Explain political environment of business?
The political environment of business are the political factors that can affect the way in which businesses operate, the businesses that are present, the obstacles that a business may face, and the likelihood of success of different types of businesses. According to the Business Dictionary the political environment is the government actions which affect the operations of a company or business. These actions can be present on several different levels including the local, state, regional, national, and international level. Those who own businesses often pay close attention to these factors to deduce the way in which government actions will affect their business.
The political environment of business is often a significant issue when discussing international businesses. The political environment of business often affects the choice of foreign market that a company will enter. This is due to the fact that it can affect the regulations that the business may face, the amount of government interference that a company can expect, the profitability of the choice to enter this market and more. In addition, the stability of the country's government and economic system are often very important factors.
The political environment of business refers to the political or government actions that impact business operations. The political factors usually go hand in hand with the legal ones and are generally viewed as the non-market forces that impact businesses. Political decisions ultimately affect the economic, social and cultural environments as a whole.
The political environment can be studied in terms of the central government, the citizens of a country, rules, and regulations or international relations. Examples of political factors related to the central government of a country are levels of bureaucracy, corruption, and government stability. A culture of corruption in a country stifles business operations by creating an unlevel playing field where corrupt individuals are more empowered to advance their business goals than their non-corrupt counterparts. A highly unstable government is unable to offer businessmen the security they need to trade peacefully, hence a highly volatile trading environment. Examples of political factors tied to international relations are policies on trade tariffs, policies on importation and exportation of goods and services and international trade agreements.