Transcript File - Business @ Beneavin College

Business, Government &
Workers
Mr Poole Business
What is a Market Economy?
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Entrepreneurs produce & sell for profit.
If a good or service is making a loss then it is
discontinued.
The role of gevernment is to encourage and
regulate business.
Mr Poole Business
Market Economy Failures and
Government Remedies
Entrepreneurs
Government
Will not produce unprofitable goods. Will provide unprofitable essential
services.
Do not provide public utilities.
Eg. museums, libraries, parks…..
Will provide public utilities.
Worry more about profits &
Set up the Environmental Protection
expansion & not about environment. Agency.
Merge & takeover regardless of
effects on choice and prices.
Set up the Competition Authority to
monitor business growth.
Only employ people so long as they
make money fir the business.
Set up agencies such as FAS to
encourage employment.
Mr Poole Business
Local Government
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Operates through elected:
 County Councils
 City Corporations
 Urban District Councils.
Mr Poole Business
Helps business by:
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Planning permission for suitable land for
industrial developmant.
Provide affordable housing in an area.
Waste & sewage disposal for h/h & bus.
Provision and maintenance of good
infrastructure.
County Enterprise Boards help new
enterprise.
Mr Poole Business
Central Government
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Comprises of the Dail & Seanad.
Dail is the place where all revenue &
spending decisions are made and
new legislation (bill) is introduced.
Budgets & bills must be approved by the
Senate.
When the bill has been passed by the senate
it must be signed by the president.
Mr Poole Business
Role of the Government in
Business
1.
Protection of consumers & employees.
2.
Regulation of business.
3.
Encouraging business & employment.
Mr Poole Business
1. Protection
Protects the citizens in a variety of ways.
 Consumers protectd by the CIA 1978,
SOGSOS Act 1980 & the Data Protection Act
1988.
 Employees protected by the Unfair
Dismissals Act 77/93, Employment Equality
Act 1998, and Industrial Relation Act 1990.
Mr Poole Business
2. Regulation
 Means ensuring that businesses operate
properly through laws & agencies:
Companies Act 1990
 Regulates the formation & operation of
private & public limited co.’s.
Competition Authority
 Regulates mergers & takeovers.
Mr Poole Business
Environmental Protection Agency
 Regulates the impact of business on the
environment.
Planning Authority
 Regulates the building of factories…….
Financial Regulator
 Regulates the Banks, Building Societies,
Credit Union, Insurance co.’s……….
Mr Poole Business
3. Encouraging
Supporting business
Grants
 Are given to TNC’s to locate in Ireland & to help
new indigenous enterprise set up.
Agencies
Support & advise businesses.
 IDA: Attract TNC’s to Ireland.
 Enterprise Ireland: Helps indigenous firms set up.
 FAS: Retrian job seekers.
 County Enterprise Boards: Support & advise local
businesses.
Mr Poole Business
Tax: Raises revenue for the government
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Low corporation tax encourages TNC’s to set
up in Ireland, increases profits reinvested.
Low PRSI reduces business costs and
encourages employment as it is cheaper to
employ.
Low PAYE means employees have a higher
disposable income and can spend more.
Low VAT increases demand so higher profits
are made and more jobs created.
Low stamp Duty will increase demand & jobs
in the construction industry.
Mr Poole Business
Fiscal Policy
 Is how the government generate revenue &
spends it.
 Current spending on public service wages
creates demand and jobs.
 Capital spending on infrastructure, roads,
hospitals & schools, creates employment in the
secondary sector.
 National wage agreements and a stable
economic climate makes Ireland an attractive
investment opportunity.
Mr Poole Business
Government Revenue &
Spending (Fiscal Policy)
CURRENT REVENUE/INCOME
(day-to-day)
CURRENT EXPENDITURE
(day-to-day)
PAYE, PRSI, VAT, CGT, CAT,
Customs Duties, Excise Duties,
Stamp Duty, Corporation Tax…..
CAPITAL INCOME
(once off)
Health, Education,
Security,Social Welfare,
Debt Servicing……..
Privatising SSB, EU Grants,
Loans
Schools, Hospitals, Roads,
Loan Capital Repayments.
CAPITAL EXPENDITURE
(once off)
Mr Poole Business
Economic Variables
Impact of the economy on business
1.
