The Interdependence of Government and Society - Assignment Example

Business, Government, and Society Question a) Business Government and Society. Government, business, andsociety fields are interdependent. Government comprises of processes and structures, which authoritatively create and apply rules and policies. Business encompasses a variety of institutions and actions while society refers to the networks of human relations, which include institutions, material things, and ideas. The elements in these fields influence each other in infinite ways. There are thus four models, which try to explain the different perceptions of relationships between the elements. These models are the dominance model, the stakeholder model, countervailing forces model, market capitalism model (Hughes & ONeill, 2008). According to the market capitalism model, a business operates in a market environment with dominant economic forces affecting it (Merino, 2012). There is no consideration of non-economic factors in the running of the business. Therefore, political and social forces have weak or no impacts on a business. A government has limited influence on the economy as market economy plays a key role. According to this model, market forces are beneficial to every member of a society as a liberated economy uses economic resources to satisfy society’s needs. Due to this fact, government intervention is not necessary. The government is only required to correct social problems while managers are to ensure efficiency and profitability of their companies or organizations. Due to the benevolent nature of market forces, an individual can privately owns a property as he/she is risking his/her investment. The need for profit making motivates a business owner as he/she invested his/her resources. However, due to the liberated economy, the competition, which exists in a market economy, limits the selfish interest of a business owner. The market causes the quality, quantity, and cost of services or property to affect the profits of a company as these factors attract or send away customers from the company. If a company increases, profits by charging highly elevated prices, low prices of products from a competitor will attract consumers. In the same case, if a company produces quality products while another produces low-quality products, customers will be attracted to the one producing higher quality products. Market economy thus controls itself for the good of everyone. There is thus no need for intensive intervention by the government. Capitalism model has four premises that guide government, society, and business relationships. These premises are the limited intervention by the government, profit being the proper measure of the performance of a corporate, the promotion of social good by economic forces, and the lastly, the view that the work of managers of any corporation is to advance shareholders’ interests (Glossner, 2010). The four premises are important and influential to any business as per the capitalism model. However, the paper applies two of them. The two are the premise that states that the profit is the proper measure of the performance of a corporate and that, which states that management’s key function is to promote shareholders’ interest. In the first premise, a business is not doing well when it is making losses. Therefore, in the case study, Sony’s problem is the lack of profits in its activities. The company is slashing 5,000 jobs and planning to sell its PC business to Japan Industrial Partners (JIP) so as to return to profit making. Through retrenchments, the company is trying to reduce the cost of production. Sony is trying to cut off the unproductive part of the business through its sale of PC business. Through this way, Sony is planning to reduce losses, and again focus more on the promising parts of the company. The second premise relates with first in this case study. According to the second premise, the key function is to promote shareholders’ interest. Interests can be the creation of wealth, helping the needy, promotion of education, and others. However, in the case of Sony, the interest of the shareholders is the creation of wealth. As is presented in the case study, Sony is not creating wealth but exhausting the wealth of the shareholders. Its second problem is thus the failure of the company in its obligation to satisfy the shareholders requirements. Because of this failure, the company is going through restructuring to go back to profit making. Question 1(b) The relationships between government, business, and society create seven environments that every business operates. These are political, economic, internal, technological, cultural, natural, and legal environments. All of these environments are important as each of them can cause a failure of a business. However, the paper discusses internal, legal, and economic environments, which it considers important and challenging to Sony. The internal environment consists of employees, managers, owners, and board of directors. Each of these four groups has unique beliefs, objectives, functions, and needs, which managers must organize to acquire the objectives of the company. In the case study, the management of Sony was forced to consider the reduction of the number of employees of the company one solution to company’s problems. Even though, it might be hard to retrench individuals who have offered their services to the company, this was one of the only