Question

In: Finance

Consider the following from your own informed and educated point of view: 1. How important are...

Consider the following from your own informed and educated point of view:

1. How important are laws to protect the prosperity of businesses?

2. How important are laws to protect society from the unintended costs of business?

3. What balance should laws seek to maintain the rights of businesses and the rights of their customers?

Critically consider these questions, looking not only at what you believe but why you hold these beliefs and opinions.

Solutions

Expert Solution

1. Laws are important to protect the prosperity of the business as a company may earn more profits through legal as well as illegal means. The illegal means of earning profits might look easy but they will spoil the name and reputation of the company. This will affect the company in the long term. So laws and its implementation are important for the prosperity of the business.

2. The unintended costs of business are the costs that the company has to pay when they do not follow the laws of the country. For example: a company that doesnot follow the laws will have to pay compliance costs. Apart from these costs there are certain costs that are to be paid by the society for the illegal activities of the company. For example: a company that doesnot carry out its activities in a legal manner may be forced to incur certain costs. A scam may lead to loss of huge amount of money in the society. The loss is a type of cost to the company.

3. There should be a balance between the rights of businesses and the rights of the customers. The businesses should carry out their activities in a legal manner without causing any harm to the stakeholders and to the environment. Similarly, the customers have certain rights like claiming a good quality product and ensuring that the company is giving them value for the money. Neither the business nor the customers should take their rights for granted. There are laws for ensuring that the rights of the customers and businesses are protected but that should not be taken advantage of. Therefore a balance is necessary.


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