02_politicalenv

8/21/2019 02_PoliticalEnv

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Political Env

Political Philosophy Ideology - who provides goods & services - capitalism, socialism & communism.

Structure - how is the govt run - Parliamentary, Republic, Monarchy etc.

Authority - who controls - democratic, totalitarian or mix

Political Institutions

Constitution - fundamental principles, rights & duties

Legislature enacts laws that guide business activities.

Executive implements the decisions of the legislature and lays down policies, regulations and

procedures that influence the activities of business.

Judiciary servers as watchdog and their rulings influence business practices. It settles disputes.

Political Systems Political parties

Election procedure

Govt stability

Policies, Regulations, Programs & Incentives

Others

Relationship with other countries

Govt transparency, Bureaucracy, corruption level, freedom of press etc.

Events outside the govt control like war, revolution, terrorisms, labor strikes etc.

Govt policies - Affect the cost & certainty of doing business.Economical, Monetary, Social, Welfare,

Trade, Procurement

Govt regulations - Capital market, Competition, Pricing, Ecological, Investment, Export/Import

Govt programs - Rural electrification, Indira Aawas Yojana, Mid Day Meal Scheme,

Govt incentives - Loans, subsidies, tax breaks


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Govt - Business - Public Interface

Role of Business Adherence to policies & regulations

Employment generation

Participate in overall economic growth

Tax payment - major source of income.

Provide products & services (Got is a large purchaser)

Providing information - to govt & politicians.

Government contracts - housing, infrastructure

Government services - lead/accompany delegations, advisory boards

Voluntary programs - echoupal, drishti

Political activity - debates, Nandan Nilekani UUID

Strategy Description

PAC Organization that pools contributions from members & donates

those to campaign for or against a candidate or legislation.

Trade Associations Organization founded and funded by business that operate in a

specific industry.

They participate in PR activities such as advertising, education,

political lobbying. Main focus is collaboration between companies.

Lobbying

SIG

Employee Involvement


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M&A

JV

Role of GovernmentThe role of the government should be to facilitate the process of peoples involvement in development

activities by creating the rights types of institutional infrastructure, particularly in rural areas. Without

organized government, individual citizens and business would operate like beasts in jungle.

Govt roles can be classified as general, provider & regulatory roles

General Role

With General Roles govt should focus on maintaining a legal /social framework and a healthy economy &

competition among business entities.

Provider Role

Public Services - As a provider, govt should provide public services like postal, defense,

parks/recreations, transportation, education and police/fire.

Jobs - Govt should also provide jobs & work related services to society. Govt is also responsible

for formulating appropriate labor laws & acts. Gratuity Act, Bonus Act, Labor Atc etc.

Business - Govt should provide necessary support to members of society to enhance

entrepreneurship through loans, subsidies & tax incentives.

Investor - Govt should provide or establish mechanisms to get capital for business. Govt is also

responsible for protecting the investment made by business.

Regulatory RoleGovernment regulation of business refers to all measures and instrumentalities that are aimed at defining

and laying down the limits of private enterprise, and controlling the various economic and business

activities in a country.

Appropriate regulatory policies help the governments to

1. Control natural monopolies

2. Control negative externalities

3. Achieve social goals

4. Control excess profits

5. Control excessive competitions6. Protect customers

7. Protect env

At high level, government regulations can be classified as economical & social regulations. Economic

regulation is defined as a type of government regulation that sets prices or conditions on entry of firms into

an industry. Economic regulation also includes the regulation of financial firms. social regulation includes

environmental controls, health and safety regulations, and restrictions on labeling and advertising. Social


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regulation involves the correction of externalities.

There are certain benefits associated with govt regulations. Some of them are

1. Fair treatment of employees

2. Safer working conditions

3. Safer & quality products4. Cleaner air & water

5. Reasonable price

The other side of govt regulations are

Direct costs like excessive compliance & taxes.

Indirect costs

Induced costs like reduced innovation, reduced investment in plant & equipments and increased

pressure on small business.

Overvalued currency

Huge transaction costs, bribery, red tapism Uncertainty

Recent trend is to increase the social regulation whereas reduce the economical regulations. The main

purpose of the deregulation is to increase competition with the expected benefits of greater efficiency,

lower prices and enhanced innovation. Governments throughout the world is facing the dilemma of how to

enhance the competition without sacrificing applicable social regulations.

Public Policy

Guidelines for public action & must be manifested in laws, public statements, official regulations or widely

accepted and publicly visible patterns of behavior.

Classification

Because public policy is intentional, that is, attempts to achieve certain goals, we can group policies into

classifications based on purpose.

Membership- citizenship & equality -

Needs- Education, healthcare etc.

Security- Government, first, exists to provide security from internal and external threats to the lives,

liberties, and properties of its members. Defense & Foreign policies, Crime policy.

Prosperity- material well being of members. Economical policy.


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Distributivepolicies allocate benefits from government to certain segments of the population. Subsidies,

Cash payment to farmers, public schools etc. The more widely the benefits are distributed, the more

consensual the policies and the more popular the policy is likely to be. Distributive policies are designed to

affect only one specific group of people or small area. These policies tend to be fairly low cost and

effective.Redistributioninvolves not only the allocation of benefits or services to certain parts of the population, but

the taxing of other parts of the population to generate the funds. Old age pensions, scholarships etc.

