Line of Business Limitations
Candlefocus EditorLOBs can be internal, meaning that they are established within a company or business. Examples include rules, policies, and procedures that detail how the company is managed and terms of employment. External LOBs are those put in place by governing bodies such as governments and regulatory bodies. They can restrict activities to certain countries, limit products and services offered, and dictate how certain businesses should be conducted. These regulations and standards are in place to protect customers, businesses, and the public in general.
One example of an LOB limitation is in the financial sector. Companies must comply with federal and state laws regulated by the SEC. These regulations limit things such as the amount of debt a company can take on, appropriate accounting and reporting standards, the types of investments that can be made, and ethical business practices.
LOB limitations are also found in the medical industry, where laws, regulations, and requirements vary from state to state. Physicians must adhere to certain standards of clinical and ethical standards set by their state board of medicine. In addition, they must obtain licensure in the state they practice in, and must obtain certifications in specific areas of treatment.
LOB limitations can often have a negative impact on businesses. For example, new regulations may create or restrict certain activities, which could result in higher costs or difficulty adjusting to the new requirements. Additionally, regulatory changes may interrupt the flow of certain goods and services, leading to increased unemployment.
Despite potential drawbacks, the overall goal of LOBs is to create a level playing field for businesses and ensure that customers receive a fair and honest deal. By complying with these limitations, companies are able to protect their customers, workers, and the public in general. This can create an environment of trust that customers look for when choosing a service provider.