage people from smoking. In 2007, smoking was banned in nearly all enclosed workplaces and public spaces in the UK. They also promote anti-smoking campaigns and encourage alternatives to smoking such as patches, E-cigarettes and nicotine gum. These interventions were made to improve public health, protect non-smokers and children, and to help reduce the strain on the NHS by reducing smoking based illnesses. In this table below we can see how this intervention helped reduce smoking.
1974 - 2011, Great Britain
1974 1978 1982 1986 1990 1994 1998 1998 2002 2006 2010 2011 Men
45 38 35 31 28 28 30 27 23 21 21 Women 41 37 33 31 29 26 26 26 25 21 20 19
Alcohol Consumption Intervention
Government backed campaigns raising awareness of the dangers of excessive alcohol consumption are a good example. The government made a move to stop alcohol related adverts being shown during the daytime to minimise exposure to young people and children. Alcohol is one of the biggest behavioural risks for disease and death, for example in 2010 to 2011 there were 1.2 million alcohol related hospital admissions and around 15,000 deaths caused by alcohol. Therefore they are trying to reduce the number of deaths influenced by alcohol consumption as well as NHS costs: every year alcohol-related harm costs society £21 billion.
Minimum Wage Intervention
The main aim of introducing minimum wages is to reduce poverty and to protect workers who have little or no bargaining power with their employers. An alternative approach to imposing a legal minimum is to try to boost the demand for labour. The National Minimum Wage rate per hour depends on your age and whether you’re an apprentice - you must be at least school leaving age to qualify. There is also a government influence on markets trying to encourage, promote or shape the future, for example, by:
Governments play a most important part in trying to stimulate employment. For all job seekers, the government has created what is called 'The New Deal', offering people the chance develop their training. It also helps them to practice on different government funded and sponsored employment schemes.
Education and training policy:
Education and training in the UK provides a valuable contribution to business. The government plays an important part in forcing through education and training changes, for example by creating more Vocational Subjects in the school curriculum.
The government can encourage trade, deject goods coming in from other countries (import) and promote sales of British goods abroad (export).
Let's look at an environmental issue caused by the business IKEA. The company's values were challenged when IKEA was confronted with environmental concerns during the 1990s. IKEA’s problem was from the use of formaldehyde in the production of particle boards for furniture, which are an essential tool in IKEA’s cost cutting strategy. Formaldehyde is a colourless gas used in the manufacturing process. It is naturally occurring and is not harmful to animals or plants, however, it can cause an allergic reaction if in contact...
Bibliography: Heidi Owens, A Natural Step Case Study,
http://www.naturalstep.org/en/usa/ikea , 29 Nov, 2013
Geoff Riley, AS Market Failure,
http://www.tutor2u.net/economics/revision-notes/as-marketfailure-government-intervention-2.html, 30 Nov, 2013
Frank Williams, The Effects of Government Policies on Businesses
http://smallbusiness.chron.com/effects-government-policies-businesses-65214.html, 29 Nov, 2013
http://www.corerfid.com/technology/TechnologyIssues/IssuesPrivacy.aspx 30 Nov 2013 29 Nov, 2013
Jane Ellison MP, Public Health
https://www.gov.uk/government/policies/reducing-smoking, 29 Nov, 2013
Alcohol and young people - the law
https://www.gov.uk/alcohol-young-people-law, 29 Nov, 2013
National Minimum Wage rates
https://www.gov.uk/national-minimum-wage-rates12, Nov, 2013
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