Business Environment - Assignment Example

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Name Instructor Course Date The Impact of Fiscal and Monetary Policy on an Organisation Fiscal and monetary policies are drafted by governments to encourage or discourage money-spending by citizens. For example, the government can increase money available to citizens by instructing Central Bank to reduce the interest rates it charges to lend money to commercial banks…
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Download file to see previous pages In other cases, reduction of tax on consumer goods encourages growth of primary industries and increases consumer purchasing power. This gives supermarkets and other retail shops a chance to sell more products and increase their profits. These profits can then be reinvested back to the economy. Low taxes are also meant to encourage the growth of fresh firms. This is because young businesses are battling with competition and thus low taxes help them retain most of their profits. Likewise, spending by the government assists fresh firms. The government is able to give out revenue by redistributing it to those new organizations through subsidized loan, grants, or other forms of spending which are driven towards expanding businesses. For instance, a Supermarket research organization may be awarded federal or state loans and grants in order to start up new stores of supermarket (Frascona 18). Fiscal and monetary policies have a disadvantage because they take a lot of time for the anticipated economic effects to apply. Despite this, the policies are helpful to the economy because they help increase aggregate demand where it is lacking and also reduce it (Fishman 11). The Impact of Competition Policy and Regulatory Mechanisms on an Organisation Competition policy and regulatory mechanisms have various impacts on business organisations such as companies and partnerships. These policies affect various types of businesses differently. For example, a supermarket such as Traders Joe is a large business that was affected differently by competition from other forms of businesses. The supermarket’s sales, in 2008 were affected by unhealthy competition from other retail chains. Consumer freedom to choose what to consume from this supermarket was limited by an advertisement that portrayed it as selling inferior goods. This made customers not buy goods from it. This is an example of how advertisements can limit consumer freedom (Lewis 10). Other activities that can lead to unfair competition may come from supermarkets that have large presence in an area. These supermarkets may raise and lower prices as they wish in order to meet their profit targets. Such supermarkets may also be in a position to buy products from manufacturers at very low prices. This means they will pass the same product to final customers at low price compared to other supermarkets (Frascona 18). A supermarket may be also having a strong brand name which makes it to be considered as one of the most successful retailers. According to Lewis, the government should control such supermarkets by taxing them more money than other supermarkets (9). This will ensure healthy competition that increases efficiency and efficient use of resources. The government may also come up with regulatory mechanism on certain products. For example, the government completely making it illegal for supermarkets to sell manufactured or processed foods to ensure that its citizens are healthy. The government may also have a zero tax on infant’s foods and clothing to encourage population growth in advance countries of the world that shows decreasing population trends (Frascona 18). Effects of market structures on the pricing and output decisions of a business The forces of demand and supply are at times not the only determinants of market price. Market structures such as oligopoly and monopoly disrupt the normal forces of ...Download file to see next pagesRead More
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