Long-term Investment Decision



Long-term Investment Decision

Introduction

The industry that was chosen is Information Technology industry of U.S. and the company is Dell. Where, the IT industry of U.S. is highly advance and developing on rapid pace. Dell is one of the measure corporations of this industry, thus, implying high growth strategies and effective management. This paper is focused on the long-term investment decision that involves analysis of government regulations or interventions in the IT industry and the requirement/reasons behind it. Further, the exploration of self-expansion complexities and necessities of IT industry due to merger is undertaken, and finally, the major forces that creates convergence between the interests of stockholders and managers are analyzed.

Government Regulation Requirement and Reasons behind Government Involvement

Government regulation holds an immense importance in nearly every aspect of economic and social life. Similarly, government regulation plays a vital role in Information Technology industry of United States. It can be said that government regulation is the most important factor behind stunning success of information technology industry of U.S. (Economist, 2009). The examples of government regulation role importance can be seen in the scenarios like when the federal trustbusters made AT&T lease its lines to others and ultimately broke up the giant telephonic organization. Afterwards the government forced IBM to divide its software and hardware businesses, which had opened the door to lower prices and competition. Significantly, the government regulation have changed the structure of industry, replacing monopolies with smaller businesses, and the compensatory skills for the specialized organizations that have to deal with others (Economist, 2009). Thus, all this has resulted in remarkable innovation for the IT industry of America.

The interest of government regulation in this industry has been growing in recent decades, like the federal government launched an e-rulemaking program which has resulted in the development of a one-step website through that public can file and access electronic comments on all the new regulation proposals initiates across all agencies (Coglianese, 2004). Strong government regulations are essential than just freeing the industry in technological markets as these it helps in emergence of common standards, which allow businesses to get modularized. This modularization, like in case of Microsoft operating system and Novell application run on IBM hardware where an AT&T internet connection can be utilized to access Google search engine. Thus, it is very much clear that government regulation plays a significant part in the success of information technology industry of U.S.

Rationale for the Government Intervention in Market Process of America

The most basic function of markets are to allocate resource, and the well regulated markets maximize the welfare of consumers, and, by enhancing economic growth, it also enhances the total welfare of the society (OFT, 2009). In order to ensure the fair mechanism of these markets in industries, government intervention is really essential. Government effects the market processes either through direct intervention like market maker or buyer/supplier of services/goods, or through indirect intervention like regulations, taxations, and other impacts. Of course there are some pros as well as cons ...