Management Chapter 7 Homework Page Businessgovernment Relations Introduction Governments Seek Protect And Promote The Public

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CHAPTER 7

BUSINESS-GOVERNMENT RELATIONS

INTRODUCTION

Governments seek to protect and promote the public good and in these roles establish

rules under which business operates in society. Therefore, a government’s influence on

business through public policy and regulation is a vital concern for managers.

Government’s relationship with business can be either cooperative or adversarial.

INTRODUCTORY CASES

Regulating Uber in Europe and the e-Cigarette Industry in the U.S.

What prompted or compelled governments to become more involved in the status of

employees or the sale of a consumer product? How do these government’s actions affect

businesses and what they are permitted to do? How did these actions affect competition

or society and the public’s health? Did government’s involvement promote or harm

companies or allow other firms to maintain their competitive advantage? Were these

efforts by the governments necessary and effective, or can this only be answered in time?

Teaching Tip: Opening Cases – Regulating Uber in Europe

Both introductory cases, the regulation of Uber in Europe and the

control over the e-cigarette industry in the U.S., are ongoing issues.

Students may want to research recent updates to the cases or investigate

how governments have handled these emerging cases.

There are numerous videos available through the Internet, such as

CNBC’s coverage of this topic, found at:

Teaching Tip: Opening Case – Controlling e-Cigarettes

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CHAPTER OUTLINE

I. HOW BUSINESS AND GOVERNMENT RELATE

A. Seeking a Collaborative Partnership

B. Working in Opposition to Government

C. Legitimacy Issues

II. GOVERNMENT’S PUBLIC POLICY ROLE

A. Elements of Public Policy

Teaching Tip: How Business-Government Relate

The proper role of government is always a matter of debate. Should

government take a pro-business (or collaborative partnership) or an

anti-business (or opposition to the government) role? A simple

exercise that can provoke some classroom enthusiasm is to split the

Teaching Tip: Public Policy

New public policy issues abound frequently. This might afford an

opportunity to have students scan the Internet or social media sites to

You might also challenge students to identify a public policy issue

emerging in another country. How is the public policy process

different across nations? Who are the major actors in the public policy

process in another country and how does this differ from the major

actors in your own country?

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 Social assistance policies

III. GOVERNMENT REGULATION OF BUSINESS

A. Market Failure

B. Negative Externalities

C. Natural Monopolies

D. Ethical Arguments

E. Types of Regulation

 Economic regulations

Teaching Tip: Social Assistance Policies

Social assistance policies, such as health care, are very important to

individuals and families. It is likely that the Obama Administration–

induced health care reform will remain an active controversial issue for

many years. Ask students to identify an elderly relative – such as a

grandparent or neighbor – or someone without health care insurance at

work. What is their opinion about health care reform, as compared to

someone who is covered through their employer?

mandated by the U.S. federal government?

Teaching Tip: Natural Monopolies

Students should be able to easily recognize natural monopolies – cable

television, electricity, railroads. Identify another common product or

Teaching Tip: Opening Case – Trade Policy

Given the current regulatory climate in the U.S., do the current efforts

at imposing tariffs or other trade barriers constitute a “trade war?”

Who benefits and who loses during a trade war?

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 Antitrust: A special kind of economic regulation

 Social regulations

F. The Effects of Regulation

 The costs and benefits of regulation

 Continuous regulatory reform

IV. REGULATION IN A GLOBAL CONTEXT

Teaching Tip: The Climate of Antitrust

There appears to be numerous examples of questions of antitrust, or

lack of competition, arising from proposed or approved mergers among

Teaching Tip: How Much Regulation?

The issue of the costs of regulation is often a political one. Student

may locate political positions that favor or oppose large government.

question.

Teaching Tip: “De–” or “Re–” Regulate?

The United States has experienced a cycle of deregulation, then

reregulation. Which part of this cycle are we current in, and are there

signs of moving into the next phase of this cycle? (Students could be

Teaching Tip: International Regulatory Control

It seems reasonable to assume that some sort of regulatory control is

necessary. What happens when trade involves more than one country?

Can there be an international regulatory body? Does it already exist?

as well as weaknesses.

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GETTING STARTED

KEY LEARNING OBJECTIVES

LO 7-1: Understanding why sometimes governments and business collaborate and

other times work in opposition to each other.

LO 7-2: Defining public policy and the elements of the public policy process.

LO 7-3: Explaining the reasons for regulation.

LO 7-4: Knowing the major types of government regulation of business.

Regulation can take the form of laws affecting an organization’s economic operations

LO 7-5: Identifying the purpose of antitrust laws and the remedies that may be

imposed.

LO 7-6: Comparing the costs and benefits of regulation for business and society.

LO 7-7: Examining the conditions that affect the regulation of business in a global

context.

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prior written consent of McGraw-Hill Education.

The global regulation of business often occurs when commerce crosses national borders

or the consequences of unregulated business activity by a national government are so

large that global regulation is necessary.

KEY TERMS AND CONCEPTS USED IN THE CHAPTER

antitrust laws

cost-benefit analysis

deregulation

Dodd-Frank Act

natural monopoly

negative externalities

predatory pricing

public policy

regulation

reregulation

INTERNET RESOURCES

www.cato.org Cato Institute

www.consumerfinance.gov U.S. Consumer Financial Protection Bureau

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prior written consent of McGraw-Hill Education.

www.reginfo.gov U.S. Office of Information and Regulatory Affairs

www.regulations.gov Regulations.gov

www.un.org/en/law International Law, United Nations

www.usa.gov Online Guide to Government Information and Services

DISCUSSION CASE

SHOULD FACEBOOK BE REGULATED?

Discussion Questions

1. Do you believe the government (in the United States and other countries) should

regulate Facebook to protect its users’ privacy? Why or why not?

2. Do you believe that Facebook’s actions so far exemplify working in collaboration with,

or in opposition to, government? Why?

Teaching Tip: The Regulation of Facebook

Some of the more interesting arguments or perspectives focusing of the

prior written consent of McGraw-Hill Education.

3. What elements of the public policy process are seen in this case: public policy inputs,

goals, tools, and effects?

prior written consent of McGraw-Hill Education.

4. Of the reasons described in this chapter to justify government regulation: market

failure, negative externalities, natural monopolies, and ethical arguments, which

reasons are relevant in this case?