Political Factors Essay Example | Topics and Well Written Essays - 1000 words

Political Factors - Essay Example Political situations and Events Different countries face different political situations and events. This can be exemplified when a multinational company with diverse interests and subsidiaries in foreign countries gets to face the wrath of war or political unrests in the host countries. For instance, oil companies that had investments in Iraq were profoundly affected by the America-led invasion that started in 2003. This also led to the imposition of a trade ban on Iraq that subsequently affected unconstructively the multinational oil companies operating in Iraq (Arnove, 2002). Wars and impending political conflicts affect business in that the purchasing power of consumers is compromised due to dwindling financial base. Wars and politically instigated conflicts bring about hardships to the people affected, affect the environment and more so disrupt the social fabrics in a society (Arnove, 2002). This chain eventually prejudices the purchasing power of the affected population as well as contributing to decrease in business profits. Conflicts also affect the stock market that translates to decrease in value of businesses listed in the stock market. Government Arrangement The type of government in a country also determines success or failure of businesses. A democratic country ruled by a compelling government is capable of facilitating an excellent business environment necessary for business growth and subsequent development. Democratic governments facilitate the existence of free market systems that enable businesses to flourish and grow. In democratic countries, business people are given opportunities to air their proposals and grievances to the established government agencies and therefore, formulation and implementation of policies is based on wide consultations (Le Billon, 2003). Alternatively, in a dictatorial/autocratic country, there is a likelihood of business failure due to diminutive policies and harsh treatment from corrupt senior government officials serving in the dictatorial regimes. These regimes are also known to cause anxiety and uncertainty and this is detrimental to growth and prosperity of businesses. Changes in National and International Law Businesses that operate in more than one country like multinational companies feel the heat emanating from constant change to national as well as international legislations that touch on trade and business. The issue of minimum wage laws in most countries has brought about changes in the business world as regards who is to be employed and what the employees are to earn. This is evident in the UK where the minimum wage decrees have been introduced and implemented. Other laws touch on employees’ insurances, maximum hours an employee should work each day, and also employees’ health and safety conditions. Trade tariffs and their subsequent legislations have also been reviewed and changed once in a while, sometimes benefiting business entities and in some instances, affecti ng the businesses in question. The largely influenced World Trade Organization has been accused repeatedly of favoring the developed countries at the expense of the Less Developed countries. Politically speaking, the organization applies diverse legislations and rules for dissimilar countries. It has been reported that when the Less Developed countries export their products to the Developed markets, they encounter tariff restrictions that are sometimes four times higher than that faced by rich countries exporting to the Less Developed