Credit Lyonnais had been under the scrutiny of the U.S. Attorney's Office for two scandals. First, it was accused of funding the takeover of MGM Studios by an individual who was both corrupt and criminal while concealing its involvement from the U.S. government. Second, they were accused of playing a role in a scheme to defraud policyholders of the Executive Life Insurance Company and of making off with over a billion dollars from fraudulently acquired junk bonds.

In 1990, Italian businessman Giancarlo Paretti purchased the controlling interest of MGM Studios with $2 billion in loans from Credit Lyonnais and its subsidiary, Credit Lyonnais Nederlands, even though Paretti had a criminal record and a bad credit rating. Paretti was required to report the terms of the acquisition, but he lied in this report, and the U.S. Attorney's Office began to investigate the origin of his finances. In, 1991, Credit Lyonnais was forced to lend Paretti more money to save MGM from financial deterioration and to avoid an investigation from a bankruptcy commission. As security for this new loan, the bank seized control of the company's stock, thus becoming owner of MGM Studios. Such ownership was in direct violation of the Bank Holding Company Act, which prohibits any financial institution from owning a nonfinancial institution. In an attempt to make it seem as though the bank was an unwitting victim of Paretti's schemes, Credit Lyonnais sued Paretti for mismanagement. The U.S. Attorney's Office was not convinced of the bank's victimization and began to investigate how Paretti had been able to request and receive twenty-three loans totaling $50 million from Credit Lyonnais Nederlands without a background check, which would have shown that Paretti had a record of fraud, forgery, and assault. It had also been discovered that Paretti had rewarded Credit Lyonnais's loan officers with shares in his Italian film company and all-expenses-paid trips on yachts and private planes. While the bank was being investigated, Credit Lyonnais created sham transactions to make it appear as if Paretti were paying down the debt when no such payments were ever made. In 1998, the U.S. Attorney's Office began to prosecute Paretti and his business partner Fiorini, but decided against prosecuting Credit Lyonnais and its officers. A settlement was prepared in which the bank would pay the U.S. government a penalty of $4 million for failing to supervise its employees. The bank also agreed to acknowledge the errors of its officers and promised to commit no further crimes in the United States. However, even before the ink was dry on the settlement, the U.S. Attorney's Office began another investigation into the criminal activities of Credit Lyonnais and its involvement with Executive Life.

Credit Lyonnais had acquired Executive Life Insurance as part of a junk bond portfolio when it bought Altus Finance in 1990. Executive Life had nearly gone under when its junk bonds lost value in the late 1980s. Credit Lyonnais officers figured that a profit could be made when the bonds recovered, so they financially backed Apollo Group Finance, which bought the bonds. But, in order to purchase the bonds, they would also have had to buy Executive Life, which would again put them in violation of the Bank Holding Company Act. To get around this problem, Credit Lyonnais concealed its interest in both the Apollo Group and Executive Life. Then, in 1992, the bank sold part of its interest in the junk bonds to a company called Artemis, whose owner was good friends with the president and other government officials. Credit Lyonnais lent him the money to buy the bonds. The junk bonds did recover and netted about $1 billion in profit while violating U.S. federal law. The violations would have been kept secret, but in 1999 a disgruntled French businessman told the California Department of Insurance that Credit Lyonnais had an illegal relationship with Executive Life. This whistle-blower began an investigation into the deal that would mark the beginning of the end of Credit Lyonnais.

In 2003, the U.S. Attorney's Office presented its evidence to a grand jury, which returned with a fifty-five-count indictment against the bank and it subsidiaries. For the remainder of the year, the two countries fought and negotiated concerning the terms of a plea agreement. Finally, in early 2004, the bank agreed to pay $100,000 to the Federal Reserve (the largest fine ever paid to that institution) and was given three years probation. A package deal required that the parties involved pay nearly $775 million in fines. Although the name Credit Lyonnais is still in existence, the bank no longer exists as a separate entity. Another French bank, Credit Agricole, bought it for $20 billion in 2002, and it plans to merge Credit Lyonnais into Credit Agricole over the coming years.

Although misconduct in pursuit of business purposes has been committed throughout commercial history, in the United States it first became a matter of wide public concern in the late nineteenth century, during the peak era of American industrialization. The aggressive and often corrupt business practices of the so-called Robber Barons created virtual monopolies (trusts) in such industries as oil and sugar, whereas railroads engaged in price discrimination that favored large companies over small producers. These trusts and behaviors spurred popular opposition that led ultimately to the creation of the first independent federal regulatory agency in 1887-the Interstate Commerce Commission to regulate railroads' rates-and to the passage of the first major corporate crime law in the United States in 1890: the federal Sherman Antitrust Act, which outlawed monopolies and conspiracies that limited competition.

Other early federal legislation included the Pure Food and Drug Act and the Meat Inspection Act, both passed by Congress in 1906. These laws were spurred by scandals in the medicinal drug and food industries and by such exposés as Upton Sinclair's best-selling novel The Jungle (1906), which described the unsanitary conditions of production in the Chicago meatpacking industry.

