Impact of Government
Research Proposal 3
Impact of Government
Business operations of companies worldwide, including Dodge Company, are influenced by the government in various ways. Commonly known as government intervention, the various government agencies, such as the Federal Reserve, have an enormous plurality of regulations or measures that define and shape firms’ competitive edge. The government can utilize devaluation, anti-trust policies, tariffs, and control of interest rates to influence business. In particular, a currency devaluation helps the government enhance exports in the short-run (Kourula et al., 2019). While the competitive edge created by devaluation is short-lived, it plays a role in sheltering local industries. However, devaluation has been criticized for blocking innovation and creativity because it is characterized by artificial relief from the much-needed competition. Typically, the absence of competition causes businesses to become less innovative because they do not invest in research and development (R&D) (Kourula et al., 2019). Ultimately, a currency devaluation in the U.S. would have far-reaching negative effects on Dodge because it operates in an innovation-driven sector.
In addition to devaluation, which revolves around creating a competitive edge by printing more money, increasing or decreasing borrowing interest rates remains a standard tool through which the government influences business. High-interest rates play a central role in reducing borrowing rates and consumer spending, reducing demand in the market (Lacey, 2010). By contrast, lower interest rates encourage borrowing and increase the amount of money in circulation. Money in the hands of the consumer allows them to spend on goods and services, which means the government would have helped enhance business activities and the entire economy. The government also uses tariffs and other anti-trust policies to protect and regulate businesses (Kourula et al., 2019). For instance, through tariffs on imports, the government empowers local firms.
Oversight of Business
The government utilizes wide-ranging regulatory oversight tools to shape the business environment within its boundaries and abroad. While critics view regulation in direct and indirect government intervention in business as one of the economic burdens that result in noneconomic gains, available evidence suggests and shows otherwise (Kourula et al., 2019). In particular, refer to the body of rules or regulations that the U.S. adopted and implemented since the 1930s, Lardner (2012) argues that appropriate oversight of business is a necessity because it ensures consumer and employee safety, creates a favorable environment for competition, and benefits the government through revenue collection. For example, the widely studied New Deal financial reforms, the 1934 Securities Exchange Act, and the Glass-Steagall Act of 1933 have played a fundamental role in enforcing guaranteed trading, banking, and securities activities, leverage limits, deposit insurance, as well as disclosure requirements. These principles have shielded individual Americans and small-scale businesses from financial panics that would be a norm in a deregulated environment.
Appropriate regulation of businesses has proved too effective in various sectors, especially the pharmaceutical, the automobile, and the meat industries. Before adopting the 1938 Food, Drug, and Cosmetic Act, people with little to no experience with drugs could enter the sector and operate their firms, flooding the market with substandard and unhealthy products. Consequently, reputable pharmaceuticals, such as Squibb, had their products seen as expensive by the consumer (Lardner, 2012). After the legislation’s introduction, morphine and related drugs filled the U.S. drugstores were eliminated. Specifically, oversight through appropriate laws has ensured the development of the pharmaceutical industry to comprise certified drug-makers. Concisely, government oversight has played a significant role in expanding the consumer’s confidence in the drug companies while at the same time ensuring a steady growth of the industry over the years.
The meat and automobile industries have had similar encounters. In particular, before the 1906 Federal Meat Inspection Act and the 2010 Food Safety Modernization Act, the U.S. market featured meatpacking houses that did not follow any critical safety standards (Lardner, 2012). Likewise, the Corporate Law and the newly introduced efficiency standards for cars have redefined sustainability strategies by automobile companies (Kourula et al., 2019). For example, Dodge now emphasizes meeting its energy or fuel efficiency goals, cooperating with stakeholders to alleviate societal problems, and engaging in other ethical business practices to remain competitive (FCA, 2020). Ultimately, appropriate oversight of businesses is needed to challenge corporate power and balance social responsibility and profitability of business organizations.
Political Strategies: Classes, Application, and Importance
Government involvement in a business is often seen as an act of political intervention. To avoid negative disruption of businesses, the government utilizes a wide range of political strategies, which manifest in various forms or classes, including outside experts, control access to information, and formation of coalitions or partnerships (Kourula et al., 2019). Broadly, as a major player in the corporate world, the government has access to different information items, including those that are treated confidential and public. Some of these items comprise quality and sustainability reports, sales projections, as well as salary information. By exercising a great deal of control over this information, the government can intervene and influence business differently through its security and other concerned agencies.
Besides controlling information to increase governmental authority in businesses’ daily running, the government occasionally uses outside experts either directly or indirectly. In particular, the government selects and engages third-party professionals in their respective fields, who, in turn, act as its representatives (Lacey, 2010; Kourula et al., 2019). These experts’ primary role revolves around expressing the government’s opinion in negotiations involving the government and small – and large-scale businesses. Outside experts’ engagement tends to be inextricably linked to coalitions and partnerships the government enters with business owners. Through public-private partnerships, the government can influence the widely sensitive decision process. Ultimately, coalitions allow both parties, the government, and businesses, to realize their set objectives.
Corporations and Government Decision-Making
Since businesses are subject to public policies that affect their operations, it remains in their very best interest to play a central role in influencing governmental decision making. Typically, businesses leverage various views and actions to shape their relationships with the government. Individuals or groups of businesses choose to consider their government connections as two parties with conflicting worldviews (Ksiezak, 2016). By defining their relationships with the government as one made up of opposing players, businesses influence governmental decision making by ensuring limited government view, while at the same time, taking an anti-regulatory approach to engagement. To achieve this, business organizations advocate free markets characterized by considerably minimal government role (Lacey, 2010). Business firms’ justifications involve the proven claim that any given economy’s workings attain success without or under limited governmental intervention. By limiting the government’s direct involvement, businesses achieve reduced taxation, regulations, and other policies.
