Critical Elements in The Politico Legal Environment

The form and structure of the government:

The form of the government can be democratic, communist, capitalist or a mix? Each of these choices will imply a corresponding relationship between business and the government. The ideology of the ruing party may itself influence the ownership, management, structure and size of business. As a reaction to this ideology, business houses adopt pro-Government or anti-Government stance.

The strength of the opposition in legislature:

A strong, fair, firm and consistent oppositions may ensure constructive criticism of the existing government policies affecting business.
They will also prevent the government form acting irresponsibly with regard to business.

The role and responsibility of the bureaucracy:

Ministers may change from time to time but the government’s administrative machinery must run without a break, Bureaucracy, thus, maintains continuity in the system; its role becomes especially powerful when the government controls and regulates business extensively.

The direction and the speed of the government policies and programmes:

Policies may be formulated with tremendous “speed.” They may come one after another through their “direction” may not be clear. Sometimes, policies may have a clear direction but may be evolved at a snail’s pace. Either way it is unfavorable for business.

Socio-economic legislations:

Business laws are numerous in number and diverse in form. They are enacted to protect the interest of various groups in society. Thus, there are laws to protect the consumers, workers, owners, shareholders, and the society at large. It is through these legislations that order is maintained in the industrial economy. Laws not only protect business they also create business.

The Politico-legal institutions:

The functioning of the legislative, executive, and judicial organs of the government affect business environment directly and indirectly. All these organs function through organizations and institutions.

Macro-Environment of Business:

Business is an organization which does not exist in a vacuum. It lives with its environment which provides resources and which lay down limits on its activities. An organization can survive and grow only when it continuously adapts and responds in time to the changing environment. We are living in the dynamic world which is undergoing a rapid change with the coming up of new ideas, economic changes, political changes and new technology.

An organization is an integral part of its environment and both are mutually independent interacting with one another continuously. The environment provides resources and opportunities to the organization need for its existence. In turn, the business is expected of offer goods and services to the people living in its environment so that the needs and desire of the people are duly satisfied and their life styles are maintained as per their expectations.