Long Term Investment Decisions Name: Lecturer: Course: Date: Introduction Prior overseeing a merger, Wal-Mart company should evaluate their capital budgeting decisions by taking into consideration certain factors like the anticipated risk, cash flows/ returns, legal issue, government regulations to mention just but a few of the factor (Ghuman & Aswathappa, 2010)…
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Therefore, this study aims at providing a sharp insight on why government regulations may or may not be needed in a market economy. Connectively, the study will put forth possible complexities that Wal-Mart Company may experience when conspiring self expansion strategy rather than a merger. In above connection, the study will put forth the possible forces that may emerge when creating a convergence between stock holders interest and as well as their impact on profitability of Wal-Mart company. 1. Explain why government regulation is or is not needed, citing the major reasons for government involvement in a market economy. Provide support for your explanation. There are various reasons why government regulation may be needed in a market economy among the reasons include; to protect consumers against exploitation by vendors via ensuring goods and services supplied meet health and quality standards (Rodine-Hardy, 2013). Government regulation may be needed to ensure that all business have been licensed in order to eliminate illegal business from being carried out. In above connection, government regulations may be needed in order to promote economic stability through application of fiscal and monetary policies (Rodine-Hardy, 2013). ...
2. Justify the rationale for the intervention of government in the market process in the U.S. The need for government intervention arose from the fact that there was an emergence of more powerful and bigger corporation in the United States, creating a need to for protecting small business against stiff and unfair competition (U.S. Department of State). Additionally, during 1930’s the united state experienced economic down turn that made its citizen to complain that capitalism had failed (U.S. Department of State). The citizens called for intervention from the united state government to remedy the situation. The united state government intervened by promoting economic growth, this further led to creation of employment opportunities (U.S. Department of State). Therefore, it can be scrutinized that government interventions is vital not only for individuals but also for the benefits of the entire market economy (U.S. Department of State). 3. Assume that the company’s is considering a merger. The possible merger currently faces some threats and that the industry decides on self-expansion as an alternative strategy, describe the additional complexities that would arise under this new scenario of expansion via capital projects. The additional complexities that Wal-Mart Company may experience through self- expansion (via capital projects) include: Financial complexities, whereby, venture capital firm may fail to finance Wal-Mart expansion plan if they perceive some level of intolerable risk (Amann, Maznevski & Steger, 2007). Additionally, Wal-Mart Company may experience hiring complexities when identifying qualified staffs to fill new positions created as a result of expansion (Amann,
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