The law of corporate crimes has expanded dramatically in the decades since, typically following either growing recognition of standard business practices that harmed the public interest, or what the media labeled as corporate crime waves of illegal activity by numerous business firms. An example of the first situation is the creation in the early 1970s of the federal Environmental Protection Agency and of new federal laws outlawing air and water pollution in response to growing public concern over industrial pollution. An example of the second is the spur to action caused by such major financial frauds as those discovered at the Enron and Worldcom companies in the early years of the twenty-first century. This pattern of widespread fraud led Congress in 2002 to pass the Sarbanes-Oxley law, legislation that created new standards of top-management responsibility for honest financial accounting and that increased penalties for defrauding investors in shares of corporate stock.

The Study of Corporate Lawbreaking

The systematic examination of lawbreaking by corporations did not develop until the middle of the twentieth century. Although Edward A. Ross, writing in The Atlantic Monthly magazine, had drawn attention in 1907 to what he labeled criminaloids operating in American business, it was not until the 1949 publication of Edwin Sutherland's pioneering book White Collar Crime that the world had its first comprehensive study of corporate offending. The book examined the violations of law by several dozen of the largest American corporations and discovered high rates of offending, typically answered by lenient government penalties. Coming early in an era dominated in the United States by the conservative, anti-Communist culture of the Cold War, the book prompted many in positions of power to call Sutherland's research an unjustified attack on business, and some labeled him a radical. Not surprisingly, his ambitious lead was followed by only a handful of smaller-scale research studies during the 1950s and 1960s. However, the social conflict and political turmoil of the 1960s and early 1970s provided fertile ground for such research, and the study of corporate lawbreaking took firmer root. In particular, the divisive Vietnam War and the Watergate-era crimes of the Nixon administration and 1972 presidential campaign, including illegal campaign contributions by corporations, focused public concern on abuses of power in both business and government. One consequence of this new political climate was the first federal funding for research on white collar crime and its regulation. The research arm of the U.S. Department of Justice funded three major research programs in the 1970s, at Yale University and at the universities of Wisconsin and Minnesota. Although the latter project dealt with employee theft from businesses rather than with corporate lawbreaking, the Yale and Wisconsin researchers took up key questions of the misconduct of businesses and of government policies for controlling it.

The Wisconsin research produced the first and only comprehensive updating of Sutherland's study, analyses of the violations of federal law by several hundred of the nation's largest industrial corporations that were published in two volumes: Illegal Corporate Behavior (1979) and Corporate Crime (1980).

Although research in this area has now established its legitimacy in both academic and government circles, it proceeds at a slower pace and at lower levels of government funding than do studies of street crime. While several reasons account for this difference, a principal one is the relatively constant high public and political concern over the dangers posed by such crimes as robbery, burglary, and murder, even when rates of such crimes decline substantially as they did in the 1990s. In contrast, public and political concern over corporate crimes rises and falls with media attention to periodic “crime waves,” such as with the recent series of financial frauds in both American and foreign companies.

Another distinction between research on street crime and that on corporate lawbreaking is definitional. Whereas the definition of street crimes is straightforward-violations of criminal laws-definitions have been more controversial for corporate crime. Some scholars argue that researchers should limit their studies only to those cases in which companies have been prosecuted under criminal laws. Others disagree. They argue that, because of the political influence especially of big business, the government treats the vast majority of corporate offenses as non criminal violations of regulatory or civil laws in order to spare companies the stigma of criminal prosecution. These scholars conclude that there is no fundamental difference between crimes as conventionally defined and corporate violations of law handled by the government as non criminal offenses. Studies that have used this broader definition of corporate crimes include Sutherland's and the Wisconsin research. Other scholars sidestep this debate by avoiding the terminology of crimes and speaking instead of corporate violations, offenses, and lawbreaking.

Factors in Corporate Lawbreaking

Whatever the definitions used in research, certainly the social harms caused by corporate lawbreaking are massive in the aggregate. Although a single price-fixing conspiracy can net colluding corporations millions of dollars in illegal profits, the financial frauds that led to the bankruptcies of Enron, Worldcom, and other corporations in 2002 alone resulted in dozens of billions of dollars of losses to investors, including many Americans' pension funds. Financial losses of this scale dwarf the annual losses due to conventional street crimes, such as robbery, burglary and auto theft. Corporate violations can also cause substantial physical harm: to workers on the job, to consumers from unsafe medicines and other consumer products, and to citizens from industrial pollution. For example, each year several thousand employees die from injuries, and several million more are injured or made ill while at work. Tens of thousands of additional deaths from chronic exposure to hazardous work environments are estimated to occur annually. Although it is not known what proportions of these injuries, illnesses, and deaths are caused by companies' violations of worker safety laws, federal Occupational Safety and Health Administration (OSHA) data suggest that corporate violations are responsible for a considerable number. OSHA data show that federal and state inspections during a single fiscal year (2004), discovered more than 121,000 serious violations of worker safety laws, violations in which there was a substantial likelihood of death or serious physical harm.

