TEACHER- ASHEKA MAHBOOB

Political Environment
Introduction

Politics is closely related to law, since politics is

concerned with the making and enforcement of laws

Politics can be defined in terms of competing view about

the kind of society we want to live in and decisions
regarding the rules and laws which are necessary to
create and sustain such a good society.

Politics is necessary because disagreement and conflict

over values and interests is a feature of all societies-your
idea of the good society might be very different from
mine.
Introduction

For a company to succeed, its management must carefully

analyze whether its corporate policies will fit a desirable
political and legal environment

country!s political system influences how business is

conducted domestically and internationally

It is very important to understand the political and legal

systems that managers encounter and the factors they need
to consider when operating in different countries

"he role of political system is to integrate society

country!s political system influences how business is

conducted domestically and internationally
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

To obey Laws

If business obeys laws the society can function smoothly and

business can prosper only when the society is functioning
smoothly but if laws are oppressive or obstructing the path of
business, they can be opposed in constitutional manner. "he
business can take the help of constitution or the &udiciary to
oppose the laws and get them repealed.
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

Payment of taxes

"he e'penditure of a modern government is heavy and is fast

increasing. "he main source of income for the government is
the different type of ta'es imposed by it. "he business pays
ta'es on goods produced by them, ta'es on goods imported by
them, ta'es on own income and ta'es on the incomes of the
employees. "he bulk of the ta' revenue is collected from
business. If business pays the ta'es honestly and on time the
government can fulfill its responsibilities efficiently. If ta'es
are evaded by one group, the burden of ta'ation increases on
some other group. (on payment of a ta' is a political offence
and also a social dishonesty.
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

Social resonsibility

In addition to the legal and political responsibilities, the

business has to take up several moral responsibilities towards
the society. "hus, the business has to provide training facilities
for the unemployed persons so that they can get absorbed in
some occupation or can setup self employment units. )everal
business houses established educational institutions, hospitals,
libraries, recreation halls, playgrounds etc. for the community.
"his is helpful in winning them sympathy from the community.
It is like an investment made by the business.
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

Pro!i"in# in$ts to t%e #o!ernment

*ften the government re+uires inputs of technical economic

financial or political importance for framing appropriate policies.
"he business has contacts in different sections of the community.
"hey can be used for collecting the re+uired information and
providing it to the government. ny action based upon accurate
inputs has greater chances of achieving a higher success. For eg,
before imposing a ta' on commodity the government likes to
know the elasticity of demand for that commodity.

*ther things remaining the same the government prefers to

impose a ta' on a commodity which en&oys relatively less elastic
demand.
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

&o!ernment Contracts

"he government has to take up several works such as

construction of roads, bridges, flyovers, airports etc.
)ometimes these works are undertaken by the government
departments but a more common method of undertaking that
work is to invite tenders and give contracts to business. It is the
responsibility of the business to complete the work in time and
maintain a high level of +uality of the work. huge pro&ect like
Padma bridge construction can be conveniently undertaken
with the help of business.
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

&o!ernment Ser!ices

"he business offers services of its leaders to the government to

work on different committees. "he business leaders have
practical e'perience of a particular type of business.
committee appointed for doing something in respect of that
business is highly benefited if some prominent person from
that field is appointed as the chairman of that committee or
commission.
#esponsibilities of $usiness toward %overnment
#esponsibilities of $usiness toward %overnment

Acti!e articiation in olitics

)ometimes the businessmen try to participate actively in

politics. If a member of some renowned business family &oins
as an -P in $angladesh then the government gets the benefit
of their practical e'perience of that field, but often the
businessmen try to keep themselves away from active politics.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

To ass an" exec$te roer laws

"he behaviour of the people in society can be effectively

controlled with the help of laws. "he government has to pass
laws which would create a friendly and helpful atmosphere for
the business to grow. t the same time the laws should be
capable of controlling the dishonest businessmen and prevent
and punish their unfair practices.

"hough passing of proper laws is important, an efficient

implementation of the law is more important. If a good law is
implemented in a bad way it produces harmful effects. It
encourages dishonesty on the part of the people.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Maintenance of law an" or"er

It is the responsibility of the government to maintain law and

order and peace in the community. ny business can e'ist and
prosper if there is law and order in the country. Periods of
disturbance are harmful to the e'istence of business and much
more to the progress of the business. "he government has to
maintain law and order for attracting foreign investment.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Pro!i"in# Money an" Cre"it

Every business re+uires credit. It is like blood circulation in the

body of the economy. Finance is provided to business by the
money market and the capital market. "he government has to
regulate them in such a way that they are able to attract more
capital and direct it to the business. It is the responsibility of
the government to maintain the financial institutions in sound
health so that they can mobilize more finances.

