As management evolves, so do policies. These political factors can influence and potentially change the entire business scenario. They can read as follows: In the case of secularism, the principle is that the affairs of this world are more important than ethics and human life. He concludes that secular totalitarianism is based on political concepts, not religious ideas. The existence of totalitarianism can range from fascism to communism. Some indicators give an idea of the risk exposure in some countries. The Index of Economic Freedom is a good example. It assesses countries based on how policies affect trade decisions. Labour laws are enacted and implemented by the government to ensure that workers` rights are protected.
It covers all aspects of business relations between employers and employees. And labor law is considered very complicated, which has many pitfalls. If companies use the latest technologies and developments and implement them with the latest law, then they can move the business forward in the right way. There are many countries where the employment of premises when opening a foreign company is mandatory. In the business environment, these are the reasons why an understanding of the law is required for an entrepreneur. It may seem obvious that companies would prefer to operate in open and democratic countries; However, it can be difficult to determine which countries meet the democratic criteria. As a result, there are a variety of institutions, including The Economist, that analyze and evaluate countries based on their openness and adherence to democratic principles. The main form of corruption that affects companies is capture.
There are many cases where corrupt companies influence policy decisions to their advantage and give them a clear competitive advantage. Although this type of corruption is illegal in many countries, it is an expected part of business in others. However, since the exit vote, the resulting uncertainty has been significant for UK and EU-based companies. Despite repeated warnings from trade associations that political indecision massively affects the ability of businesses to operate effectively, business owners are forced to create contingency plans at a significant cost. Similarly, almost all of Cairo took to the streets for the ouster of Egyptian President Mubarak Hosni. After the 18-day revolution in 2011, the president was forced to resign. During this time, many companies have been negatively affected. That`s why political stability is crucial for businesses. Conducting a macro-environmental analysis, a good example of how political factors have influenced a company, can be associated with Nike. Nike is a globally recognized sportswear, shoes, accessories and sports equipment. Nike has been very lucky because the U.S. government has formulated such guidelines that will promote business growth.
The company benefits from a stable currency and low interest rate conditions, as well as highly competitive tax provisions that help the company drive growth. The U.S. government has taken initiatives regarding transparency in the global value chain, from which Nike has benefited greatly. However, Nike is facing tough times in its outsourced manufacturers in other regions such as Indonesia, Thailand and Vietnam, where political unrest is on the rise. Many external environmental factors can impact your business. It is common for managers to accurately assess each of these factors. The goal is always to make better decisions for the progress of the company. Some common factors are political, economic, social and technological factors (known as PEST analysis). Companies are also looking at environmental, legal, ethical and demographic factors.
The implementation of complex tax policies can hinder the expansion of businesses in many industries. Municipal initiatives are designed to help local businesses. Companies must take this into account when entering a foreign country. If a contractor does not respect labour law, he may face legal challenges. For a better understanding of U.S. labor law, contractors can refer to U.S. labor laws. To understand the role of government in the economy, it is important to recognize its place in a country. In the Global Business online course, Harvard Business School Professor Forest Reinhardt explains that government has four basic functions: Remember: politics is to business what winds are to a sailboat. If they blow cheaply, you need to take full advantage of them, but if they inevitably change direction, you need to be able to adapt quickly. The political environment is generally divided into the following types of political ideologies, which are most prevalent in many countries. Raising or reducing taxes could be an example of a political element.
Your government could raise taxes for some businesses and cut them for others. The decision has a direct impact on your business. So you should always keep abreast of these political factors. Government interventions such as changes in interest rates can have an impact on the demand behaviour of businesses. In democracies, businesses understand that most rules survive government changes. All changes generally reflect a changing economic environment, such as the Great Depression of 2008, not a change in state actors. There are many ways in which political factors can affect businesses. The political factor is an external environmental factor that increases risk and can also lead to significant business losses. It can also change the overall bottom line, which is why companies should deal better with politics both locally and internationally.
Many companies have someone specifically designated to deal with these politicians and political agendas. Fair and competitive elections are called the political right of citizens, and elected representatives are granted limited power that can protect minorities in this society. Political factors can influence companies in several ways. These external environmental factors can result in a risk factor that can lead to a significant loss of business.