Political Analysis

Political analysis is the analysing of a business political environment.In recent years the political and governmental policy of a state has been having great effect on the business environment in that country. The purpose of this article is to look at how the political and governmental policy of a state can influence your business. A political system is made up of institutions, interest groups, political organisations and their relationship with one another. Political system may be either local, national or global. Today the world is like a little community. Nations intaract with one another and globalization makes the community a very small village.

As an entrepreneur you have to be aware of how the political system will affect your business interest. How government legislations and other political factors will present threats or opportunity to your business.

Let us see how the following government policy can affect your business.

Govenment Housing Policy

If the government policy on housing is to build new houses and reduce the cost of mortgage for first time buyers how will this policy affect a small business.

For those business that are in the housing market this will be a great opportunity for them because they will have opportunity to bid for new housing contracts, for those in the housing supply chain they will also see new market opportunity.

New housing project will be awarded, there will be need for workers in the housing sectors. The mortgage industries will have more customes as more firstime buyers will be looking into the property market.

Whatever policy the government formulate with regards to housing it will have its own threat or opportunity on business in that sector.

Government Policy on Defence

Government policy on defence will always come as threat or opportunity to business in the defence sector.

Closure for militry base will have serious impact for local supply. Lets take as example the US government pulling troops from Afghanistan; This will affect all the business in that supply chain.

From the suppliers of militry hardware to uniform and militry clothings, housings, medical and security. All the business that profit from the existence of the millitary there will be adversely affected.

To the local there this may have a possitive effect on their own business environment as it will give local people to opportunity to set up firms to fill the gap that will be created.

Political analysis also look at political globalization. Country like the United Kingdom that is in the European Union is affected by the political policies of the EU.

It is advisable to always carry out political analysis when doing your business analysis.

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