Political Factors

Political factors are one of the environmental factors that is affecting a business and is
given a lot of importance. Government policies can affect businesses. All companies and firms
must follow the laws. The political environment can impact and add risks that lead to major
losses.

Government Policies that Affects Business

There are 4 government laws that affect a business namely the Regulatory laws, Labor laws, Tax
laws and Reporting laws. Regulatory laws are standards that affect how a business operate in
certain situations. Labor laws are regulations that is directly pertaining to how businesses or
firms treat their employees. Tax laws controls how a business must report its financial status to
the government. Lastly, reporting laws is somehow related to the tax laws which controls how a
business must report their finances to investors and to the government.

Taxes Laws
Varying tax rates on the sale of goods and property taxes at the state and local levels can
influence where businesses decide to situate themselves and build locations. If a state's tax rates
are deemed low for business growth, it could lead to businesses deciding to move locations.

Stability of the Government

Political stability plays an important role for business environment. It affects the investor and
also the consumer’s confidence, having a wide impact on the economy. Changes in political
stability can have implications for investments, consumptions and economic growth.