Political Environment in Business and Factors

What is Political Environment?

Political environment is concerned with general stability of the country in which an enterprise is expected to perform and the political philosophy of party in power towards business. Political forces define the business climate by the constraints they impose and by the activities they permit.

They also affect the way business enterprise protect their inventions and patents etc. If political parties believe in well- being of the country and society then there will be no problem in maintaining political stability. Political stability ensures effective planning and implementation of economic programmes.

Factors of Political Environment

Political philosophy of party in power, general political conditions, leadership qualities are the important factors which create political environment. Main factors of political environment are as follows:

  1. Political Philosophy
  2. Political Atmosphere
  3. Quality of Leadership
Factors of Political Environment
Factors of Political Environment

Political Philosophy

Political parties have their own political philosophies. Capitalism, communism, socialism, mixed economy are the economic systems by which political parties are required to explain their stand or opinion.

They are also expected to implement their economic agenda decides the techniques and priorities of the economic development. In this way different political philosophy determine the role and forms of entrepreneurial activities.

Political Atmosphere

Favorable political conditions are necessary for the economic development of the country. Political instability creates uncertainty while entrepreneurial activities need a clear, certain and comparatively stable government policy, political instability, public movement etc. are the result of power conflict of political parties of the country.

In this situation, entrepreneurs are unable to take a sound business decisions as they need a clear-cut Government policy. Political instability increases the level of risk. So entrepreneurs are required to keep a watch on the possibilities of stability in political activities before involving themselves in entrepreneurial activities.

Quality of Leadership

In modern scenario, political parties rule the country and thus leadership of party in power decides the destiny of the country. Matured, decisive, competent and efficient leadership enables the country to have an effective economic growth strategy.

Accelerated economic development ensures the well-being of the country. So, it is for the political leadership to provide sufficient incentive and protection to entrepreneurial activities at the Government level.

FAQs Section

What are the factors of political environment?

These are the three main factors of political environment:
1. Political Philosophy
2. Political Atmosphere
3. Quality of Leadership.