Political, Governmental, and Legal Forces

• Federal, state, local, and foreign governments are

major regulators, deregulators, subsidizers, employ
ers, and customers of organizations.

• For industries and firms that depend heavily on gov

ernment contracts or subsidies, political forecasts c
an be the most important part of an external audit
Political, Governmental, and Legal Forces
• The increasing global interdependence among eco
nomies, markets, governments, and organizations
makes it imperative that firms consider the possibl
e impact of political variables on the formulation a
nd implementation of competitive strategies

• In the face of a deepening global recession, countri

es worldwide are resorting to protectionism to saf
eguard their own industries.
 Examples
01 European Union (EU) nations have tightened their
own trade rules and resumed subsidies for variou
s of their own industries while barring imports fr
om certain other countries
02 India is increasing tariffs on foreign steel.
Russia perhaps has instituted the most protectionist measur
03
es in recent months by raising tariffs on most imports and su
bsidizing its own exports. Russia even imposed a new toll on
trucks from the EU, Switzerland, and Turkmenistan.
 Political, Governmental, and Legal Forces
• Governments are taking control of more and more compani
es as the global economic recession cripples firms considere
d vital to the nation’s financial stability.
• Example:
France in 2009 took a 2.35 percent equity stake in troubl
ed car-parts maker Valeo SA. President Nicolas Sarkozy of Fran
ce has created a $20 billion strategic fund to lend cash to bank
s and carmakers as many governments become more protecti
onist.
Some Political, Governmental, and Legal Vari
ables
• Government regulations o • Number of patents
r deregulations • Changes in patent laws
• Changes in tax laws • Environmental protection laws
• Special tariffs • Level of defense expenditures
• Political action committee • Legislation on equal employment
s • Level of government subsidies
• Voter participation rates • Antitrust legislation
• Number, severity, and loc • Sino-American relationships
ation of government prot • Russian-American relationships
ests
Some Political, Governmental, and Legal Vari
ables
• European-American relationships
• African-American relationships
• Import–export regulations
• Government fiscal and monetary policy changes
• Political conditions in foreign countries
• Special local, state, and federal laws
• Lobbying activities
• Size of government budgets
• World oil, currency, and labor markets
• Location and severity of terrorist activities
• Local, state, and national elections
Technological Forces
• The Internet has changed the very nature of opportunities a
nd threats by altering the life cycles of products, increasing t
he speed of distribution, creating new products and services,
erasing limitations of traditional geographic markets, and ch
anging the historical trade-off between production standardi
zation and flexibility.

• The Internet is altering economies of scale, changing entry b

arriers, and redefining the relationship between industries a
nd various suppliers, creditors, customers, and competitors.
Technological Forces
To effectively capitalize o
n e-commerce, a number
of organizations are esta
blishing two new positio
ns in their firms
• Chief information Officer
(CIO) is more a manager,
managing the firm’s relat
ionship with stakeholders
• Chief Technology Officer (CT
O) is more a technician, focu
sing on technical issues such
as data acquisition, data proc
essing, decision-support syst
ems, and software and hard
ware acquisition.
Technological Forces
• Technological advancements can create new markets, res
ult in a proliferation of new and improved products, chan
ge the relative competitive cost positions in an industry,
and render existing products and services obsolete.

• Technological changes can reduce or eliminate cost barri

ers between businesses, create shorter production runs,
create shortages in technical skills, and result in changing
values and expectations of employees, managers, and cu
stomers.
Examples of the Impact of Wireless Technolog
y
• Airlines—Many airlines now offer wireless technology in flight.
• Automotive—Vehicles are becoming wireless.
• Banking—Visa sends text message alerts after unusual transacti
ons.
• Education—Many secondary (and even college) students may us
e smart phones for math because research shows this to be grea
tly helpful.
• Energy—Smart meters now provide power on demand in your h
ome or business. TITLE
 Examples of the Impact of Wireless Technolog
y
• Health Care—Patients use mobile devices to monitor their own health,
such as calories consumed.
• Hotels—Days Inn sends daily specials and coupons to hotel guests via t
ext messages.
• Market Research—Cell phone respondents provide more honest answe
rs, perhaps because they are away from eavesdropping ears.
• Politics—President Obama won the election partly by mobilizing Faceb
ook and MySpace users, revolutionizing political campaigns. Obama an
nounced his vice presidential selection of Joe Biden by a text message.
• Publishing—eBooks are increasingly available.