The paper "Protecting Local Firms by Their Governments " is an outstanding example of management coursework. Most local firms do engage their governments in lobbying for their rights and place in international trade. Governments also protect their local firms when it is believed that such firms are facing stiff competition or are being damaged through unfair competition from other foreign firms. The idea of protecting local firms by their governments is usually political and economic motivation. Local government’ s participation in international business can only work for short term periods but bring some negative impacts in the end (Wild, 2008).
Among the disadvantages of government participation in global business, including the idea of making local firms less competitive in the global business among other drawbacks. However, it also comes with various opportunities for the same protected firms. Most governments develop policies to protect their local firms through such methods as adopting trade policies that include tariffs, import quotas, subsidies, and other handicaps used to regulate the importation of goods. Governments also may decide to raise the prices of imported products to make them less attractive to local consumers and make local products cheaper to attract and encourage local consumers.
Another important protectionism device is the use of import quotas that aims at limiting the number of imported products (Ball et al, 2012). Opportunities for national firms The arguments that favor government participation in global business on behalf of local firms could be the prevention of dumping. Dumping can occur when foreign firms export their products at a cheaper price in order to make local companies less viable and thus driven out of business.
In this regard, foreign companies can easily enjoy monopoly and profitability. Although this argument has some degree of credibility, it is also difficult to establish the exact costs of a specific firm. It is also possible that foreign firms can find an effective way to produce more products that can call for national governments to regulate monopoly other than applying protectionist policies (Wild, 2008). Another argument that encourages government participation in global business is that of employment opportunities. This improves rates of employment since imports have the possibility of taking away domestic jobs.
A good example of this argument can be related to the UK car markets back in the 1970s where foreign car manufacturers took the market away. Therefore, government action in protecting local firms against the foreign competition can help improve employment and thus increase per capita income hence improving the living standards of the citizens. This also offers a great opportunity for local firms to grow and seize more opportunities to make them highly competitive (Hill, 2012). Government participation in international business on behalf of its local firms is very much important in protecting local infant industries.
This protection of local companies against foreign unfair competition helps the local infant firms to grow and have a competitive advantage against international industries. This will put foreign firms that are starting up at a very difficult situation in competing on prices of already established and stable local firms. It is also important for local firms since foreign companies would produce large volumes of products and thus have an added advantage of controlling local economies of scale than the local firms (Ball, et al, 2012).
This will put local firms at a glance in the global business and participate in international business in a more competitive stage.