ROLE OF THE STATE AND ITS

IMPACT ON BUSINESS ORGANIZATIONS

IMPORTANT INVOLVEMENTS OF THE GOVERNMENT WHICH
HIGHLIGHTS ITS FUNCTIONS ON REGULATION AND PROTECTION OF THE
GENERAL PUBLIC

 ROLE OF GOVERNMENT IN BUSINESS

 Privatesector is the chief economic force of every
country, but it needs government regulation.
 The Constitution gives the government the power
to regulate some commerce.
CONSUMER PROTECTION
 When a vendor fails to honor the guarantee, the purchaser
has recourse in the law.
 When a product causes harm to an individual, the courts
may hold the vendor or manufacturer responsible.

 LABELING

 Manyfoods, must display nutritional content on the

packaging.
OTHER MANIFESTATIONS OF CONSUMER
PROTECTION
 Business need the court system for protecting property rights,
enforcing contracts, and resolving commercial disputes.
 Government protect consumers from business.
 Government hears and corrects consumes’ complaint about business
fraud and put into effect recalls of substandard and dangerous
products.
 Government controls private companies’ actions to protect public
health and safety.
Example: Control effort of the Food and Drug Administration (FDA)
banning harmful drugs and medicines.
CONTRACT ENFORCEMENT

 Businesses deal with other businesses through contracts.

 The government enforces these contracts.
 Contracts may be complex or they may be simple.
 If one party fails or refuses to meet its obligation under a
contract, a company will turn to the government’s legal
system for enforcement.
EMPLOYEE PROTECTION
 Many agencies work to protect the rights of employees.
(Regular employment, probationary employment, minimum employable age,
prohibition against stipulation of marriage, anti-sexual harassment law, etc.)

Examples:
The Occupational Health and Safety Administration- an agency under the
Department of Labor. Its mission is to ensure a safe and healthful work
environment.
The Equal Opportunity Commission protects employees from discrimination.
The minimum wage law- set a hard minimum benchmarks of compensation.
ENVIRONMENTAL PROTECTION

 EXTERNALITY
 When a marketing transaction impacts a third party (often the
environment) besides the marketer and purchaser.
 CLEAN AIR ACT
 The comprehensive federal law that regulates air emissions
from stationary and mobile sources.
 Addresses emissions of hazardous air pollutants.
INVESTOR PROTECTION

 Government mandates the companies make financial

information public, thereby protecting the rights of
investors and facilitating further investment.
-Generally done through filings with the Securities and
Exchange Commission.
ISSUES THE GOVERNMENT SHOULD ADDRESS WELL
IF ITS COUNTRY WANTS TO BE CONSIDERED BUSINESS AS WELL AS
INVESTOR FRIENDLY

 STARTING A BUSINESS
 Should be easy for anyone in a particular country.
 Should be counted in days or weeks only under ideal
setting, not months.
 LICENCES
 Should be more simplified.
 EMPLOYING WORKERS
 Has to be in an environment where Fair Labor Practices thrives
but not to the point where workers are overly pampered.
 Pampered labor scares off investors.
 GETTING CREDIT
 Facilities should be present
 Banking system and financial institutions should be healthy to
easily obtain credit for business.
 PROTECTING INVESTORS
 There should be a clear and functioning government policy
that protects investor’s money.
 Can be a government guarantee or arrangement
 PAYING TAXES
 Tax system should not be in a way that is discouraging to
investors in terms of incentives and disincentives.
 EXPORT POLICY
 A country should be more liberal in its policy on the entry
and exit of goods.
PERMISSION
 Most businesses need to register with a state government to
operate.
 The function of this registration is usually to define the
financial liability the owners of the company have.
 Registration also allows the government to monitor companies
to execute its other functions in the business world.
TAXATION

 Governments at all levels tax businesses, and the resulting

revenue is an important part of government budgets. Some
revenue is taxed at the corporate level, then taxed as personal
income when distributed as dividends.
ROLE OF GOVERNMENT POLICY

 Promotes businesses
Examples:
Tax holidays for foreign companies in the Economic Zone
(ECOZONE)
Tax benefit the government is giving to board of Investment
(BOI) registered companies.
These companies are getting quality services at a relatively
low-cost.
PRESSURE GROUPS

 Organized group that seeks to influence not only

government policy but also private enterprises’ operating
policy.
 Concerned in the protection of and advancement of a
particular cause or interest.
TYPES OF PRESSURE GROUPS

ECONOMIC PRESSURE GROUPS

 GIANT PRIVATE CORPORATIONS (THE GIANT CONNECTION)
 PROFESSIONAL ORGANIZATIONS
 TRADE ASSOCIATIONS
 TRADE UNIONS
GIANT PRIVATE CORPORATIONS
(THE GIANT CONNECTION)

 The size and subsequent power of these companies can

rival that of the government, and they therefore carry
enormous political weight.
 do some maneuvers to outdo their competitor through the
use of “special connections”.
PROFESSIONAL ORGANIZATIONS
 Powerful group bound by the common interests of its members.
 This group has some very powerful members in it but powerful
only in the professions that they represent
Prime Examples: Philippine Institute of Certified Public
Accountants (PICPA), Philippine Medical Association (PMA),
Integrated Bar of the Philippines (IBP)
 The Philippine Bar through the body called the Judicial and Bar
Council (JBC) plays an important role in the selection and
nomination of justices which is also an important source of
opinion.
TRADE ASSOCIATIONS
 Association of business with common interest to protect to.
 This business groups have seen the need to organize as
essential if they are to influence the formation of policies in
government ant private enterprise.
Examples: Chamber of Commerce, business clubs, and other
commercial associations like the Association of Hospital Owners
 ASSOCIATION OF HOSPITAL OWNERS
 Made a hard stand on the implementation of the cheaper
medicines law
TRADE UNIONS
 Works for the protection of the labor sector
 Cluster of unions that can have pressure on governmental
policies and companies’ philosophy and governance.
 Partido ng Manggagawa (PM)
 Associated Labor Union- Trade Union Congress of the
Philippines (ALU-TUCP)