The fundamental aim of any given business is to make profits and maximize those profits. Organizations therefore in its day to day business activities will always aim at making the maximum profits at a very low cost of production. This basically means that a company wants to make very high profits without incurring a lot of expenses. In minimizing their cost of production while still ensuring that maximum profits are realized, sometimes companies violate regulations and laws governing them.
It is therefore of utmost importance that there are other external bodies charged with the function of carrying out checks and balances to ensure that companies, businesses and organizations in general do not violate laid down regulations as they attempt to maximize their profits at very low costs of production and also that the consumers gets the products at very affordable prices and that the environment is not polluted by the by-products of the manufacturing companies. Therefore the first purpose of regulating companies is to ensure that the consumer on the ground is not shortchanged in terms of prices.
This basically means that without regulations a company may charge unreasonably high prices for its products to the disadvantage of the customer. The regulatory bodies therefore ensure that a standard price for every particular product is set and companies are given a limit and extent up to which they are not expected to exceed. Should there be a violation by any company the regulatory body always steps in and takes an immediate action and if the company had no justifications whatsoever to go against the laid down regulations, disciplinary measures against the company are the next step.
Business regulation is viewed by many as a way of enhancing better business environment. Regulation is also done to ensure that companies give consumers quality products for their money. It has been observed over the past years that failure to keenly monitor a company’s activities leads to recklessness and negligence by manufacturers so that consumers get very lo0w quality products. The laws governing the regulation of a company therefore provide for a regulatory body whose function is basically to check the kind of products a company produces in terms of quality.
The issue of quality is almost synonymous to suitability of a product for use by customers in terms of safety. A product could be of low quality in that it is not up to the standards expected of such a product. For instance, if it is a vehicle it would be said to be of low quality if it fails to cover the mileage a car of a similar make would be expected to make. Quality is also looked at in terms of suitability so that it is important for the regulatory board to establish whether a company is making are suitable for use.
For instance, if it is a company that manufactures food stuffs, then the regulatory body must ensure that the foods manufactured are actually edible and safe for human consumption. In case of medical products they must ensure chemicals used in the manufacture of medicines have no side effects on the body of a patient. In case of electronic products it is vital to ensure that the are safe so that they don’t blow up on the user of that product. It is for this reason that every country has regulatory bodies known as bureaus of standards of goods and products in general are maintained by the manufacturers.
Regulation by external regulatory bodies is also done to ensure do not carelessly dispose off waste products thereby polluting the environment. Most companies if left to go unregulated would cause a l0ot of harm to the environment. This is because of the kind of waste products they produce. Most of the waste products are not only toxic but also poisonous. The regulatory bodies are therefore very instrumental in ensuring that companies treat their waste products prior to releasing them to the outside world.
Better still, they ensure that even with the w3aste products being treated, they are disposed in the right place and manner. A case scenario of a company that used to produce to waste products that were toxic and then carelessly release the waste products into the open air. This in turn caused the surrounding residents great suffering as there was an outbreak of diseases. The regulatory body immediately intervened and the company was closed down indefinitely until they found a lasting solution.
It has also been observed that most industries would rather drain their waste products in the water . odies notwithstanding their toxic levels so that they cut down expenses of having to dispose the waste products in the right way. This kills the aquatic animals thus destroying the environment. The regulatory bodies in such cases are very quick to ensure that no life both human and that of animals is put in danger. Regulation is also done to ensure prompt payment of taxes by companies. Every company in business in every country is required to pay taxes to the government of that particular country.
This forms a source of income for the government. Most companies as discussed earlier are very evasive because their main goal is to make maximum profits. Thus they sometimes attempt to evasion of payment of taxes in order to make as high profits. It is no secret that even the consumers on the ground who are the back bone of the business field are more often than not treated very unfairly by the businessmen as they attempt to achieve their principal of maximum profit at the lowest possible cost.
