government role in business.pdf

Government Encouragement of Business 1. Taxation Policy 2. State Agencies 3. Government Expenditure 4. Government Grants 5. Government Planning Taxation Policy -reduction in PAYE rates should increase spending power and stimulate the demand for goods and services eg the government widened ta...

Government Encouragement of Business 1. Taxation Policy 2. State Agencies 3. Government Expenditure 4. Government Grants 5. Government Planning Taxation Policy -reduction in PAYE rates should increase spending power and stimulate the demand for goods and services eg the government widened tax bands charged at the higher 40% rate in the 2023 Budget, increasing take-home income -reduction in corporation tax could improve a company's profits and its ability to fund future business growth, thus increasing the number of employees it will need eg the government maintained the low 12.5% rate in the 2023 Budget, encouraging more foreign direct investment (this will be changed due to new EU regulations) -changes to tax rates could stimulate demand in certain sectors eg the construction sector would benefit if stamp duty was lowered, as it would make it cheaper for people to buy houses -an increase in tax credits could stimulate demand for goods and services, as it would mean more disposable income for PAYE earners whose take-home pay would increase eg a reduction in VAT should be passed on by sellers, which should help reduce selling prices for goods and services, stimulating demand and improving competitiveness abroad State Agencies -government agencies encourage different business activities through advice, training, mentoring, grants, and market research -eg Enterprise Ireland, Industrial Development Authority (IDA Ireland), Local Enterprise Office (LEO) 39 Enterprise Ireland -responsible for developing indigenous Irish industry with an export focus (Unit 6 Notes page 20) -it helps Irish businesses to grow and expand sales abroad, which increases Ireland's balance of payments -it helps Irish-owned businesses with ten or more employees seeking to deliver new export sales in the following ways -trade fair events = provides a programme of trade missions, trade fairs and knowledge events to give clients the opportunity to connect with existing and new customers and increase sales in international markets and exchange ideas -provides funding support = provides a range of financial support for start-ups, expansion plans, research and development and business plans, it provides equity investment and support for companies, from entrepreneurs with business propositions for a high-potential start-up through to large companies expanding their activities and growing international sales -export assistance = it has international offices that can assist with export growth by providing marketing services or connections and introductions to potential customers overseas, it has built up local knowledge and networks, from heads of government to end customers. -research and development = it provides incentives to stimulate in-company research and development, it encourages companies to collaborate with research institutions, to develop and bring to market new technologies, products or processes, it provides support for both companies and researchers in higher education institutes to develop new technologies and processes that will lead to job creation and increased exports Industrial Development Authority -IDA Ireland is responsible for the attraction and development of foreign direct investment in Ireland -multinational companies (MNCs) such as Google, Intel, Microsoft and Facebook all interacted with the IDA when setting up in Ireland (Unit 6 Notes page 19) -it provides support in the following ways 40 -provides data on Ireland = IDA Ireland provides information and statistics on key business sectors and locations within Ireland, including market size, sales trends and employment figures -conducts research on suitable locations = IDA Ireland offers advice on property for international investors, it researches potential bases and industrial estates that would suit businesses from different sectors and recommends them to potential companies interested in developing in Ireland -networks with local industry = IDA Ireland introduces potential investors to local industry, government, service providers and research institutions so that incoming businesses can develop links, build relationships and seek advice in advance of setting up in the country. -develops third-level links = IDA Ireland builds links between international businesses and third- level education, academic and research centres to ensure the necessary skills and research and development capabilities are in place Government Expenditure -the government can stimulate business development through its capital expenditure and current expenditure policies -capital expenditure is one-off spending by the government -eg the M20 motorway is being built to link Cork and Limerick, this creates employment in the construction sector as well as increasing the demand for materials used to build the road, improved infrastructure will mean it is easier, cheaper and quicker for businesses to transport goods -current expenditure is regular day-to-day spending eg the government pays salaries to teachers, the Gardaí, nurses, etc. in the public sector, this gives public sector workers income to spend, increasing the demand for goods and services. Government Grants -government grants are sums of money given to businesses for a certain purpose (Unit 6 Notes page 35) -if the business adheres to the terms and conditions of the grant, it does not have to pay any of the money back 41 -grants can be used for research and development, feasibility studies, to buy machinery, to pay for training or to expand -grants allow businesses to expand quicker, and help to attract more foreign direct investment to Ireland -Local Enterprise Offices, Enterprise Ireland and the IDA Ireland are state agencies that offer grants (Unit 6 Notes page 38) Government Planning -the government can help to create a stable and more predictable economic environment, encouraging businesses to expand by talking to unions about pay in the country -government national wage agreements allow businesses to predict their wage costs, as well as reducing the risk of industrial relations problems -government announces changes to taxes and new financial policies in the budget each year, this might include new taxes and changes to excise duties and the national minimum wage -minimum wage is the legal minimum hourly payment an employee can receive. It is set by the government -eg the minimum wage went up from €11.50 to €12.70 per hour in 2023 budget, this rise increases