Long Term Investment Essay Example | Topics and Well Written Essays - 1250 words

Long Term Investment - Essay Example But for this expansion the selected company has to make some capital budgeting decisions. Merger is not an easy to do activity and involves incorporation of two big organizations. A company could decide for merge because of many reasons, like provide capacity utilization, to gain economies of scale, to gain access to new suppliers, distributors, customers, products etc. although merger is not always helpful to the society (Kaplan, 2006). Merger sometimes reduces competition and the most cited fact known by all is that consumers are always hard to attract in competitive environment (Saari, 2007). Mergers can often result in a great number of social benefits. They also can produce economies that can reduce cost, improve quality, and increase output. 1. Explain why government regulation is or is not needed, citing the major reasons for government involvement in a market economy. Provide support for your explanation. The Samsung Company is trying to expand and gain dominance, but there a re certain regulations that the company has to follow so as to ensure zero breach of law against the regulations settled by the government. The rules and regulations set by the government for merger policy are strict enough to ensure that the merger proves beneficial for the society. The regulations are set by the government on the basis that the merging companies eliminate the competition between them (Saari, 2007). Merger can be for the competitive reasons or for an attempt by the large firms to create enough activity and exercise higher power in the industry (Chatterji & Kuenzi, 2001). To determine the industry sensitivity government actually encourages mergers. The role of government in market economy is very important. The current economic situation did not come out thin air, rather, it is because of the growth of incorrect policies and most of the time because of lack of effective policies by the main entities that mainly empower manages of the economy. If the government fails to perform its functions than negative consequences might be expected. Major reasons for government involvement in a market economy: The following are some of the major reasons for government involvement in a market economy system. Provide economy with legal structure: This is one of the most important functions a government needs practice. In order to perform this function, the government needs to furnish economy with regulations, legislation and mean that ensure product quality. Maintaining competition: Government involvement is another important requirement in order to maintain competition. Government needs to fight monopoly power and non-competitive behavior. Thus anti-monopoly laws are designed to regulate business behavior and promote completion. Redistribution of income: The government needs to design relief programs for poor, handicapped and unemployed lot. This could be a good support for poor people and this program can help in transferring income from high income groups to these limited income people. Stipulation of public goods: When all the market fails to promote the basis and the needed goods the government fills in the space. Promoting growth and stability: The government should promote macroeconomic growth and stability through changes in fiscal and monetary policies. 2. Justify the rationale for the intervention of government in the market process in the U.S.