What is Political Force?
The political environment consists of factors related to the management of public affairs, general stability, government attitudes, and their impact on the business of an organization.
The political environment has a close relationship with the economic system and economic policies.
The political philosophy of the government wields a great influence over business policies. Organizations are conscious of the political environment as the influence of the political environment on their business is enormous. Most governmental decisions related to firms are based on political considerations in line with the political philosophy of the government.
This environment is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies.
Essentially, the environment is concerned with how organizations try to influence governments and how they try to understand the current and anticipated influences of those governments on their competitive actions and responses.
The direction and stability of political factors are major considerations for understanding the macro-environment and formulating strategies. Political factors define the legal and regulatory parameters in which an organization operates.
Government guides and controls the business through its regulations and policies. Thus the type of government running a country is a powerful influence on any business. A firm must consider the changes in the regulatory framework and their impact on the business.
The political system prevailing in a country decides, promotes, fosters, encourages, shelters, directs, and controls the business activities of that country. A stable, honest, efficient, and dynamic political system ensures the political participation of people and assures personal security to the citizens. It is a primary factor for economic development. The political system comprises three vital institutions: legislative, executive or government, and judiciary.
Fair-trade decisions, antitrust laws, tax policies, minimum wage legislation, pollution control policies, pricing policies, and many other actions are placed in front of firms with the aim of protecting consumers, employees, the general public, and the environment.
These factors reduce the potential profits of firms.
However, some political actions (subsidy, patent laws, and product research grants) are designed to benefit and protect companies. So, the political system either may limit or benefit the firms.
Factors in Political Force
Some of the important factors and influences operating in the political environment are as follows: (1) the general state of political development; (2) the degree of politicization of business and economic issues; (3) the level of political morality; (4) the constitutional framework, directive principles; (5) political stability, ideology and practices of the ruling party;(6) policies related to licensing monopolies, foreign investment, and finance of industries; (7) policies related to distribution and pricing and their control; (8) policies related to imports and exports; and (9) the policies related to the public sector and small-scale industries.
Commonly, firms develop a political strategy to specify how they will study the political environment as well as approaches they might take (such as lobbying efforts) in order to successfully deal with opportunities and threats that surface within this environment at different points in time.