The Impact of the Domestic Regulatory Environment on Competition and Case Study

The Impact of the Domestic Regulatory Environment on Competition and Corporate Strategy Development - Case Study Example Now a days, after the globalization and liberalization policies, the competition is not only from companies located with in a nation but also from firms established globally. All these factors that affect the competition and firm’s strategic management plans would be further influenced by domestic regulatory environment. The domestic regulatory environment includes the government policies that aim at social and economic justice, tariff structure in different services and technical regulations that aim at enhancing the growth rate. The influence of external environment and government polices on the corporate strategic options was well established (Venkatraman and Prescott, 1990). Though it was proved that the role of management positively influences the company’s performance, still the constraints caused by the domestic environment may result in negative growth rate (Thomas et al., 1991). This may happen at higher intensity when the domestic regulatory environment discou rages the products of the company by putting environmental safety norms. The government policies may also aim at bringing welfare state of the society for which the companies may be asked to follow the steps fulfilling the social obligations which in turn negatively influence the firm’s performance (Bryer, 1982). ... Similarly, the companies which are involved in fruit juice making may get huge benefit if the government policy encourages the export environment by giving tax concessions. At the same time, the companies that are involved in electronic goods may incur losses if the domestic environment encourages the imports from other nations at a cheaper price. Hence, the private or corporate business firms must have dynamic strategic management development options which provide higher adaptation compared to its competitors in the market (Teece et al., 1997). The element of diversification gives remarkable edge to the corporate houses in making flexible adjustments in response to any domestic regulatory environment. The advantage of mixing several products that suit the customer needs in terms of competitive edge and firms performance was well established (Simmonds, 1990). Those firms which concentrated only on one product have higher risk due to change in domestic regulatory environment. These fi rms may respond well to the technical regulations laid down by the government from time to time, but they fail in their competitive ability and adjusting to the new tariff structure in the market and to the regulations related to social and economic justice in the society. The companies which have strong and dynamic strategic development / management team strive well in the market as they predict the new changes in domestic regulatory environment and hence they respond faster to the changes with highest competitive ability. The corporate houses must respond to the domestic regulations as early as possible to reduce the losses and to capitalize the new situation