Marketing decisions and activities are restrained and controlled by multitude of laws and regulations established by the political institutions. Laws have been enacted to preserve a competitive atmosphere or to protect the consumers. Extent of the impact of these laws on marketing mix variables will depend on how marketers and the court interpret such provisions.
Other sources of regulations include the local authorities etc.
Some industries are subjected to heavy regulation e.g. electricity, water, rail transport – This gives company’s operating in this environment monopoly and prices are restricted. This is justified by the large sum of money that needs to be invested in the industries.
Changes in law can be anticipated from governing party’s manifestos to guide the firm’s political priorities. Also the government publishes papers to consult on plan on issues like green issues, employment, wages etc.
The government is also responsible for creating a stable framework for which business can be done e.g. in terms of physical infrastructure, social infrastructure and market infrastructure.
Some political changes can make planning of company activities difficult and there are political risks that can damage the firm e.g. wars, political chaos (Mageuzi and Mungiki etc).
The concern is the stability of the political system, the government commitment to the rule of game, expectation of change in government and expected changes in the business practices etc.
Government policy in particular industry is important
Titany answered the question on November 24, 2021 at 12:12