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.