Governments view business organizations as a critical vehicle for social reform. Many political factors have an impact on the business industry, coming from the theory of the governing party to the political feedback to economic trends. Running a business comfortably depends on a number of factors including political environment in a country. POLITICAL FACTORS AFFECTING BUSINESS Issues in Contemporary Business 2. When the party permits the more hands-off method to regulate companies is in power, then firms don’t have to worry about failures in the environmental protection and safety, as much as what they do when the party that approves more regulation is in the majority. If these policies are liberal and practical, then that government will be able to witness the growth of business in its tenure, otherwise not. The political environment is one of the external environmental factors which affect the business. Some common factors are economic, social, technological, and political. Businesses choose an environmental analysis depending on the nature of operations. The political factors affecting business are often given a lot of importance. Other factors you should assess are political, economic, technological, environmental, ethical, and legal. POLITICAL: Political factors can affect the organization in many ways. Join Us on Facebook and Twitter, Political Factors Affecting Businesses That You Need To Know, eBay comes to the vicinity of small towns by eBay UK, KPK govt Planning to regulate donkey production and export to China. China is an economic and political superpower. Various aspects of government policy can influence companies because they must follow the law. Government changes in their rules and regulations could have an impact on business. It is likely to be able to add on a risk factor which can lead to a major loss. The availability of physical facilities limits the scope and prospects of business. Business environment is therefore, the total of all external forces, which affect the organization and the business operations (Kotler &Armstrong 2004). The economic environment affects business presentations. companies, beginning in the late 1930s. Therefore, businesses must be fully prepared from the fallouts in government politics. A steady political environment develops confidence in consumers and corporations investing, or still planning to spend in a particular country. A stable political system can affect the petition of a particular local market. One of these factors is a political change. These include economic, social, legal, technological and political factors. Political changes can bring about a lot of changes for a country lead to many changes in the countries businesses and business management. Many external factors can affect your business. What Are Political Factors in Business Political factors, in the context of the external environment in which a business functions, are a type of external constraint acting upon a business. The government is responsible for protecting the public interest. Companies must address the risk of political factors by making decisions that will reduce the external impact on the environment of business. Physical factors mean and include geographical factors like weather, climatic conditions etc. Business environment is therefore, the total of all external forces, which affect the organization and the business operations (Kotler &Armstrong 2004). affects the working of an international business firm. A steady political environment develops confidence in consumers and corporations investing, or still planning to spend in a particular country. The political and economic sides of the analysis are directly government-related, while government policies indirectly affect the social and technological environment. Physical and Technological Environment. The political environment can affect business institutions in many ways. 6. The changes can be economic, social, or legal, but it could be these factors: List of political factors that affect businesses: Effects of political factors on businesses, Importance of discerning political environment. Examples of legislation that force a business to act in a certain manner are health and safety laws and the federal minimum wage. 4. We shall now explain these internal and external factors of business in detail. Political factors such as changes in tax rates, policies and actions of government, political stability of country, foreign trade regulations etc. Usually these influences cannot be controlled by the business itself. A business is an economic system or an organization where services and goods are exchanged for money or for other services and/or goods. Login. Governments can raise or lower corporation tax, which will impact on profits. Brexit is an important and growing source of uncertainty for firms From a business perspective, changes in these machinations can affect the fortunes of your company in several different ways, regardless of your size or reach. Nike is a globally recognized athletic apparel, footwear, sports accessories and equipment. Politics always has a way of affecting the environment of any business and it can sometimes have disastrous effects on a business e.g. Responses from Decision Maker Panel survey give us four key findings about how Brexit is affecting UK businesses. The result is that of all the political issues in business, geopolitical risk is probably the fastest growing. These factors include macroeconomic issues such as high interest rates and social issues such as civil unrest. Definition of Environmental Factors. Impact of Business Environment. Why should businesses care about the different political and legal systems around the world? Political and economic Political overview. These factors may be current and impending legislation, political stability and changes, freedom of speech, protection and discrimination laws are factors affecting business operation and activities ABSTRACT . It is the federal government that passes … A business operating in multiple states should be aware of any political changes that can affect the import-export restrictions on the quality and quantity of the product. A political factor is an activity that relates to government policy as well as the administrative practices which can affect something. Some of the political factors that affect international business include” (Justin Ervin. Politicians can also influence the rate of development of new technologies. Therefore, as a business person, it is imperative to understand your political environment. Political decisions affect the socio-cultural environment of the country. Managers must keep a bird’s eye view over political factors. Business is affected by different factors which collectively form the business environment. Political factors affecting businesses are likely related to legal factors influencing companies. Understand government-business trade relations and how political and legal factors impact international business. Brexit and political issues in business For any UK-based firm or companies with investments here, Brexit must come top of the list of political issues in business. Political chaos can result .to disruption of business both online and physical. The economic environment, in turn, affects the performance of a business organization. The changes in political factors can impact company strategies because of these reasons: There is one area in which political parties mostly varies is the level of regulation that the business industry needs to face. A business is an economic system or an organization where services and goods are exchanged for money or for other services and/or goods. 1. Why should businesses care about the different political and legal systems around the world? They can also affect businesses by increasing value-added tax on products or business rates. For the latest updates on the key economic responses from governments to adress the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.. Political factors affecting businesses are likely related to legal factors influencing companies. Typically, governments have a great deal of power over businesses and many times, there is not much that businesses can do about it. Georgine K. Fogel, Lawrence Technological University . We encourage startups to share their stories with us. International bodies such as the European Union and the World Health Organization (WHO) effect both Tesco and NHS, however not in the same way.. As Tesco is arguably the largest Supermarket chain in the UK it is always in the spotlight when decisions … It can impact positively or negatively depending on the situation, business, and many other factors. Political changes can bring about a lot of changes for a country lead to many changes in the countries businesses and business … How political changes might influence your business management. Political Impact on Business. One of these factors is a political change. When government agencies and leaders set policies, they start movements that have a great impact on the legal structure in which firms either thrive or start to decline, and also financial market conditions that influence customers attitudes and the level of support that the government offers to companies and businesses. While Global businesses operate in overseas markets there is often a risk, the risk is referred to as political environment risk, and these factors can facilitate or hinder business operation. Definition and Examples, Marketing Environment Definition Factors & Examples, How Legal Factors affect Business Environment, Direct Selling – Meaning, Types, Pros, Cons, …, Non-Store Retailing – Meaning, Types, Examples, Pros …, First Mover Strategy – Definition, Pros, Cons …, Promotional Email – Meaning, Types, Examples & …. Some firms survive by offering bribes to government officials. These are factors which business cannot control. 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