Manufacturers and owners of companies always want to be beneficiaries of their work at no extra cost thus tax evasion and avoidance is very common in the business field. However, they ignore the fact that by engaging in such malpractices of tax evasion and avoidance the government stands s to lose a lot in terms of revenue and as a result the country’s population suffers as the government is no longer able to sustain their needs due to insufficient revenues. Note that the manufacturers have had nothing to lose as their businesses still go on as desired.
It is also important to note that failure of companies to pay taxes automatically means that a lot more will be demanded from the individuals thus suppressing the common citizen. Most people don’t find the importance of paying taxes. Tax is an obvious source from which countries can generate cash to fund human development. It is also one of the means by which they can begin to free themselves from dependence on handouts and the punitive conditions often attached to aid.
Tax can also help countries determine their own route out of poverty. How Tax Policies Fleece the Poor, Christian Aid, September 2005, page6) Regulatory bodies therefore ensure that companies pay taxes as they should to avoid suppressing the poor people. Research indicates that evasion and avoidance of taxes by companies has led to a considerable increase in Value Added Tax which is the tax imposed on common goods used by ordinary people therefore placing an unfairly heavy burden on poor people. Regulation of companies is also done to ensure that employers respect labor laws put in place to protect rights of employees at the work place.
More often than not employers ignore the rights of their employees thus employees are made to work under very poor conditions. Therefore the regulatory bodies in conjunction with non-governmental bodies come together in defending the rights if the workers and ensuring that companies follow the laws governing the rights of the employees to the letter. The regulatory bodies also ensure that workers are not treated unfairly in terms of wages by ensuring that they are paid above the minimum wage.
It also ensures that employees are not overworked in term s of work load and the number of hours that they work. The regulatory bodies are also very keen in terms of the age limit so that companies do not employ underage employees in order to have cheap labor. Another major function of the regulatory bodies is to ensure that companies submit annual returns as they should and within the required time. The annual returns and reports contain the activities of the company for a given period usually one year and include income generated, profits made, expenses incurred and losses made.
Most companies default in the submission of these annual reports and returns in order to conceal the profits made and consequently evade being taxed. They also default in submission of the reports as a way of covering up for any activity or activities carried out in the year that contravened any laid down rules. The regulatory bodies therefore step in to ensure that all companies submit their annual returns and reports and that they do so within the required time.
Regulatory bodies also play a major role in ensuring that companies comply with the general requirements of operating and running of a company. This is in relation to the formation of a company, who makes the board of governors, who constitutes members of a company, shareholders and all other requirements a company is expected to comply with in its operations. The regulatory bodies are always in the frontline in the protection of investors so that companies do not manipulate them as far as investment is concerned.
From the roles discussed earlier, it is very clear that a regulatory body is of great importance in the business field as it ensures that companies operate without the slightest form of flaws. From the discussion, it is very clear. From the discussion, it is clearly spelt out that companies cannot by any means regulate themselves. This is for the obvious reasons that regulations of their operations are obviously incompatible with the fundamental principle with their fundamental purpose, goal and objective of making maximum profits at the lowest possible cost.
It is unrealistic and almost impossible to expect that companies will regulate themselves while it is very clear that their main objective in business and the task of regulation totally are not synonymous. It is therefore in order to conclude that if companies are left to be in charge of themselves and asked to regulate themselves while it is very clear that their many objectives in business and the task of regulation totally do no rhyme.
It is therefore in order to conclude that if companies are left to be in charge of themselves, they would take advantage, exploit people and the consumer on the ground would be on the losing end. It is therefore correct to state that regulation of companies and other business organizations can only be successfully done by external regulatory bodies separate from the company itself who have no interest whatsoever in either the company or activities.
Therefore it is only with the right regulatory measures that a fair playground in the business industry can be achieved. This can be achieved by ensuring that regulatory bodies are established for checks and balances of companies and business organizations at large. Regulation by eternal regulatory bodies has also played a major role in establishing fair and healthy competition among businessmen therefore has a level playground to do their business.