Political Environment Definition and Components of Political Environment

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Political Environment Definition and Components of Political Environment

Political Environment Definition and Components of Political Environment

Introduction to Political Environment

The political environment of a business may be defined as the sum total of the is political events and conditions that have a direct or indirect bearing on the growth and development of business. The political environment could change as a result of the actions and policies of governments at all levels, from the local level to the federal/central level. A stable political system and government create different business opportunities. Further, political stability promotes policy stability which is very essential for the growth and development of the business sector. A democratic political system, stable government, and rule, of law are the foundations for the development, of business in a country. The political environment is perhaps among the least predictable elements in the business environment.

Besides political stability, business firms should face a number of other political issues. They are ideological differences, aggressions among the communities, terrorism, government intervention, and labor activism. They affect business operations adversely.

The political environment could introduce a risk factor that could cause them to suffer a loss. Businesses need to be prepared to deal with the fallouts of government politics.

The frequent change in government creates drawbacks, as it brings changes in policy, bureaucracy, rules, and regulations. The change in government leads to a change in policy and creates confusion among the investors and loses their confidence. In Nepal, unstable politics has been a major hurdle in the development of the business sector in the country.

Components of Political Environment

Political Environment is wide in nature. It includes various components which are mentioned below:

1. Political Ideology

Political ideology may be defined as a set of ideas, principles, and philosophy. It offers some political and cultural outlooks. A political ideology is largely concerned with the allocation of power. Political ideology is normative in nature. Different types of political ideologies exist in the world. They are mentioned below.

a. Democratic: 

Under democratic ideology, the power is vested in the people. A democratic system is always governed by the elected representatives of the people. Human right is always at the center of democratic ideology. The multiparty system exists. Fundamental rights such as the right to freedom, right to equality, right to justice, right to property, right to religious freedom. right to privacy and right against exploitation is ensured. The private sector is regarded as an indispensable part of the development of the country.

b. Totalitarian: 

Under this political philosophy or ideology, the power is centralized to the government that does not tolerate parties of differing opinions. It exercises dictatorial control over many aspects of life. Under this, the government attempts to control the whole economy. The private sector doesn’t flourish under such ideology.

A democratic system of governance is better for sustained economic prosperit} and private sector development. However, some scholars argue that a certain degree of autocracy is congenial for implementing economic reforms and business sector development. North Korea, China, and Syria are the countries with totalitarian political ideologies.

Nepal has a federal democratic republican system. It ensures the ruse of democratic rights by operating relationships among federal units based on cooperative federalism, local autonomy, decentralization, and proportional principles in governance. It also aims to establish a welfare state by maintaining a justifiable system in all sectors of national life by keeping sovereignty, independence, and integrity at the highest level and preserving the life, property, equality, and liberty of the citizens by means of rule of law, fundamental rights and values and principles of human rights, gender equality, proportional inclusion, participation, and social justice.

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