How do political factors affects businesses? Provide a possible solution.

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pohnpei397 eNotes educator| Certified Educator

Political factors can affect businesses by making the environment more or less friendly for business.  Often, there is very little that businesses can do.  They can lobby for better laws, but they clearly have little to no control over the political environment.

Governments typically have a great deal of power over businesses.  They can make life very difficult for those businesses.  They can require businesses to get all sorts of licenses to operate.  They can require voluminous paperwork.  They can pass laws about what employers have to do to hire and fire workers.  They can levy onerous taxes.  All of these things can make it very hard for businesses to operate.

The problem for businesses is that there is very little that they can do individually to combat these problems.  The government is the only entity that can actually change the laws.  Therefore, businesses have to try to persuade the government to institute changes.  The best solution, then, if for businesses to band together, perhaps creating a chamber of commerce or similar group that can speak for all businesses.  If enough businesses put their weight behind such a group, it might be able to influence the government and reduce the number of government policies that make it harder to do business.