There is similar uncertainty about the frequency with which corporations break laws and how many offenses they commit annually. Unlike the federal government's annual compilations of street crimes, no regular accounting system tracks corporate violations of law in the United States. What exists instead are a handful of studies, none of recent vintage, that suggest rates at which corporations break laws. They are all limited by their reliance on samples of companies and on available government data on firms found in violation of law. Of necessity, the studies, therefore, do not include offenses unknown to law enforcement officials or not pursued by them.

Sutherland's study in the 1940s of the offense histories of seventy large corporations found that all had committed at least one violation, averaging fourteen violations each over the course of their business lifetimes (which averaged forty-five years), or roughly one case of lawbreaking every three years for the average firm. The violations included price fixing, financial fraud, false advertising, and illegal treatment of workers. His study also found that 60 percent of the companies had been convicted of criminal offenses and that these forty-two firms had averaged four criminal convictions each.

The Wisconsin research compiled legal actions taken by the federal government in 1975 and 1976 against 477 of the largest industrial corporations in the United States. Almost half of the companies were charged with violations of law that were not minor in the areas of unfair competitive practices, worker safety, product safety, and environmental protection, among others; the companies so charged averaged three such cases in the two-year period. Of the enforcement actions taken against these companies, only 3 percent involved criminal prosecutions. Relatedly, a study of more than 1000 major corporations by Fortune magazine found that 10 percent of them had committed substantial violations during the decade of the 1970s.

Because corporations break laws at different rates and violate different types of law, and because rates of such lawbreaking vary over time as well, it is apparent that motivations and opportunities for violating laws vary. Understanding these variations has been the goal of considerable social science research. In their search for explanations of corporate lawbreaking, the studies suggest the importance of a number of factors, including the aggressive pursuit of profit, the nature of product markets, the cultural values of individual companies, and corporate officials' perceptions of the legitimacy of the laws that prohibit misconduct. These factors do not operate independently; instead they appear to interact with each other to produce a greater or lesser likelihood that companies will break laws.

For example, there is a slight tendency for companies experiencing relatively low profitability to commit more offenses, but more profitable firms often commit them as well. This tendency suggests that the pursuit of profit is more likely to produce lawbreaking when the corporate culture emphasizes the importance of profitability over other social values, such as corporate responsibility to the community, workers, consumers, and the natural environment. The values established by top corporate executives are key in establishing cultures that are either law-abiding or violation-prone. But executives' values are themselves shaped by such factors as the culture of the industries in which companies compete, the design of compensation systems for management performance, pressure from stock markets to show consistent short-term profit growth, and whether or not the government enforces the laws consistently and aggressively.

The Control of Corporate Offenses

Several mechanisms have been used and proposed to limit lawbreaking by corporations. Legal approaches figure most prominently among these mechanisms, but they also include improved ethics training for both business students and active managers and compliance and ethics programs operated inside companies. Law may inhibit wrongdoing in either of two ways. It may deter offenses through fear of criminal punishment and costly financial penalties, or it may morally educate citizens to avoid prohibited harmful behaviors. To date, research on the deterrent effects of law for corporate offenses generally suggests that punishment has only modest effects on future compliance with legal rules. Especially for large companies, deterrence will be limited when fines are small relative to the firms' wealth and when companies can use their financial resources and legal expertise to prevent government from provoking or seeking harsh sanctions. Under some circumstances fines and prison terms for individual corporate executives and managers may deter future offenses.

Some scholars, most prominent among them the sociologist John Braithwaite, have advocated the greater use of cooperative methods of legal response to violations in the first instance, rather than an initial reliance on punishment. Such methods include negotiations between government regulators, a law-violating business, and affected third parties (e.g., workers, investors, and community members) toward compliance with legal requirements; if the company continued to violate the laws, the government would then apply increasingly stringent penalties. Advocates of this approach argue that it would produce better compliance with law because company personnel would be more likely to accept the moral importance of socially responsible behaviors. Other scholars are skeptical, and such approaches have yet to be widely applied and assessed for their effectiveness. In the meanwhile, the U.S. Sentencing Guidelines for Organizations, implemented in 1991, have helped spur the development of compliance and ethics programs in many companies; under the guidelines, violating companies that can show good-faith compliance programs may receive reduced penalties upon conviction. National patterns of enforcement for corporate lawbreaking remain dynamic. These patterns include the imposition of criminal, civil, and regulatory law penalties by both national and state-level government units as well as class-action lawsuits brought by victims of corporate wrongdoing. Over time, enforcement varies in its intensity and in the severity of punishments and costs imposed upon violating companies. Especially in the wake of the numerous financial frauds by corporations in recent years, there have been many cases in which individual companies have paid financial penalties and court settlements of tens and even hundreds of millions of dollars. The effects of such costs on future corporate compliance with law remain to be seen.

In every state, government intervenes in market pricing with an apparent motive to maximize its efficiency. Government intervention results in imposition of:

• Price Floor
• Price Ceiling

Effects of Price Floor (Minimum Price) on consumers and producers

Sometimes government has to raise prices above the market clearing level or equilibrium point.