production costs for businesses operating in Ireland that pay their workers the minimum wage, it might make Ireland less attractive for foreign direct investment or new businesses as it means they would have higher costs compared with other countries with lower minimum wage levels, however, it gives workers more disposable income, increasing the demand for goods and services Government Regulation of Business -environment protection = government regulates business in order to protect the environment, it established the EPA (Environmental Protection Agency), role is to protect the environment through its licensing, enforcement and monitoring of business activities -consumer protection = Competition and Consumer Protection Commission allows complaints from consumers against businesses under the Consumer Protection Act 2007 and it is in charge of monitoring how businesses behave in Ireland, the Sale of Goods and 42 Supply of Services Act 1980 gives the consumer rights in relation to goods or services bought or hired (Unit 1 Notes page 19) -employee protection = government regulates business in order to protect employees in the workplace using legislation on unfair dismissal, equality and industrial relations, including the Employment Equality Act 1998, Industrial Relations Act 1990 and the Unfair Dismissals Act 1977 (Unit 1 Notes page 27) -data protection = the government regulates businesses in order to protect the general public against the misuse of information in manual or electronic format through the Data Protection Commission, it ensures that businesses are acting properly under the guidelines of General Data Protection Regulation 2018 (GDPR) (Unit 3 Notes page 31) Community Development -the voluntary or professional efforts of local communities support and develop the social and economic activity of a local community for the benefit of the community -involves collective action to achieve the community's desired goals -it attempts to solve the economic and social problems through a spirit of enterprise, responsibility, empowerment and self-reliance -community development has both economic and social benefits (if asked for benefits, always give some from economic and social, stating which is which) -community development itself is based locally and led by a local community team or organisation that creates a community development plan and raises finance through grants from state agencies (Unit 6 Notes page 35) -it is about self-help as opposed to depending on the government or outside agencies to develop -the aim of community development is to improve the local social and economic infrastructure -eg Local Enterprise Offices are local organisations that provide valuable funding, advice, information and support for people interested in starting a new business or growing an existing business including entrepreneurs, early stage promoters of new business ideas, start ups and small business looking to expand (Unit 6 Notes page 43) 43 Economic Benefits of Community Development -employment = it creates direct employment and thereby increases spending in the local economy, as locals are getting paid more so are likely to spend some of it in local shops and restaurants -spin off effect = it creates spin-off jobs, local businesses might use local suppliers and businesspeople visiting the area might use local taxis, restaurants and B&Bs -enterprise culture = promotes an enterprise culture that encourages new ideas and new businesses, people can see other locals succeeding, which encourages them to start a business because they see that it is possible -standard of living = increased local employment means increased income amongst local people thus greater disposal income and spending power, improving standard of living -local authority income = increased local businesses means increased income for local authorities through commercial business rates, generating local revenue which can be used to improve local infrastructure Social Benefits of Community Development -community spirit = it creates confidence and improves community spirit, a feeling of doom or low expectations for the future is replaced with a hope for growth and prosperity -empowerment = it empowers the local community and generates a sense of pride, new shops and clubs bring energy to a community and make it somewhere that locals are proud of -reduced depopulation = it slows migration away from rural areas (depopulation), which keeps skilled workers and members of the community in the area, this might mean businesses and services stay open, so the community does not suffer from more business closures and clubs do not stop running -improved infrastructure = increased local revenue from commercial rates through new and developing businesses can be used to improve local infrastructure such as roads, playgrounds, libraries etc Community Development Organisations -Local Enterprise Offices -Leader Programme 44 -Pobal -Area Partnership Companies Local Enterprise Offices (LEOs) -there are 31 Local Enterprise Offices located in local authorities nationwide -these are 'the First Stop Shop' for anyone seeking information and support on starting or growing a business in Ireland -they provide advice, information and support for people interested in starting a new business or growing an existing business including entrepreneurs, early stage promoters of new business ideas, start ups and small business looking to expand -LEOs located in local authorities are funded by the Department of Business, Enterprise and Innovation through Enterprise Ireland LEO Support and Services -mentoring programs = LEOS connect companies with experienced experts that have been successful in business, they offer one-to-one advice and guidance to the business. LEOS also offer regular group advice clinics -training programs and advice = they organise workshops about different situations that a new or growing business might encounter eg a ‘start your own business' programme -business networking = they organise networking events which put entrepreneurs in contact with like-minded people whose experience and knowledge can greatly help when you are trying to solve the day-to-day problems of business and take advantage of opportunities and connections. People can swap contact details and work together to learn -financial supports = LEOS provide a range of grant assistance to eligible companies, to help fund start-up costs, expansion plans, entry into new markets and jobs growth, these include Business Priming Grants, Business Expansion Grants and Feasibility Study Grants (Unit 6 Notes page 35) Leader Programme -the Leader Programme is an EU-funded initiative designed to assist rural communities in creating enterprises that suit their own local