2. POLITICAL ENVIRONMENT The influence of political environment on business is enormous The political system prevailing in a country decides, promotes, fosters, encourages, shelters, directs and controls the business activity of that country

3. THREE INSTITUTIONS LEGISLATURE EXECUTIVE/GOVERNMENT JUDICIARY

4. LEGISLATURE Most powerful political institution It is vested with powers such as policy making, law making, budget approving, executive control and acting as a mirror of public opinion It has a considerable influence on business like determining the type of business activities a country should have, who should own them, what should be their size of operations, what should happen to their earnings and other related factors

5. EXECUTIVE/GOVERNMENT Four Important Roles The Regulatory Role The Promotional Role The Entrepreneurial Role The Planning Role

6. a. BUSINESS RESPONSIBILITIES TO GOVT. b. GOVT. RESPONSIBILITIES TO BUSINESS

7. GOVT. RESPONSIBILITIES TO BUSINESS Establishment & enforcement of laws Maintenance of order Money and credit Orderly growth Infrastructure Information Assistance to small industries Transfer of technology Government Competition Inspections & licenses Tariffs & quotas (foreign competition)

8. BUSINESS RESPONSIBILITIES TO GOVT. Tax payment Voluntary programmes Providing information Govt. contracts Govt. service Political Activity

9. JUDICIARY It determines the manner in which the work of the executive has been fulfilled It ensures that the executive authority conforms to the general rules laid down by the legislature It is the power of the judiciary to settle legal disputes that affect business considerably

10. DISPUTES SETTLED BY JUDICIARY Employer & employer Employer & employees Employee & employee Employer & public Employer & government