Effect on Consumers: Government set a minimum wage rate to stop it from dropping to a minimum level. Without governmental intervention the wage rate would be established at the equilibrium level. At that wage the quantity of labor demanded (jobs) is equal to the quantity of labor supplied (labor force) and there is no unemployment. If the government establishes a wage rate above the equilibrium level then the quantity of labor demanded will be less and the quantity of labor supplied will be more than at the equilibrium and thus there will be unemployment. For those who have a job at the controlled wage the government intervention seems a good thing. For those who lose their job as a result of the government intervention the controlled wage is a bad thing, but even these people may publicly favor the government intervention because they expect that they will eventually find a job at the controlled wage.

Consumer does not the enjoy price flooring, because he has to spend more than the equilibrium point.

Effect on Producers:

Particularly speaking in context of Pakistan, minimum selling price is set for the crops so that it benefits directly to farmer and encourage him to produce more. Falling prices have caused the profits of farmers to fall. The market is sending the farmer a signal. It is telling him or her to leave farming and do something else. What is the farmer's sin? It is not that the farmer has been inefficient or has made bad business decisions. The problem is that the farmer is too good. Farmers are able to produce more food than consumers want to buy at prices that will allow the farmer to make a profit. To farmers and others, this seems unfair.

Another prevalent effect of price floor is in the form of import duties. Government imposes duties to encourage the use of local goods in a market by establishing a minimum selling price to that imported good. Selling below that minimum price is illegal. That gives extra price advantage to local producer and enables him to compete against foreign products. Producers enjoy high profitability and market share that results in producer surplus. Supply surplus is the result of price floor.

Effects of Price Ceiling (Maximum Price) on consumers and producers

Government often set maximum price below equilibrium level with a motive that all the buyers can get benefit of certain good or services by purchasing them at controlled price.

Effects on consumer: Consumer will try to get more of the commodity as it is set below the equilibrium price and hence will result in market shortage. Governments normally impose price ceiling on commodity items like sugar, flour, poultry, meat etc. The result of price ceiling is consumer surplus.

However, due to shortage not every one can enjoy the commodity or good at controlled price so price ceiling is good for the person who has been benefited by this price ceiling, on the contrary it is bad for those who could not get the product due to shortage.

Effect on Producers: With a reduced price producer are not encouraged to produce more. So there is a shortage. Price ceilings provide a gain for buyers and a loss for sellers. Sellers would like to avoid the loss if they can. One way to do so is called a black market. In this case, the sellers illegally raise the price and hope to get away with it. So, for example, tickets to popular events are sold by scalpers at high prices.

 

There are SBA Loans, Micro Loans, Personal, Minority Loans, Investors, Refinancing, and of course your family.

SBA Loans are government loans set aside for first time business owners but, unless your credit is substantially higher than the norm, they will not assist you. This money, in my opinion, is set aside for people just moving into the country. It sets them up for success. If you are in this majority, good for you, if you're not; like I was it was difficult.

I actually had extensive experience in the field but, I don't think that matters a bit.

Microloans are just a little easier to get depending on your credit. You will receive a smaller amount than typical loans. Usually $25K-50K. These are also accessible through the SBA.

Another option is a Personal Loan at your bank. Again, you must have great credit and
when you tell them what the money is actually for, be prepared for a very lengthy speech.

Banks don't like lending money for restaurants. It's highly risky for them and of course most restaurants fail in their first year. However, I do want you to know that restaurants only fail due to lack of knowledge, it's not just about the money.

If you are woman, there are Minority Loans available. You can check them out at www.sba.gov or just put in minority woman business loans in Google and you'll find a plethora of resources.

Investors can also be a good source however, please do your research. It may be easier to get your money from a family member. Use them as an investor.

Regular Investors will normally take more of a cut of the monies than you want to give up. They will want to put their 2 cents in even though they may have had no exposure to restaurant industry. They're not all like this. Hopefully you can find a silent Investor.

A good Google term to search under in Angel Investors.

Refinancing your home. We are all aware of the present state of the housing market but, if you are one of the few that does have some equity in your home, this is a great way to go. I went this way and came out with over $60K. This is a great start.

Let me reiterate. A good start

Depending on the type of business you plan to open, it typically takes up to $150,000 to get you through a year of business. This cost includes: build-outs, inventory, plan reviews, licensing, equipment, small wares, tables, chairs, Serv safe certification, office supplies, credit-card processing equipment, lease money, and so much more.

If you plan on renting a location, you must have the funds for a deposit, first and last month's rent, and about 6 months more of rent money while you wait for your plan review to be accepted by the Department of Business and Professional Regulation.

In this time, you need to make sure you have the money put aside for you to live. You may want to consider keeping your old job until the restaurant opens. I know it's hard, and the excitement gets the best of you but, trust me you have to be smart about this.

I left my job a bit too early and I learned that this was not the way to go.

Nevertheless, I know that if you have knowledge and the patience to make your dreams of owning a restaurant a reality, it will happen. Don't give up, there's always a way.

A full free economy however has never existed. Total price deregulation is simply not possible even in a capitalist government. To impose restrictions on prices is an aspect of a mixed economy. Sometimes governments found it necessary to limit activities of certain market actors to protect the interest of the consumers.

