government can influence the firm's plan and productivity level
both positively and adversely..
- impact on
planning concerned with price-it there is less
competition then the firm would set high price in the market,which
is a positive impact and if government increases the competition
through imports and FDI(foreign direct investment) then the firm
are bounded to sell the goods and services at lower price.which is
a negative impact.
- impact on
planning concerned with quantity-if government
policy is favourable then the firm would be able to produce
higher quantity of goods.but if government restricts the quantity
through prodcution quota or any unfovrable policy then producers
would be discourage concerned with their production.
- market
efficiency-if there is better marketing
facilities,transportation and incentives then it would make
positive impact on the production process and in case of contrary
situation it would make adverse impact on production.
- determination
of margin of profit-if there is no competition and
government subsidies are provided then the margin of profit would
increase.and if government puts restriction and levy taxes and
duties thus the profit margin would decreases.
- expansion and
contraction of business-if policy is favorable then
the producer would encouraged to expand the production process
which is a positive aspect on business activity.but if government
introduces a policy which is not favorable for the growth of
business then the producers would decline the producton as a result
there would be contraction of the size of business.