Political Systems and Business Politics

Political Systems and Business

Politics play an important role in providing an environment that is conducive for business to both foreign and domestic investors and the politically stable countries are more attractive to foreign investors. The governments of different countries employ different political systems which therefore becomes a major concern for any company or organization to consider before investing. Any international company that intends to venture into business should asses the political situation of the host country to verify whether the political climate is suitable for their operations.

Various aspects of politics such as the political unrest, government policies, corruption, change of regulation and other government actions should be considered. These factors have a direct impact on the operations of the foreign investors as they interfere with the long-term plans and business objectives in terms of the market share and profitability. It is for these reasons that the international companies prefer countries with democratic political systems due to their stable environment for doing business as opposed to the totalitarian political systems.

In a totalitarian environment, business for the foreign companies is quiet a challenge if profitability is to be realized both in the short and the long run. In countries with such a system, there is no room for opposition to the government, they are ruled by a single party and both the economic and political issues lie with the government and a few individuals. There is no participation by the society or the stake holders in making decisions and all the decisions and control of all the resources are centralized.

Doing business in such an environment is a challenge to both foreign and domestic companies since it denies people an equal opportunity to do business and to take part in important matters of the state. An example of this kind of political form is China where the rules can be changed anytime by the government which might change the nature of doing business or may totally paralyze the business of a foreign company. Lack of opposition to carry out checks and balances and to challenge some of the key government policies is risky and does not provide a suitable environment for doing business. All the decisions are based on the interest of a few individuals with power and not taking into consideration the interest of the majority of the citizens. There is no fair play and most international companies become vulnerable in such an environment due to the political uncertainty and interference by the government making it difficult to make projections and achieve the company's objectives hence unsuitable for doing business (Jason Chavis, 1999).

Democratic political systems however provide the international companies with a stable environment to do business. It is a system that involves the participation of the citizens and they are encouraged to take part in the decision making processes and policies that that shape both the economic and political landscape of the nation. With the participation of the citizens the environment for conducting business is fair and equal for all since the rules and regulations have the majority's participation and represent the will of the people.

The citizens exercise their political rights and they have the right to make amendments on specific clauses within the laws that govern them. The suggested amendments are forwarded to the parliament or the right body for debates and approved before being enacted into law for the benefit of the citizens. The democratic political systems advocate for good governance and transparent policies in which the services are devolved to the people which eliminates the bureaucracies involved in the service delivery. The devolved system of government ensures an equal distribution of resources and a reasonable collaboration between the government and the private sector partners which attracts more investments.

Democratic political systems empower the citizens and they become vocal on issues that affect the society and their concerns are addressed. The existence of the community-based organizations and the civil society organizations advocate for the rights of the citizens and push the government among other duty bearers to deliver the essential services such as the infrastructure which attracts investments. The independence of the judicial system that is separated from the interest of a few people provides a stable system which ensures that the right legal framework is in place for enacting friendly rules and regulation and delivering fair rulings to all.