Supply and demand forces are constantly at work in a free market. The quantity of the product supplied is determined by the quantity demanded by the consumer. The quantity demanded by consumer, in turn, is determined by the product's price.

The law of supply is directly proportional to price of the product which means the higher the price, the more supply is needed. The law of demand is inversely proportional to the demand and price which means, the higher the price the less demand.

For the supply and demand curve to be steady, equilibrium in the marketplace must be maintained. Equilibrium means price and quantity will remain where it began. For instance, if the price of a product is below equilibrium, the consumers demand increased sharply. There is an abrupt increase in demand which is more than what the producers are capable of supplying. Shortage of the product, in this instance the soup, occurs. The shortage will then cause the product's price to go up quickly. Producers are forced to increase the price until it is able to produce enough products to meet the consumers' rising demands or the equilibrium is once again reached.

The opposite is also true. If the good is sold above equilibrium, then demand lowers and the producers have to lower the price to eliminate excess inventory until the equilibrium of demand and supply is reached.

In this case, if a price shock occurs drastically changing the supply and demand curves then most probably the desire or demand of the product from those with the purchasing power is greater than the supply or production. Therefore there are more consumers with the desire and capacity to buy chicken soup but the supply is limited or not enough to meet those demands hence the very dramatic increase in price occurs.

A price shock in a market economy will lead to a temporary reduce of the degree of output and consequent increase of the price. Adjustments forces will normally bring back equilibrium by bringing the output rate and the price level back to their former levels.

Now suppose that Governor Davis of California decides that Goldilocks is paying too much for chicken soup and adequate nutrition is a necessity (the reason she is going about eating the soup of the three bears). The current market price of chicken soup is $1.00 per 10 oz. can; the Governor announces a price cap of $0.75 per 10 oz. can. In the usual supply and demand case, this move will greatly affect the equilibrium.

Since the price of the chicken soup is now lower and the demand is still much higher than the actual amount producers are prepared to supply then further shortage of the chicken soup could occur. This could actually be a detriment instead of a solution to the price shock occurrence. The increase to the aggregate demand coupled with the dwindling supply could lead to permanent changes in the price of the chicken soup.

If regulation of chicken soup price is to be imposed then regulation of the amount of chicken soup each household can buy should be imposed too in order to equal demand with supply.

The impact of the household choice in this situation is critical to the goal of attaining market equilibrium of supply and demand. Households may opt to forego buying the chicken soap altogether. They might protest the $1 price as excessive and choose to spend their money on similar but lesser expensive products such as chicken noodles or asparagus soup. Or, more economically, they can make their own chicken soup from scratch. If the suppliers cannot meet the demand for the time being, then the consumers might as well temporarily refrain from buying chicken soup until such time that the original selling price is back.

There are great elasticities of demand and supply enjoyed in the wholesale electric power market. Wholesale electric power market monopolizes the supply of electricity. That means they do not have competitors that could affect their product pricing. It is also difficult if not virtually impossible for consumers to stop or even lessen their demand for electricity. The sales volume therefore will not likely lower as the demand will continue to be the same despite the higher price thus effectively increasing their revenues. This offers the wholesale electric power market a lot of power over product pricing. It is not unusual to find situations where wholesale electricity producers will deliberately hold power off the market to force consumers to pay prices for electricity thus increasing their profits even higher.

Governor Gray Davis` demand for the federal government to impose price caps on wholesale electricity to be able to cope with the rising electricity charges and afford to supply all essential services is reasonable. The temporary price caps at wholesale could effectively soften the increasing fiscal burden on the state government until new plants come on line. The price caps could be set at a level that would yield a strong return to the industry`s investments. Wholesale price caps on electricity could be the best option for the government. In this instance, price regulation could work favorably to attain equilibrium of demand and supply.

Lack of sufficient capital is one of the important causes of business failures. Sometimes a business with suffient capital will fail, because the owner invests too much money in equipment and buildings, and does not keep enough for working capital.

In starting a new business, a person should not be eager to own his own building or to buy expensive equipment. He must know that he can noı operate his business profitably because of a lack of working capital. A building can be rented and equipment can be obtained on some plan of payment that does not require the immediate outlay of the total amount in cash.

If production costs can be reduced by producing larger quantities in one location, these savings may more than offset the added cost of transporting the finished products to customers. Without low-cost transportation, both within countries and internationally, there would be no mass distribution as we know it today.

Transporting costs may limit the target markets a marketing manager can consider. What really interests customers is that shipping costs increase delivered cost. Transport costs add little to the cost of products that are already valuable relative to their size and weight. But transporting costs can be a large part of the total cost for heavy products of low value - like many minerals and raw materials. Here are nine examples of such products, with their respective transporting costs as a percent of selling price in ( ):

1. Sand and gravel - (55%)
2. Bituminous coal - (42%)
3. Cabbage - (38%)
4. Iron ore - (20%)
5. Manufactured food - (8%)
6. Chemicals and plastics - (6%)
7. Factory machinery - (4%)
8. Electronic equipment - (3%)
9. Pharmaceuticals - (1%)

Government often plays an important role in the development of a country's transportation system - including its roads, harbors, railroads, and airports. And different countries regulate transportation differently, although regulation has, in general, been decreasing.

