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Final Review BU111.docx

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Sofy Carayannopoulos

How Government Influences Business -As a customer buys products and services -Government is sometimes the most important customers Ware guns and tanks, fighter jets. If your business specializes in this, the government will be your only customer, as the average citizen does not need these items. -As a competitor Canada Post, CBC -Government can be a competitor since they have the brand loyalty -As a regulator -Regulates business activity CRTC, Wheat Board -Purpose: -Promotes competition Competition Act -Protects consumers Hazardous Products Act -Achieve social goods Universal health care, education -Protect the environment Canada Water Act; Fisheries Act -Tried to investigate collusion in order to protect consumers. (Collusion joining together of businesses and picking one price in order to maximize profit). -The government will pick the social standard that benefits consumers -As a taxation agent -Need to collect tax to fund activities -Collected by all three levels of government: -Progressive tax depends on level of income received. Ex. Income tax -Regressive tax independent of income. Dependent on what you are buying. Ex. Sales tax no relation to your income -Restrictive tax Prevent consumption. Ex. Gas tax -As a provider of incentives and financial assistance -Subsidies, tax breaks, support services -Subsidies An opportunity for the people within the field. Ex. Encouraging films to be produced in Canada by subsidizing. -Tax Breaks-tax rebates. Ex. As an incentive to reduce pollution -Support services support entrepreneurship -Bail outs -Bail outs help company survive to protect jobs because it is cheaper to bail them out than to pay all of the employees unemployment insurance -Additionally, these individuals would not have income to spend and increase the circular flow of income -As a provider of essential services highways, armed forced, police and fire department, hospitals, education How Businesses Influence Government -As lobbyists -Lobbyists marginal stakeholders. Not a direct threat. -Hired to represent a companys / groups interest -Government is run by people and people can be persuaded. -Paid individuals who approach politicians to persuade them to support legislations favourable to the group they represent -Lobbying Act must register and follow rules -Must register as a lobbyist government needs to know who and what they are dealing with -As trade associations -Trade Associations lobby groups for an industry. Ex. The tobacco industry. -Trade associations and lobbyists can sometimes clash -Employees and owners of small businesses -Through advertising -Corporations influence voters -Indirectly persuade the government. -Create an ad and get the public to support it -The public will then contact the politicians about it -Effective, but tough to do it is tough to get public to contact politicians -RCA used this approach for the black and white TVsForms of Ownership Sole Proprietorship Business and owner are one in the same Advantages Disadvantages Taxed as personal income (Advantage if business has losses) Net income is personal income. Ease of formation -Requires no paperwork Individual income tax is used which is higher than corporate income tax Fewer regulations so small and government Unlimited liability Debt of business is debt of doesnt want to discourage them with regulations owner bank will come after personal assets Lack of continuity Business ceases to exist if owner walks away in any other way even if Complete control over profits and decisions another owner takes over. It legally ceases to exist Government support (advice) Government wants to encourage entrepreneurship so it provides support Limited managerial and financial resources Difficult to obtain outside financing Bank will not give a loan. Owner must therefore use person
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