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Antitrust Laws

Published September 6, 2013 by Mayrbear's Lair

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Fair trade and competition is a significant component in how business leaders conduct commerce. Gellhorn and Kovacic (2004) assert that societies have adopted legal systems to control and regulate anti-competitive conduct for several millennia where an antitrust incident documented in Ancient Greece describes a case brought against the grain dealers cartel in Athens in 386 BC (Gellhorn & Kovacic, 2004). By understanding the origins of antitrust statutes authorities are better able to comprehend how to decode them. For this discussion post, we will examine the recent attempted merger of AT&T with the T-Mobile Corporation that was dropped after the Justice Department took an aggressive stance and sued to block the deal contending the merger would constitute a violation of antitrust laws.

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Antitrust laws are regulated by the federal government to manage anticompetitive practices. Hovenkamp (2011) contends that in order to comprehend antitrust policies, knowledge is required in two rudimentary regions of economics: price theory and industrial organization.  Price theory consists of the decision-making process that determines the quantity and the cost of goods. Industrial organization on the other hand, is the theory of how the framework of the organization and the market are established. In a perfectly competitive market, for instance, all participants have knowledge of price, output and other information. In other words, competitive equilibrium means that all sellers make a standardized product that consumers can purchase at the same price from any outlet. However there are other elements that can affect the market. For instance, supply and demand for products play a role as well. In addition, there are consumers that are willing to pay different amounts. Monopolies, however, create opportunities to increase output and raise profit margins. When profits in a market are high two things happen: (a) companies will produce more, and (b) new companies are formed. This momentum continues until it reaches a point where supply and demand intersect (Hovenkamp, 2011). From that point on, continuation to produce the product increases cost, resulting in too much supply. In addition, revenues decline because of the decrease in demand. Based on this model, the government was justified in believing that the AT&T/T-Mobile merger was a threat to fair competition in the cellular communication market.

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The US government has the authority to exercise its power to protect citizen rights. Merced (2011) reported that if the merger between communication giant AT&T and T-Mobile would have been allowed to occur, it would have created a duopoly between AT&T and Verizon Wireless leaving the two giants to control three-quarters of the cellular communications market (Merced, 2011). This would have ripened the field for the two giants to engage in anticompetitive practices that could have a profound affect on: (a) price manipulation; (b) restriction on the availability of products; and (c) agreements to fix prices that undermine the market. Seaquist (2012) purported that the Sherman Antitrust Act of 1890 which is based on common-law practices integrated with standards of conduct, regulates and punish businesses that engage in anticompetitive practices and was established to prevent mergers like these from occurring (Seaquist, 2012). In fact, just recently, the news reported that the government intervened yet again to stop another merger. This time between American Airlines and US Air, contending that the union would affect higher prices in airfare that would be unfair to citizens. In conclusion, consumers win when Antitrust Laws prevent mergers of large conglomerates because of: (a) higher prices to consumers, (b) they reduce innovative opportunities, and (c) they leave little room for competition. Without antitrust policies, the world would indeed be a very different place today.

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References:

Gellhorn, E., & Kovacic, W. (2004). Antitrust law and economics in a nutshell. St. Paul, MN: West Publishing Co.

Hovenkamp, H. (2011). Black letter outline on antitrust (Fifth ed.). St. Paul, MN: West Publishing.

Merced, M. D. (2011, December 19). AT&T ends $39 billion bid for T-Mobile. Retrieved August 19, 2013, from http://www.dealbook.nytimes.com: http://dealbook.nytimes.com/2011/12/19/att-withdraws-39-bid-for-t-mobile/?_r=0

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Securities Law

Published September 4, 2013 by Mayrbear's Lair

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The most common securities many individuals are familiar with are stocks and bonds. According to Gabaldon and Soderquist (2011) the courts, however, have acknowledged all types of investment schemes, including some that relate to earthworms, chinchillas, and warehouse receipts for Scotch whiskey, which can also involve a security. People that invest in securities learn to become familiar with security laws to avoid violating them. It can also help them determine whether a transaction is a legitimate security based on concepts that are completely foreign like those mentioned here (Gabaldon & Soderquist, 2011). In other words, understanding security laws may help them learn how to profit from them, plus, it can also serve to protect their investments. In addition, regulation allows for fair competition in the marketplace. For example, consider a private California university that wants to issue “shares in learning” certificates; are they required to register the stock they offer with the Securities and Exchange Commission (SEC)?

