Government policies are set of decisions that are made by government officials and other top acting political officials inorder to influence different sectors of the country's economy. In other words, we can say, they are the different laws that are made to either shape, frame or jeopardize the previous policy made.
So, for every governmental realm to be functional, there must be set of policies made inorder to counter different problems facing the state of the economy, some maybe good policies while others maybe as bad as it could get, all depends on the type of people sent to represent the masses..
Effects Of Government Policies On Businesses
Taxation: Tax has over time been one of the core policies affecting businesses, in a situation where government decides to increase tax rate and promote excessive Value Added Tax (VAT) on goods, there will be high tendency for prices of goods to skyrocket because the producers will shift part of the tax to the wholesaler and the wholesaler will do same to the retailer and the retailer will do same to the final consumer, when this happens, prices of goods tend to be on the high side thereby leading to low consumption of goods or even production of low quality products in the market system.
• Minimum Wage: It is of no news that the rate at which government places minimum wages on public servants influences our business, in a situation for example in Nigeria where a bag of rice cost 45,000 Nigerian naira, that's equivalent to 280 STEEM, but the minimum wage is 18,000 Nigerian naira which is equivalent to 112 STEEM, this margin is too much, that means it will take a civil servant two months of full salary to afford a bag of rice excluding savings. This is really slowing consumption rate in the market system.
Price Regulation: Some policies aimed at regulating price in the commodity market are most often times very dangerous. Most times, government will enforce certain price range on commodities forgetting the cost of raw materials and labour. This alone bring little to no profit to the producers thereby resulting in some companies folding up.
• Monopoly Of Items: Some government officials implement monopoly policies on certain items inorder to gain from them also, this hinders healthy market competition and production of alternatives in the commodity market, price variance will be obstructed thereby promoting compulsory monopoly.
In Conclusion
For some reasons, the government are responsible for most of the crisis we face in our various businesses are not to some extent our faults, lets be so cautious of the people we chose to represent us over there because they determine our future and fate
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