Explain the political environment of business with the help of current references and examples.

The political aspect of the business environment is usually discussed in conjunction with the legal environment, since it is the political environment that affects legislation of businesses.  An understanding of both is important for any business, small, medium, or large.

Political and legal environments vary from one country to the next, and the country I am most familiar with is the United States.  In the United States, politics plays an important role in business, and...

The political aspect of the business environment is usually discussed in conjunction with the legal environment, since it is the political environment that affects legislation of businesses.  An understanding of both is important for any business, small, medium, or large.

Political and legal environments vary from one country to the next, and the country I am most familiar with is the United States.  In the United States, politics plays an important role in business, and this can be seen in the current presidential election cycle.  As a general matter, there are two political extremes on the spectrum, at one end, low taxes for business, small government, a balanced budget, minimal government regulation, anti-immigration policies and at the other end, higher taxes (particularly for the wealthiest), government borrowing and spending, more government regulation, and pro-immigration policies. There was a time at which it was safe to say that Republicans strongly favored trade agreements, but what either party's position is on this is not clear anymore. 

Any business needs to know what the prevailing winds are for all of these matters.  For example, if corporate income taxes are going to be going up, there are companies who will choose to move elsewhere, which, in fact, many have already done.  If small government is going to prevail, those companies who reap the benefit of government contracts can no longer count on that work such as road or bridge repair. If government is going to borrow and spend, many businesses will reap the benefit of new contracts.  Less regulation always seems like it should be of great benefit to businesses, and I'm sure there are some silly regulations out there.  For the most part, though, government regulations are meant to ensure a level playing field for businesses and to protect the safety of the public.  Without many of these regulations, there would be far more lawsuits against businesses.  Immigration policy affects the supply and demand of the labor market.  I have read that when Alabama passed a Draconian anti-immigration statute, the crops rotted in the fields because there was no one to harvest them. 

You can see in order to successfully run any business, it is necessary to keep track of the political and legal environment.  Whether this is going to be a good time to start a business, a good time to expand, or a good time to take a business abroad is going to depend a great deal upon knowledge of this environment and the ability to make a reasonable prediction about which way the wind is going to blow in the next four years.