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Ch 11, Instructor’s Manual, Business & Society, Carroll 10e

Chapter 11

Business, Government, and Regulation

LEARNING OUTCOMES

After studying this chapter, you should be able to:

1. Articulate a brief history of the changing nature of the government’s role in its relationship

with business.

3. Identify the elements in the complex interactions among business, government, and the

public.

5. Identify and describe the government’s regulatory influences on business, including the

major reasons for regulation, the types of regulation, and issues arising out of deregulation.

TEACHING SUGGESTIONS

INTRODUCTION – In this chapter the authors examine the relationship between business and

government, along with the general public, which also plays an important role. The central focus

here is the government’s role in influencing business, although, as discussed in the next chapter,

business also influences government.

KEY TALKING POINTS – Many schools provide an entire course titled Business, Government,

and Society, which indicates the centrality of the subject matter in this chapter. Many students

will be quite familiar with the concept that government regulates and influences business (the

focus of this chapter) but will be less cognizant of the reciprocal relationship (Chapter 12).

Because the business/government relationship does flow in both directions, the instructor should

consider covering Chapters 11 and 12 as a single unit, so that students realize the full extent of

the influence each has over the other.

Several books have delved into this subject in some depth. The instructor may want to

incorporate some of their content into the classroom discussion or assign students to read

sections of different books. One of the earlier writings was Taking Care of Business, a 32-page

Ch 11, Instructor’s Manual, Business & Society, Carroll 10e

While many students understand the concept of regulation, they don’t understand the process. At

a basic level, students should understand that Congress creates laws, various regulatory agencies

PEDAGOGICAL DEVICES – In this chapter, instructors may utilize a combination of:

Cases: 18-Dole’s DBCP Legacy

19-Should Directors Shine Light on Dark Money?

20-DTCA – The Pill Pushing Debate

21-Big Pharma’s Marketing Tactics

Ethics in Practice Cases:

The Marijuana Regulatory Dilemma

Banning the Big Gulp

Spotlight on Sustainability:

Utilities and the Costs of Going Green

Power Point slides:

LECTURE OUTLINE

I. THE PENDULUM OF GOVERNMENT’S ROLE IN BUSINESS

II. THE ROLES OF GOVERNMENT AND BUSINESS

A. A Clash of Ethical Belief Systems

III. INTERACTION OF BUSINESS, GOVERNMENT, AND THE PUBLIC

A. Government-Business Relationship

B. Public-Government Relationship

C. Business-Public Relationship

Ch 11, Instructor’s Manual, Business & Society, Carroll 10e

IV. GOVERNMENT’S NONREGULATORY INFLUENCE ON BUSINESS

A. Industrial Policy

B. Privatization

C. Other Nonregulatory Governmental Influences on Business

V. GOVERNMENT’S REGULATORY INFLUENCES ON BUSINESS

A. Regulation: What Does It Mean?

B. Reasons for Regulation

2. Controlling Negative Externalities

4. Other Reasons

C. Types of Regulation

2. Social Regulation

D. Issues Related to Regulation

VI. DEREGULATION

A. Purpose of Deregulation

B. The Changing World of Deregulation

VII. SUMMARY

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

Students should recognize that their answers to these discussion questions should be well

reasoned and supported with evidence. Although some answers will be more correct than others,

students should be aware that simplistic answers to complex questions, problems, or issues such

as these will never be “good” answers.

1. Question: Briefly explain how business and government represent a clash of ethical

systems (belief systems). With which do you find yourself identifying most? Explain. With

which would most business students identify? Explain.

Answer: As business historians often point out, corporate charters were first issued

explicitly to serve a public good. In that sense, business has changed from a collectivist

2. Question: Explain why the public is treated as a separate group in the interactions among

business, government, and the public. Doesn’t government represent the public’s interests?

How should the public’s interests be manifested?

Answer: Ideally, the public is represented by the government. However, this is an

imperfect process. In addition, the public does not speak with a single voice—there are

3. Question: What is regulation? Why does government see a need to regulate? Differentiate

between economic and social regulation. What social regulations do you think are most

important, and why? What social regulations ought to be eliminated? Explain.

Answer: Regulation is the act of controlling the activities of others by means of rules, law,

or constituted authority. Typically, government regulates to correct past wrongs, achieve

4. Question: Outline the major benefits and costs of government regulation. In general, do

you think the benefits of government regulation exceed the costs? In what areas, if any, do

you think the costs exceed the benefits?

Answer: This will be a difficult question for students to answer, simply because the costs

5. Question: What are the trade-offs between privatization and federalization? When would

one or the other be more appropriate? What problems might you foresee and what future

events would merit a shift in the current mix?

Answer: The privatization/federalization debate centers on the question of efficiency.

Proponents of privatization contend that almost everything can be accomplished more

6. Question: What are deregulation and reregulation? Under what circumstances should

each be considered?

Answer: Deregulation is the counterpart to regulation, that can sometime overlap due to a

GROUP ACTIVITIES

Group Activity 1 – The Regulatory Process

While many students understand the concept of regulation, they do not understand the regulatory

process. At a basic level, students should understand that Congress creates laws, various

regulatory agencies create rules/regulations within the parameters of those laws and that the

public has an opportunity to comment on the proposed regulations.

To help students understand this concept, instructors should divide students into groups of three

to four students. Each group should then be assigned a law (preferably one that is studied in this

textbook). The students should research when the law was passed and the regulatory agency

responsible for implementing regulations under the law. They should summarize any regulations

Ch 11, Instructor’s Manual, Business & Society, Carroll 10e

Group Activity 2 – Deregulation

Divide students into groups of three to four students. Have students research (1) how Enron

lobbied Congress to deregulate the wholesale electricity industry and (2) how the deregulation of

the electricity industry has impacted consumers. Students should note any benefits or problems

that have occurred as a result of the deregulation of this industry. Instructors may want to guide

students to the situation that occurred in California as a result of the deregulation of this industry.

INDIVIDUAL ASSIGNMENT

Ask students to research the Patient Protection and Affordable Care Act of 2010. As a starting

point, instructors may want to guide students to the following websites, which summarize the

law:

In connection with their research, students should prepare a typed-written response to the

following questions:

(1) What are health insurance exchanges?

(2) How will the law affect business? Specifically, what requirements does the law place on

employers?

(3) What is a public option? Why is it controversial? What role does the public option

currently play in healthcare reform?

(4) In your opinion, what role should the government play in healthcare? Explain.