There are many ways that government can change or create a competitive advantage-disadvantage. The leverage that the government can give an entrepreneur, through subsidies or tax breaks or laws or regulations, are far too powerful for an entrepreneur to take an anti-government position. Yet most entrepreneurs are free thinkers that support free market capitalism and minimum government intervention – and their lies the rub.
How can a free thinker support government intervention, subsidies, tax laws and regulations when they are trying to bring a new product to the market?
Most entrepreneurs have a background in engineering or business or marketing, not government. With a lack of understanding of the powerful roll that the government has in the economy, they can easily start with an anti-government mind set.
Big Business Influence
The big businesses have all realized the importance of government and the competitive advantages that government can give them, by hiring government lobbies to support their positions and sway votes to their advantage. Entrepreneurs and small businesses don’t have the financial means to invest in lobbies, and therefore are at the mercy of the existing laws and regulations. Sometimes entrepreneurs and small businesses are run out of business by government changes that were influenced by big business. Who said life was fair?
Big businesses use the government as leverage against competitors. Companies like Microsoft and Wal-Mart do it all the time. Sometimes the only competitive advantage a company has is a government regulation or subsidy - even though other companies have better products.
What is an Entrepreneur to do?
The best strategy for an entrepreneur is to go after a new market with little government regulation and laws to provide big businesses a competitive advantage. Public opinion can also be very powerful, as the ‘save the environment’ concept has been gaining public support for years. Attaching the ‘Green Earth’ market is likely to be defended and supported by public opinion and against the big businesses that are adding to the problem – regardless of what they are producing. Public opinion can drastically change industries and create new opportunities for businesses.
In the end, an entrepreneur can do very little about the current laws and regulations and therefore needs to find a way to create a business model that can take advantage of the existing government situation or future situation created by new regulations.
Entrepreneurs learn very quickly that 'free markets' are not 'fair markets'. If fact almost all businesses use a government law or subsidy as leverage to build their business. The balance of government is difficult and always a trade off. Powerful lobbies are the only force that is able to change government policy, so there is very little that an entrepreneur can do about them. All that an entrepreneur can do is consider current government policy as fair game to use as leverage to compete in the global economy.