How Can The Political Environment Affect Business?

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Anonymous Profile
Anonymous answered
The political environment can affect a business either positively, or negatively, depending on the prevailing situation in a country. It mainly forms the external factors - which are part of the macro-environment, control of which is beyond the ability of human beings.

These factors touch on the way politics are conducted in a country, which directly reflects on what is happening within the government itself.

This means that a democratic country will accord freedom to its people to vote for a government which has their interests at heart, and thus business will thrive - owing to the good policies the government implements.

On the other hand, a dictatorial government will not earn the respect of its citizens - leading to economic as well as political instability and uncertainty.

Even though such a government will eventually go, businesses suffer a lot during the government's tenure, since they are not sure of their future. This underlines the importance of a democratic government to a country and to business.

Needless to say, once a country is stable, more investment opportunities will be realised, thus attracting more and more investors. This will reflect positively and directly on local businesses, as citizens will be able to have full confidence in them.

Business success depends on politics to a high degree, and in many ways. Politicians are usually the people controlling the operations of a government, and will decide which countries to trade with, as well as on setting the trading conditions.

This means that, if a certain business or its owners are not on good terms with the politicians, then they will suffer.

Furthermore, the rules that govern and regulate the manner in which trade is conducted are enacted by the politicians - thus good relations are needed between stakeholders in the business sector and politicians, to facilitate success.
Anonymous Profile
Anonymous answered
Business deals totally depend on the political environment. Let me tell you how:

1) The politicians are the only people who decide with which other countries trade takes place, and under what conditions.

2) The rules and regulations for trade are passed by politicians.

3) If political relations are not good with a neighboring country, or with any country with whom you want to trade, you will not be allowed to do so - due to the rules & regulations which have been made by the politicians.
Anonymous Profile
Anonymous answered
The political environment is one of the most important factors affecting the operations of a business. Political forces are said to be part of the macro-environment. All the factors of the macro-environment are external to an organization, and completely beyond its control.

Political factors are concerned with the overall situation of politics in a country, which can, in turn, be associated with the situation of government.

If a country is democratic by nature, people will have full voting authority and will be able to choose a government that will work for the betterment of the people and the country. In such a situation, businesses will thrive, because of the good policies of the government.

On the other hand, if there is no democracy, there is no respect for the chosen government, and there will therefore be instability and uncertainty in the country.

Governments will come and go, and so will their respective decisions and policies. Businesses will suffer in such a case, as they will not know what will be their future.

That is why it is said that a stable and democratic government and its political decisions are important for a country, and for business overall. A stable political situation will also attract more and more investors from other nations.
Anonymous Profile
Anonymous answered
1. Stability of the government
2. Government type (dictatorship, democratic, monarchy, etc)
3. Economic policy of the government
4. Trade policy
5. Diplomatic events in surrounding countries

All of the above factors affect the business environment and whether or not business will thrive.
Recent events in Pakistan, and the current situation in Iraq, are examples of what happens to business when the political environment is unstable.
Anonymous Profile
Anonymous answered
1. Stability of the government
2. Government type (dictatorship, democratic, monarchy, etc)
3. Economic policy of the government
4. Trade policy
5. Diplomatic events in surrounding countries

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