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Government policy forms a critical component in any business. This is because government policy is what determines the business processes and procedures that will be followed in meeting business objectives. Normally, governments tend to formulate business policies that favor their economic interests. These policies are usually influenced by members of the political and ruling class elite. As a result, some of the policies formulated do not necessarily promote a healthy business environment. Before governments consider what kind of polices they should undertake, they need to consider the specific rationale that will be used in the policy interventions (Organization for Economic Cooperation and Development, 2011). When little consideration is given to the rationale used, this leads to the creation of an unfair business environment in which some members benefit more than others. Due to an unbalanced business environment, some players in the industry end up losing their market share. For example, the government may introduce policies that encourage expenditure on schools, which will benefit businesses that deal more with school supplies (The Times 100, 2012). Hence, government policies may provide a major boost for certain business settings while snatching it away from others.
A change in the government policies may also be triggered the introduction of certain regional policies into the country’s policy framework. This phenomenon has been observed in different regional contexts where the formation of new unions has led to new trade and business policies being formulated. Once these policies are formulated, each member is required to abide by them. For example, in Europe, when the European Union was formed, the incorporation of new directives and regulations into each of the European nation’s laws had a significant impact on business activities in Britain (The Time 100, 2012). Hence, when unions are being formed, businesses usually suffer a lot due to new taxation and legal requirements.
Terrorism is another major issue that has the capability of affecting the business environment. In the recent past, terrorism has become a global issue that has prompted national governments to institute preventive measures. These measures are usually intended to safeguard business and members of the population from undergoing major losses. In essence, a terrorism threat may result in the closure of business and evacuation of human population (Richardson & Gordon, 2007). Terrorism threats may also result in major infrastructural damages, which may affect critical processes needed for the success of any business. For example, the occurrence of a terrorism event may result in the destruction of an important road network or it may result in the cancellation of flights from a particular destination. As a result, this may interfere with the transport and delivery of certain supplies to a retail store or it may affect the occurrence of a strategic meeting between two business executives.
Additionally, terrorism may affect business operations in many dimensions, especially those that may not be seen as critical. For example, terrorism may affect the transmission of global business operations. In the world of business, there are certain establishments that rely on their supplies from particular global locations. For example, a seller on eBay.com may be selling items to customers in the United States (Brian, 2004). Hence, when a terrorist event occurs in the United States, this may affect the normal shipment process of some items due to the occurrence of diverts in certain terminals. For example, if a terrorism event occurred in California, a shipment of mobile phones destined for California may end up being delayed at a terminal in the United Kingdom while awaiting decision on the choice of an alternative terminal other than California (Brian, 2004).
Differences between US and England legal practices
In as much as there may be some similarities between the law practices in the United States and the United Kingdom, there are certain fundamental differences that exist between the two economic giants. First, in the United Kingdom, the Misrepresentation Act of 1967 gives sellers the chance to eliminate the term representation to minimize the risk of a torturous claim from taking place, while in the United States, it is common to find buyers being subjected to warranties and representation that are meant to determine the course that misrepresentation will follow (Ferera, Philips, & Runnicles, 2007). In this regard, buyers in the United States are subjected to different legal protection mechanisms compared to buyers in the United Kingdom. Secondly, in the United Kingdom, if a buyer had background knowledge before the execution of an agreement it results in a breach of warranty; however, in the case of United States, if a buyer had background knowledge, the determination of a warranty breach will depend on the circumstance. (Ferera, Philips, & Runnicles, 2007).
Thirdly, in the United Kingdom, the seller’s disclosure against warranties expressed in a sale and purchase agreement is usually contained in a separate letter of disclosure and not in the agreement schedule (Ferera, Philips, & Runnicles, 2007). In this regard, it is the buyer’s discretion to read the seller’s disclosure since it may easily be overlooked in some circumstances, consequently giving the seller an advantage in case a legal issue arises. In the United States, the buyer is usually given the authority to allow disclosures of specific elements that are related to specific segments expressed in the warranties (Ferera, Philips, & Runnicles, 2007). In addition, it is not common to come across general disclosures as seen in the case of United Kingdom. This has the effect of protecting the buyer from certain liabilities that may not be clearly expressed in some segments of the warranty statements.
Tax Policies in Capitalist vs. Socialist Nation
Socialism refers to an economic system that contains elements of communism as well as capitalism (Madura, 2006). In this economic system, governments play a major role in controlling the way business ownership takes place. The government also provides the bulk of essential services such as health care. As a result, socialist nations tend to have some of the highest taxation rates to sustain governmental expenditures (Madura, 2006). The taxation policies ensure that there is a tradeoff between the requirement for high taxes and provision of certain services to the society. The taxation policies in socialist nations also discourage the establishment of individually owned businesses while encouraging the establishment of firms that are run by a society or community (Madura, 2006). In addition, the taxation policy in socialist nations gives express authority to the government to make decisions on how tax is spent to develop the national economy.