Dodge Lobbying Strategies
Dodge, like any other business, remains an active participant when it comes to influencing government policies. To achieve their goal of ensuring limited government involvement in the industry and meeting their corporate social responsibility (CS), Dodge uses different forms of lobbying strategies, including its membership in the National Association of Manufacturers (NAM), using paid adverts, and direct partnership with local, state, and federal governments. Through NAM, Dodge has gained access to the much-needed equal opportunity in the manufacturing sector, free enterprise, as well as competitiveness (FCA, 2020). On the same note, paid ads and partnerships allow the company to criticize and compliment individual government policies and engage in addressing societal issues, respectively (DeLorenzo, 2014; Lacey, 2010). Most importantly, these lobbying strategies are essential in persuading the government to adopt and implement policies that favor businesses, such as incentivizing for-profit organizations because of their active role in job creation.
Current Political Environment
The various lobbying strategies that a business adopts and incorporates into its daily operations to achieve and maintain its competitive edge depend on the prevailing political, legal, and economic environments. In this context, the current political climate in the U.S. has benefitted Dodge and other automobile sector firms. In particular, the Trump’s administration’s “America First” strategy has created a relatively favorable political environment for manufacturers because an increase in government spending accompanies the approach, reduced taxes or tax cuts, and simple regulatory measures (DeVore, 2019). The administrated has played a leading role in maintaining currency exchange stability, competitive tax and fair tariff arrangements at the international level, and low-interest rates. These economic cum political undertakings have spurred economic growth across the country, especially in the manufacturing industry, with automobile makers reporting high profits.
While the U.S. is currently witnessing domestic political challenges due to social unrests and election dreadlocks, the current political environment is yet to hurt businesses. By contrast, government initiatives remain growth-oriented, as witnessed in the more transparency and equality in the global supply and value chains. In particular, the administration has insisted on creating a leveled playground for all players, especially major world economies, such as China, South Korea, Japan, and Canada (DeVore, 2019). The demand for equality led the U.S. to withdraw from several agreements, including the Paris Accord. As a result, such extraordinary political moves have signaled to Dodge and other U.S. companies. Their success and survival depend on environmental laws to not necessarily face crippling penalties over some breaches (Milman & Holden, 2020). Although Dodge remains committed to its social responsibility, the government’s decision to relax compliance to overly stringent environmental laws would allow the company to compete with automobile makers from Japan and other countries with relaxed energy or fuel economy standards.
The current political environment has enhanced business-government relations because the latter’s various growth-driven policies are benefitting businesses and the electorate in terms of high profit and job creation. From the perspective of Dodge and firms in the manufacturing sector, tax cuts, and appropriate oversight through controlled environmental laws all commingle to reduce their financial burdens (DeVore, 2019). When political activities and stability return more money to business organizations, they hire more employees and invest in research and development (R&D) to increase their market share and performance. From the government or standpoint, a favorable political environment presents businesses with the opportunity to hire and pay more employees and taxes, respectively, which, in turn, benefits the current administration and the country as a whole. Ultimately, the political environment influences investment decisions, profitability, hiring, and lobbying strategies adopted by businesses.
References
DeLorenzo, M. (2014). Dodge, HYPERLINK “https://books.google.com/books?id=Zm91AwAAQBAJ&pg=PA8″100 yHYPERLINK “https://books.google.com/books?id=Zm91AwAAQBAJ&pg=PA8″earHYPERLINK “https://books.google.com/books?id=Zm91AwAAQBAJ&pg=PA8″s. Motorbooks, pp. 8–9.
DeVore, C. (2019). Trump’s economic policies: Jobs surge in both manufacturing and low tax states. Forbes, Jan. 30, 2019.https://www.forbes.com/sites/chuckdevore/2019/01/30/two-huge-effects-of-trumps-economic-policies-jobs-surge-in-both-manufacturing-and-low-tax-states/?sh=1b4420267665
FCA. (2020). 2019 sustainability report. https://www.fcagroup.com/en-US/investors/financial_information_reports/sustainability_reports/sustainability_reports/FCA_2019_Sustainability_Report.pdf
Ksiezak, P. (2016). The benefits from CSR for a company and society. Journal of Corporate Responsibility and Leadership, 3(4), 54-65.
Kourula, A., Moon, J., Salles-Djelic, M., & Wickert, C. (2019). New roles of government in the governance of business conduct: Implications for management and organizational research. Organization Studies, 40(14), 017084061985214
Lacey, S. (2010). Top 25 U.S. energy lobbyists of 2010. https://www.renewableenergyworld.com/2010/12/29/top-25-u-s-energy-lobbyists-of-2010/
Lardner, J. (2012). Why oversight is good for business? The Nation, Mar. 21, 2012. https://www.thenation.com/article/archive/why-oversight-good-business/
Milman, O. & Holden, E. (2020). Trump administration allows companies to break pollution laws during coronavirus pandemic. The Guardian, Mar. 27, 2020. https://www.theguardian.com/environment/2020/mar/27/trump-pollution-laws-epa-allows-companies-pollute-without-penalty-during-coronavirus
