Increase or decrease in tax could be an example of a political element. Your government might increase taxes for some companies and lower it for others. The decision will have a direct effect on your businesses. So, you must always stay up-to-date with such political factors. Government interventions like shifts in interest rate can have an effect on the demand patterns of company.
Certain factors create Inter-linkages in many ways. Some examples are:
◾Political decisions affect the economic environment.
◾Political decisions influence the country’s socio-cultural environment.
◾Politicians can influence the rate of emergence of new technologies.
◾Politicians can influence acceptance of new technologies.
The political environment is perhaps among the least predictable elements in the business environment. A cyclical political environment develops, as democratic governments have to pursue re-election every few years. This external element of business includes the effects of pressure groups. Pressure groups tend to change government policies.
As political systems in different areas vary, the political impact differs. The country’s population democratically elects open government system. In totalitarian systems, government’s power derives from a select group.
Corruption is a barrier to economic development for many countries. Some firms survive and grow by offering bribes to government officials. The success and growth of these companies are not based on the value they offer to consumers.
Below, is a list of political factors affecting business:
◾Freedom of the press
◾Data protection law
◾Health and safety law
◾Regulation and deregulation
◾Tax policy (tax rates and incentives)
◾Government stability and related changes
◾Government involvement in trade unions and...