Capitalism refers to an economy system in which mechanisms are put in place to safeguard the individual rights of citizens. The business environment in capitalist nations provides more freedom with regard to competition. The taxation policies in capitalist nations are relatively low because the government provides subsidies to encourage entrepreneurship (Madura, 2006). The policies also provide more authority to the citizens in determining the expenditure structure of the funds accrued from taxation (Madura, 2006). In essence, the taxation policies in capitalist nations promote less interference from governments in the running of individual businesses. In addition, the taxation policies in capitalist nations are designed such that member of the business community are able to raise concerns regarding the operational framework followed in certain business segments, for example, there may be different operational frameworks in manufacturing segments compared to retail establishments
Explanation of Policy Strength on Dollar
The action of the Federal Reserve slashing interest rates and the European Central Bank holding interest rates at steady levels has a definite impact on the relative strength of the dollar against the Euro. The Federal Reserve is given authority to develop monetary policies, which are designed to influence the availability of money and credit facilities in the county (The New York Times, 2012). These policies are usually exercised by changing interest rates and purchasing financial assets in order to influence the direction in which economic growth takes. These monetary policies are selectively developed to respond to certain conditions in the market. In order to keep interest rates at a record low, the Federal Reserve usually amasses sufficient funds, which are then given out to bail out corporations and provide mortgage securities (The New York Times, 2012). This way the interest levels charged by the lending financial institutions are kept at the lowest levels in order to assist the affected corporations in recovery.
In essence, the action of lowering the interest rates of the Dollar reduces the relative strength against the Euro because the European Central Bank can buy more Dollar reserves while the Dollar is unable to buy more Euro reserves. In the case of the European Central Bank, the action of keeping interest rates at a steady level protects the investors from losing against the Dollar because of the low value of the U.S Dollar. According to the Foremost Currency Group (2012) the exchange rates between the Dollar and Euro was affected when the Euro was kept steady at €1.20 and resulted in low returns from investors while the currency remained stronger against the Dollar. This is driven by the fact that lower interest rates would actually weaken the currency (Foremost Currency Group, 2012). Thus, this shows the interaction that takes place between the Dollar and Euro in the after the actions taken by the respective authorities (Federal Reserve vs. European Central Bank) who are responsible for controlling the interest rates. In the recent Wall Street meltdown of 2008, the Federal Reserve responded by instituting recovery mechanisms that were aimed at supporting the economy and preventing it from undergoing possible collapse (The New York Times, 2012). In this regard, the Federal Reserve held interest rates at near zero levels after December 2008 (The New York Times, 2012). Consequently, this affected the exchange rates against other foreign currencies. Nevertheless, at the time, the interest rates of the Euro were fluctuating at lower levels since the collapse of the Wall Street also affected trade activities in Europe.
According to Blecker (2003), in the peak of February 2002 when there were similar efforts from the United States of lowering the Dollar, other nations such as China maintained fixed exchange rates as a way of responding to the potentially market-driven scenario. Similarly, the action taken by the European Central Bank of ensuring that the Euro remains during this time can also be seen as a positive reaction to safeguard the value of the Euro. In essence, since the impact on the currency rate is actually market driven, it implies that the exports and import markets in both countries will also be affected by the action taken on the interest rates
Legal Appropriateness of International Companies Employing Minors
The issue of parents allowing their children to work in order to survive is subject to different viewpoints. Indeed, if parents in economically deprived areas allow their children to work despite there being institutions and mechanisms in place to safeguard the rights of children, international companies should pursue the same as long as the children are treated fairly. In this regard, fair treatment implies recognizing the regulation provided by the International Labor Organization. This will also entail acknowledging the physical, psychological, and intellectual limitations of children in fulfilling certain jobs (Derrick & Megan, 2008). When these limitations are recognized, it will be easier to deploy children in relatively safer work environments, which will not result in misuse and exploitation of their labor. Additionally, when children are deployed, the international companies need to take positive measures by empowering children intellectually through part-time education programs (Derrick & Megan, 2008). These programs will ensure that the children develop better skills that will increase their chances of getting better opportunities.
Moreover, the international companies need to provide better incentives when employing the children. While doing this, they need to choose a reasonable age bracket for deployment. There should also be a special criterion for selecting the qualified candidates for the jobs (Derrick & Megan, 2008). This will ensure that only the genuine children are selected. The criterion used will ensure that a proper assessment is conducted of the children after receiving appropriate consent from their parents. Additionally, the international companies should put mechanisms in place that will protect the children from exploitation. Normally, when children are employed in some settings, there is usually a tendency of paying them meager wages (Derrick & Megan, 2008). Reports also indicate that they are subjected to manual labor of magnitudes that they cannot manage. As a result, they end being physically abused and mistreated. The way forward is for international companies to develop appropriate payment schemes that are based on industry standards for unskilled workers. A portion of the money paid to the children will be submitted to their parents while the remainder will be kept as their savings. The international companies’ management will also need to ensure that the children’s upkeep is kept is maintained at the best standard.
Nevertheless, there will be need for policies to be developed by other industry stakeholders, especially children rights organizations in order to prevent international companies from using this opportunity unfairly. Several suggestions can be proposed. First, restrictions will be placed in certain industries where safety audits have been conducted to approve the capability to accommodate children in chosen roles. Secondly, the companies will need to provide special incentives for the children being employed and among these incentives will include the right to pursue education. Thirdly, the companies will also be required to provide medical and life insurance for these children. Fourthly, the children will only be required to work for a specific period of time, which gives them sufficient time to rest and to pursue their education (Derrick & Megan, 2008). Fifthly, the companies will be required to ensure that these children progress in their education and that they will be absorbed as skilled staff upon completion of specialized training in an area that will benefit the company. Sixthly, there will be need to formulate a policy that will limit the percentage of children that can be employed in a specific setting. For example, the percentage can be placed at 2% so that only genuine cases are allowed. This will also safeguard the professional image of the companies that are involved.