POLITICAL ENVIRONMENT

POLITICAL ENVIRONMENTThe influence of political environment on

business is enormous

The political system prevailing in a country decides, promotes, fosters, encourages, shelters, directs and controls the business activity of that country

THREE INSTITUTIONSLEGISLATURE

EXECUTIVE/GOVERNMENT

JUDICIARY

LEGISLATUREMost powerful political institution

It is vested with powers such as policy making, law making, budget approving, executive control and acting as a mirror of public opinion

It has a considerable influence on business like determining the type of business activities a country should have, who should own them, what should be their size of operations, what should happen to their earnings and other related factors

EXECUTIVE/GOVERNMENTFour Important Roles

The Regulatory RoleThe Promotional RoleThe Entrepreneurial RoleThe Planning Role

a. BUSINESS RESPONSIBILITIES TO GOVT.

b. GOVT. RESPONSIBILITIES TO BUSINESS

GOVT. RESPONSIBILITIES TO BUSINESSEstablishment & enforcement of laws

Maintenance of order

Money and credit

Orderly growth

Infrastructure

Information

Assistance to small industries

Transfer of technology

Government Competition

Inspections & licenses

Tariffs & quotas (foreign competition)

BUSINESS RESPONSIBILITIES TO GOVT.

Tax payment

Voluntary programmes

Providing information

Govt. contracts

Govt. service

Political Activity

JUDICIARYIt determines the manner in which the work

of the executive has been fulfilled

It ensures that the executive authority conforms to the general rules laid down by the legislature

It is the power of the judiciary to settle legal disputes that affect business considerably

DISPUTES SETTLED BY JUDICIARYEmployer & employer

Employer & employees

Employee & employee

Employer & public

Employer & government