Making any business decision is best guided by the flow of correct information internally and externally. Internal factors include organisational structure, corporate culture, available resources, mission, vision and objectives. External factors are micro factors like suppliers, customers, competitors and the public and macro factors like technology, politics, economics, legal and ethics.
POLITICS
Political factors influence economic development by either supporting or disrupting the process of development. Politics represents factors linked to legislation, finances, and the environment that can directly affect business. So long as governments make laws, politicians shape discussion of these laws and businesses have to follow these laws, then the linkage between business and politics shall forever be an important facet that all business managers must be well aware of.
HOW POLITICS SHAPES BUSINESS
Political factors can impact the economic structure of the business, which tends to affect the business development. These factors include government regime, political stability or instability, policy management, corruption and trade laws.
Government regime
This is the type of government in a country, which either can be democratic, authoritarian or communist. Regime type influences policies that affect personal and public business development. For instance, in a democratic system power is vested in the people, which they exercise directly or indirectly through freely elected representatives. Therefore, policies relating to business operations are made favourable, encouraging more business. However, in a communist system, there are strict regulations on equality and a classless society. Therefore, businesses compensate their employees fairly equal as no profits are reserved.
Policy management
Prevailing business and tax laws affect how enterprises are run, whether positive or negative, there is a way that political Acts of parliament, policies, laws and regulations shape the business environment. It does this by making policies through Acts of parliament and by-laws passed, to govern businesses.
A direct economic impact that the government policies display is that It is common to find politics affecting issues like press freedom and business operations, which in turn affects how business is run and managed this is so because business needs the press to advertise and get information.
Government work is highly facilitated through taxes collected from individuals and companies in a country. Therefore, through the social contract between the citizens and the government, there is an understanding that the government works for the people and protects their interests. Taxation policies, which largely guide how businesses are run must be developed by the same government.
Politics shapes the natural social culture – traditions, habits, patterns and beliefs present in a population group – in many ways. For instance, policies that guided how to go about the Covid-19 pandemic. This affects businesses negatively and certain government policies lead to direct losses. When the political atmosphere is heightened and tense, it’s normal for a business to feel the effects as people move and trade less freely.
New technology coming to the market can be subject to laws, government involvement, and politics is never far off in determining when and how these technologies get released to the public, which interferes greatly with how business is run.
Trade laws
These are local and international policies that impact the importation or exportation of goods. Trade laws are linked to politics because governments and politicians develop policies regarding business. Trade includes tariffs or fees and taxes imposed on certain imports and exports. Some trade deals between countries can reduce trade tariffs. However, this often occurs between two developed nations. Underdeveloped or developing economies face high taxes that could prevent them from participating in international trade.
Political stability and instability
Governments normally want to implement a stable environment that attracts business and investment but this is not always the case. The unpredictability of politics needs to be factored into business decisions made during a time of political unrest or election or campaigns. This is pronounced in countries where political systems are yet to be entrenched in the country. Therefore, politics becomes volatile.
Corruption
Business managers have to know of the different factors that could affect the success or failure of business projects that they are about to start, or currently engaged in. In corrupt and totalitarian governments, many factors determine many things for businesses endeavours. For instance, will the business need to bribe to get licences? Will the business need to know officials in government to get contracts or tenders? Another or thing that can frustrate new businesses, is the complicated levels of bureaucracy within the government. The red tape can be such a hustle and impede the growth of smaller enterprises mostly.
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