02_politicalenv
TRANSCRIPT
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Political Env
Political Philosophy Ideology - who provides goods & services - capitalism, socialism & communism.
Structure - how is the govt run - Parliamentary, Republic, Monarchy etc.
Authority - who controls - democratic, totalitarian or mix
Political Institutions
Constitution - fundamental principles, rights & duties
Legislature enacts laws that guide business activities.
Executive implements the decisions of the legislature and lays down policies, regulations and
procedures that influence the activities of business.
Judiciary servers as watchdog and their rulings influence business practices. It settles disputes.
Political Systems Political parties
Election procedure
Govt stability
Policies, Regulations, Programs & Incentives
Others
Relationship with other countries
Govt transparency, Bureaucracy, corruption level, freedom of press etc.
Events outside the govt control like war, revolution, terrorisms, labor strikes etc.
Govt policies - Affect the cost & certainty of doing business.Economical, Monetary, Social, Welfare,
Trade, Procurement
Govt regulations - Capital market, Competition, Pricing, Ecological, Investment, Export/Import
Govt programs - Rural electrification, Indira Aawas Yojana, Mid Day Meal Scheme,
Govt incentives - Loans, subsidies, tax breaks
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Govt - Business - Public Interface
Role of Business Adherence to policies & regulations
Employment generation
Participate in overall economic growth
Tax payment - major source of income.
Provide products & services (Got is a large purchaser)
Providing information - to govt & politicians.
Government contracts - housing, infrastructure
Government services - lead/accompany delegations, advisory boards
Voluntary programs - echoupal, drishti
Political activity - debates, Nandan Nilekani UUID
Strategy Description
PAC Organization that pools contributions from members & donates
those to campaign for or against a candidate or legislation.
Trade Associations Organization founded and funded by business that operate in a
specific industry.
They participate in PR activities such as advertising, education,
political lobbying. Main focus is collaboration between companies.
Lobbying
SIG
Employee Involvement
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M&A
JV
Role of GovernmentThe role of the government should be to facilitate the process of peoples involvement in development
activities by creating the rights types of institutional infrastructure, particularly in rural areas. Without
organized government, individual citizens and business would operate like beasts in jungle.
Govt roles can be classified as general, provider & regulatory roles
General Role
With General Roles govt should focus on maintaining a legal /social framework and a healthy economy &
competition among business entities.
Provider Role
Public Services - As a provider, govt should provide public services like postal, defense,
parks/recreations, transportation, education and police/fire.
Jobs - Govt should also provide jobs & work related services to society. Govt is also responsible
for formulating appropriate labor laws & acts. Gratuity Act, Bonus Act, Labor Atc etc.
Business - Govt should provide necessary support to members of society to enhance
entrepreneurship through loans, subsidies & tax incentives.
Investor - Govt should provide or establish mechanisms to get capital for business. Govt is also
responsible for protecting the investment made by business.
Regulatory RoleGovernment regulation of business refers to all measures and instrumentalities that are aimed at defining
and laying down the limits of private enterprise, and controlling the various economic and business
activities in a country.
Appropriate regulatory policies help the governments to
1. Control natural monopolies
2. Control negative externalities
3. Achieve social goals
4. Control excess profits
5. Control excessive competitions6. Protect customers
7. Protect env
At high level, government regulations can be classified as economical & social regulations. Economic
regulation is defined as a type of government regulation that sets prices or conditions on entry of firms into
an industry. Economic regulation also includes the regulation of financial firms. social regulation includes
environmental controls, health and safety regulations, and restrictions on labeling and advertising. Social
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regulation involves the correction of externalities.
There are certain benefits associated with govt regulations. Some of them are
1. Fair treatment of employees
2. Safer working conditions
3. Safer & quality products4. Cleaner air & water
5. Reasonable price
The other side of govt regulations are
Direct costs like excessive compliance & taxes.
Indirect costs
Induced costs like reduced innovation, reduced investment in plant & equipments and increased
pressure on small business.
Overvalued currency
Huge transaction costs, bribery, red tapism Uncertainty
Recent trend is to increase the social regulation whereas reduce the economical regulations. The main
purpose of the deregulation is to increase competition with the expected benefits of greater efficiency,
lower prices and enhanced innovation. Governments throughout the world is facing the dilemma of how to
enhance the competition without sacrificing applicable social regulations.
Public Policy
Guidelines for public action & must be manifested in laws, public statements, official regulations or widely
accepted and publicly visible patterns of behavior.
Classification
Because public policy is intentional, that is, attempts to achieve certain goals, we can group policies into
classifications based on purpose.
Membership- citizenship & equality -
Needs- Education, healthcare etc.
Security- Government, first, exists to provide security from internal and external threats to the lives,
liberties, and properties of its members. Defense & Foreign policies, Crime policy.
Prosperity- material well being of members. Economical policy.
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Distributivepolicies allocate benefits from government to certain segments of the population. Subsidies,
Cash payment to farmers, public schools etc. The more widely the benefits are distributed, the more
consensual the policies and the more popular the policy is likely to be. Distributive policies are designed to
affect only one specific group of people or small area. These policies tend to be fairly low cost and
effective.Redistributioninvolves not only the allocation of benefits or services to certain parts of the population, but
the taxing of other parts of the population to generate the funds. Old age pensions, scholarships etc.