2.
3.
4.
5.
6.
7.
Interest Rates
Inflation
Taxation
Grants
Unemployment
Exchange Rates
Environmental Policy
Mr Poole Business
1. Interest Rate
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Is the price that has to be paid for the
use of money by the borrower.
It is set by the European Central Bank.
Low interest rate is good for business
as it: Reduces the cost of building so
more businesses will expand.
Mr Poole Business
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Encourages consumerism, increases
profits & creates jobs.
However low rates may fuel inflation
and eventually lead to higher rates.
Mr Poole Business
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High interest rates:………………..
Mr Poole Business
2. Inflation
 Is the sustained increase in the level of prices in
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the economy as measured by the Consumer Price
Index (CPI).
Low inflation is good for business as:
The cost of raw materials & wages are lower.
The gov as the largest employer does not have to
spend huge amounts in wage increases.
Our exports will be more competitive if our rate of
inflation is lower than other countries.
Mr Poole Business
3. Taxation (2009)
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Low taxation means that workers have a
higher disposable income and more spending
power.
Increase in demand for products will lead to
more revenue from VAT, PAYE, PRSI etc.
Lower PRSI means it is cheaper to employ so
more people will be employed.
Mr Poole Business
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Low corporation tax encourages TNC’s to
set up in Ireland, increased profits may be
reinvested in Ireland.
Low stamp Duty will increase demand &
jobs in the construction industry.
However the gov must ensure it has enough
tax to cover it’s spending.
Mr Poole Business
4. Grants
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Are non-repayable funds given by the government
to businesses to set-up & grow.
The IDA give grants to TNC’s.
Enterprise Ireland gives grants to indigenous
enterprise.
Grants are funded by tax revenue or borrowing.
A booming economy will generate tax revenue
which in turn will allow more grant aid for business
start-up.
Mr Poole Business
5. Unemployment
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High unemployment will lead to fall in
consumer spending.
Less tax revenue is generated and more
social welfare is needed so there will be an
increase in the tax rate.
Raised tax rates further dampen consumer
demand and slows down business
development.
Mr Poole Business
6. Exchange Rates
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Is the price at which one currency can be exchanged for
another.
€1.00 = st£1.10
Eg
or
€1.00 = st£0.90
Which one has the euro more valuable?
€1.00 = st£1.10
You get more for your euro in England.
Mr Poole Business
Continued…
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When the value of the euro increases:
Exports to non EU countries become dearer.
Imports from non EU countries become
cheaper.
The Balance of Payments will be less
favourable , more imports and less exports
means that jobs will be lost & business will
close.
Mr Poole Business
Do this one yourselves
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When the value of the euro decreases
Mr Poole Business
7. Environmental Issues
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Green taxes imposed on goods such as
petrol causes the price of raw materials to
increase.
Higher standards in production & energy
consumption increases production costs for
some businesses.
However green alternatives is a source of
business opportunity. Eg. Wind power.
Mr Poole Business
Impact of business on the
development of the local economy
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Generates Employment: Directly and
indirectly. Eg: factories, houses, ships, pubs,
schools, hospitals………
Creates Wealth: People with a higher
disposable income will spend more &
businesses may reinvest its profits locally.
Sponsorship: Local business may sponsor
events and improve the social environment.
Mr Poole Business
Impact of Business Nationally2002
Positive impact of business on the economy:
Generates employment:
 Jobs are created in all sectors of the
economy both directly & indirectly.
Generates tax revenue:
 Corporation Tax, PAYE, PRSI, VAT all increase
when businesses prosper and this in turn
provides money for the government.
Mr Poole Business
More government services:
 Government can spend more on health,
education & utilities due to extra revenue
generated.
Future development:
 Reinvesting of businesses surpluses in new
business & expansion ensures a continued
cycle of economic activity.
Mr Poole Business
Negative impact of business on the
economy:
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Pollution:
Eg. Noise, air, water …..
Redundancies:
Increased competition may lead to closures and
job losses.
Inflation:
Profiteering by large businesses may lead to
higher prices & wage increases which may result
in inflation.
Mr Poole Business
How the government affects
the labour force.
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These are the red headings. Write a
few sentences about each yourself!!!
National Agreements
Lower taxes
Government expenditure
Government regulation
Government as employer
Mr Poole Business