Company structure & the functions of management

   Right, Shall we begin?

   Good morning. For those of you who don’t already know me, my name is Bolotnov Dimitry. I’m a full time second year student of the faculty of Public Administration of National Research University – Higher school of economics. It’s my privilege today to be talking to such a distinguished audience. I plan to be brief. I shall only take five minutes or so of your time.

  The subject of my presentation is Government policy and business behavior. I have divided my presentation into three main parts: government policy, its objectives and electronic government. If you have any questions, I’d be glad to answer them at the end of my talk. Let’s get down to business.

  First, I’d like to talk about government policy and its affection on business. Governments create the rules and frameworks in which businesses are able to compete against each other. From time to time the government will change these rules and frameworks forcing businesses to change the way they operate. Business is thus keenly affected by government policy. Key areas of government policy that affect business are economic and law.

  Let`s talk about economic government policy. There are two main types of it – fiscal and monetary.

   Fiscal Policy uses taxation and government spending to steer the economy. Taxation policy affects business costs. For example, a rise in corporation tax on business profits has the same effect as an increase in costs. Other business taxes are environmental taxes, and value added tax. VAT is actually passed down the line to the final consumer but the administration of the VAT system is a cost for business.

   The second action is government spending. Government spending policy also affects business. For example, if the government spends more on schools, this will increase the income of businesses that supply schools. Government also provides subsidies for some business activity - e.g. an employment subsidy to take on the long-term unemployed.

   Since taxation and government spending represent reversed asset flows, we can think of them as opposite policies.

   Monetary policy rests on the relationship between the rates of interest in an economy, that is, the price at which money can be borrowed, and the total supply of money. A rise in interest rates raises the costs to business of borrowing money, and also causes consumers to reduce expenditure, leading to a fall in business sales. The basic job of monetary policy is to keep the temperature of the economy about right. The benefits which business should look for from the successful conduct of monetary policy lie not in a temporary respite from higher interest rates, but in achieving a sustained climate of low inflation and economic stability.

   Furthermore government is able to change the legal framework. Central government can pass legislation aimed at regulating the activities of business sector, e.g. laws related to health and safety at work.

   There are different tools to measure effectiveness of government regulation. One of them is Regulatory Quality Index, which indicates the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development. . The index values range from -2.5 (very poor performance) to +2.5 (excellent performance). Russia is the one hundred thirty seventh out of two hundred and eleven countries, right below Zambia. Great result.

   The objectives of any government can be classified into two main categories: economic and non-economic or social objectives.

   Economic objectives. These will include the following:

• Promoting a stable and sustainable level of economic growth;
• Maintaining inflation at an acceptable level (currently the target is 2.0%). In comparison, in Russia now days the level of inflation is about 9%;
• Working to achieve full employment, defined as "employment opportunity for all";
• Monitoring the level of the balance of payments. Now days we have a positive balance of payments about 45 billion dollars. In 2011 strengthening of balance of payments is expected. We’ll see;
• Improving the welfare of the population.

   There will also be a number of non-economic objectives which government might pursue:

• Reducing the level of poverty
• Providing equality of opportunity
• Protection of the rights of the individual
• Increasing the minimum wage
• Improving educational and health provision
• Providing clean and healthy environment

   Next topic we are going to discuss is electronic government. It’s the use of information technology to free movement of information to overcome the physical bounds of traditional paper and physical based systems. Andrew Chadwick and Christopher May constructed a framework of three models for electronic interaction between states and citizens - managerial, consultative and participatory.

   Managerial models are focused on service delivery, with interaction largely limited to sending back and forth information related to services.

   Consultative models involve more policy discussion and the exchange of ideas, but again the information flows are unilinear and streamlined.

   Participative models, on the other hand, involve multi-directional and complex interaction between different governments and stakeholders, with detailed deliberation and exchange of information and ideas.

   The concept of building an e-Government of the Russian Federation was approved by the Federal Government on May 6, 2008 and is being developed constantly. However there are still a lot to do.

   So, in conclusion, I’d like to say that government influence is vital for stability and development of the country. However such regulations are not always effective.

   As William Howard Taft, the 27th President of the United States and later the tenth Chief Justice of the United States said  «We are imperfect.  We cannot expect perfect government».