Governmental and Political Factors
Governmental and political factors are exerting an increasing influence on how businesses operate. Firms must comply with regulations dealing with hiring practices. taxes. consumer lending, safety. pricing. advertising. plant location. and pollution
Governmental activity also provides both opportunities and threats Thus, some government programs(for example. tariffs on foreign competing goods and tax reductions) provide growth or survival opportunities. Conversely. increased taxes in certain industries(for example. video arcades could threaten profitability.
In general. businesses operate as they presently do because society allows them to. If and when society no longer approves of certain practices or situations, it can withdraw that permission by demanding government intervention via regulation or the judicial system. Society's concern about pollution and energy conservation. for example, has been reflected by governmental activities. Society has also demanded more stringent safety regulations for consumer products. The key point is that strict compliance with existing regulations may not be sufficient. businesses must also consider their own influence on potential regulations. Self-regulation may be more appealing than government regulation.