Government Intervention

Government intervention is when the government interferes in business activity.

Government interference might benefit consumers as it can allow more competition amongst businesses. More competition could mean that businesses would have to secure there place in the marker by attracting more consumers. They may do this by dropping prices in order to out do their competitors and gain more sales than them. By dropping their prices consumers would gain the same product for less money, hence demand would be likely to increase generating more sales for the consumer. In the electricity businesses case, it would gain more consumers and customer loyalty for its low prices. Gaining more sales means it would be building up a large customer base as long as customers stayed loyal; this would build up a better brand image and would in turn give a better corporate image. Although the brand image and corporate image may be tainted, as people would know that the government intervened in order for the business to act in this way. It would depend on how much the business intervened and the history behind the business and how it was acting before the government changed it s ways. Was it selling at unfair prices? it would also depend on how much they dropped their prices, if it wasn’t as much as other competitors it still may have a lack of demand for their brand and hence not be able to build up a large customer base to be as competitive as their competitors. I think that as an electricity company they would have to be very competitive in order to stay in the market.

It may be very beneficial for consumers as electricity is a necessity, and it would be unfair to make them pay large sums of money because they know that people need it. Since government intervention, prices have decreased and may now be at a satisfactory rate at which every body can afford to pay. This would benefit consumers as they would have more money to spend on other necessitates which is important as the...