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Federal laws mandate that securities are registered before they go up for sale. Companies are expected to file the paperwork with the SEC and the Supreme Court determines what securities constitute an investment contract. In order to be considered an investment contract: (a) it must provide an investment opportunity, (b) establish a common enterprise, (c) provide an opportunity to make a profit, and (d) the returns are derived from the management of others. In addition, the registration process must include detailed information on the provisions of the security offered, including the corporation’s properties and business, the company’s management team and their compensation, security holdings and benefits, a certified financial statement by an independent accounting firm, and any pending lawsuits the company may be engaged in. There are, however, exceptions to registering securities before they go up for sale. For instance, the SEC exempts securities that are issued by banks prior to July 27, 1933 or any securities issued by the government. In addition, securities are exempt if they have been issued by nonprofit organizations including religious, charitable, educational, benevolent or fraternal organizations (Seaquist, 2012). Based on this information, the private university in California, therefore, would be considered exempt, and not required to register with the SEC because it falls under the category of a nonprofit educational organization.

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Regulating securities is an extremely complicated matter. Hazen (2009) contends that it is particularly perplexing because of the degree of detail and difficulty in elaborating both federal and state laws. Although originating is a matter of state law, the majority of regulation for securities falls under the jurisdiction of the federal law (Hazen, 2009). In other words, dealing with federal securities regulations is usually a difficult task that requires the consultation of several sources for efficient management because of the complexities involved. With respect to the stocks issued in from the private California university, according to Seaquist (2012) the Securities act of 1933, Rule 504 of Regulation D states that non-public issuers are permitted to sell up to one million dollars of securities in a twelve month period to any buyer. Under Rule 147, regulations also state that securities offered for sale by an organization that conducts 80% of their business in one state, are also exempt from filing (Seaquist, 2012). Given this information, one can conclude that the private university in California would be exempt from filing with proof the institution meets the following criteria: (a) it is a nonprofit educational organization; (b) the amount offered does not exceed the maximum value mandated in Rule 504 of Regulations A and D, and (c) they conduct most of their business in California where their facilities are located and students attend classes. In conclusion, because of the complexities involved with security laws, it is best to check with a legal consultant to determine exemption status.

References:

Gabaldon, T., & Soderquist, L. (2011). Securities Law (4th ed.). New York, NY: Thomson Reuters/Foundation Press.

Hazen, T. (2009). The Law of Securities Regulation (6th ed.). St. Paul, MN: West Publishing.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Administrative Law and Business

Published August 28, 2013 by Mayrbear's Lair

Administrative-Law

There are those that favor an increase of government regulation in the business arena in light of events like Enron and the credit crisis of 2008, while others believe that self-regulation is more effective without the intervention of government agencies and their administrative laws. Funk and Seamon (2009) suggest that administrative laws are like the air we ingest: invisible and ubiquitous.  Administrative agencies effect many areas of our lives that most people take for granted. In other words, they are part of the atmosphere that comprise modern society and like our physical environment, a necessary component (in some form) to help sustain civility (Funk & Seamon, 2009).  However many company leaders believe that government intervention is not effective and regard it as an unfair practice that forces financial burden on businesses, particularly small ones. Seaquist (2012) contends that the purpose of government agencies and their administrative laws is to help oversee and carry out specific government functions that help maintain a civil society (Seaquist, 2012). However, the effectiveness of these regulations are altered and evolve as society does and as administrations change and incorporate their political views.

