Political Environment

In international business, knowledge about political environments is very important. Why? Please provide examples.

The Political environment is often a direct consequence of the political parties in power, which represents the popular opinion of the citizens of the region. If the citizens are, for example, pro-Big Business then probably taxation will be modest and there will not be a lot of stringent rules about environmental considerations.If the citizens are very concerned about safety issues, for example, then there will be a lot of rules and regulations governing things such as transportation safety, which will make it more expensive for some companies that have big shipping costs.

The political environment can affect a business either positively, or negatively, depending on the prevailing situation in a country. It mainly forms the external factors - which are part of the macro-environment, control of which is beyond the ability of human beings.

These factors touch on the way politics are conducted in a country, which directly reflects on what is happening within the government itself.

This means that a democratic country will accord freedom to its people to vote for a government which has their interests at heart, and thus business will thrive - owing to the good policies the government implements.

On the other hand, a dictatorial government will not earn the respect of its citizens - leading to economic as well as political instability and uncertainty.

Even though such a government will eventually go, businesses suffer a lot during the government's tenure, since they are not sure of their future. This underlines the importance of a democratic government to a country and to business.

Needless to say, once a country is stable, more investment opportunities will be realised, thus attracting more and more investors. This will reflect positively and directly on local businesses, as citizens will be able to have full confidence in them.

Business success depends on politics to a high degree, and in many ways. Politicians are usually the people controlling the operations of a government, and will decide which countries to trade with, as well as on setting the trading conditions.

This means that, if a certain business or its owners are not on good terms with the politicians, then they will suffer.

Furthermore, the rules that govern and regulate the manner in which trade is conducted are enacted by the politicians - thus good relations are needed between stakeholders in the business sector and politicians, to facilitate success.

The political environment is one of the most important factors affecting the operations of a business. Political forces are said to be part of the macro-environment. All the factors of the macro-environment are external to an organization, and completely beyond its control.

Political factors are concerned with the overall situation of politics in a country, which can, in turn, be associated with the situation of government.

If a country is democratic by nature, people will have full voting authority and will be able to choose a government that will work for the betterment of the people and the country. In such a situation, businesses will thrive, because of the good policies of the government.

On the other hand, if there is no democracy, there is no respect for the chosen government, and there will therefore be instability and uncertainty in the country.

Governments will come and go, and so will their respective decisions and policies. Businesses will suffer in such a case, as they will not know what will be their future.

That is why it is said that a stable and democratic government and its political decisions are important for a country, and for business overall. A stable political situation will also attract more and more investors from other nations.

To give an example is Colombia, although Colombia is a developing country,it is seen internationally as one of the countries with strong democracy in Latin America, as in recent years citizens has participated massively in the electoral processes, and the results have been very good because terrorism that made the guerrillas and groups outside the law has decreased significantly, which results in an increase in foreign investment, today Colombia is among the top 5 countries for investing in Latin America.