solutions, which the management had to effect in order to promote the interest of the shareholders. The legal environment comprises of regulation, litigation, and legislation. Five en-ring tendencies in the legal environment controls business behavior. Regulations and laws have grown in complexity and number. Today, rights that protect stakeholders like consumers, employees, managers, suppliers, and others have expanded. It is thus not easy for a company to retrench its employees as they have legal protection. Due to this fact, Sony is being challenged on the issue of retrenchment, as the 5,000 employees have legal rights that allow them to sue the company at will. Even if the company succeeds in retrenching them, it can be forced to pay litigation fees, and make some payments to the retrenched employees. The economic environment comprises of commodity prices, currency fluctuation, competitor’s actions, wages, government policies, technology change, and many other economic activities, which affect market operation. In the case study, Sony is competing with many other companies yet the situation has forced it to sell its business to one of them. The situation has forced Sony to make plans release its PC business through a sale to Japan Industrial Partners (JIP). The company thus has to consider well its plans as it might be strengthening its competitor. The decision of selling PC business is a challenge as the company is trying to avoid losses while also trying to remain strong in its business environment (Worthington & Britton, 2006). References Hughes, O. E., & ONeill, D. (2008). Business, government and globalization. Basingstoke [England: Palgrave Macmillan. Merino, N. (2012). Capitalism. Detroit: Greenhaven Press. Glossner, C. L. (2010). The making of the German post-war economy: Political communication and public reception of the social market economy after World War II. London: Tauris Academic Studies. Worthington, I., & Britton, C. (2006). The business environment. Harlow: Financial Times Prentice Hall. Question 2(a) Lobbying is an attempt by a lobby group or individuals to influence the directions of decisions or policies made by government’s officials. Organized groups, individuals, legislators, advocacy groups, or corporations can engage in lobby actions. Democratic governments allow lobbying as they consider citizens, organizations, advocacy groups, or corporations as possessing certain rights, which make them able to engage in dialogue with their governments. Corporate lobbying is an attempt by firm and/or corporations to influence their governments so that the decisions they make can favor them, as governments make policies, which influence and shapes the functions of businesses. Because of these facts, corporate lobbying is done to protect the interests of a business (Bouwen, 2002). Question 2 (b) Corporate or firm political activities take different forms, which include contributions to campaigns, moving public opinions through advertisements, promoting advocacy in grassroots, hiring former public official, lobbying, and joining and promoting trade associations. Lobbying is the main tool, which corporations use to engage in political activities. As mentioned earlier, corporations engage in lobbying to promote their benefits. It is, however, difficult to measures these benefits. This is because corporations, which usually engage in lobbying, are quite different from those, which do not. Nevertheless, proofs of successes exist for companies that engage in lobbying. For example, despite the smallness of public sector in U.S, federal expenditure accounts between one-fifth and one-fourth of the total annual GDP. A company can thus influence the federal government to use this amount of money on some of their products or services and thus improve its profits. An example is the JPMorgan Chase & Co, and it has benefited from the lobbying. JPMorgan Chase & Co is the largest multinational financial and banking institution in America. Its total assets amount to 2.515 trillion U.S dollars. The corporate headquarter is situated at 270 Park Avenue, Manhattan, New York City, U.S. The current structure of JPMorgan Chase is a combination of Washington Mutual, Bear Stearns, JPMorgan & Co, Chase Manhattan Bank, and Bank One. The JPMorgan & Co was founded out of the partnership of Morgan & Co and Drexel and was later renamed JPMorgan & Co in 1895 (Vault, 2005). During the economic crisis of 2008, JPMorgan Chase used 5.4 million U.S dollars to lobby for a bailout in 2008. Due to its lobby activities, the company was seen as the one of the important solution to the economic crisis of 2008. Thus due to its lobby activities, the bank received $94.7 billion as bailout money from the Federal Reserve (Freedman, 2010). The company benefited from its lobby activities as it was able to change government policies to its favor. Unlike other companies, it received much support from the federal government when most companies were struggling financially. For example, it was given $30 billion to buyout Bear Stearns. Instead of giving enough financial support to Bear Stearns, Fed saw it necessary for it to be taken over by JPMorgan. References Freedman, J. (2010). The U.S. economic crisis. New York: Rosen Pub. Bouwen, P. (January 01, 2002). Corporate lobbying in the European Union: The logic of access. Journal of European Public Policy, 9(3), 365-390. Vault (Firm). (2005). JPMorgan Chase. New York, N.Y: Vault Inc. Read More