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In order to better comprehend what role government regulation should play to ensure ethical corporate conduct, we must first understand what role administrative agencies and their laws are meant to play and why they were established in the first place. Funk and Seamon (2009) purport that historically, the most significant agencies (or departments), consisted of the President’s Cabinet or close advisory members.  There are fifteen areas these departments oversee: Agriculture, commerce, defense, education, energy, health and human services, homeland security, housing and urban development, interior, justice, labor, state, transportation, treasury, and veterans’ affairs. The formation of these agencies and the demands placed on the leaders altered the historic importance of the cabinet members (Funk & Seamon, 2009). Subsequently, as these agencies evolved, they slowly began to take on a life of their own. For example, the agencies focus on implementing and managing their administrative laws, which are primarily about procedure and the systems they maintain, in order to take action that affect citizens. The administrative laws in turn, are determined from judicial opinions, driven by judicial decisions – as opposed to statutory or regulatory content.  In the meantime, growing concerns over costs and the efficiency of these government regulations, continue to lead to the creation of many new laws and executive orders designed to reform them. In theory, as society evolves and new technology expands, these regulations and agencies continue to make adjustments and the cycle continues.

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One thing is for certain, administrative regulation agencies have been granted considerable power. Gellhorn and Levin (2006) purport that some of these powers are assigned on an industry wide basis like the FBI and IRS whereas other agencies enforce norms of conduct within the economy like the Federal Trade Commission (FTC) that enforces the ban on unfair methods of commerce and competition (Gellhorn & Levin, 2006). What makes these agencies dramatically unique is that each operates wielding the power of all three principal branches of government. In other words, they have legislative power to issue rules that control behavior, including the enforcement of heavy civil or criminal penalties for violations. They also have executive power to investigate possible violations and prosecute offenders. In addition, they have judicial power to adjudicate disputes that fail to comply with mandates. For example, the Securities Exchange Commission (SEC) created regulations that outline specific disclosures that must be taken into consideration in a stock prospectus. This later becomes a law that is passed by the legislature that the SEC uses to enforce and prosecute violators. Then, the SEC acts as the judge and jury by conducting adjudicatory hearings.  What makes this a unique situation is that these administrative agencies are typically unattached to any of the three branches of government (executive, legislative, or judicial). This then, raises questions of concern with respect to the constitutional distribution of authority in our government which is based on the principle of the separation of powers. We must remember that the division of these branches serves to provide a check and balance system of the power exercised by the other two branches. This means that the combined powers of the administrative agencies are not in alignment with the three part paradigm of the democratic government system the founding fathers designed. Institutions granted that kind of power can become dangerous because they have no one but themselves to answer to. In light of this significant information, it seems the real question is not whether government should increase or decrease their regulatory measures, the real question is how to make them effective at what they were designed to do, with checks and balances in place to ensure that these agencies and the government leaders that run them, manage society in a fair and ethical manner and that the distribution of power is more evenly divided to detect ethical misconduct before another crisis threatens the global economy.

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References:

Funk, W., & Seamon, R. (2009). Examples and explanations: Administrative law (Fourth ed.). New York, NY: Aspen Publishers.

Gellhorn, E., & Levin, R. (2006). Administrative law and process: In a nutshell (Fifty ed.). St. Paul, MN: West Publishing Co.

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

Collaborative Learning in Organizations

Published May 10, 2013 by Mayrbear's Lair

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Collaboration and collaborative learning are processes that integrate people, systems, and technology.  They exist in organizations where there is trust, decentralization in the decision making process, and that practice openness and fairness in their communication systems.  This configuration is designed to satisfy the needs of the whole rather than a need for one individual’s participation to spearhead the decision making process in an effort to protect their own interests.  Collaboration offers a way for organizations and communities, for example, to address pressing issues like housing, crime, poverty, employment, and education.  Collaboration can be as simple as a conversation among associates, a motivational presentation to the public, or as complex as a structured project where participants are required to update information in real time (Blevins, 2001).  This research takes a look at the collaborative learning process and organizations that work together to obtain greater resources, help improve ineffective conditions and systems, and to achieve higher levels of recognition and rewards in a highly competitive marketplace.

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A Closer Look

More organizations are joining people together in creative ways to help tackle issues that lie beyond the parameters of any one individual.  Peterson’s (2001) research reveals that in today’s global arena, employees that work together in collaboration can make the difference between a company’s failure and success.  To achieve a level of success, collaborative efforts must consist of the following components: (a) a shared vision, (b) clear and open communication, and (c) the establishment of genuine trust among the collaborators.  Working together cohesively builds stronger relationships that provide a foundation for further collaborative efforts because they are now more adept in finding solutions.  His study concludes that effective business collaboration can bring people together to increase performance and productivity for a competitive advantage (Peterson, 2001).