"he government, through the central bank of the country has to

maintain a stable and appropriate rate of e'change which is
helpful in attracting more foreign investment
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

B$il"in# 'nfrastr$ct$re

ll productive activities re+uire infrastructure by way of means

of transport and communications, supply of energy and credit,
providing appropriate information about the openings for
different businesses etc. If the government is successful in
building efficient infrastructure, business can e'pand at a fast
rate.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Basic Researc%

Innovation is the watchword of modern business. Introduction of

proper innovations at proper time re+uires e'tensive research. It
is of . types, a, $asic research and b, commercial research.

, $asic research is not profit oriented, hence it is the

responsibility of the government to conduct it and provide
foundation for the commercial research.

$, /ommercial research is profit oriented0 the business

undertakes commercial research by using the basic research as
the foundation. "he government can give incentive to
commercial research by providing fiscal concessions and
monetary incentives.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Pro!i"in# information

"he government collects information on several issues such as

the growth of population, changes in the demographic features,
trends in migration etc. "his information is highly useful to
business in formulating its policies. "he government can keep
that information open to business
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Controllin# t%e #rowt% of monoolies an"

reser!in# cometition

free market economy has an inherent tendency to give birth

to monopolies. "hey are economically and socially harmful.
"hey result into concentration of economic and political power.
"hey are also instrumental in increasing ine+ualities. "he
government can pass appropriate laws and can take timely
action for preventing the growth of monopolies and encourage
competition.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Reser!ation of fiel"s of ro"$ction

"he government reserves certain fields of production

for the public sector. "he remaining part is kept open
to the private sector. In India several fields of
production were reserved for the small scale and
cottage industries. "he sphere was contracted after
we adopted the policy of globalization.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Protections

"he industries belonging to the developing countries are not

able to compete with the industries belonging to the developed
countries. It is the responsibility of the government to give
them protection by using tariff and if necessary, non-tariff
barriers. t the same time the industries should not get undue
protection which would develop complacency. fter the
establishment of the 1"*, protection is slowly on the decline.
%overnment #esponsibilities toward $usiness
%overnment #esponsibilities toward $usiness

Awar"in# atent ri#%ts an" coy ri#%ts

Progress in any field re+uires research inventions and

innovations. "he &ob of patent rights and copyrights is to give
protection to those who invest in research and arrive at
inventions and innovations. Every country has its patent rights.
fter the establishment of the 1"* the member countries have
adopted the rules and regulations prepared by 1" in respect of
patent rights, copy rights and allied matters
"he international dimension
"he international dimension

In today2s globalized world, business operations 3e'change

and production4 span national borders. )o that business-
government relations are not confined to business own
national government

$angladeshi companies e'porting to china or establishing

production facilities there have to deal with the political
institutions, rules and procedures of that country

In pursuing overseas e'pansion business may look to their

own government for assistance in, for e'ample, negotiating
market access and favorable trade rules
"he international dimension

%arments sector of $angladesh has favorable trade rule for

e'ample

5uotas protected our domestic industry

$eginning from the mid-6789s the trade in te'tile globally was

regulated by the multi-fiber agreement 3-F4
$asic Political Ideology
$asic Political Ideology

Political ideology is the body of constructs 3comple' ideas4, theories,

and aims that constitute a sociopolitical program

:iberalism

/onservatism

socialism

Pluralistic

All i"eolo#ies contain(

vision of what the good society should look like 3i.e. a vision of
the kind of society that supporters of the ideology favor4

n assessment of what needs to be changed or preserved in

e'isting society

political program or set of policies intended to bring about

progress towards the good society
$asic Political Ideology $asic Political Ideology

Politically Pluralistic society is when different ideologies

coe'ist because there is no one ideology that everyone accepts

Pluralism arises because groups within countries often differ

significantly from each other

-ost modern society are pluralistic politically, meaning

different ideologies coe'ist because there is no one ideology
that everyone accepts

Pluralism arises because groups within countries often differ

significantly from each other in language 3e.g., India4, ethnic
background 3e.g., south frica4, or religion 3e.g., (orthern
Ireland4. "hese and other cultural dimensions strongly
influence the political system
$asic Political Ideology $asic Political Ideology

"he ultimate test of any political system is its ability

to hold a society together despite pressures from
different ideologies tending to split it apart. "he more
different and strongly held the ideas are, the more
difficult it is for a government to formulate policies
that everyone can accept