communities or areas 45 -the programme supports projects that improve rural tourism, enterprise development, broadband and basic services -they are targeted at hard-to-reach communities and rural youth -local action groups (made up of local representatives from the community and the public and private sector) are responsible for selecting and awarding Leader funding to projects within their geographical area -there are 29 local action groups -eg the Kerry Leader Programme has a budget of €8.2 million to fund new initiatives from 2023 to 2027 to help achieve economic development or social inclusion or to improve the rural environment Pobal -this organisation oversees the distribution of funding from the government and the European Union to assist projects that help community development -its main aim is to fund social initiatives rather than commercial ones to improve the quality of life in communities -Pobal also supports the Department of Rural and Community Development in the administration of the Leader programme Area Partnership Companies (APCs) -these encourage and assist local enterprise and try to improve the standard of living for local communities -they offer training courses, volunteering roles to develop experience, and short-term employment on local projects -they can focus on particular groups and communities that might be regarded as socially excluded, including children and families in disadvantaged areas, people with disabilities, the unemployed and the traveller community eg the Bray Area Partnership works with disadvantaged communities and identifies target groups with the objective of overcoming barriers to them sharing equally in the economic, cultural and social life of Bray 46 Business Ethics -a set of moral rules and standards that provide guidelines for right and truthful behaviour in business situations with its various stakeholders -these moral principles should guide how a business makes decisions so it considers right and wrong, fairness, honesty and respect in a business context, regardless of the impact on profits -it is based on the social, ethical and environmental responsibility of a business Unethical Behaviour -low wages -poor shoddy goods -sourcing raw materials from unethical suppliers (eg sweatshop factories) -unsatisfactory dividends to shareholders -unsafe working conditions -damaging the environment -employee discrimination Improving Business Ethics -encourage whistleblowing = business could encourage staff to report any unethical behaviour that they witness or know about, it could incentivise employees to offer information on bad practice in the firm to managers, which would discourage unethical behaviour, as other employees would know that it might be reported -code of ethics = a code of ethics could be developed, this is a formal written statement setting out the expected moral behaviour of anyone involved in the business, it includes the expected behaviour of employees when interacting with colleagues, customers and the community, it should encourage fairness, honesty, respect and a knowledge of which behaviours are seen as right and wrong -model ethical behaviour = a business could train management to lead by example and highlight where they are being more ethical to their teams, managers could reward ethical behaviour by staff with bonuses or awards to encourage other staff to emulate it 47 -staff training = staff members could receive education on the company's code of ethics at their induction training. They should also receive annual training to reinforce the principles of the business -discipline procedures = business could develop consequences for particular behaviours, it should create clear procedures for its staff and punish breaches of the code of ethics through fines, demotion or dismissal -ethical audits = business could appoint an external auditor, someone from outside the organisation could be hired to look in an unbiased way at how different areas of the business behave to identify areas in which the company could improve -reward ethical behaviour = ethical behaviour should be encouraged and rewarded through monetary and non-monetary rewards like bonuses or promotions Code of Ethics -a formal written statement setting out the expected moral behaviour of anyone involved in the business -it includes the expected behaviour of employees when interacting with colleagues, customers and the community -it should encourage fairness, honesty, respect and a knowledge of which behaviours are seen as right and wrong Benefits of Code of Ethics -decision making = agreeing upon and following a code of ethics provides a great foundation for all future business decisions thus improving decision making capabilities, it helps the company to consider all the stakeholders that it impacts (employees, community etc) when making decisions -high standards = when a business sets out desired behaviour, it is easier for management and staff to know what is expected of them, so they can behave appropriately in alignment with the high standards set by the code -corporate image = if a business promotes its code of ethics on the website and shows examples of how it acts in harmony with the code, it creates positive PR for the brand, which helps to attract employees and customers, boosting its reputation 48 -rules and procedures = creating a code of ethics defines expected behaviours and makes consequences clear to those who do not follow the rules, unambiguous rules should help to deter breaches of the code -encourages whistleblowing = a code of ethics could contain information on how employees can report unethical behaviour to management, this should encourage and enable them to report things that concern them Disadvantages of Code of Ethics -culture clashes = employees might dismiss a new code as a box-ticking exercise by management if it is not followed by action, employees might not support the new code, especially if they do not feel management are buying into it and leading by example -keeping up-to-date = a code of ethics is a live document, to remain relevant, it needs to be updated regularly to include new behaviours that are considered unethical eg might include how employees interact on their social media or using company email addresses -enforcement = sanctioning employees, especially if it is a new process for a business, might cause industrial unrest and present conflicts for management to deal with, staff might feel that management are questioning their values by introducing a code and they might act out against any repercussions -training = staff will need to be given training on a new code, it will need to be built into induction training, all staff will need regular reminder training, costing time and resources