This refers to the various ways by which government controls the activities of business organization to ensure social and economic order in the society.
REASONS FOR GOVERNMENT REGULATION OF BUSINESS
- To raise money through taxes e.g. V.A.T. Education tax etc
- To protect consumers against exploitation by producers and middle-men eg by ensuring quality products or by ensuring regular supply of essential goods and services.
- To ensure uniformity in commercial practices.
- To protect employers and employees and ensure industrial peace
- To ensure conformity to international law and protocols e.g. IATA guidelines in the aviation sector.
- To facilitate even development of all parts of the country or to promote some critical sectors of the economy.
- To promote general improvement of the economy.
METHODS OF GOVERNMENT REGULATION OF BUSINESS
The various ways by which government regulates business include:
- Registration of business: Government register business organization in order to have accurate and up to date statistics on the number and types of business organization operating in the country for example, Limited Liability Companies are registered by the Corporate Affairs Commission.
- Patents (Patent Rights): This is the right or privilege granted by law to an inventor of machine or processes of production to enable him enjoy the benefits of his effort for a given period of time. Subsequent to this given time, other person may now copy or imitate the invention or process.
- Trade Marks: This is an identification, distinctive symbol design or special marks used in distinguishing products made by a particular company or business organization. The trade mark is registered by the owner and confers on him the exclusive rights to use such identification on his product. The essence (importance) of trade marks becomes obvious when products are to be advertised or promoted e.g. Coca-cola continuous Ribbon; Mercedes Benz Star etc.
- Copy rights: This is the sole right accruing or granted to the owner or producer of literary, artistic, dramatic or musical works to reproduce his works and enjoy the financial benefits thereof for a specific period of time. Another person cannot reproduce such work without a written permission from the copy right owner. The copy right usually subsist for some definite periods (50 years for musical copy right) after which it expires.
- Approval of Business Location: Government is sometime involved in giving approval for the location of business enterprises. An example of this is the directive of CBN to bank to open their branches in rural areas.
- Through the activities of government agencies established to monitor and enforce quality, prices standard or law e.g. SON, NAFDAC, FEPA, KAI etc.
- Regulations over ownership of Business: Ownership of business can also be regulated through some policies like indigenization, commercialization and privatization.
- Statutory Obligation like payment of Corporation Tax, publication of accounts etc.