Political environment

Slides of Political Environment

1. Political Environment

2. Political environment It refers to the influence exerted by the three political institutions viz., legislature executive and the judiciary in shaping, directing, developing and controlling business activities . A stable and dynamic political environment is indispensable for business growth. Political environment includes factors like the nature of government policies particularly those related to taxation, industrial relations, regulation of internal business and industry, and foreign trade regulations . It also relates to the stability of the government in power and risk of major political disturbances . The political environment include govt,its policies, philosophy & lobbying(Pressure) group that influence or restrict individual organization in the society. Political environment in a country in which a business firm operates is very important force to determine the success & failure of business activity . Political environment consist of different forces that influence business like political system, political institution, political philosophies, pressure group etc.

3. Significance of political environment for business Bureaucracy Corruption level Freedom of the press Tariffs Trade control Laws related to education, health, environment Regulation and deregulation Tax policy Political stability Trade unions Import restrictions on quality and quantity of product Intellectual property law Consumer protection

4. Political stability stimulate business expansion Business legislation may create opportunity or threats Government is concerned for the protection of public interest Govt is major consumer of goods and services Govt action may facilitate or hinder business activity Govt spending stimulates the economy

5. Nepalese P olitical System Nepalese political system may be explained under the following headings: Political Ideology Political structure(constitution) Govt. and its branches Political parties

6. Political ideology Normative in nature Set of ideas, principles and philosophy Political or cultural outlook Concerned with allocation of power and resources Different types of political ideologies Democratic Totalitarian Nepal has federal democratic republican system

7. Political structure (Constitution) The term 'Political Structure' refers to institution or group and their relationship to each other, their pattern of interaction with political system & political regulation, laws, norms, present in political system in such a way that they constitute political landscape of the political entity. Political structure is represented by constitution, election procedure & power centers . It guides the political process . Constitution provides framework for governance of the state. A constitution is a document that record the fundamental principles according to which a country is governed. It determines the structure of the government. Constitution distributes power among its difference organs & systematizes the use of state authority.

8. Constitution of Nepal 2072 35 parts and 308 articles and 9 schedules Special features Drafted by CA Sovereignty and state power entrusted upon people Provisions of federal system with 7 provinces 3 level of governance: central, provincial and local Competitive multi-party democratic system Executive power is vested on council of ministers Provision of mixed election system Bicameral legislative consisting 275 lower house 59 members in upper house Fundamental rights increased 31 Three levels of courts Directive principles of state

9. Government and its branches Legislative Formulation of laws, Controlling the Finance, Administrative function, Amending the constitution Executive Administrative work, Diplomatic work, Financial work, Military works Judiciary Provide equal justice to citizen, Protecting the public right, Use the existing laws of country, To interpret the constitution if there is any controversy, To suggests, advice to the legislative and executive in critical legal matters.

10. Political parties: Players of political system A political party is an organization of likeminded people with same political aim & programs . common thought about the particular theories, principles or philosophy. Their main objectives are to win the election, form the government & lead the country according to principles & practices of their party. There are leaders, their supporters & workers at different levels like in the local level, district level & national level Political parties are the backbone of the democratic system & play a vital role in the development of democratic system.

11. In Nepal we have competitive multi party democratic system The party has grown like mushroom & their number has now cross the mark of hundred. The process of splits, mergers and defection has become an ongoing phenomenon . At present 30 political parties have representation All political parties have their own political ideologies & policies which may influence the business activity within the country . For e.g. communist parties advocate state control & role of the public sector & congress party advocates liberalization endorse for the private sectors. Role of political parties: Past to the present

12. Responsibilities of political parties Form the govt and rule Act a responsible opposition if not in govt Work as a bridge between govt and people Protect the sovereignty and integrity of nation Help in bringing sustainable peace Remain neutral and independent

13. Constitutional Bodies CIAA Auditor General Attorney General PSC EC NHRC National Natural Resources and Fiscal Commission Other Commission( National women, national Dalit, National inclusion, Indigenous nationalities like Madhesi , Tharu and Muslim Commissions)

14. Business Government Relationship Government refers to the legislations, administrator, arbitrator (Mediator) in the administrative bureaucracy who control a state at a given time and to the system of government . Government is the means by which state policy is enforced as well as the mechanism for determining the policies of the state. Government refers to the center of political authority having the power to govern There is close relationship between govt & business. The economy of any country is depends on its govt. govt shapes the economy according to its ideology & philosophy. Govt creates promising approach for economic activities within the country. Govt decide how much of the country resources should be earned by the state, how much state should look after needy & how much individual should be responsible for themselves.

15. Govt determines the taxation policy. Govt determines whether there should be public ownership of property of private ownership of property. Govt creates suitable atmosphere for the different economies i.e. capitalism or socialism. Extension of new investment sector in the country, encouraging & approaching multinational company, drafting the trade import & exports, different acts & rules related to business depends on the Govt Business sector helps to sustain Govt of country by fulfilling its objectives such as employment opportunity, regional balance, social justice, stability in price & stability in economy.

16. Business govt relationship may be explained through following points Role of govt towards the business: Infrastructure and manpower development Formulation and enactment of regulations and policies Provide stable environment Source of information Financial assistance Subsidies Security Promotion of business

17. Role of business towards the govt Tax payment Execution of contract s Rendering of advice Source of information

18. Basic Issues in Business Govt Relations Government is an important force in the political environment of business . It is also a stakeholder in business . There are two way relationships between government and business. Government is the promoter, regulator and creator of business. Business organization on the other hand helps the government by paying taxes, execution of government contract, rendering advice to government and providing government information. Both business and government develop cordial relations . Government should promote and facilitate business activities and business should compliance with laws and regulation and helps solve problems faced by the government.

19. The relationship between government and business is particularly complex where the state itself involve in business. In Nepal, there are varieties of industries running under the ownership of state and compete with private ownership companies, therefore the clash of interest arising between public and private sector. The government cannot ignore the interest of labor force, consumer and the wider society. Other pressure groups include the employees association also influences laws and policies of government.

20. Basic issues in business govt relations Government Ownership of Nepalese Business Public Private Partnership: Over dependent private sector Employer’s Association: Labor as a political force: Governance

21. Risk Assessment Of Political Environment Problems of Nepalese political Environment are factors and forces which may adversely affect the business activities in the country, problems in political environment arise from governmental action like amendment of main law, valuation of the currency, increases in taxes and so on. Problems in political environment may also arise from non-governmental action within the country such as extortions, kidnappings and acts of terrorism traditional hostilities, ideological conflicts and so on are the common problems found in political environment which has vital impact on Nepalese business Political instability gives birth to many problems like currency controls, changes in tax laws, government intervention, nationalization of business

22. Methods of alanyzing political risks Grand tour Old hand Delphi technique Quantitative method Rummel & Heenan

23. Issues in Nepalese Political environment Political instability Lack of broader vision on political parties Lack of consensus among political parties Weak implementation of rules and regulations Confusion in new constitution Lack of good governance Employers associations Labour as political force Emergence of pressure groups Over dependent private sector