In this essay I intend to look at how the government's interventions affect the business environment. I will look into what actions government can take, and their effect on firstly the firms and then on the consumers and people in the business environment. My intention is to show that governments help the society and business environment more than hinder them.
Introduction.
Government play an all deciding role in creating a successful business environment. Without a government, its interventions and legal policies the business environment would very chaotic. Governments help both the consumers and producers, and therefore create a much more stable and well functioning business environment. However some interventions will benefit one and not the other, however if done correctly serves for a much better business environment.
Government interventions on the firm.
If a market had no government intervention, the producer would be able to abuse their power. There are many factors involved to ensure that producers do not abuse their power. One of these is minimum wage. Had there been no government intervention, the companies in the market would be able to lowers wages in order to keep costs down. Government make sure that the working environment is kept at an acceptable standard, as is the case with the health inspections. Another thing they do in order to help the business environment is to ensure that there is competition in the market. If a market is being controlled by a few firms and the barriers to entry are high, the government might choose to help new firms get started, in order to make the market more competitive. .
Government can of course also hinder the business environments in different ways. One example can be found in Finland. When I lived in Finland four years ago, I noticed how the Finnish alcoholic beverage market was structured. It is controlled by a firm called Alko, which is government owned and has a complete monopoly on the market.