Political Environment
Political environment
Political environment is related to management of public affairs. Political environment mainly refers to the political structure, composition of bureaucracy, and ideology of the ruling government. Political philosophy can be democratic or autocratic. Democracy provides greater role to private sector. The political systems that exist in a country influence business organizations. The investments from private sectors highly depend on the political stability of the country. If the political risk is high, there will be less investment in the business sectors. The political forces consist of the following which must be considered by business people:
1. Constitution:
It is a fundamental law of a country. It is a framework within which all people and activities are guided. It contains different acts, sections, and subsections describing basic principles to protect public interests.
2. Political Parties: There can be many political parties under different political systems. Different political parties have different ideologies and announcements for political and economic prospects. They may declare the statement, which may affect in business community.
Philosophy is an ideology that a State adopts. Usually, there are three types of political ideologies such as democratic, socialism, and mixed. In democratic philosophy, much emphasis is given to private sectors whereas in socialistic ideology, State holds all the economic activities. In mixed philosophy, both State and private sectors involve in business activities.
4. Political Institutions: It consists of legislative, executive and judiciary, Legislature enacts rules, regulations and laws whereas executives implement them. Judiciary ensures whether rules and laws are properly implemented.