Political Factors

Political factors define the legal and regulatory parameters within which firms must operate.Political constraints are placed on firms through fair-trade decisions,antitrust laws,tax programs,minimum wage legislation,pollution and pricing policies,administrative jawboning,and many other actions aimed at protecting employees,conumers,the general public and the environment.Because such laws and regulations are most commonly restrictive,they tend to reduce the potential profits of firms.However, some political actions are designed to benefit and protect firms.Such actions include patent laws,government subsidies, and product research grants.Thus, political factors either may limit or benefit the firms they influence.

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