The political environment is a crucial external determining factor in your business. What happens in your country’s politics and other countries’ politics has much to do with your business.
What Does the Term Political Environment Mean?
The political environment usually refers to the actions taken by the government, which affect the daily activities of any business. It is the nature of the political situation in the country where you are doing business or where you intend to do business. Are you aware of the political aspects that affect your business?
You need to understand the political environment in which you operate because it may present political risks to your business. For example, your business is subject to political risks if a war erupts in any country where you do business. Likewise, changes in government policies may either affect you positively or negatively. The political environment existing in any country affects the economic climate or performance directly.
As a business owner, you need to keep yourself aware of the political environment you operate. Changes in politics affect significantly small business owners. It is, therefore, essential to know whether the changes in politics and government policies are supportive or unfavourable to your business. This awareness enables you to run your business from an informed point of view so that you don’t get subjected to political risks.
What Aspects of the Political Environment Should You Consider as You Do Business?
1. Stability of Government
Peaceful Environment
It is essential to know how stable the national government is and how it is likely to be in future, depending on the prevailing political circumstances. Political instability makes it very difficult to do business. An abrupt change in a political regime may make businesspeople lose their property and hard-earned money. If you are operating a business in such a country, the risk of losing business is high.
2. International Relations
How does your government relate to other governments? Does your home government maintain good relationships with other foreign governments? For instance, diplomatic events are likely to affect your business if you trade internationally. Poor diplomatic relations with other countries can result in the imposition of trade embargoes. It could result in your exports being blocked or subjected to high tariffs.
An excellent political environment makes it possible to establish good relations with other foreign governments. It, in turn, creates directly or indirectly an attractive environment for new investors.
3. Government Bureaucracy
Political Environment Impact
Thirdly, the political climate in which you do business may be slow to facilitate the opening or conducting business activities in the country. Long processes whereby investors or entrepreneurs get subjected to fill in many forms discourage them from doing business.
As I conclude, I would like to appeal to you to follow carefully the environment in which you operate. It helps you to know what to do to guard yourself against any eventualities that may result from any changes in the politics of the countries where you do business. Political shifts can also create significant opportunities for you as a business person. But such changes can come your way if you keep yourself knowledgeable about the political environment in which you do business.
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