Chapter 10: Regulating Business

Question 1

Spectrum of Regulation

Answer 1

Self-regulation: regulation imposed by the corporation or industry and not by the government or market forces.
●Pros?
●Cons?
●Government regulation
●Pros?
●Cons?

Question 2

Market Regulation

Answer 2

No need for government-imposed laws or regulations.
●Corporation influenced by market forces.
●Laissez-faire approach.
●Government does not interfere with business.
●Consumers can force companies to behave in particular ways by refusing to purchase goods or services or through boycotts.

Question 3

Self-Regulation

Answer 3

Corporate self-discipline regulation
●mission, values statement, codes of conduct or ethics
●Industry self-regulation
●voluntary codes
●Self-regulation involving stakeholders
●Negotiated self-regulation
●Mandatory self-regulation

Question 4

Scope of government regulation

Answer 4

●Government:
●is architect of economic growth
●prescribes rules businesses must follow
●is a major purchaser of goods and services produced by businesses
●is a major promoter and subsidizer of businesses
●is a supplier of debt capital to many businesses (i.e. Tax expenditures or tax credits; Chosen instrument)
●is a rescuer of failed businesses

Question 5

Scope of Government Regulation

Answer 5

Government:
●is the protector of business and producer interests
●is the owner of business enterprise
●is a partner with business in some endeavours (i.e. Mixed enterprises; and Public-Private Partnership (PPP))
●directly manages (through regulation) large areas of private business activity
●is the protector of various societal interests against business exploitation

Question 6

Legislating CSR

Answer 6

Legal system can be used to protect stakeholders (e.g., investors, consumers, employees).
●Attempts have been made to legislate CSR in U.S., UK, and Canada but with only limited success.

Question 7

Business ess Involvement in Politics:

Answer 7

Financing of political parties.
●Publicly expressed support for a candidate or party.
●Publicly expressed views on political issues.
●Executives running for public office.
●Management’s position on employee participation.

Question 8

Lobbying

Answer 8

All attempts to influence directly or indirectly any government activity, and includes any attempt to influence legislators, their staff members, public administrators, and members of regulatory agencies.

Question 9

Business lobbying

Answer 9

Business lobbying attempts to influence:
●Making or amending of legislation and regulations
●Making or changing of government policies or programs
●Government decisions in the awarding of grants, contracts, contributions, or any similar benefits
●Government appointments to boards, commissions, and any other public office

Question 10

Types of business lobbyists

Answer 10

Business interest groups or associations.
●Consultants who specialize in government–business relations.
●“In-house” lobbying capability through Government relations or public affairs staff.

Question 11

Business lobbying benefits

Answer 11

Offfseet the influence of other groups.
●Opinions or perspectives must be made known to governments if informed decisions are to be made about public policies affecting business.

Question 12

Business lobbying criticism

Answer 12

Practices unethical (e.g., bribes, gifts, improper political contributions, blackmail).
●Business lobby too powerful.
●Business has unequal access to government.
●Cost of business lobbying passed on to consumers.

Question 13

Corporate public affairs departments

Answer 13

The management function responsible for monitoring and interpreting the governmental environment of the corporation or industry and for managing the responses necessary to protect the interests of the corporation or industry.
●Role expanded to include community relations, media relations, environmental monitoring, issues management, lobbying, and public relations.

Question 14

Corporate agenda

Answer 14

real or imagined alleged domination of public policy or government programs by corporations or business organizations in their own best interests.
●The corporate agenda might include:
●Reduction of government involvement
●Deregulation of business and industry
●Reduced corporate taxation
●Enactment of free trade agreements and support for globalization

Question 15

Corporate welfare

Answer 15

Any action by municipal, provincial, or federal governments that gives a specific corporation or an entire industry a benefit not offered to others
●Industries appear increasingly willing to advocate for and accept government assistance

Question 16

Impact of government involvement

Answer 16

●Deregulation
●Definition: the reduction of government influence or impact over the economy allowing for a freer and more efficient marketplace
●Pros: more competitive business environment, resulting in higher productivity, more efficiency, and lower prices
●Cons: reduced environmental quality standards, greater financial uncertainty, and market control by monopolies.

●Privatization
●Definition: Strengthening of the market at the expense of the state
●Common themes of privatization:
●Provision of public service by the private sector
●Degrees of privatization (i.e. complete or partial)
●Techniques or forms of privatization (i.e. divestiture, contracting out)
●Terms are used that have overlapping meanings (i.e. “contracting out service delivery”)

Question 17

Ethical Implications in
Business–Government Relationship

Answer 17

Appropriateness of government involvement and interference in business operations
●Matter of accessibility to government
●Favouritism to some corporations regarding loans, grants, or protection
●Endorsement of political candidates or parties can be perceived as expecting favours in future
●Lack of transparency in relationship between government and business

Question 18

Ethics in government

Answer 18

The relationship between business and government involves the ethical behaviour of politicians and public administrators.
●Governments have developed codes and conflict of interest guidelines
●Business codes and guidelines often include clauses identifying appropriate behaviour when dealing with government
●Morality of operating some government-owned business corporations