Redistributive policies tend to be very expensive in nature, and also seek to make a very large change, or

propose something of an important nature.

Regulatorypolicies impose constraints on individuals and groups. They reduce liberty of action. Criminal

justice laws, speed limits, env protection etc.

Self-regulatorypolicies are similar to regulatory, except that the persons or groups regulated possess

considerable authority and discretion to formulate and police the regulations governing them. Attorneys,

physicians, engineers, and other professions, for example, receive authority from government to license

practitioners, thus determining who may and who may not practice the profession.

Collective or Public Goods- National defense, clean air, traffic control etc.

Private Goods- distribution & redistribution policies comes under this category.

http://voices.yahoo.com/four-types-governmental-policies-why-they-are-620599.html

Public Policy Levels

International Level TRIMS, TRIPS

National MRTP Act

Regional Level sharing river water among riparian states, Common agriculture Policy

State Level Prevent Groundwater Contamination, SH

Public Policy Process Stages
http://www.google.com/url?q=http%3A%2F%2Fvoices.yahoo.com%2Ffour-types-governmental-policies-why-they-are-620599.html&sa=D&sntz=1&usg=AFQjCNG9EycnWMpUrsZwMWBtqf2w03LI4Q


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Identify the policy problems

Agenda setting, that is, deciding what is to be decided, is the first critical step in the policymaking

process. To get on the agenda, problems must come to policymakers attention.Influential individuals and

ordinary citizens, organized interest groups, think tanks and policy planning organizations, political

candidates, and officeholders all employ the tactics of agenda setting, usually through attempts to get themass media to publicize the issue.

Non-decision makingoccurs when powerful individuals, groups, or organizations act to suppress an issue

because they fear that if public attention is focused on it, their best interests may suffer. Non Decision

making also occurs when political candidates, officeholders, or administrative officials anticipate that

powerful individuals or groups will not favor a particular idea.

Political ideologyis a driving force in agenda setting.

Special interest groupsare a staple of the political landscape, and they do their best to influence the

political agenda either directly or indirectly. Special interest groups may represent people based on race,

ethnicity, gender, sexual orientation, age, income, profession, or other factors.

Mass media- Deciding what is news and who is newsworthy is a powerful political weapon.

Television executives and producers and newspaper and magazine editors decide what people,

organizations, and events will be given public attention.

Public opinion

Formulate policy proposal

Policy-planning organizations, interest groups, government bureaucracies, state legislatures, and thepresident and Congress may all engage in formulating policy proposals.

Legitimize policy

Policy is legitimized as a result of the public statements or actions of government officials, both elected and

appointedthe president, Congress, state legislators, agency officials, and the courts. This includes

executive orders, budgets, laws and appropriations, rules and regulations, and administrative and court

decisions that set policy directions.

Implement

Policy implementation includes all the activities that result from the official adoption of a policy. Policy

implementation is what happens after a law is passed. Traditionally, public policy implementation was thesubject matter of public administration. The separation of politics from administration was once

thought to be the cornerstone of a scientific approach to administration. But today it is clear that politics

and administration cannot be separated. Opponents of policies do not end their opposition after a law is

passed. They continue their opposition in the implementation phase of the policy process by opposing

attempts to organize, fund, staff, regulate, direct, and coordinate the program. If opponents are

unsuccessful in delaying or halting programs in implementation, they may seek to delay or halt them in

endless court battles. In short, conflict is a continuing activity in policy implementation.


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Evaluate

Formally or informally evaluated by public, mass media, interest groups, outside consultants & govt

agencies.

Additional Notes

Capitalism - People own their own businesses and property and must buy services for private use, such as

healthcare. (US)

Socialism - Governments own many of the larger industries and provide education, health and welfare

services while allowing citizens some economic choices. (India)

Communism - Government owns all businesses and farms and provides its people's healthcare, education

and welfare. (Cuba)

Parliamentary - A parliamentary system is led by representatives of the people. Each is chosen as a

member of a political party and remains in power as long as his/her party does.(India)

Monarchy - A monarchy has a king or queen, who sometimes has absolute power. Power is passed along

through the family. (Jordan)

Totalitarian - Rule by a single political party. People are forced to do what the government tells them and

may also be prevented from leaving the country.(China)

Dictatorship - Rule by a single leader who has not been elected and may use force to keep control. In a

military dictatorship, the army is in control. Usually, there is little or no attention to public opinion or

individual rights.(Iraq)

Theocracy - A form of government where the rulers claim to be ruling on behalf of a set of religious ideas,

or as direct agents of a deity.(Iran)

Democracy - In a democracy, the government is elected by the people. Everyone who is eligible to vote -

which is a majority of the population - has a chance to have their say over who runs the country. (India)

Totalitarian - Rule by a single political party. Votes for alternative candidates and parties are simply not

allowed. Citizens are allowed and 'encouraged' to vote, but only for the government's chosen candidates.

(North Korea)

Govt Stability

Radical shifts in govt philosophy when opposing political parties comes into power.

Pressure from nationalist & self interest groups.

Bias against foreign investment.

Conflicts between political parties.

Questions

1. Mention some of the influences of state on business (3)

2. What exactly is the regulatory role of govt on business (3)

3. Note on political env (3)


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4. How does the political env influence the business undertaking (10)

5. Write a detailed note on interface between govt & business (10)

02_politicalenv

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