Chapter 9 of our book covers the topic of government relations to businesses in America. The actual beginning of government regulation in business began in 1887 with the Act to Regulate Commerce and with the institution of the Interstate Commerce Commission. This was followed by the Sherman Antitrust Act in 1990. One of the most significant acts that affected business was the Sarbanes-Oxley Act of 2002. This act was designed to review and protect audit requirements and practices.
Today, government is involved in almost all stages of business development and businesses eventually realized that instead of fighting the government’s regulation, it might be more useful to lobby their own positions to political decision makers. In December 2002, a survey revealed that of the 565 Fortune 1000 firms, 72.6% have political interaction with the federal government. And many companies have felt the consequences of not having a presence in Washington. This includes Wal-Mart when they were attempting to open stores in China. Today, Wal-Mart has 5 lobbyists in Washington. In America, the government and business relationship is an ongoing process.
An example of government regulation in today’s economy is the fall of General Motors. Attached is a link to a video with a debate with Peter Flaherty, president of National Legal and Policy Center, debating the actual cause of GM’s death. Flaherty claims government safety regulations and fuel economy standards resulted in making vehicles harder to sale and had car companies creating too many similar vehicles and lessening competition. He claims the biggest short coming was the failure to take on unions and that government regulations distorted the entire standard of the industry.
http://www.youtube.com/watch?v=rWfsHlT65ic
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I definitely agree with Renee when it comes to companies who have lobbyists in Washington fighting for their companies wants and needs. It is not necessary for a company to have interaction with the government but it can certainly help. A company typically has a better chance of cooperating with the government if they try to interact with them by giving them ideas and suggestions for regulations on business.
ReplyDeleteI feel that Regulatory Agencies are extremely important because they set regulations and standards for the citizens to live by. The cooperation of these agencies and the government is crucial for the well-being of America. Even in instances when a business or agency has violated a law or regulation it benefits the company to cooperate with the government and more than likely they will get by with a lesser punishment.
I have provided a link for the Pittsburgh Technology Council. Their purpose is to be a voice for companies around Western Pennsylvania. The PTC employs an experienced government relations team that works to educate individual technology firms about government-related threats and opportunities.
http://www.pghtech.org/government-relations/default.aspx
The role of lobbyist has become increasingly important for businesses. With increased government regulation (at least in this administration) it is important that a business has their side of the situation heard by the lawmakers. Regulation can be both good and bad. Typically it is good for consumers and at least somewhat bad for businesses. In my opinion there needs to be a fine line between how much regulation is too much so that businesses can still operate but consumers are not "ripped off". This is where lobbyist are important.
ReplyDeleteThe beginning of the chapter talks about the Sarbanes-Oxley Act of 2002, which came in the wake of a series of corporate financial scandals, such as Enron and Arthur Andersen.
ReplyDeleteAs a branch manager at my previous company, the Fastenal Company, it was your responsibility to sign a document every month and return it to corporate that ensured that your branch adhered to the Sarbanes-Oxley Act. The document required you to sign off on the accuracy of such issues at your branch as cash flow and accounting records. This helped to ensure that your branch was contributing to Fastenal's overall adherence to the Sarbanes-Oxley Act. If there was a random audit of your branch, and some of the issues that you signed off on as being correct on your monthly Sarbanes-Oxley Act were found to be wrong, you faced serious disciplinary action, such as termination in some cases.
The following link provides a description on the Sarbanes-Oxley Act and its various elements.
http://www.soxlaw.com/
Government will always have a hand in business. How much they should be involved, however, seems to be up for debate quite often. The government involves itself with business so much in order to protect the consumer. Without a governmental hand in business, there would be no regulation and businesses could essentially do as they please. As Chris said, the role that the government plays in business is good for the consumer but bad for business. However, organizations tend to look to the government for assistance when bailout times come around and they need additional help in order to stay in business.
ReplyDeleteAttached is a link discussing the governmental role in today's mortgage crisis. http://www.christonium.com/manhattan/Government_Involvement_and_The_Mortgage_Crisis
In my opinion government relations with businesses works better for the consumer essentially. But as Kayla stated the government also bails many companies out in times of crisis, so businesses have to appreciate government relations because when their cards are down the government make efforts to rescue them. The government has to regulate businesses because if they didn't consumers would suffer. At the same time the government will take care of these businesses because our economy will grow if we have more successful enterprises. Their stance on business should be as overlookers. They should watch over business to ensure that all parties are treated fairly. Government regulations are a nescesary evil in the business world.
ReplyDeleteThis link has more iinformation if needed.
http://www.j-bradford-delong.net/TotW/business_and_government.html
As many would agree, having the government on your side is far better than having them against you. Just ask GM, Citi, etc.
ReplyDeleteIn order to have a positive relationship with the government organizations must play by the rules they have had established for them. Whether the organization agrees with the practices or not, its the law. Some organizations with large governmental interaction even go as far as dedicating entire departments and the resources needed to fund them to government relations and compliance.
Having interned with a financial related organization that utilized a special class of investors to generate capital I am well aware of the filings that were required with the SEC and other governmental divisions. The paperwork, often lengthy, required details that some felt were rather personal. However, the penalties and future scrutiny for not complying with the filings were far more severe.
This link shows an example of one such form that had to be filed:
http://www.sec.gov/about/forms/forms-11.pdf