The ability of collaborative groups to persevere in doing constructive work also depends upon their success in resolving issues.  The key roles in collaborative efforts are trust and good communication during each phase of the process, especially when issues like mutual respect, attributions, political processes, expectations, and consensus are addressed.  In addition, organizations learn to work in a collaborative effort despite of such barriers like gender, race, and age.  In other words, complicated stereotypical effects that favor one demographic category over another have less determinate influences on the various gatekeepers who can obstruct the collaboration process (Peterson, 2001).

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Organizations Demonstrating Collaborative Cultures

The American Cancer Society is one of the largest nonprofit organizations in the US.  Despite their size, the quality of their work, and maintaining a stellar reputation, they are an organization that believes they can only carry out their mission effectively by developing collaborative partnerships with other organizations.  For example, their teaming with Yellow Cab and United Checkers Cab, as well as other programs like Look Good Feel Better, helps bring awareness to raise funds for breast cancer research and other related patient programs.  As a result, they have pioneered a variety of approaches to promote collaboration with local, grassroots organizations to reach their public health goals (Mattessich & Murray-Close, 2001).

Scholastic institutions that address education and youth development within poverty-stricken regions are another example of collaborative learning at an organizational level.  These firms learned to collaborate with national nonprofit organizations to comprehend local needs and helped establish a reputation among the local populace to achieve their goals.

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Fink’s (2007) research is focused on another driving trend that motivates firms to implement tools of collaboration.  These firms have adopted electronic communication tools as a means to facilitate collaboration.  These include the implementation of systems like discussion boards, instant messaging, and groupware.  These tools are used to facilitate communication and coordination without time and space limitations.  His studies focus on the organizational view of the impact and role of e-collaboration.  In this case, e-collaboration is conceptualized as a change-oriented capability that enables a firm to identify, integrate, and apply its knowledge assets to meet competitive demands.  In this context, e-collaboration potentially has three organizational roles: (a) coordination, (b) learning, and (c) innovation associated with efficiency or competitive impacts.  His study concludes that organizations in less dynamic business environments need e-collaboration for operational purposes, emphasizing coordination components, whereas companies in high-velocity business environments utilize e-collaboration for strategic purposes, emphasizing the learning and innovation roles (Fink, 2007).

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Conclusion

Shankman (2013) describes successful organizations as institutions that are comprised of people who work together in an atmosphere that is conducive to stability, good cheer, and led by leaders who are almost always the role models for the change they seek (Shankman, 2013).  Community leaders and inhabitants who engage in collaboration efforts to accomplish tasks can improve their civic conditions but also reinforce social fibers and increase the regions’ capacity to become more distinguished.  In conclusion, collaboration builds stronger relationships and can enhance social conditions in creative ways.  It offers communities a tool for improvement and introduces innovative opportunities to tackle issues.

References

Blevins, R. (2001, ). A study of association between organizational trust and decision-making, communications, and collaboration in comprehensive, regional institutions of higher education. ProQuest Dissertations and Theses. Ann Arbor, MI, USA: ProQuest, UMI Dissertations Publishing. Retrieved April24 2013, from http://search.proquest.com/docview/304707494?accountid=32521

Fink, L. (2007, Jul-Sep). Coordination, learning, and innovation: The organizational roles of e-collaboration and their impacts. International Journal of E-Collaboration. Hershey, PA, USA: IGI Global. Retrieved April 24, 2013, from http://search.proquest.com/docview/222376102?accountid=32521

Mattessich, P., & Murray-Close, M. (2001). Collaboration: What makes it work. St. Paul, MN: Wilder Publishing.

Peterson, M. (2001, February). International collaboration in organizational behavior research. Journal of Organizational Behavior. Chichester, US: Wiley Periodicals Inc. Retrieved April 24, 2013, from http://search.proquest.com/docview/224884660?accountid=32521

Shankman, P. (2013). Nice companies finish first. New York, NY: Palgrave MacMillan Publishers.