Until the 1980s, for example, the U.S. government had a lot of control over transporting. Government agencies approved routes, what services could be provided, and rates. Because rates were regulated, carriers typically did not compete on price. And some carriers were approved to carry some products but not others.

All of this caused higher prices and much waste. For example, the rules required a carrier that took Cummins diesel engines from the Midwest to California to use an extra long route going out - and to make the return trip empty. Other carriers took California vegetables to the Midwest - and they too went home empty.

Today, most of the rules in the United States (and in many other countries) have been relaxed. For example, as part of their move toward unification, most European countries are dropping their transporting regulations. The tunnel constructed under the English Channel is a dramatic example of the changes that took place. The "chunnel" allows trains to speed between England and the rest of Europe.

As regulations decreased, competition in the transportation industry increased. As a result, a marketing manager generally has many carriers in one or more modes competing for the firm's transporting business. Or a firm can do its own transporting. So knowing about the different modes is important, and this will be taken up in my succeeding articles.

Abstract: Transporting is the marketing function of moving goods. While it can be costly, and that governments may influence it, transporting aids economic development and exchange.

Tax can be defined as a compulsory levy by government on goods, services, income and wealth. Primarily to obtain revenue. In other word, it is levy or dues on the income of persons and companies. It provides definite source of revenue of person for government expenditure. It is the way by which government obtain extra money it spends from income of individual or companies.

Tax in Nigeria

In the Stone Age, tax was collected in Nigeria long before the coming of Europeans. It was collected by the Local Chiefs for the purpose of administration and defense. Every person was expected to give part of his or her proceeds from cultivation of land to the state. Those who were cultivations were required to give their sources for public work such as clearing the bush, digging the pit latrines, wells etc for the benefit of the community as a whole. Failure to render such services usually resulted in loss of properties, which might be reclaimed after payment of line.

With the coming of Europeans, taxes were collected from individual through local chiefs. In 1946, a legislative council was set for the whole country, which obliged the regional council with a large measure of financial responsibilities.

After independence state government were to find out other sources of generation revenue. The first tax was introduced in 1904 in the northern region by Lord Lugard known as community tax.

According to the tax laws the board can revised the assessment if it deems necessary, and can institute legal action against any tax defaulters in respective of his status in the community such legal rights have been derived by politician and poor administration of tax laws.

Types of Taxes

1. Direct Tax
2. Indirect Tax

Direct taxes in Nigeria consist of the following:

1. Personal Income Tax (PIT)

1.  
   • Company Income Tax (CIT)
   • Withholding Tax (WHT)
   • Capital Gain Tax (CGT)
   • Capital Transfer Tax (CTT)
   • Petroleum Profit Tax (PPT)

1. Indirect taxes in Nigeria consist of the following:

1. Custom Duties
2. Excise Duties
3. Value Added Tax (VAT)

Problems Encountered in Tax Collection

According to Lawal (1982) posits that the following are the problems of tax collection in Nigeria.

1. Inadequate Staff

   Lack of adequate staff or manpower to carryout the assignment efficiently and this has contributed to the low revenue generated for the country

2. Mismanagement of Tax Collected

   Where taxes collected were not been utilized for the purpose for which it was collected. This makes taxpayers not to give out their wealth for the nation.

3. Bribery and Corruption

   In this day, tax collected personal interest has over ride their official interest in the performance of their duties, consequently affect revenue generation for the nation

4. Poor accounting record

   Most businessmen, traders, professionals do not keep proper records of their income and expenditure

5. Inadequate Facilities

   The facilities like motor vehicle and motorcycle to carry out the assignment effectively is inadequate

6. Lack of voluntary compliance from the taxpayers

   This attitude of taxpayers cause tax avoidance, evasion and delinquency

Prospects of Tax Collection

Adam Smith (1968) identified the following prospects of tax collection.

1. The administration of tax collection will be strengthened to ensure more efficient tax collection, through training of staff, awareness, campaigns & computerization.
2. Government should continue to ensure that the tariff policy enables our local industries to be competitive.
3. Specifically, aggressive action should be taken to block revenue leakage on high duty goods and bulk items.
4. VAT has become a veritable source of revenue earnings for the government and therefore needs to be strengthened and expanded. To broaden the tax base and to bring the VAT administration closer to the taxpayers, new local VAT offices should be established all over the country.
5. Government should also ensure fair tax administration based on the principle of derivation of tax proceeds; it is recommended that the tax law should be enacted.

Invariably right after such commercials aired, I would receive hundreds of phone calls from people who, of course, wanted me to help them take advantage of some of that “free money.” I unfortunately then had the pleasure of being the wet blanket who had to tell them that it wasn't quite as simple as it seemed.

It would be easier if the advertisement was just plain false. However, the truth is that it is not. The gentleman in question doesn't lie in what he says. He simply doesn't bother to tell the whole story. Therein lies the problem.

It is true that the federal government gives away hundreds of thousands of dollars of grant money every single year, specifically for the purpose of starting new businesses. However, often times such money is slated for specific types of industries, certain locations of the country, and/or certain groups of people. And a set of restrictions is also established with regard to “how” and “when” the grant money can be spent. Those minor details are not found out until the book - which the ad was crafted to sell - is purchased. Only then, do people find out that most average citizens just don't qualify.

