The political factors that affect businesses are often given attention. Many aspects of government policy affect businesses. All firms follow the law and business managers must find how existing and upcoming legislation affect their activities. The political climate can impact businesses in many ways. It can add a risk factor and cause a major loss. Therefore, businesses organizations should be able to deal with international and local outcomes of politics.
Political factors are made up of changes in the government policies. The changes can be social, legal or economic. Also, it could be a mix of these factors. Decrease or increase in tax is an example of a political element. A government might lower taxes for some companies and increase it for others. The decision directly affects the businesses of those companies.
In the business environment, the political environment is possibly one of the least predictable elements. Changes in regulation and political stability are two main factors that affect businesses. Lack of political stability can lead to looting, riots, and general disorder. On the other hand, when government alters their regulations, businesses struggle to cope with the new laws. Other political factors that affect business include bureaucracy, corruption level, freedom of the press, tariffs, trade control, education law, anti-trust law, employment law, discrimination law, data protection law, environmental law, and safety law.