LongTerm Investment Decisions

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Internal factors are the factors that are influenced by the business establishment internally while external factors are factors that affect an investment where the business establishment has no control over. An example of such factors is government involvement. Why Government Regulation is or is not needed Normally, market structures and systems are formed by the various aspects of demand and supply. However, governments intervene in the market systems in various ways. Such ways include taxation, subsidies, allocation of rights, and rules and regulations among others. One reason why the United States of America government intervenes in the market economy is to ensure that there is free and fair competition. This, it does in various ways the notable one being putting various rules and regulation in the market economy. This is especially done to allow new business establishments entry into the market. Major corporations are known to merge or acquire another business establishment in order to ensure that they maintain their control over the market. This makes it hard for small business establishments especially new ones to enter the market thus discouraging entrepreneurship which repels investments. Another reason why there is the need for government intervention in the market economy is to ensure that indigenous companies and business establishments are safeguarded. This is especially the case when it comes to the farming industry where the United States of America government offers help to farmers through subsidies and tax exemptions to farmers in order for them to compete with International Corporation, which has an advantage of the farmers in terms of various factors such as availability of cheap labor. There is the need for government’s intervention in the market economy when it comes to goods and services which are sensitive to nature. For example, the government must control the production, sale, and buying of firearms and ammunition since this is an issue which is sensitive. Another sector that the government intervenes as a necessity due to sensitivity is the provision of public services such as health, water, education, security, and electricity. There is need of government intervention is such instances due to the fact that these are human needs that when left to the private-sector control they might lead to chaos due to various factors. Finally, yet importantly, the government intervenes in a market economy to ensure that it has access to enough revenue to meet the country’s needs. This is usually done through taxation where the government influences the market economy in order to generate its revenue. The rationale for the Intervention of Government in the Market Process in the U.S The need for government intervention in economic markets in the United States of America provides the rationale for the government’s involvement in the market process in the country. Firstly, the fact that government intervention in the market process in the United States of America results in social equity is a major motivator for the government to regulate the business processes in America.