For the most part, people must realize that pinning their hopes on “free money” is not particularly realistic. Think about the old saying “you don't get something for nothing.” It definitely applies here. Even those types of businesses that are actually eligible for grant funds will be expected to risk something of their own.

Even businesses seeking grant funds or a small business loan, may be expected to provide some equity into the deal. For the purposes of a small business loan that is at least 20%. Sometimes the equity can be in the form of tools, equipment, inventory, or other goods that the business already owns. Sometimes, however, it must be cash. Either way, there is almost never a totally free ride. Nor should there be!

Anyone wanting to start his or her own business must be willing to sacrifice something. It they don't, chances are they won't ever take the business 100% seriously. If it is too easy to back out when the going gets rough, that is exactly what some people will do - run.

Real entrepreneurs understand this concept and embrace it willingly. The risk is, after all, half the fun and half of the reward. Building something out of nothing is one of the greatest pleasures that life has to offer. It gives human beings a sense of self-satisfaction that cannot be easily matched. On the other hand, if they allow someone else to take all of the risks, it is unlikely that the end result will be as satisfying at all.

“Free money” sounds like a great concept, but it isn't really what is needed. Successful businesses are built on the blood, sweat, tears, and, yes, even the money of their owners. It is the very fact that sets them apart from all the rest.

Don't get me wrong, those who fit within the parameters of small business grants can - and should - take advantage of the money. Just don't rely solely on “free money” as the means for starting a business. Doing that is shortsighted and takes away a lot of the fun of building something all on your own.

Look for my next article “It's Not Raining Loans, But They Do Exist” for more information on obtaining money to start a new business.

Over the years it has become one of the fastest growing economies in the world. Promotion of economic growth and development.

The Indian government is highly focused on bringing changes to the economy and promotes high economic growth. Realizing the potential of the world market and foreign investors the government has set up numerous policies, which promote investment and provide incentives for foreign and local investors.

The Fiscal budget for the year 2001/02 was released around mid February; this brought in new policies and changes including:

There are tax exemptions for 15 years for units in infrastructure and the core sectors (not specified).

This tax exemption will attract more investors to invest their funds in infrastructure and core sectors, promoting economic growth and benefiting many other businesses and consumers through flow on effects of improved infrastructure. There will also be high employment (of skilled and unskilled labor) and better living standards, which contributes to economic development.

Venture capital made simpler. This will allow small businesses to get started quicker and easier,and "made simpler- is likely to suggest the cut down of red tape to allow easy access into the market. This contributes to economic growth and creates employment and greater competition and consumer choice (as a result of increasing number of businesses). It will also attract higher direct foreign investment, which is a great benefit for the nation especially at trouble periods.

Long term capital gains tax capped at 10% for all. This would mean more people would invest in shares, which encourages businesses to expand and employment would increase. The value of the businesses will also increase because shareholders are likely to prefer capital gains overtime rather than instant returns (dividends). The businesses can now invest the profits to increase its value. This will of course contribute to the economy.

IT is given special status. The reason for this is because the Indian government wants to promote it-s nation a as a technological advanced nation and in order to do this they must stimulate the IT sector. The "special status- means the sector and investors (willing to invest in the sector) will receive many benefits and incentives from the government to do so.

Tax-free status for bonds targeted at housing development activities. This will not only lead to higher investment in property development, it will also lead to overall economic development because housing development activities include housing middle to lower class people, by providing them a better environment to live in the standards of living are dramatically improving.

10% surcharge on income tax. This may seem a peculiar decision but the government is trying to increase it-s tax base, which it can then distribute back to the public through infrastructure development, educational programs and housing developments.

There has also been tariff deductions to attract foreign investment and competition. This will have the effect of improving the competitive nature of import competing industries, and an over all growth in efficiency and output.

Promoting the economy to foreign investors:

Foreign investment policies

Majority foreign equity allowed in several sectors … allowing for easier access for overseas investors to own and manage businesses in India.

Foreign investment of up to 51% in 35 high priority areas is eligible for automatic approval, provided by the RBI. These incentives allow foreigners to invest and therefore provide an inflow of funds into the nation, promoting economic growth and development.

Goods of foreign brand names and trademarks for sale are allowed. This shows that the Indian government has realized the needs for it to become a globally integrated nation.

Foreign companies are permitted to open branches in India - businesses that set up in India will make good use of the resources available, this includes employment and use of local materials. This will boost economic growth and development as funds are injected into the economy.

Local industry incentives

The Indian government has created many incentives for domestic investors. Ensuring that the incentives comply with the economic philosophy of the government.

Tax-free status for the first five years for power projects, businesses involved in exports, units in free trade zones, infrastructure development and new industries.

Tax deductions of up to 100 per cent on export profits.

New industrial undertakings will receive a 30 per cent tax deduction on net income.