Ideologies also help bring countries together

1hen operating in a foreign country, it is important

that managers understands its history and the present
ethnic groups that could cause political tension and
instability
;emocracy
;emocracy

"he ideology of pure democracy derives from the ancient

%reek, who believed all citizens should be e+ual politically
and legally, should en&oy widespread freedoms, and should
actively participate in the political process

In reality, society!s comple'ity increases as population

increases, and so full participation by citizens in the decision
making process has become impossible in these modern
times

-ost democratic countries practice various forms of

representative democracy, in which citizens elect
representatives to make decisions rather than those citizens
voting on every specific issue
;emocracy ;emocracy

/ontemporary ;emocratic political systems share

the following-

Freedom of opinion, e'pression, press, and freedom to

organize

Elections in which voters decide who is to represent them

:imited terms to elected officials

n independent and fair court system with high regard of

individual rights and property

nonpolitical bureaucracy and defense infrastructure

n accessibility to the decision-making process

Political #ights
Political #ights

"he ma&or indicators of political rights are

"he degree to which fair and competitive election

occur

"he ability of voters to endow their elected

representatives with real power

"he ability of people to organize into political

parties or other competitive political groupings of
their choice

"he e'istence of safeguards on the rights of

minorities
/ivil :iberties
/ivil :iberties

"he ma&or indicator of civil liberties are

"he e'istence of freedom of the press

E+uality under the law for all individuals

"he e'tent of personal social freedoms

"he degree of freedom from e'treme

governmental indifferences or corruption
Is democracy good for business<
Is democracy good for business<

"he desirable features of a political system from a

business point of view may include the following,

Political stability, i.e. there being a little risk of a violent

overthrow of the state, but also not too fre+uent changes of
government

Effective government, in the sense of governments being able

to perform their basic functions such as to maintain order in
society, but also being able to run the country competently and
implement their policies

#ule of law, particularly in terms of =clean! government

operating within the law, and the absence of corruption

#esponsiveness to business interests

Is democracy good for business<

It can be argued that liberal democracy has proved to be

the best system of government in terms of meeting these
criteria, and the countries with the most successful 3i.e.
wealthiest4 economies are also democracies.

$ut there are of course some companies that are willing

to do business with undemocratic, authoritarian, and
corrupt governments and that is why they want to help
such party to secure and retain power

$ut it does suggest that a healthy market economy is

associated with democratic politics
Is democracy good for business<

*n the other hand, democracy is not without risks and

uncertainties for business. It is in nature of political
disagreement that one person!s idea of good government is
different to another!s. For e'ample, democracy does not
guarantee good government from a business perspective,
since business can be outvoted by other groups and
stakeholders who want governments to introduce policies
that are opposed by business

-ost obviously political rights have historically been

utilized by workers to elect parties to government that
represent their interests.
Is democracy good for business<

;emocracies do not always ensure political stability

and can involve fre+uent changes of government,
may produce weak or ineffective government, and
are not immune to corruption.
"*":I"#I(I)-

;emocracy is at one end of the political spectrum, and

totalitarianism is at the other

In a totalitarian system, decision making is restricted to a few

individuals

"otalitarianism takes several forms, including fascism,

authoritarianism, and communism

n e'ample of fascist totalitarianism in the past include %ermany under

>itler

E'ample of authoritarianism include /hile under Pinochet

uthoritarianism differ from fascism in that the former

simply desires to rule people, while the later desires to control
people!s minds and souls, to convert them to its own faith.

In /ommunism , political and economic systems are

virtually inseparable. /ommunist believe in the
e+ual distribution of wealth, which entails total
government ownership and control of resources.

/hina, (orth ?orea and @ietnam are e'amples of such nations.

F*#-A:"I(% (; I-P:E-E("I(% P*:I"I/:
)"#"E%IE)

"here are certain steps that a company must follow if

it wants to establish an appropriate political strategy
in its countries of operation.

Identify the issue. 1hat is the specific issue facing the firm-trade
barriers, evironmental standards, worker rights<

Define the political aspect of the issue. ;oes the government feel
strongly about the specific issue, or is it of minimal concern< Is
there a political dimension to the issue, or is it something that
can be dealt with outside of politics<

Access the potential political action of other companies and

special-interest groups. 1ho are the parties that are affected
and able to generate political pressure< 1hat are their strategies
likely to be<

Identify important institutions and key individuals-

legislatures, regulatory agencies, courts, important
personalities.

Formulate strategies. 1hat are the key ob&ectives, and the

likely effectiveness of alternative strategies<

Determine the impact of implementation. 1hat will be the

public relations fallout in the home and host countries if the
action taken is unpopular<

Select the most appropriate strategy and implement.