What Are Political Factors?

A political factor is an activity having to do with government policy and its administration that has the potential to change or influence a business. New legislation is one example of a political factor because it can impact the company’s operations by either requiring or prohibiting it to act in a particular way.

A political factor is an external constraint on a company, meaning that the influence comes from outside the organization’s control. The biggest political factors are related to government administration and activity. Examples of legislation that force a business to act in a certain manner are health and safety laws and the federal minimum wage. Environmental laws that limit pollution are prohibitive political factors.

It is possible to affect political factors by lobbying the legislatures. If an industry is particularly strong, it can dominate and control the very people who are supposed to be regulating the company.

International business trade has even more political factors imposed upon it. A company is sometimes subjected to high taxes on the products it is attempting to sell. Embargoes potentially also deny access to various markets that do not allow the products to be imported. Even civil war in other countries can strongly hinder business activities.