Redistributive policies tend to be very expensive in nature, and also seek to make a very large change, or
propose something of an important nature.
Regulatorypolicies impose constraints on individuals and groups. They reduce liberty of action. Criminal
justice laws, speed limits, env protection etc.
Self-regulatorypolicies are similar to regulatory, except that the persons or groups regulated possess
considerable authority and discretion to formulate and police the regulations governing them. Attorneys,
physicians, engineers, and other professions, for example, receive authority from government to license
practitioners, thus determining who may and who may not practice the profession.
Collective or Public Goods- National defense, clean air, traffic control etc.
Private Goods- distribution & redistribution policies comes under this category.
http://voices.yahoo.com/four-types-governmental-policies-why-they-are-620599.html
Public Policy Levels
International Level TRIMS, TRIPS
National MRTP Act
Regional Level sharing river water among riparian states, Common agriculture Policy
State Level Prevent Groundwater Contamination, SH
Public Policy Process Stages
http://www.google.com/url?q=http%3A%2F%2Fvoices.yahoo.com%2Ffour-types-governmental-policies-why-they-are-620599.html&sa=D&sntz=1&usg=AFQjCNG9EycnWMpUrsZwMWBtqf2w03LI4Q -
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Identify the policy problems
Agenda setting, that is, deciding what is to be decided, is the first critical step in the policymaking
process. To get on the agenda, problems must come to policymakers attention.Influential individuals and
ordinary citizens, organized interest groups, think tanks and policy planning organizations, political
candidates, and officeholders all employ the tactics of agenda setting, usually through attempts to get themass media to publicize the issue.
Non-decision makingoccurs when powerful individuals, groups, or organizations act to suppress an issue
because they fear that if public attention is focused on it, their best interests may suffer. Non Decision
making also occurs when political candidates, officeholders, or administrative officials anticipate that
powerful individuals or groups will not favor a particular idea.
Political ideologyis a driving force in agenda setting.
Special interest groupsare a staple of the political landscape, and they do their best to influence the
political agenda either directly or indirectly. Special interest groups may represent people based on race,
ethnicity, gender, sexual orientation, age, income, profession, or other factors.
Mass media- Deciding what is news and who is newsworthy is a powerful political weapon.
Television executives and producers and newspaper and magazine editors decide what people,
organizations, and events will be given public attention.
Public opinion
Formulate policy proposal
Policy-planning organizations, interest groups, government bureaucracies, state legislatures, and thepresident and Congress may all engage in formulating policy proposals.
Legitimize policy
Policy is legitimized as a result of the public statements or actions of government officials, both elected and
appointedthe president, Congress, state legislators, agency officials, and the courts. This includes
executive orders, budgets, laws and appropriations, rules and regulations, and administrative and court
decisions that set policy directions.
Implement
Policy implementation includes all the activities that result from the official adoption of a policy. Policy
implementation is what happens after a law is passed. Traditionally, public policy implementation was thesubject matter of public administration. The separation of politics from administration was once
thought to be the cornerstone of a scientific approach to administration. But today it is clear that politics
and administration cannot be separated. Opponents of policies do not end their opposition after a law is
passed. They continue their opposition in the implementation phase of the policy process by opposing
attempts to organize, fund, staff, regulate, direct, and coordinate the program. If opponents are
unsuccessful in delaying or halting programs in implementation, they may seek to delay or halt them in
endless court battles. In short, conflict is a continuing activity in policy implementation.
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Evaluate
Formally or informally evaluated by public, mass media, interest groups, outside consultants & govt
agencies.
Additional Notes
Capitalism - People own their own businesses and property and must buy services for private use, such as
healthcare. (US)
Socialism - Governments own many of the larger industries and provide education, health and welfare
services while allowing citizens some economic choices. (India)
Communism - Government owns all businesses and farms and provides its people's healthcare, education
and welfare. (Cuba)
Parliamentary - A parliamentary system is led by representatives of the people. Each is chosen as a
member of a political party and remains in power as long as his/her party does.(India)
Monarchy - A monarchy has a king or queen, who sometimes has absolute power. Power is passed along
through the family. (Jordan)
Totalitarian - Rule by a single political party. People are forced to do what the government tells them and
may also be prevented from leaving the country.(China)
Dictatorship - Rule by a single leader who has not been elected and may use force to keep control. In a
military dictatorship, the army is in control. Usually, there is little or no attention to public opinion or
individual rights.(Iraq)
Theocracy - A form of government where the rulers claim to be ruling on behalf of a set of religious ideas,
or as direct agents of a deity.(Iran)
Democracy - In a democracy, the government is elected by the people. Everyone who is eligible to vote -
which is a majority of the population - has a chance to have their say over who runs the country. (India)
Totalitarian - Rule by a single political party. Votes for alternative candidates and parties are simply not
allowed. Citizens are allowed and 'encouraged' to vote, but only for the government's chosen candidates.
(North Korea)
Govt Stability
Radical shifts in govt philosophy when opposing political parties comes into power.
Pressure from nationalist & self interest groups.
Bias against foreign investment.
Conflicts between political parties.
Questions
1. Mention some of the influences of state on business (3)
2. What exactly is the regulatory role of govt on business (3)
3. Note on political env (3)
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4. How does the political env influence the business undertaking (10)
5. Write a detailed note on interface between govt & business (10)