The government, as well as state and local bodies, have a great deal of influence over the way that companies conduct their business. They can pass laws affecting specific marketers or restrict the ways in which they can advertise. While many businesses support government regulations related to patents, others chafe at the restrictions they place on advertising. Examples of this include the tobacco industry, which had to endure the federal ban on TV advertising, the food industry, which has expressed unhappiness over trans-fat labeling laws, and the broadcast industry, which is worried about fines for violating the rules of the Federal Communications Commission. Meanwhile, many telemarketers have complained about the existence of “do not call” registries.
Politics also affect the macroeconomic environment, as the government develops policies to drive the growth of an economy. Politics also determine the distribution of spending power among various groups of consumers, as well as between the public and private sectors. Governments also have a great deal of influence on business, with trade agreements and other policies affecting the relationship between companies and consumers. For example, the US government has been supportive of global companies and has promoted growth-oriented policies.
Whether you’re a global or local business, it’s important to know what the political environment is like in the country where you do business. Many companies don’t realize that government decisions affect their business, and this is a major risk. While the impact of political factors may not be immediate, it can still affect their profits. Therefore, it’s essential to develop a strategic approach for dealing with political factors.