Political Environment of Business

Political environment is concerned with the influence of government on business organization both in strategic & functional limeurias. The Political Environment of business is largely determined by the type of government. Whether parliamentary, Presidential or even of monarchy type.

All business are directly or indirectly affected by various policies enforced by the government. Process & strategies. Of the business are determined by these policies. The policies are not rigid and keep on changing from time to time.

The government put considerable influence on business by mean of its policies, structure and philosophy, which create external environment of the business. The prevailing does so in the interest of the country.

Hence ,manager needs to adopt their companies as per changing political environment so that the company may grow and sustain its operations. The business has to constantly respond with increasing government control information.

A business has to consider several political factors which constitute the type of p.e. faced by the company. The factors include taxation policies, FDI, Tariffs etc.

The environment is not completely predictable; hence managers must be very conscious the evaluation, examination & prediction of current & political government policies as regard to foreign investment of domestic company & the investment of foreign as in the home country. In order to function in global economy , manager must be aware of the potential change in the external environment & shape their decision accordingly. It is extremely important for managers to be conscious of the considerable influence of the government on business organization. For example, Indian companies are looking for foreign investment since globalization.

In order to function in the global economy managers must be aware of potential changes in the external environment &shape their decisions accordingly.

The economic environment does also have influence on political environment, as both are inter-related to each other. There is no fixed boundary to isolate each environment. The economic environment considers the impact of global economies ,foreign investment decisions and government’s domestic economic development and policies. A manager put in depth understanding of these issues. One of the most challenging task before a manager is to get success in the global market place. Eco dev & political policies are determent by the perception of govt. towards intenational business.

There are various complex factors that have impact on the normal functioning of B. Organizations, which includes change in central or state government, elected candidates modification in government ideals, philosophies, law & order enforced by the government new economic policy & reforms change in taxation, agenda of the govt., focal issues of the govt., government focal shift in case of natural disasters like flood, volcanic eruptions, drought etc.