From time immemorial, politics and business have been inextricably linked. Political environment refers to political system followed by the country (democracy or totalitarianism) the ideology of the ruling party, the political stability, the
political players, and the public opinion.
The political instability is a big threat for the business. Tata Motors as part of threat had to shift its NANO car project from West Bengal to Gujarat. Recent political unrest in the Middle-East was an opportunity for the non-Middle- East country petroleum producers, but a threat for the Middle-East producers. Dubai Ports Company’s decision to sell their US affiliate to some American firm to manage American sea ports was a politically sensitive decision. Government of India’s initial decision to not to allow the Chinese Company Huwawei was a political decision. Recent decision of the Government of India to not to notify FDI in multi-brand retail was a political decision.
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The decision to ban PP bags by Delhi Government was a political decision. It was an opportunity for non-pp bag manufacturers, but a threat for the pp bags manufacturers. Government of India’s decision to ban sachets for gutka manufacturers, it is a threat for them. Government of India’s excise duty on large cars is 24%, it proved to be a threat for its long car ‘DZire’, and now it has decided to manufacture more of small size ‘DZire’ to avail 12% excise duty and lower the prices by Rs 30,000. Because of political decision to put green dot on vegetarian packed food, the marketers have to follow the same.
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Regional integration is a political decision, which may bring in opportunities and threats to different organisations. Tata Motors feel that duty cut on European cars is a threat for them. Sanction on trade with Iran is a political decision of the US and the EU. It is a threat for Indian exporters to Iran and the oil importers in India. To reduce work visa or charge higher visa fee is a threat to Indian IT companies, but an opportunity for the US IT companies.