Marketing Environment: Political Factors

The political environment includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex.Marketers need to monitor the changing political environment because political change can profoundly affect a firm’s marketing.

At the most general level, the stability of the political system affects the attractiveness of a particular national
market. While western Europe is generally politically stable, the instability of many governments in less developed countries has led a number of companies to question the wisdom of marketing in those countries.

Governments pass legislation that directly and indirectly affects firms’ marketing opportunities. There are many examples of the direct effects on marketers, for example laws giving consumers rights against the seller of faulty goods. At other times the effects of legislative changes are less direct, as where legislation outlawing anti- competitive practices changes the nature of competition between firms within a market.

Governments are responsible for protecting the public interest at large, imposing further constraints on the activities of firms (for example controls on pollution, which may make a manufacturing firm uncompetitive in international markets on  account of its increased costs).

The macroeconomic environment is very much influenced by the actions of politicians. Government is responsible for formulating policies that can influence the rate of growth in the economy and hence the total amount of spending power. It is also a political decision as to how this spending power should be distributed between different groups of consumers and between the public and private sectors.

Government policies can influence the dominant social and cultural values of a country, although there can be argument about which is the cause and which is the effect. (For example, did the UK government’s drive for economic expansion and individual responsibility during the late 1980s change public attitudes away from good citizenship and towards those of ‘greed is good’?)

Increasingly, the political environment affecting marketers includes supra-national organizations, which can directly or indirectly affect companies. These include trading blocs (e.g. the EV, ASEAN, and NAFTA) and the influence of worldwide intergovernmental organizations whose members seek to implement agreed policy (e.g. the World Trade Organization).

Example- In UK there is act passes called as UK bribery Act 2010 ,it covers all the companies which have presence in UK.Under this Act any company's employees or representatives can be persecuted if they are found guilty in act of bribery in UK or any other country.This even applies to the foreign companies which have presence in UK.

Another example,In USA ,Dodd frank act has come into picture, which makes compulsary for the Companies to list the Taxes,Royalties and other payments they make in other countries to be disclosed in their books.