Political Factors

PESTLE analysis political factors

It is always advisable to keep abreast of potential policy changes in any government because even where the political situation is relatively stable there may be changes in policy at the highest level and these can have serious implications.

This may result in changes in government priorities, which in turn can result in new initiatives being introduced as well as changes to trade regulations or taxation. These can include changes in:

• Employment laws
• Consumer protection laws
• Environmental regulations
• Taxation regulations
• Trade restrictions or reforms
• Health and safety requirements.

The creation of global bodies such as the European Union has led to legislation being introduced into member countries that may have an impact on your organization's operations. For example, the free movement of goods and services throughout the EU allows organizations to operate in 27 different countries with relatively few restrictions.

If your organization is assessing the possibility of operating in the Middle East or in some parts of Asia then the political dimension can be the most serious consideration of all. The organization's entry into the new territory may not be straightforward, either because of that country's official policy or because the political realities of operating there are onerous.

For example, it may appear as if foreign investment is welcomed but the burden of bureaucracy is too weighty to make it profitable. The level of corruption may not palatable for practical or ethical reasons. Other broader political issues you should consider are the political stability of neighboring countries, the level of freedom of the press, and the country's overall 'attitude' to foreign investment.

Key Points

  • Political factors include government attitudes to employment, consumer protection, the environment, taxation, trade restrictions, and societal reforms, as well as the burden of bureaucracy and the level of corruption.
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You may also be interested in: Introduction to PESTLE Analysis, PESTLE Factors, Political Factors, Economic Factors, Social Factors, Technological Factors, Legal Factors, Environmental Factors and Advantages and Disadvantages.

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