Political environment of

business

Priyanka sangharsh sonwane

M BA
 Meaning

Political environment refers to the system of the

government and judiciary in a nation on
International business.
Political environment includes factors such as
ideology and policies of the government , nature and
type of economic system , relation with other nations
, political stability etc.
Economic policy of ruling party has serious economic
and business implications.
 Main components:

Political ideology of the government

Political stability in the country
relations of government with other nations
Defense and military policy
Welfare activities of government
centre-state relationship
Approach of opposition parties towards business.
Regarding Working of MNCs ,political environmentis
of three types:
Political Environment of Domestic country in which
MNC operates
Political Environment of Foreign Country to which
MNC belongs
International Political environment
 Political Institutions in a Democratic Country

Legislature: whose role is to make the laws.

Executive: Responsible for implementing the laws.
Judiciary: Responsible for interpreting the laws and
setting disputes.

Legislature: It refers to our elected representatives.It

comprises parliament at the centre and state
legislature at the state level. It frames policies ,enacts
laws , frames budgets etc.
Executive: It executes the rules and regulations
framed by legislature. It compromises government
which includes ministers , govt. officials etc.
Judiciary: It refers to the system of courts in the
nation . It comprises courts like supreme court ,
High court etc . It ensures that legislature is making
laws within the framework of constitution.
 Legal Environment

It refers to rules and regulations framed by

government to regulate business units.
The main Indian economic legislations are discussed
below:
1. Indian contract Act,1872
2. Negotiable Instrument act,1881
3. Sale of Goods act,1930
4. Partnership act,1932
5. Labour laws
6. Companies act,1956
7. Foreign Exchange Regulation act,1973
8. Consumer Protection act, 1986
9. SEBI Act 1992
10. MRTP act,1969
 Critical evaluation of Political and Legal
environment

Failed to check concentration of economic power

Inefficient Public sector Units
Failed to achieve Balanced Regional Development
Failed to eliminate poverty
Exploitation of consumers
Failed to check Black Money
Failed to protect Interest of workers.
 Causes of Failure

Unstable governments
Corrupt Political leaders
Corrupt administration
Manipulation of Funds
Ineffective enforcement of Laws
Inefficient working of PSUs
Inefficient political leaders