Further Economic Development the Indian government has taken greater concern in the welfare of its people. It has set up Second National Commission on labor to protect millions of workers. Ensuring they are not exploited through low wages, unreasonable expectations# etc. This has the effect of improving wage levels, and living standards among the people.

The government also uses a proportion of its expenditure on education, health, water supply, sanitation, housing, slum development, social welfare, nutrient, rural employment# etc. This ensures the people living below the poverty line (over 30% of the urban population) will receive enough benefits for them to enjoy a reasonable living standard and the future generation is given many incentives to shift away from the poverty stricken areas to become financially stable.

The government has also ensured increased availability of health care which has lead to an improvement in the living standards (improved death rate, birth rate...etc).

Example: Infant mortality rate has improved from 129/1000 in 1971 to 80 in 1994.

Impact of Globalization

The significant decline in the GDP of a number of East Asian countries, continuing recession in Japan, lack of capital growth in developing countries, unsustainable fiscal weakness in South American countries and volatility of capital and Foreign exchange markets in developed nations were a number of causes in world economic down turn in the year of 1998-99. All these factors had major impacts on India, hence the name the impacts of Globalization on India. These impacts include:

Inflation rose sharply during 1998-99. It reached a height of 8.8 per cent in September 98 it dropped steeply in January 1999. This rise in inflation was caused by numerous problems; one of them was the dramatic increase in some agricultural commodities.

Deceleration in the growth of India-s exports continued, as growth was negative for the first 9 months of 1998.

??The current account deficit fell from 1.6per cent of the GDP in 1997-98 to 1.4 per cent of the GDP in 1998-99.

There has also been a deceleration in private inflows, which lead to a lower than expected net capital inflows between 1998-99.

Manufacturing growth as a part of the GDP fell to 7.7 per cent in 1996-97 from the previous year-s level of 15 per cent. And it fell slightly to 6.8 per cent in 1997-98.

The above impacts show how closely integrated India with the global economy, many production decisions and government policies must comply with the global market situation in order for India to continue as a fast growing economy.

Positive effects of Globalization

Prior to The 80s when the Indian government undertook major reforms to relax restrictions on foreign trade and investment it suffer from a very low GNP growth rate of below 3.5%, but as a result of opening up to the global market GNP growth is averaged at 5-6% per year.

Indian Businesses are able to find new markets overseas to sell their products to, they will have the advantage of cheap resources such as labor.

Entrepreneurs from foreign nations are also able to make efficient use of these resources when they set up business in India. This of course leading to greater employment levels, greater output and overall economic development and growth.

Average real wages of unskilled labour has increased, which will lead to an increase in the standard of living.

There have been signs of improvements in living standards in the general population a s a result of economic growth and globalization. Poverty ratio has declined dramatically from 56.4% of the rural population in 1973-74 to 37.3% in 1994. The urban poverty ratio has also fallen significantly form 49% in 73-74 to 32.4 in 1993-94. These are all results of job creation and developments undertaken by the government and private institutions.

Due to the reduction in barrier import competing businesses have become more competitive leading to greater efficiency and better-priced and quality goods.

Due to Globalization developing nations such as India become more 'modernized- as new technology and industries can quickly be adopted.

Due to Globalization exports have risen dramatically leading to economic growth.

An indirect result of Globalization is the improvement in infrastructure.

Additional employment opportunities of 29.74 million jobs were created between Jan 94 to March 97.

Negative effects of Globalization

Globalization has lead to environmental damage in India (as with many developing nations).Due to large-scale industrialization urban slums have formed, air and water pollution has dramatically increased. Multinational firms have exploited resources belonging to the country and lead to land degradation. Delhi for example is the 4Th most polluted city in the world.

Though foreign investment will promote economic development in the short term, the profits earned from the business venture move out of the country. There is also a possibility that at times of recession investors (in portfolio investment) may withdraw their funds causing further problems.

Domestic resources such as labor maybe exploited my large production based firms. These firms may also abuse natural resources and use them inefficiently.

Domestic producer being overpowered my overseas giants, who already have competitive advantages over the domestic producers, and have more funds to invest. This will lead to the closure of many domestic owner firms.

Statistics

These statistics reflect the impact of the Asian financial crises on India, and it-s overall performance between 1996-98.

Gross domestic product for example has fallen due to low aggregate demand, while Gross Domestic Investment has increased due to higher incentive to invest surplus funds.

1997, 1998, 1999

• GDP Growth (%) 8 6.1 6.2
• Exports (as % of GDP) 10.9 11 10.7
• Imports (as % of GDP) 14.1 13.8 14.2
• Gross Domestic Investment (% of GDP) 25.6 23.6 29
• Savings and investment 1996 - 97 1997 - 98
• Gross domestic savings 24.4 23.1
• Gross domestic investment 25.7 24.8
• The slump in savings and investment is once again due to the impacts of the Asian financial crises.

Sectors real growth rates 1997-98, 1998-99

• Agriculture -1.0 5.3
• Industry 5.9 4.7
• Manufacturing construction 6.8 5.7
• Mining 4.1 2
• Services 8.2 6.7
• Agriculture continues to be a major growth point as it is a major part of exports.

Inflation 2000, 2001, JAN

• 3.6% 8.2%